1、010417SHELM038JL_RAJv5i,CONFIDENTIAL,This report is solely for the use of client personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the client organization without prior written approval from McKinsey it is not a complete record of the discussion.,August 20, 2
2、001,Mobile Handset Competitor Profile: Motorola,SAMSUNG ELECTRONICS CHINA (SEC China),010417SHELM038JL_RAJv5i,2,OVERVIEW OF COMPETITOR ANALYSIS FRAMEWORK,1. Background information,Location Registered capital Management team Equity structure,Starting year Number of employees Era analysis,4. Value cha
3、in strategy,5. Organization and ownership,6. Financial performance,Focus on Marketing, advertising and promotion Distribution (channel and sales force),Organization structure Ownership structure,Sales Profit,2. Strategy,3. Product/market,Mission Vision Corporate strategy Market position,Key product
4、offerings Key customers Value proposition Geographic focus Pricing,010417SHELM038JL_RAJv5i,3,BACKGROUND INFORMATION,1. Background information,Location Registered capital Management team Equity structure,Starting year Number of employees Era analysis,4. Value chain strategy,5. Organization and owners
5、hip,6. Financial performance,Focus on Marketing, advertising and promotion Distribution (channel and sales force),Organization structure Ownership structure,Sales Profit,2. Strategy,3. Product/market,Mission Vision Corporate strategy Market position,Key product offerings Key customers Value proposit
6、ion Geographic focus Pricing,010417SHELM038JL_RAJv5i,4,MOTOROLA HAS HIGH ASPIRATIONS FOR ITS CHINA BUSINESS,Targeting sales of US$ 10 billion in China by 2002/2003Focusing production operations in China, as production there is about 15-20% cheaper than in Singapore and 30-40% cheaper than in Europe,
7、Source: Analyst reports,010417SHELM038JL_RAJv5i,5,MOTOROLAS CHINA BUSINESS SPANS SIX PRODUCT CATEGORIES,Motorola China,Mobile handsets,Network equipment,Pagers,Two-way radios,Semi- conductors,Auto electronics and accessories,Mobile network equipment,Fixed line network equipment,Wireless communicatio
8、ns,Source: Motorola website,Set up representative office in 1987 Operations include: 1 holding company 1 WOFE 8 joint ventures 26 subsidiaries 12,000 employees US$ 3.4 billion total investment to date,010417SHELM038JL_RAJv5i,6,STRATEGY,1. Background information,Location Registered capital Management
9、 team Equity structure,Starting year Number of employees Era analysis,4. Value chain strategy,5. Organization and ownership,6. Financial performance,Focus on Marketing, advertising and promotion Distribution (channel and sales force),Organization structure Ownership structure,Sales Profit,2. Strateg
10、y,3. Product /market,Mission Vision Corporate strategy Market position,Key product offerings Key customers Value proposition Geographic focus Pricing,010417SHELM038JL_RAJv5i,7,MOTOROLAS HANDSET STRATEGY COMBINES AN ATTRACTIVE PRODUCT RANGE WITH SUPERB VALUE CHAIN MANAGEMENT,Developed a wide product
11、range which covers all key price points and offers a wide range of functionalityInvested heavily in product localization through China-based R&D teamExpanded local manufacturing in order to reduce costs and improve time-to-marketClosely managed first-tier group of nine resellers in order to minimize
12、 price competition and facilitate order trackingCommitted handset promotion Speedy roll-out of new releases Provision of high-quality after-sales services Advanced technology,Product range,Value chain,Core competencies,010417SHELM038JL_RAJv5i,8,PRODUCT/MARKET,1. Background information,Location Regis
