Reinventing Ericsson Background
Ericson a Swedish telecommunication company told us on how the it’s survived in order o maintain sustainability the company to compete with other companies and also how to develop the technology to support company growing up. Company still saw telecommunications as a long-term market business with reason most of the people around the world think that communications is not just important but a necessity. Ericson had almost gone bankrupt when the dot-com Buble burts and the telecom market collapsed in late 2000. Ericson’s road to recovery had begun under then CEO Kurt Hellstrom. As a long-term business Ericsson has to be more focused and market oriented company. In order to achieve suistained profitability, company must build efficiency and continuous improvements in all operations which are business unit configuration, reorganize or restructure the company and decide how far company should move into the enterprise segment by optimizing research and development (R&D) the most important resources which should be managed in a more rationalized way. Keywords : Restructuring, Consumer focus and Relationships, Marketing, Organizational Structure, Sales, Competitive Advantage, Telecommunications Industry, Sweden.
Ericsson CEO’s
For 127 years
1876 – 1876 – 1900 1900
: Lar Magnus Ericsson
1900 – 1900 – 1909 1909
: Axel Bostrom
1909 – 1909 – 1922 1922
: Hemming Johansson
1918 – 1918 – 1922 1922
: Gottlieb Piltz
1922 – 1922 – 1930 1930
: Karl Fredrik Wincrantz
1930 – 1930 – 1932 1932
: Johan Gronberg
The Problems of Ericsson
In 201 the turmoil begins, started with frequent executive changes and set back in the mobile handset business. Continued with the order stock dropped, all the clients just stooped buying. Stock dropped dramatically. Of course it impacted to company’s revenue which was declining, in other hand company had invented more capital expenditures.
The turnaround program cam as a shock to everybody in company. Nobody believe they could tkae out such big chunks of money which about SEK 20 billion or 23% of operating expenses. The first impact starting with reducing the number external R&D concultants and temporary workers from 15 thousands to less than 7 thousands. Secondly cutting travel and other expenses. The mobile handset business continued to make losses through out 2001 and sales decreased. Unlike its competitor, company had failed to break though in the mass-market due to the phones were over-engineered and “ugly” and launches were often late. The R&D in Ericsson aren’t doing well -
They did some research which isn’t right on target The long R&D lead times, standardization procedures and adoption times could slow down new versions for longer than expected. In 2001, our company produced phones were over-engineered and ugly, and launches were often late. They have to many employe who aren’t doing there job effectively
Recomendation
In terms of marketing, a core centralized approach would be preferable. The function should probably reside at the top level of the company, allowing for synergy and marketing complete solution in a unified way, whereas market specific communication would be wasteful in terms of recreating the same messages multiple times. Another approach would be moving the marketing functions into each business unit, however this again doesn’t support the diverse nature of the company. Either solution helps reduce overhead cost and streamlline communications, however with different focused depending on how much actual crossover there is in the marketing communication between differ ent solutions. The sales side needs its own administrative layer, The current style of direct CEO involvement was more befitting Hellstrom, who came from a sales background. Not only could the operations do with a more sales-centric person overseeing this part of the business, but the CEO is already extremely taxed by the need to involve himself in the details of the R&D decisions and otherwise the broad scope of the company. Taking the direct responsibility of sales away from the CEO and making it a separate fuction would free up valuable CEO time, which would help assure the company stays on the right course. It would also reinvigorate the sales efforts, which could foreseeably work together more closely with the marketing division. R&D is the cornerstone of the company, however Svanberg is correct in that there is mycg to be done to rationalize the process. New ideas should be cultivated, but alsi assessed at frequent intervals to determine which set number of ventures to prioritize going forward/ R&D shoule be a more cross-organizational process.
Solution for R&D problems : 1. Our R&D must more focused approach , like what R&D should do when doing a research?. First, we have to know what factor to influence customer decisions (cultutal factor,Social Factor, Personal Factor) . Second, reserch about motivation of our customer and more standardized processes could lead towards operational excellence in that area. 2. We direct our R&D team to do the research more detail and correct with the right market share. Include do more deatiled research for get perfect information for costumer about what the type or spesification they needed. So we can reduce market failure. 3. Our company try to joint venture with Sony for marketing mobile phones. Hopefully, we can renewing the design and sales of consumer el ectronics. 4. We should give additional aplication, like “Ericcson Gift”, with this, customer can get extra promotion for their social life ( free movie tickets, discount for buy marchendise, etc) for improve their customer loyalty. 5. We have cut our employe were now affecting the whole of our ’s organization. Every dividion had to save money and the managers spent their time choosing who to fire next.
Conclusion
Organizational structure to prepare the company for future challenges. The structure of the marketing, sales and R&D fuctions was key issue. We have to be on top of where the market places is, what the right future technological choices are and what the customers want and can’t delegate too much and let for example the head of research make the t echnology choise as these are core bisiness decisions.
Bibliography
Narayandas, Das, Vincent Marrie Desain, Daniela Beyersdorfer, and Anders Sjoman. “ Reinventing Erricsons.” Harvard Business Shool Case 9-507-075, June 2007.
CASE ANALYSIS MARKETING MANAGEMENT
REINVENTING ERICSSON
REGULER 36 Group 3 Rizal Arifianto Imanuel Nugraha Selaksa Florent Sinuraya
Lecture : Ike Janita Dewi, SE., MBA., Ph.D
2014
