This case authored by Patric Regner though seemingly technical has some excellent strategic lessons. And this was proved convincingly by the presenting group in our class at Tasmac today. This happens to be the first presentation of the new semester Oct 2010 –Jan 2011. Audience participation was spectacular and the question – answer session brilliant. It was evident all the participants had studied the case well.

The key strategic issues

(a) Strategic change from a public telecommunication to a mobile telephony focus.

(b) How strategic innovation may emerge from the periphery of an organization.

(c) How a small and insignificant unit (SRA) in Ericsson turned the company into the world’s largest supplier of mobile telephone systems.

Hamza, Harshita, Shraddha, Rajat

Ericsson and SRA – Why the conflict

Ericsson – The parent had grown large and trapped in a narrow vision – the switching and transmission systems.

R&D efforts and resources invested in switching and later in their digital switching technology product – AXE its flagship controlled by Ericsson’s Public Telecommunication division. The latter was not interested in switches for mobile systems – finally they did offer switches to the Swedish PTT only to preserve old relations.

Ericsson due to the standing demand and assured contacts from the Swedish PTT had did not develop competitiveness.  A bureaucratic culture had set in thereby lacking agility. It became slow to respond to the market changes.

SRA – a small autonomous subsidiary operated in an entrepreneurial style. It had a focus on radio products for military and civilian use. It believed the future belonged to mobile telephony.

It was different from its Swedish parent not only due to size but also minimal revenue earnings. It reflected a British culture.  Because GE-Marconi had 29% ownership in SRA.

SRA’s bold strategic intent in 1983 was – by 2000 the sales of Ericsson mobile telephone business will surpass its favorite business of public telephone systems. This was ridiculed and laughed at by the main organization members.

Ake Lundqvist was an aggressive leader who believed passionately in his vision – success in mobile telephony. SRA lacked resources and technology to execute its mobile telephony expansion in different countries. It filled its technology gaps by acquiring companies and fought for resources from within.

SRA fought a dual battle – internal (switching division & corporate management) and the external market for gaining contracts.

Therefore a clash of culture, different styles of working and differing vision led to a running internal conflict between the two.

Amrita put up a point as to why did Ake resign when Ericsson had achieved complete success? The same point had come up in the presentation done in the previous semester. Both Naveen and Ravi were of the view that a Ake was a leader who thrives best in an unstructured situation such leaders do not fit well in a large steady setting. They love challenges and ambiguity.

Core competencies

An interesting point was nicely brought up by Naveen on Ericsson’s inability to achieve its declared strategic intent – ‘the merging of computers and communications – C&C’. He compared it with the success of NEC who in 1980s had declared a similar strategic intent and achieved it too. This was because the latter developed a strategic architecture to align the entire organizations resources towards implementing the core competency of C&C. Ericsson could not mobilize resources through a strategic architecture- perhaps due to organizational inertia.

I compliment the smartly attired presenting team comprising Rajat, Hamza, Shraddha and Harshita for a well rehearsed and coordinated presentation. The entire class in particular Ravi, Naveen, Vishaal, Amrita and others participated actively by contributing their thoughts meaningfully.

Conclusion

Finally Ake’s strategic intent did become real in the year 2000. Some credit is also due to the parent Ericsson who allowed some autonomy to SRA.

Well done folks!

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About dilipnaidu

An open mind! Love to share my thoughts and a keenness to learn. An engineer and a MBA I had a wonderful innings in the Army and later moved to consultancy and teaching. My current interests are reading, music, growing culinary herbs, playing golf and yoga. I am serious on "Living life less seriously". A warm welcome to you be well and be cheerful always.

15 responses »

  1. david says:

    please can you help with the critical success factor of this case?

    Liked by 1 person

  2. Suranga Athukorala says:

    can i get a structure or a contents of you project?

    Like

  3. Suranga Athgukorala says:

    Hi Team,
    i was encouraged by your group work.
    keep it up.
    i am also doing a case study similar to your one.
    but i am clueless, and need some help.
    can you send me some info please.

    Like

    • Dilip says:

      Hi & welcome Mr. Suranga Athgukorala,

      How nice to have you stop bye.

      Do let us know how we can be of use to you. We will surely attempt at identifying issues. It will help us learn too.

      Kind regards,

      Dilip

      Like

  4. Manasa says:

    Oh my god!!!

    Seeing all the comments for the case study Ericsson its really unbelievable… last trimister I was part of the same case study presentation in my team… the kind of discussions which came up at that time were no where comparable to what it is now… We had discussions on entrepreneurship/leader, diversification and so on but here I found some thing different… I hope my team and class missed some of the beautiful chaps at our time so that we would have further discussions anyhow always we have tomorrow so I am gonna be a part of this case study let me see if i can even post some comments upto my knowledge of this case study… I even suggest you all to focus in more broader ways… How this small part SRA can acquired the world… The role of Ake… the diversification of the company… taking the real challenges (lovely dare)… conquering them… convincing the people… the most important is observation… catch u again… Cheers!!!

