The Business Economist at Work: Motorola

By Davis, Thomas F. | Business Economics, October 1997 | Go to article overview

The Business Economist at Work: Motorola


Davis, Thomas F., Business Economics


I have been a professional economist for over twenty years, progressing through a number of employers - government, academic and private sector. Each assignment has taught me something that proved important in the next. While I maintain that the most useful lessons have been learned on the job, I also have the standard educational background - B.A., M.A., and Ph.D. in Economics. In every job, the advanced degree was the "ticket" that let me in the door. However, if you want to stay on the side of the door that says "employed," you must add value to the decisionmaking process.

My official title at Motorola is Chief Economist and Director, Corporate Strategy Office. You might ask what economics has to do with strategy, and, hopefully, you will get the answer by reading the rest of this piece. Before I tell you about what I do, you should understand something about my employer.

COMPANY OVERVIEW

Motorola is one of the world's leading providers of wireless communications, semiconductors and advanced electronic systems, components and services. Major equipment businesses include cellular telephone, two-way radio, paging and data communications, personal communications, automotive, defense and space electronics and computers. Motorola semiconductors power communication devices, computers and millions of other products.

The company was founded by Paul V. Galvin in 1928 as the Galvin Manufacturing Corporation, in Chicago, Illinois. Its first product was a "battery eliminator," allowing consumers to operate radios directly from household current instead of the batteries supplied with early models. In the 1930s, the company successfully commercialized car radios under the brand name "Motorola," a new word suggesting sound in motion. During this period, the company also established home radio and police radio departments, instituted pioneering personnel programs, and began national advertising. The name of the company was changed to Motorola, Inc. in 1947. The decade of the 1940s also saw the company enter government work and open a research laboratory in Phoenix, Arizona, to explore solid-state electronics. By the time of Paul Galvin's death in 1959, Motorola was a leader in military, space and commercial communications, had built its first semiconductor facility and was a growing force in consumer electronics.

Under the leadership of Robert W. Galvin (Paul Galvin's son), Motorola expanded into international markets in the 1960s and began shifting its focus away from consumer electronics. The color television receiver business was sold in the mid-1970s, allowing Motorola to concentrate its energies on high-technology markets in commercial, industrial and government fields. By the end of the 1980s, Motorola had become the premier worldwide supplier of cellular telephones and in the early 1990s received its first orders as the prime contractor for the IRIDIUM[R] satellite-based, global personal communications system.

Sales in 1996 rose to $28.0 billion and earnings were $1.15 billion. In 1996, 58 percent of sales were outside the United States. The company's operations are highly decentralized, with six sectors and one group reporting to the Office of the Chief Executive. The businesses include the Semiconductor Products Sector; the Cellular Subscriber Sector; the Cellular Networks and Space Sector; the Land Mobile Products Sector; the Messaging, Information and Media Sector; the Automotive, Energy and Components Sector; and the Motorola Computer Group.

DUTIES DETERMINED BY CORPORATE NEEDS

What I do on a daily basis is determined by the needs of the company (they change rapidly). In fact, change is the one constant. Much of the need for growth and change in our corporate environment is dictated by the markets we serve.

The most telling fact from the Motorola overview above is that about 60 percent of Motorola's revenues come from outside the United States. We expect that figure to approach 75 percent as we enter the new millennium. …

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