Motorolla in Turkey
Essay by Mostafa Abou Ghaly • April 12, 2016 • Case Study • 493 Words (2 Pages) • 2,103 Views
Page 1 of 2
- Motorola apparently had conducted no business in Turkey prior to the Telsim deal. Motorola’s interests were clear: a Turkish market with a population of seventy million and double-digit growth rates for many years to come was certainly a temptation, and entering the Turkish market successfully could open future business opportunities in neighboring Georgia, Armenia, Iran, Iraq, and Syria. Yet Ericsson, the Swedish telecommunications manufacturer with the largest market share in the network equipment business worldwide, had a budget of $2 billion for its entire vendor financing deals together, and Motorola shelled out this amount for one deal only. Motorola made a fundamental negotiation mistake in addition to several strategic mistakes in this investment. What were these mistakes?
- Through reading the article, it is obvious that Motorola was exposed to a very different market. This market has a culture to that of the Middle East and the most dominant business families were of Italian decent. Therefore, Motorola should have researched more into the Middle Eastern way of conducting business and the culture. I believe that Motorola invested way too much and jumped on the mere fact that there could be a promising opportunity for them in Turkey. Not only an opportunity would open up in them in Turkey, but they also were eager for the vast breach of the market in that region. If Motorola had done the needed research for such a deal, they would have avoided that. In any cross border business negotiations, its crucial that the company has to understand the local laws of the country they are conducting business in. As we have seen many companies suffering in Cuba and other unstable countries where corruption is present. As for the strategic mistake, they could have done a safer deal as I have learned in International Business; the best market penetration strategy in foreign countries is usually joint ventures or strategic alliances. So Motorola could have taken an alternate path that would have been a safer resort for them to achieve what is in their best interest and help them reach their goal.
- Why did the Turkish government in the form of TMSF agree to share the funds generated by the sale of Telsim’s assets with Motorola and Nokia, knowing that these companies had both already written off their losses associated with Telsim?
- It doesn’t talk much about the incentive that the TMSF had to pay back Nokia and Motorola. Despite the fact that Nokia and Motorola had filed lawsuits and won, the Uzan family refused to pay. I believe that it was out of good faith, when the TMSF took over all their assets, they decided to try and pay off the company’s debt. This was to cover the losses that both companies have endured through their business in Turkey.
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