Motorola Inc Case Study

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Motorola Inc.

Facts: Motorola was founded in 1928 and was well known for its radios and other electrical andelectronic products. They were one of a few American companies that marketed a wide range of electronic products. They created a new division called Application Specific Integrated Circuit(ASIC), which was a new and dynamic market with unique requirements. This was changing the way Motorola delivered its products to its customers. This caused them to look at designing an effective management control system. Once they founded the ASIC division, they needed to organize the division and create management control systems within this newly founded division which included the manufacturing and accounting systems.1)  

What are the key success factors for Motorola's ASIC Division? The opening of a new production facility in Chandler was an opportunity for them to make changes within the division. * New plant floor layout that was designed particularly to suit the JIT philosophy and to the specific processes of the plant * Ability to adapt to the changes in the industry and provide new products. This can be seen from the involvement of customer in the middle of the development cycle * Reduced Product Development time

* Strict Quality assurance measures.
* Production system and plant designed specifically to fit the needs of the division. * Shorter development to manufacturing cycle2)
 
Does a traditional standard cost system address these key success factors?

The traditional standard cost system was designed for a old style or traditional production system. The dynamic changes, rapid volume production, number of different outputs of the ASIC division don’t fit into the framework of the current accounting system. The traditional system was a functional based accounting system, while ASIC needs a product oriented accounting system. In many case functional based accounting would not be a meaningful measure for ASIC division. Currently, when variance was...
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