    Like

    • Dilip says:

      Hi Manasa,
      A warm welcome after a long time. Your Ericsson started it so well and the team from this semester picked up he thread with enthusiasm.

      Your comments on Jollibee too to the point. This too was high energy presentation and captivated the audience.

      Thanks for your visit. Wish you best of luck. Regards.

      Like

  5. Nisha Sashidharan says:

    Dear Sir ,

    All i can say is hats of to Shraddha,Rajat,Hamza & Harshita , as they bought out the essence of case study so pleasantly considering the limitation of time. 🙂

    Also thanks to you as well for including this case-study …. as we got to learn more also got an insight and comprehension of Erricson. Am sure the learning from this case is exceptional and admirable !!!

    Thanks and regards,
    Nisha 🙂

    Like

  6. Reshma Shah says:

    Dear Sir,

    i should say the presentation made by Shraddha, Rajat, Hamza and Harshita was really a hands up!! The case gave us a boost in relation to what we studied in the class…thanks for the article a real good one…

    Regards,
    Reshma Shah

    Like

    • Dilip says:

      Hi Reshma,

      Welcome! Yes it feels really good when the team effort shows up. The active participation of the class revealed how well the theoretical concepts have been assimilated. Great class indeed. Thanks for dropping by.

      Cheers!

      Like

      • Navin Kumar says:

        It is true that Sony Ericsson is a joint venture established on October 1, 2001 by the Japanese consumer electronics company Sony Corporation and the Swedish telecommunications company Ericsson to manufacture mobile phones.
        Source:
        ^ a b “Ericsson – press release”. Cision Wire. http://www.cisionwire.com/ericsson/sony-ericsson-mobile-communications-established-today. Retrieved 2001-10-01.

        But it is also true that Ericsson reported a $1.3bn loss for its second quarter compared with a $953m profit the previous year, mainly because of the decline in its handset business.
        Source:
        http://www.computing.co.uk/computing/news/2068856/ericsson-nokia-profits-hit

        Another piece of information which further elaborates on the financial miseries of Ericsson is mentioned below.
        Some critiques hold Ramqvist (1990 to 1998) responsible for Ericsson’s inability to make tough decisions, such as failing to exit its doomed handset business, which cost the company $2.4 billion in one year. In 2001 the stock dropped 75% from the previous year’s high. In particular, its handset business has been outstripped by competitors such as Nokia, and Ericsson has not acted fast enough.
        Source:
        https://dilipnaidu.wordpress.com/2010/07/08/ericssons-success-in-mobile-telephony-sras-role/

        Going by the above mentioned facts it is quite surprising to note that Sony despite knowing Ericsson’s financial drubbing and plummeting market share opted for a joint venture with Ericsson. Whereas, it could have acquired and/or taken over Ericsson. On the contrary, it should also make us appreciate the negotiation skills of Ericsson’s top brass who pulled out the unexpected.

        We should also discuss this perspective to derive some more astute learning vis a vis strategic management.

        Thanks & regards!

        Like

  7. shraddha karamchandani says:

    Dear Sir,

    I am glad U liked our work. It wouldn’t have been possible without all the guidance, the encouragement and the support we got from you.
    We still have a long way to go. We still need to imbibe all the positivity you emote.
    Thank you once again. The class participation gave us many new persepectives to the case.I would also take this opportunity to thank Ravi & Navin.

    Thanks
    shraddha

    Like

  8. Geetha says:

    Dear Sir,

    Thank you for sharing this very interesting case study. Two things that struck me here are:

    1. “Both Naveen and Ravi were of the view that Ake was a leader who thrives best in a unstructured situation they do not fit well in a large steady setting. They love challenges.”
    Yes, a Visionary Leader especially flourishes best in chaotic conditons because it is those sort of situations that facilitate leaping into new possibilities.
    2. “An interesting point was nicely brought up by Naveen on Ericsson’s inability to achieve its declared strategic intent – ‘the merging of computers and communications – C&C’.”
    These two C’s – ‘computers and communications’ yield a few more absolutely vital C’s – the ability to ‘connect’ with ‘clarity’ while at the same time being ‘concise’.

    Kudos to your students for this very well-presented work and may I please take this opportunity to wish you and your family which includes all your students also, a very happy, safe and colourful Diwali?

    Thanks and regards,

    Geetha

    Like

    • Dilip says:

      Geetha,

      A very happy Diwali to you! Yes the class really did some great stuff. Your appreciation means a lot to all of us.

      I am so glad that you added three more Cs and they do fit in the core competence lexicon beautifully. I intend using it in future discussions.

      Best regards!

      Like

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