Reinventing Ericsson

BackgroundThe Ericsson of Swedish company is one of the biggest telecommunication vendor , founded on 1876 by Lars Magnus Ericsson. The Company told us to how survived in order to 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. In 1990s where telecom industry were booming decade specially for GSM systems, Ericsson kept as leader and help 40% of GSM market share. Led by Lars Ramqvist, Ericsson booked nine times revenues in 1998 compare from 1990. Frequent executive changes and lag in the mobile handset business after Ramqvist step down 1998 , but still good in product that produced by good R&D bright forcast new technology in GSM , called 3G , keep made Ericsson growth well. Organization size also growing and bigger as it business by employed almost 107.000As 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 wayEricson had almost gone bankrupt when the dot-com Bubble burts and the telecom market collapsed in late 2000. Ericsons road to recovery had begun under then CEO Kurt Hellstrom.The Problems of EricssonIn 2001 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 came as a shock to everybody in company. Nobody believe they could take 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

RecomendationIn order to achieve suistained profitability organization and business should be able to adapt any change quickly and understanding in market situation. Product orientation and sales orientation were the most marketing method that used by mostly technology companies. Market oriented is a method that used in marketing by learning analyze what market expect. Dividing the market in to several groups based on several criteria is the best approach , called segmented market. Using segmented market can also avoiding the economic of scale losses. Segmented market can understand customer expectation more details. With this segmented market , company can evaluate their product based on market segment , can define which product more acceptable for specific segment and wanted by customer. This approach also can define which product can be eliminated avoid and reduce losses. Service excellence which mean serve and give value added to the customer also new method that keep customer loyalty. To know what is the competitor looks like and tried to minimize their advantages and keep company advantages is the important thing. The good company also should prepare the strategies how to face the competitor in the competitive market In telecommunication company , since technologies are their main core, R&D should be kept sharp on how to innovate in technology and combine with customer behavior and culture. 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 (Culture, Social and 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.

ConclusionOrganizational 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.

BibliographyNarayandas, Das, Vincent Marrie Desain, Daniela Beyersdorfer, and Anders Sjoman. Reinventing Erricsons. Harvard Business Shool Case 9-507-075, June 2007.

CASE ANALYSISMARKETING MANAGEMENT

REINVENTING ERICSSON

EKSEKUTIF A KLS 37BGroup 4Rahadian Achmad ArifSutiasih NurcahyaniYomas Purwarianto

Lecture : Ike Janita Dewi, SE., MBA., Ph.D

2015