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Running head: MOTOROLA CASE STUDY

Bob Galvin and Motorola, Inc. Case Analysis Linda M. Smith Oklahoma Wesleyan University

MOTOROLA CASE STUDY Bob Galvin and Motorola, Inc. Case Analysis This analysis of Bob Galvin and Motorola, Inc. will show the organizations overview

and process and provide a critical analysis of the organizations structural changes that occurred. This study will include the history of the company, arising problems, cause and effects, and alternative solutions that lead this organization to succeed through cultural and structural changes. This analysis will point out the organizational systems affected such as: 1) structural, 2) psychosocial, 3) technical, 4) managerial, and 5) goals and values. The analysis will show how the cultural and structural changes affected the organization. Discussion will show alternative solutions, recommendations, and implementation plans. The History of Motorola A Chicago based firm by the name of Galvin Manufacturing Company was founded by Paul Galvin in 1928. The first products were alternating electrical current converters and automobile radios. Mr. Galvin called the car radio he developed the Motorola-coming from motor and victrola, that later became the companys name. Paul and his brother Joe worked hard to create a very humane and democratic work environment and treated their employees very well. They were very personable with the staff and addressed each employee on a first name basis and developed a trusting rapport. They actually replaced the time clock with an employee honor system. The firm employed 2,000 employees and offered a profit sharing program. Motorola was a union free work environment (Jick & Peiperl, 2011). As the years went by, Motorola expanded its product line with home radios, phonographs, televisions, transistors, and semiconductor components. They produced semiconductor products that consisted of microprocessors, memory chips, and integrated circuits. The Communication Sector included two-way radios, paging devices, and cellular

MOTOROLA CASE STUDY phones. The Information System Group produced an integrated line of data transmission and distributed data processing systems. The Automotive and Industrial Electronic Group produced fuel-injection systems, electronic engine controls and instrumentation, and electronic appliance controls. The Government Electronic Group conducted research in satellite communication technology (Jick &Peiperl, 2011).

Bob Galvin, Pauls son, joined the firm in 1944 as a stock clerk and worked his way up to chairman and Chief Executive Officer (CEO). He served as CEO from 1956-1988 and was responsible for creating the concept of corporate initiatives to foster Motorolas renewal. He had come to realize that the company had become too large for one person to personally influence change. The initiatives became the way to introduce, implement, and institutionalize deliberate and ongoing renewal (Jick &Peiperl, 2011). Paul taught Bob to believe in the building and maintaining an entrepreneurial culture. Their culture believed that entrepreneurs take risks and will inevitably experience some failures but do not fear failure because the fear of failure could prevent you from taking risks. The other belief was to recognize the possibility of failure and move quickly to cut losses once its clear that a new project will not be profitable. When Paul died in 1958, this philosophy was left behind (American National Business Hall of Fame, 2001). In the 1970s, the organization made a strategic decision to concentrate on industrial market opportunities. In the 1980s, Motorola was a major supplier in consumer market cellular telephone and pager systems. In the 1990s, Motorola was the number one of mobile sales. Today, Motorola is a major player in a fierce electronic revolution of global dimension. (Entrepreneur Media, 2011, p.1 ) .

MOTOROLA CASE STUDY Motorola Problems and Causes Motorola was a very large organization and the organizational structure was a problem. With about 75,000 employees, Motorola covered the entire United States (US) and 15 foreign countries. There were too many layers of management and centralized. There were nine to twelve layers between the first line managers and the executive level. The average span of control was over five people or fewer. 30% of the managers managed three people or less. The Tripartite Structure were comprised of Bob Galvin, CEO/Chairman, William Weisz, Vice Chairman, and John Mitchell, President (Jick &Peiperl, 2011). Japanese competition was also a rising problem. With Japans technology expanding, they were very much a threat to Motorola. Japan was selling products at less than fair value to rapidly increase their market. Galvin worked on a federal foreign and trade committee relations to fight unfair trade practices and protectionism (Jick &Peiperl, 2011). Galvins leadership enabled Motorola to launch its then famous six-sigma quality management program (American National Business Hall of Fame, 2001). The budget was also a problem for Motorola. In the early 80s, with the struggling

economy, Motorola was also struggling to maintain a budget. The long term competitive strategy and customer needs were observed by short term incentives. Galvin had a sense of urgency that unless changes were made in the company that the strength of the company would fail and with him approaching retirement, Galvin wanted to ensure success of the company (Jick &Peiperl, 2011). Much to everyones surprise, in 1983, Galvin announced that the organization needed structural changes with smaller and more focused business units. He wanted to decrease the