13、tered capital Management team Equity structure,Starting year Number of employees Era analysis,4. Value chain strategy,5. Organization and ownership,6. Financial performance,Focus on Marketing, advertising and promotion Distribution (channel and sales force),Organization structure Ownership structure
14、,Sales Profit,2. Strategy,3. Product /market,Mission Vision Corporate strategy Market position,Key product offerings Key customers Value proposition Geographic focus Pricing,010417SHELM038JL_RAJv5i,9,Motorola has entered the low-end of the mobile handset market since 1999. Its products are more func
15、tion-driven compared with Nokias products, which are more fashion-drivenMotorola takes more than 50% of the share in the high-end and high-mid-end of the mobile handset market, and more than 20% of the share in the low-end and mid-low-end. Its low-end handsets represent more then 50% of its product
16、offeringsMotorolas market share is relatively consistent across tier-cities and geographies, taking approximately 30% everywhere,KEY MESSAGES - PRODUCT/MARKET,010417SHELM038JL_RAJv5i,10,MOTOROLA HAS RECENTLY FOCUSED ON BUILDING OUT ITS LOW-END PRODUCT PORTFOLIO,Product positioning Dec 2000,Business/
17、professional,Personal,Product positioning Jun 2000,V8088 (1.6%),Business/professional,Personal,V998 (5.6%),LF2000 (2.9%),LF2000 (4%),368C (3.1%),338C (0.6%),T2688 (4.8%),CD928 (1.1%),V2188 (3.8%),V2088 (2.0%),A6188 (1.4%),V8088 (3.9%),V998+ (7.0%),P7689 (1.8%),L2000 (2.2%),LF2000 (1.7%),368C (2.3%),
18、T2688 (6.2%),V2188 (1.3%),V2088 (1.0%),366C (0.5%),T2288 (0.3%),T360 (0.3%),High,High- medium,Medium- low,Low,High,High- medium,Medium- low,Low,Source: Interviews, McKinsey analysis,010417SHELM038JL_RAJv5i,11,MOTOROLA MODELS ARE MORE FUNCTION-DRIVEN THAN NOKIA,Fashion,Business,Basic,Fun,Changeable c
19、over,Sub-100g,Voice-dial,Recording,Vibration,Tri-band,WAP,Built-in modem,IR-port,Chinese input,Li-Ion battery,SMS messaging,Games,Composable/ downloadableringer tone,8210,6210,P7689,V998+,L2000WWW,Fashion,Classic,Price in China (RMB),2652,2878,2369,1800,1452,Equivalent features, Nokia more fun/fashi
20、on vs. Motorola more functions,Motorola offers lower price models with similar features, tri-band and WAP,* Nov. 2000 price,Key differences,010417SHELM038JL_RAJv5i,12,Source: GFK, Sino-MR,MOTOROLA HAS HIGHER SHARES IN CHINA IN FASHION AND BUSINESS SEGMENTS,Nokia Motorola,Models,2000,China,Taiwan,Hon
21、g Kong,Indonesia,Singapore,Flagship,8850 A6188,Fashion-High,8210, 8250 V8088, V998+,Fashion-Low,3310 T360, T2988, T2688,Basic,3210, 5110 V2088/2188, V2288, StarTac, CD928/938,Business -low,6150 L2000 Series,Business -High,6210, 7110 P7689,Total:,010417SHELM038JL_RAJv5i,13,MOTOROLA HAS DRIVEN SALES I
22、NCREASES PARTICULARLY IN THE LOW-END PRODUCTS,Mid-low (RMB1500-2500),High-mid (RMB2500-3500),High (RMB 3500),December 2000,April 2001,Product mix Percent of units,Market share by price point Percent,Low (RMB1500),Dec 2000-April 2001,Mid-low (RMB1500-2000),High-mid (RMB2500-3500),High (RMB3500),Low (
23、RMB1500),Source: Interviews, Sino-MR (Dec 2000 - April 2001), McKinsey analysis,Mid (RMB2000-2500),010417SHELM038JL_RAJv5i,14,MOTOROLAS MARKET SHARE IS RELATIVELY CONSISTENT ACROSS TIER CITIES AND GEOGRAPHIES,Market share by tier cities Percent,Market share by geographic areas Percent,North,West,Nor
24、theast,Central,Tier 1,Tier 2,Tier 3,2000,April 2001,South,East,Source: Sino-MR, GfK,Dec 2000-April 2001,010417SHELM038JL_RAJv5i,15,VALUE CHAIN STRATEGY,1. Background information,Location Registered capital Management team Equity structure,Starting year Number of employees Era analysis,4. Value chain
25、 strategy,5. Organization and ownership,6. Financial performance,Focus on Marketing, advertising and promotion Distribution (channel and sales force),Organization structure Ownership structure,Sales Profit,2. Strategy,3. Product/market,Mission Vision Corporate strategy Market position,Key product of
