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010417SHELM038JL_RAJv5iCONFIDENTIALThisreportissolelyfortheuseofclientpersonnel.Nopartofitmaybecirculated,quoted,orreproducedfordistributionoutsidetheclientorganizationwithoutpriorwrittenapprovalfromMcKinsey&Company.ThismaterialwasusedbyMcKinsey&Companyduringanoralpresentation;itisnotacompleterecordofthediscussion.August20,2001MobileHandsetCompetitorProfile:MotorolaSAMSUNGELECTRONICSCHINA(SECChina)010417SHELM038JL_RAJv5i2OVERVIEWOFCOMPETITORANALYSISFRAMEWORK1.Backgroundinformation•Location•Registeredcapital•Managementteam•Equitystructure•Startingyear•Numberofemployees•Eraanalysis4.Valuechainstrategy5.Organizationandownership6.FinancialperformanceFocuson•Marketing,advertisingandpromotion•Distribution(channelandsalesforce)•Organizationstructure•Ownershipstructure•Sales•Profit2.Strategy3.Product/market•Mission•Vision•Corporatestrategy•Marketposition•Keyproductofferings•Keycustomers•Valueproposition•Geographicfocus•Pricing010417SHELM038JL_RAJv5i3BACKGROUNDINFORMATION1.Backgroundinformation•Location•Registeredcapital•Managementteam•Equitystructure•Startingyear•Numberofemployees•Eraanalysis4.Valuechainstrategy5.Organizationandownership6.Financialperformance•Focuson–Marketing,advertisingandpromotion–Distribution(channelandsalesforce)•Organizationstructure•Ownershipstructure•Sales•Profit2.Strategy3.Product/market•Mission•Vision•Corporatestrategy•Marketposition•Keyproductofferings•Keycustomers•Valueproposition•Geographicfocus•Pricing010417SHELM038JL_RAJv5i4MOTOROLAHASHIGHASPIRATIONSFORITSCHINABUSINESS•TargetingsalesofUS$10billioninChinaby2002/2003•FocusingproductionoperationsinChina,asproductionthereisabout15-20%cheaperthaninSingaporeand30-40%cheaperthaninEuropeSource:Analystreports010417SHELM038JL_RAJv5i5MOTOROLA’SCHINABUSINESSSPANSSIXPRODUCTCATEGORIESMotorolaChinaMobilehandsetsNetworkequipmentPagersTwo-wayradiosSemi-conductorsAutoelectronicsandaccessoriesMobilenetworkequipmentFixedlinenetworkequipmentWirelesscommunicationsSource:Motorolawebsite•Setuprepresentativeofficein1987•Operationsinclude:–1holdingcompany–1WOFE–8jointventures–26subsidiaries•12,000employees•US$3.4billiontotalinvestmenttodate010417SHELM038JL_RAJv5i6STRATEGY1.Backgroundinformation•Location•Registeredcapital•Managementteam•Equitystructure•Startingyear•Numberofemployees•Eraanalysis4.Valuechainstrategy5.Organizationandownership6.Financialperformance•Focuson–Marketing,advertisingandpromotion–Distribution(channelandsalesforce)•Organizationstructure•Ownershipstructure•Sales•Profit2.Strategy3.Product/market•Mission•Vision•Corporatestrategy•Marketposition•Keyproductofferings•Keycustomers•Valueproposition•Geographicfocus•Pricing010417SHELM038JL_RAJv5i7MOTOROLA’SHANDSETSTRATEGYCOMBINESANATTRACTIVEPRODUCTRANGEWITHSUPERBVALUECHAINMANAGEMENT•Developedawideproductrangewhichcoversallkeypricepointsandoffersawiderangeoffunctionality•InvestedheavilyinproductlocalizationthroughChina-basedR&Dteam•Expandedlocalmanufacturinginordertoreducecostsandimprovetime-to-market•Closelymanagedfirst-tiergroupofnineresellersinordertominimizepricecompetitionandfacilitateordertracking•Committedhandsetpromotion•Speedyroll-outofnewreleases•Provisionofhigh-qualityafter-salesservices•AdvancedtechnologyProductrangeValuechainCorecompetencies010417SHELM038JL_RAJv5i8PRODUCT/MARKET1.Backgroundinformation•Location•Registeredcapital•Managementteam•Equitystructure•Startingyear•Numberofemployees•Eraanalysis4.Valuechainstrategy5.Organizationandownership6.Financialperformance•Focuson–Marketing,advertisingandpromotion–Distribution(channelandsalesforce)•Organizationstructure•Ownershipstructure•Sales•Profit2.Strategy3.Product/market•Mission•Vision•Corporatestrategy•Marketposition•Keyproductofferings•Keycustomers•Valueproposition•Geographicfocus•Pricing010417SHELM038JL_RAJv5i9•Motorolahasenteredthelow-endofthemobilehandsetmarketsince1999.Itsproductsaremorefunction-drivencomparedwithNokia’sproducts,whicharemorefashion-driven•Motorolatakesmorethan50%oftheshareinthehigh-endandhigh-mid-endofthemobilehandsetmarket,andmorethan20%oftheshareinthelow-endandmid-low-end.Itslow-endhandsetsrepresentmorethen50%ofitsproductofferings•Motorola’smarketshareisrelativelyconsistentacrosstier-citiesandgeographies,takingapproximately30%everywhereKEYMESSAGES-PRODUCT/MARKET010417SHELM038JL_RAJv5i10MOTOROLAHASRECENTLYFOCUSEDONBUILDINGOUTITSLOW-ENDPRODUCTPORTFOLIOProductpositioningDec2000Business/professionalPersonalProductpositioningJun2000V8088(1.6%)Business/professionalPersonalV998(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%)T2688(6.2%)V2188(1.3%)V2088(1.0%)366C(0.5%)T2288(0.3%)T360(0.3%)HighHigh-mediumMedium-lowLowHighHigh-mediumMedium-lowLowSource:Interviews,McKinseyanalysis010417SHELM038JL_RAJv5i11MOTOROLAMODELSAREMOREFUNCTION-DRIVENTHANNOKIAFashionBusinessBasicFun•Changeablecover•Sub-100g•Voice-dial•Recording•Vibration•Tri-band•WAP•Built-inmodem•IR-port•Chineseinput•Li-Ionbattery•SMSmessaging•Game