MOTOROLA CASE STUDY layers of management and bring the management closer to the product and divide the company into two small businesses (Jick &Peiperl, 2011). Organizational Systems Affected The organizational structure was the first system affected. It went from being a

centralized organization to decentralizing. The many layers of management were downsized and the employees were shocked of the restructuring of the organization. Many of the organizations top leaders did not share Galvins urgency concerning the competitive issues. Psychosocially are the employees once had felt over managed and under directed, they may have felt more empowerment after the layers of management decreased. The company that had been built on trust and Motorola was good to their employees and maintained a good working relationship with the employees. They treated each employee with respect and dignity and maintained open atmosphere and communication. They continued to offer opportunities for training and development. The employees had always felt a sense of security working for Motorola (Jick & Peiperl, 2011) so feel sure they must have felt some resistance and fear of what would happen (American National Business Hall of Fame, 2001). Technical and managerial systems were also affected. The business was broken down in more divisions and the Human Resources (HR) in the Semiconductor Products Sector had explained how change is difficult. The strategic and competitive reasons to do so were not a popular decision to many of the upper leaders and resistance was there. The HR staff believed that neither managerial agreement nor an effective change process would be easy to come by. (Jick & Peiperl, 2011, p.131). The goals and values were to remain a successful, profitable company while maintaining a happy, cohesive employee relationship with each employee. Motorola stood by its belief to

MOTOROLA CASE STUDY

constantly respect the people and do not uncompromised integrity. He hoped that this trust would lead to creativity and a long run survival of a thriving company (American National Business Hall of Fame, 2001). Alternative Solutions Instead of surprising the organization with his 1983 speech, Galvin could have talked this over with the other executive officers and employees to come up with ideas for restructuring of the organization. People are more likely to accept the change if they are actively involved in the change. But to surprise everyone and just drop it like a bomb left some doubt and fear with the other executives and employees. Galvin was a successful entrepreneur but could have empowered his employees and ask for their input. For a CEO that was so adamant of its employees dignity and respect, isnt it strange he didnt think to respect their input of ideas would be relevant in the change? Recommendations and Implementation Plans The recommendations are for future decisions and changes in the organization to include each employee in decisions, allow them to input ideas, be active in decision making, and keep them informed at all times of the changes and the status of the change. Employee empowerment is essential for a company to grow and survive. The employees make the organization and the employees feel valued when they are part of the change. Actively participating in the change will only strengthen and unify the organization. The organization will thrive with the new found cohesiveness and loyalty of these newly empowered employees. A recommendation to keep the training sessions and furthering education is also part of the plan. Motorola has been a thriving and successful company for over 83 years. They survived the changes that affected the organizations structure, psychosocial, technical, and managerial

MOTOROLA CASE STUDY factors. Their goals and values have been a priority in this organization with concern of maintaining respect and dignity of the employees. The company has remained successful and keeps its great reputation and is a leader in technology. Motorola is a prime example of a company that can withstand changes within the organization although it may have been ill planned. Change is inevitable and change is what has kept Motorola successful.

MOTOROLA CASE STUDY References American National Business Hall of Fame.(2001). Bob Galvin: Motorola. Retrieved February 2, 2011, from http://www.anbhf.org/laureates/bgalvin.htm Entrepreneur Media. (2011). Entrepreneur: As evolutionary approach to revolutionary change. Retrieved February 2, 2011, from http://www.entrepreneur.com/tradejournals/article/ print.16482367.html Jick, T., and Peiperl, M. (2011). Managing change: Cases and concepts. (3rd ed.). New York: McGraw-Hill Irwin.