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Reinventing Ericsson

Background
Ericson a Swedish telecommunication company told us on how the its 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. Ericsons 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 CEOs For 127 years
1876 1900 : Lar Magnus Ericsson
1900 1909 : Axel Bostrom
1909 1922 : Hemming Johansson
1918 1922 : Gottlieb Piltz
1922 1930 : Karl Fredrik Wincrantz
1930 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 companys 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 arent doing well
- They did some research which isnt 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 arent 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 doesnt
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 different 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 electronics.
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 ours 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 cant delegate too much and let for example the head of research make the technology
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