Motorola 2011 Annual Report Download - page 21

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that we receive from the contracts. In certain jurisdictions when contracting with the government no limitation to
liability is permitted by law. Recalls involving regulatory non-compliance could also result in fines and additional
costs. Finally, recalls could result in third-party litigation by persons or companies alleging harm or economic
damage as a result or the use of the products.
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 or deliver
products that do not meet regulatory or industry standards or requirements, or (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 and as we expand our Global Services organization our
use of subcontractors will increase. 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 regulatory compliance issues and could harm our
business, financial condition and results of operations.
Failure of our suppliers, subcontractors, third-party distributors and representatives to use acceptable ethical
business practices could negatively impact our business.
It is our policy to require our suppliers and subcontractors to operate in compliance with applicable laws, rules
and regulations regarding working conditions, employment practices, environmental compliance, anti-corruption
and trademark and copyright licensing. However, we do not control their labor and other business practices. If one
of our suppliers or subcontractors 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 or subcontractors
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 products 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. As we expand our Global Services
organization our need to partner will increase.
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