Motorola 2010 Annual Report Download - page 26

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Many of our components and products are designed or manufactured by third parties and if such third-parties lack
sufficient quality control or if there are significant changes in the financial or business condition of such third-
parties, it may have a negative impact on our business.
We rely on third-parties to design or manufacture many of our components and finished products. We could
have difficulties fulfilling our orders and our sales and profits could decline if (i) we are not able to engage such
manufacturers with the capabilities or capacities required by our business, (ii) such third parties lack sufficient
quality control and fail to deliver quality components or products on time and at reasonable prices, (iii) if there are
significant changes in the financial or business condition of such third parties.
We utilize the services of subcontractors to perform under many of our contracts and the inability of our
subcontractors to perform could cause our products or services to be produced or delivered in an untimely or
unsatisfactory manner.
We engage subcontractors on many of our contracts. We may have disputes with our subcontractors, including
disputes regarding the quality and timeliness of work performed by the subcontractor. Our subcontractors may not
be able to acquire or maintain the quality of the materials, components, subsystems and services they supply, which
might result in greater product returns, service problems and warranty claims and could harm our business,
financial condition and results of operations.
Failure of our suppliers to use acceptable ethical business practices could negatively impact our business.
It is our policy to require our suppliers to operate in compliance with applicable laws, rules and regulations
regarding working conditions, employment practices, environmental compliance and trademark and copyright
licensing. However, we do not control their labor and other business practices. If one of our suppliers violates labor
or other laws or implements labor or other business practices that are regarded as unethical, the shipment of
finished products to us could be interrupted, orders could be canceled, relationships could be terminated and our
reputation could be damaged. If one of our suppliers fails to procure necessary license rights to trademarks,
copyrights or patents, legal action could be taken against us that could impact the salability of our inventory and
expose us to financial obligations to a third party. Any of these events could have a negative impact on our sales and
results of operations.
Our success is dependent, in part, upon our ability to form successful strategic alliances. If these arrangements do
not develop as expected, our business may be negatively impacted.
We currently partner with industry leaders and other large organizations to meet customer product and service
requirements and to develop innovative advances in design and technology. Some of our partnerships allow us to
supplement internal manufacturing capacity and share the cost of developing next-generation technologies. Other
partnerships allow us to offer more services and features to our customers. However, such arrangements carry an
element of risk because, in many cases, we must compete in some business areas with a company with which we
have a partnership and, at the same time, cooperate with that company in other business areas. If such arrangements
do not develop as expected, our business could be negatively impacted.
We rely on third-party distributors, representatives and retailers to sell certain of our products.
In addition to our own sales force, we offer our products through a variety of third-party distributors,
representatives and retailers. Our distributors or representatives may also market other products that compete with
our products. The loss, termination or failure of one or more of our distributors or representatives to effectively
promote our products, or changes in the financial or business condition of these distributors, representatives or
retailers, could affect our ability to bring products to market.
Our future operating results depend on our ability to purchase a sufficient amount of materials, parts and
components to meet the demands of our customers and any reduction or interruption in supplies or significant
increase in the price of supplies could have a negative impact on our business.
Our ability to meet customers’ demands depends, in part, on our ability to obtain timely and adequate delivery
of quality materials, parts and components from our suppliers. If demand for our products increases from our
current expectations, we could experience shortages. We have experienced shortages in the past that have negatively
impacted our operations. Although we work closely with our suppliers to avoid shortages, there can be no assurance
that we will not encounter shortages in the future or that such shortages will not negatively impact our operations.