For a week I’ve had the Marketplace section of the May 28th Wall Street Journal sitting next to my keyboard.  On the front page, there happened to be three articles that are quite relevant to the things we discuss in Strategic Management Accounting.  This blog post is about the first of these articles.

In class I often discuss the same kind of companies over and over: airlines, car manufacturers, cell phone manufacturers, etc.  What makes cell phone companies so interesting is that they operate in a competitive environment that is among the least forgiving and the most changing of any product market today.

As recently as 5 years ago, Motorola was on top of the world with their Razr phones.  Even in the late 1990s, they were in the spot Apple occupies today.  Nimbler and more innovative competitors rose to the top and today Motorola is hoping to recapture some of that magic by introducing new models in partnership with Verizon Wireless that are based on the Google operating system, Android.  Interestingly enough, Verizon Wireless is hoping to gain some competitive leverage to blunt AT&T’s position as sole marketer of iPhones and 3G iPads in the United States and has branded its Android phones with the Droid moniker — whether they are made by Motorola or not.

Motorola, and its clam shell StarTac, introduced in 1996, dominated the nascent cellphone market at that time. It was overtaken the next decade by Nokia Corp.’s superior logistics and mass production as well as South Korean rivals. Since then, Motorola has bounced between flop and hit. The ultrathin Razr sold more than 110 million units after being introduced in 2004, but then-CEO Edward Zander failed to find a successor and Motorola’s market share shriveled.

The article points out that Motorola is currently losing $22 per handset sold so they will need some successes soon to avoid ending up as a former player in the cellphone market.  This article highlights how important it is for strategy and execution to remain solid because as soon as a company falters these days, especially in a market like cellphone manufacturing, there is little time to recover.

Motorola Raises Bet on Verizon, Google Raises Bet on Verizon,. Sara Silver. Wall Street Journal. (Eastern edition). New York, N.Y.: May 28, 2010. pg. B.1