26、ferings Key customers Value proposition Geographic focus Pricing,010417SHELM038JL_RAJv5i,16,Motorolas value delivery system strategy has evolved since 1997. Product development has been more customer oriented and new releases are catering for needs by different customer segments. Localization of mob
27、ile handset manufacturing has been furthered to a production capacity of 18 million units in Tianjin and 8 million units in Hangzhou. With increasing investment in sales and marketing, Motorola is now the strongest brand in ChinaMotorola employs PTAC, CellStart, Heguang, Eastcom, SunYin, Sinya, Nort
28、h Telecom, Hengxin, and Forte as its 9 first-tier resellers. It intends to reduce the many tiers of resellers that has become a disadvantage to Motorolas channel efficiencyMotorolas key strength lies in advanced technology, committed promotion, wide distribution network and quality after-sales servi
29、ce,KEY MESSAGES - VALUE CHAIN STRATEGY,010417SHELM038JL_RAJv5i,17,MOTOROLAS VALUE CHAIN HAS EVOLVED OVER THE PAST THREE YEARS,From. . . (1997),To. . . (2000/2001),Manufacturing Sales and marketingDistribution,Production capacity in Tianjin (1.5 million) and Hangzhou (200,000)Strong brand awareness M
30、arket share 34%50% reimport via Hong Kong Strong nationwide tiered dealer network (10-15 tier A dealers) Close relations with PTTs,Expanding production capacity at Tianjin to 18 million units, and at Hangzhou to 8 million unitsStrongest brand awareness in China Developed needs-based customer segment
31、ation Market share 30%50% reimport via Hong Kong Number of dealers limited to 9; shared exclusivity by product Kept strong retail support (doubled marketing and sales staff since 97),Source: Interviews, McKinsey analysis,010417SHELM038JL_RAJv5i,18,MOTOROLAS KEY STRENGTHS LIES IN ADVANCED TECHNOLOGY,
32、 COMMITTED PROMOTION, WIDE DISTRIBUTION NETWORKS AND QUALITY AFTER-SALES SERVICES,Source: IDC 2000,Key strengths,Recent development,010417SHELM038JL_RAJv5i,19,MOTOROLA DISTRIBUTES EXCLUSIVELY THROUGH NINE FIRST-TIER RESELLERS,Source: IDC,RationalesMotorola employs PTAC, CellStart, Heguang, Eastcom,
33、SunYin, Sinya, North Telecom, Hengxin, and Forte as its 9 first-tier resellers. Historically assigned one Motorola model to each reseller Eliminates price competition Enables Motorola to effectively manage production volume with order tracking Recently shift strategy to have 2 authorized resellers f
34、or every model in order to improve promotions and access to customers Motorola is the best vendor on channel support as promotion and advertisement is provided. It also helps resellers to set up service centers to handle repair and maintenance services. As the leading vendor in China, Motorolas chan
35、nel strategy is of continued importance,Motorola Channel Structure,Motorolas well-built distribution network plays an important role in its success in China Too many tiers of resellers become a disadvantage to Motorolas channel efficiency,Vendor,1st-tier resellers,2nd -tier resellers,Retailers/retai
36、l chain stores,Consumers,100%,21%,64%,3%,85%,12%,76%,010417SHELM038JL_RAJv5i,20,ORGANIZATION AND OWNERSHIP,1. Background information,Location Registered capital Management team Equity structure,Starting year Number of employees Era analysis,4. Value chain strategy,5. Organization and ownership,6. Fi
37、nancial performance,Focus on Marketing, advertising and promotion Distribution (channel and sales force),Organization structure Ownership structure,Sales Profit,2. Strategy,3. Product /market,Mission Vision Corporate strategy Market position,Key product offerings Key customers Value proposition Geog
