Ericsson and the creation of the mobile telephony systems business

Résumé du document

In 1980, SRA was a small and autonomous subsidiary of Ericsson whose president was Ake Lundqvist. Ericsson was one of the biggest public telecommunications company at that time when Bjorn Lundvall was the CEO. The text focuses on the entry of Ericsson in the mobile telephone market. Indeed, it raises several problems, and the major one can be the role played by the centre and the peripheral divisions. How to drive innovation in such a case? How to deal with risk-taking? How to manage increasing tensions and cultural conflicts between divisions? One can answer these strategic issues through the provided questions. First of all, we will identify the statement of Ericsson's CEO about the development of his own business and about the development of SRA's business. Then, we will focus on the future of the potential market for mobile telephones. In 1980, what was the opinion of Ericsson's CEO about both his company and about SRA's vision? Finally, we will highlight the capabilities and the competences of Ericsson and of SRA.

Extraits

[...] He proposed new ways of doing things and was the first person at Ericsson to recognize the admissibility of the potential development of the mobile technology. To conclude, one can say that the strategy lenses refer to an efficient balance between each of these three views (design, experience and ideas). It involves all structures evolving around the core entity. In deciding the strategy development, top management should manage the link between the environmental changes, their organizational diversity and the necessity to maintain competitive advantage. [...]

[...] SRA's capabilities and competencies are in their core field (radio communication), but not in mobile phones systems. They are definitely not ready to venture into the area. Question What would the same people (Bjorn Lundvall, Ericsson's CEO in 1980) now say about the development of mobile phones? The structure of the organizations in 1980, functioned in the following manner: on one hand there were the headquarters of Ericsson with the Corporate and Public Telecommunications division and on the other hand, there was the radio communication division, one of its subsidiaries called SRA. [...]

[...] Ericsson and the creation of the mobile telephony systems business Introduction In 1980, SRA was a small and autonomous subsidiary of Ericsson, whose president was Ake Lundqvist. Ericsson was one of the biggest public telecommunications company at that time and Bjorn Lundvall was its CEO. What is at stake in this case study? The text focuses on the entry of Ericsson in the mobile telephony market. It raises several problems and the major one is the role played by the central and peripheral divisions. [...]

[...] They [behave] differently”. Ericsson's people usually refer to them as the “cowboys”. Thus, Ericsson has no stake in the future of the mobile telephony market. The results of the surveys were not good and their direct competitors were not rushing into the market. On the other hand, SRA is very enthusiastic about the future potential development, based on the intuition of its president. The capabilities/competences of their business: The strategic capabilities of an organization arise from its resources and its competences. [...]

[...] Ericsson was undergoing the historical influence of the switching technology competencies. This means that the Public Telecommunications division was the collective group in control at that time. Ericsson's managers who were operating in this division had similar tendencies and therefore were about to insufflate to the entire Ericsson Group, their ideas and collective vision. These beliefs were shared by all the members of Ericsson except by SRA which was, in fact, independent. This organizational paradigm led to taken-for-granted assumptions about the future development of Ericsson: the development of the switching technology was their future. [...]