Erikson

1. Background
 Ericsson was founded in 1876 by Lars Magnus Ericsson, as a repair shop for telegraph
equipment
 In 1975, Ericsson introduced AXE (the first computer controlled switch)
 In 1980, Ericsson became a supplier of complete mobile telphony system (they’re
manufacturing a base station, using telephone traffic by radio waves instead wires).
 In 1990, Ericsson got 40% GSM market share (the highest earning in history and booked nine
times revenue in 1998 compare from 1990) diomongin di presentasi.

2. Problem
http://id.wikipedia.org/wiki/Gelembung_dot-com

 In 2001, the network operators were hit by general downturn of the economy (The “dot-
com-bubble” was bursting).
 Financial markets became cautios of any company link with internet, IT, and telecom.
 Ericsson’s hanset was made over-engineered & ugly. Launched were often late.

3. Dampak buat Ericsson

 Ericsson’s Customer halt their Investment
 Ericsson’s stock and revenue dropped dramatically
 Cashflow turn in negative
 Ericsson can’t paid their fixed cost (they had been largely overinvesting previously like 2000
employees were added).
 They can’t compete with another competitor (handset market).

Ericsson’s Forecasts in early 2002 and Actual Outcome (Line = forecast, bars = outcome)
  Ericsson believe that 3G technology will be used by many telecomunication industries.
 Ericsson forecasted an increase in the operators’ capital expenditures and ramped up
 In the first quarter 2001, Ericsson added 2,000 employee to the existing 105,000

I. Solusi Awal yang dilakukan erricsonnn (Kurt Hellström as

CEO)
1. Reduce Employee
 In march 2001, R&D consultant & temporary worker has been decreased from
15,000 to less than 7,000
 In December 2001, Staff had been reduced by 22,000 to 85,000
 In December 2002, Staff had been reduced by another 20,000 to 65,000.
2. Decided to implement saving program
 Ericsson memiliki target penghematan sebesar SEK 20 billion yang diambil dari biaya
operasional selama 2 tahun.
 selling off distribution operations within Enterprise Systems and real estate assets
3. Divest Assets
 In 2001, Ericsson launched a 50/50 joint venture with Sony. (sony brought its strengths
in design and sales of consumer electronics) ; Some claimed Ericsson’s
“phones were over-engineered and ugly, and launches were often late”.x
Sandström.
 In 2001, Ericsson sold their stake in Juniper Networks. (they got additional SEK 5.5
billion).
4. Restructured organization
 In 2001, Ericsson centralize area. (5 market area were combined to 3; market unit
were reduced from 100 to 35).

II Hasil dari kebijakan awal yg dilakukan Ericsson

 Ericsson was still reporting an operating loss of SEK 21.3 billion.
 Ericsson had kept in presence in all 140 countries.(masih menguasai 40 % pangsa
pasar)
Ericsson’s Customer and services now

1. Network (55 percent Ericsson’s net sales)

 Development and deployment LTE system
 WCDMA &CDMA
 Microwaves transport
 Internet Protocol (IP)
2. Services ( 40 percent net sales)
 help customers expand their businesses and keep pace with the latest industry
developments
 Ericsson integrate equipment from multiple vendors, handle multi-technology
change programs, design and integrate new solutions, and manage their operations
3. Support solution
BU support system solution develops and delivers software based solutions for OSS/BSS, TV
and media solutions and services for the emerging m-commerce ecosystem. OSS/BSS are a
key element of any operator’s network and business strategy. Ericsson consolidates its
position as a leading player in the OSS/BSS market with key positions in service fulfillment,
assurance, network optimization and real-time charging, as well as significant capabilities to
support operators end-to-end. An essential part of an operator’s overall enterprise
architecture is service enablement, which allows the operators and brokered assets from
partners to become part of the digital services ecosystem. This therefore makes service
enablement an integral part of OSS/BSS and the network.
III. Kebijakan strategik yg dilakukan Carl-Henric Svanberg as
a Ericsson’s new CEO & President
1. Market Segmented (Differed in each geographical market)
 Develop market
*// for country which have had good network construction, their goal is how to
offering new technology *//

 mature market
*// if ericsson had no presence in that area, Ericsson’s target is to offering their
product at lower prices than another competitor *//

 emerging market
*// Ericsson tried to find the biggest potential market like China and India *//

2. Organizational Restructured
Simplicity, clarity, & responsibility.
*// If the organization is clear, then staff have the assignments and equipment
they need and enjoy their job better, quality becomes right, lead times and costs
go
down, customers are happy, profit goes up, shareholders are happy. *//

*//Divided into 3 promary business segment (system (75% of sales) ; Operation; Phone).
Divided into 4 Business unit (system, CDMA system, transmission & transport network, global
services). Global services provided customer support, education, managed services. Untuk
menjadi nilai tambah untuk menghadapi persaingan baru khususnya di china. *//

3. Centralize Sales & marketing division

*// - the idea is to improve process & workflows.
How ?
by bringing all the communication competences together in one department and cut
down local resource to create one central consistent message.
- For the marketing division, Svanberg had also ordered a brand health survey of
Ericsson and its main competitors to see how they were perceived by existing and
potential customers and what the clients’ key selection criteria were. Ericsson
should listen more closely and “become more customer than technology focused.
*//
Make the organization more centralize (reported directly to svanberg).
(Such a position could allow Ericsson to further reduce the market units and streamline the
number of global accounts that reported directly to Svanberg.)
*//

4. Cutting Research & Development development & lead times

 *// he makes R&D division more efficient by cutting development times become two thirds
of the process & wanted to cut these lead times into half. Studied showed that inovation
time within 100-hours process was about 15 hours.
It makes reduce the R&S % as cost of sales from 20 % to 12 %.*//

4. Summary
1. the Economic Environtment (market condition and situation) can make....
2. Ericsson had failed to analyze what’s customer need and want.

5. Solution
1. Ericsson have to analyze market condition & situation at that time. (from M/B in market)

2. Ericssson’s organization should be inovate & adapt faster to any change.

*// improve process & workflow, make it more effectively & efficiently.

3. They have to change from technology oriented to customer oriented.

*// dengan cara melakukan survey konsumen dan pesaing utama untuk melihat potensial
dan existing customer. Apa yang harus ditingkatkan dan dipertahankan *//
4. R&D harus melakukan analisis berkala dan menciptakan keunikan produk dari pesaing.

5. We should give a value added to the customer from good service.

*// Untuk menjadi nilai tambah untuk menghadapi persaingan baru khususnya di china
Global services provided customer support, education, managed services*//