Why Motorola Failed in China: An In-Depth Review

Abstract

The paper illustrated the reasons behind the major failure of Motorola’s failure in the industry of Chinese mobile phones. Motorola had initial dominance and significant investment, but despite having that Motorola failed due to major misalignments in understanding the culture, executing strategy and responding properly to the market. The paper highlights that China is a collectivist country, and the strategy that Motorola followed is US-centric. Using Hofstede's cultural dimension and international business frameworks it is examined that the strategy clashed with the high power distance and long term focused cultural setting of China. Motorola Failed to maintain its first mover advantage, had a poor demand forecast, and underutilization of local R&D skills which are emphasized in the study using the international trade theories such as Porter’s Diamond Model and the New Trade Theory. Motorola started in China via joint ventures and fully owned subsidiaries but their market importance gradually reduced because of not being able to localize products and using co-development strategies. Motorola followed a global low cost strategy that only focused on product offerings that are similar with poor after sale support. The Chinese market expects quick service and digital integration but Motorola overlooked that. The analysis suggests that the collapse of Motorola was a cultural misalignment and insufficient localization which could be addressed by emphasizing on cultural intelligence, quick operational methods and consumer centric localization. The study demonstrates the crucial need for the adaptation and aligning strategy with the host country to achieve sustainable global success.