38、raphic focus Pricing,010417SHELM038JL_RAJv5i,21,Motorola has 8 JVs, 1 WOFE and 1 holding company in China, among which Hangzhou Eastcom Cellular Phone (8 million units production capacity) and Motorola Tianjin (MCEL, 18 million units capacity) are devoted to mobile handsetsMotorola is mainly organiz
39、ed along product lines, however, its WOFE in Tianjin has been reorganized to be more customer focused. Motorola Tianjin is divided into 4 sectors, i.e. Personal Communication for consumers, Commercial, Government and Industrial Solutions for corporate and government, Global Telecommunication Solutio
40、ns for telecom operators, and Integrated Electronic Systems for assemblers,KEY MESSAGES - ORGANIZATION AND OWNERSHIP,010417SHELM038JL_RAJv5i,22,MOTOROLA HAS 8 JVs AND 1 WOFE IN CHINA, AMONG WHICH 1 JV AND THE WOFE ARE DEVOTED TO MOBILE HANDSETS,Motorola (China) investment,Leshan - Phoenix semi-condu
41、ctor,Shanghai Motorola paging products,Hangzhou Motorola Mobile communi- cation,Hangzhou Eastcom cellular phone,Shanghai zhongmei automotive electronics,Huamin Smart card, Beijing Huamin smart card system manufacturing,Motorola Tianjin (MCEL),Established year,Product offering,1995,1995,2000,2000,199
42、9,1998,1992,Semiconductor,Pager,GSM and CDMA network,Mobile handsets,Automotive electronics,Smart card system and product,Mobile handsets Mobile infrastructure Semi-conductors Two-way radios Base stations Handset accessories,With Ansenmei and Leshan Radio,With Shanghai Radio (SRCEM),With Eastcom and
43、 Putian,42% With Eastcom and Putian,With Shanghai GE,With Sino-overseas construction information,100%,Source: Motorola press release,010417SHELM038JL_RAJv5i,23,MOTOROLA IS ORGANIZED ALONG PRODUCT LINES, HOWEVER ITS WOFE IN TIANJIN HAS BEEN REGORGANIZED TO BE MORE CUSTOMER FOCUSED,R&D Hang Zhou/ Shan
44、ghai,Manu- facturing,Sales,Services,Manu- facturing,Sales,Services,Personal communication,Commercial, government and industrial solutions,Global Tele-communication solutions,Integrated Electronics Systems,Asia tele-communication product manufacturing site (planned),R&D,Manu- facturing,R&D,Manu- fact
45、uring,Sales,R&D,Manu- facturing,Sales,R&D,Manu- facturing,Mobile handset* pager *In 2001, 18 million units capacity,GSM, CDMA Mobile network and handsets,GSM, CDMA Mobile network,Mobile handsets* *In 2001, 5 million units production 8 million units capacity,Two way radio,GSM, CDMA systems, e.g., bas
46、e station,Batteries,Hangzhou Motorola mobile communication,Hangzhou Eastcom cellular phone,Motorola Tianjin (MCEL),Source: Motorola press release,010417SHELM038JL_RAJv5i,24,FINANCIAL PERFORMANCE,1. Background information,Location Registered capital Management team Equity structure,Starting year Numb
47、er of employees Era analysis,4. Value chain strategy,5. Organization and ownership,6. Financial performance,Focus on Marketing, advertising and promotion Distribution (channel and sales force),Organization structure Ownership structure,Sales Profit,2. Strategy,3. Product/market,Mission Vision Corpor
48、ate strategy Market position,Key product offerings Key customers Value proposition Geographic focus Pricing,010417SHELM038JL_RAJv5i,25,Motorola has been maintaining its market share of 30% in mobile handset. Due to increasingly intensive competitions, its market share is expected to drop to 20% in 2
49、005.Motorolas EBIT margin for mobile handset is 5%, which is very low compared with Samsungs EBIT at 15% and Nokias EBIT at 20%. The low EBIT margin is mainly due to its high cost of goods sold.,KEY MESSAGES - FINANCIAL PERFORMANCE,010417SHELM038JL_RAJv5i,26,MOTOROLA HAS GROWN WITH THE MARKET AND MAINTAINED ITS 30% MARKET SHARE IN MOBILE HANDSET,
