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Case
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Reference no. 304-533-1
Published by: IBS Center for Management Research
Published in: 2004

Abstract

Ericsson, a company more than 120-years old, enjoyed immense success until the 1990s. The company was amongst the pioneers in the telecom industry, yet it could not adapt to the changes in consumer tastes and preferences in the late 1990s. Ericsson failed to adapt its mobile handsets to consumer tastes, and this led to a fall in sales of its handsets. Competitors meanwhile took over Ericsson's space in the market. As sales fell, Ericsson's other businesses were also affected. Finally the company adopted some tough measures to restrict the downslide in its sales. It cut its manpower by half to reduce costs and identified the core areas in which the company could specialise. Ericsson also identified its weaknesses and its strengths. It understood that it was a company that was good at manufacturing good quality and high technology equipment, but was not good at marketing its products to individual customers. Therefore Ericsson entered into a joint venture with Sony to form Sony Ericsson, as its new mobile handset unit. Ericsson also restructured itself, unprofitable or unmanageable businesses were sold off and some new companies were acquired to fill in the gaps in its product range. Eventually, in 2003, the company once again registered profits.

Teaching and learning

This item is suitable for postgraduate courses.
Location:
Industry:
Size:
Large
Other setting(s):
1970-2004

About

Abstract

Ericsson, a company more than 120-years old, enjoyed immense success until the 1990s. The company was amongst the pioneers in the telecom industry, yet it could not adapt to the changes in consumer tastes and preferences in the late 1990s. Ericsson failed to adapt its mobile handsets to consumer tastes, and this led to a fall in sales of its handsets. Competitors meanwhile took over Ericsson's space in the market. As sales fell, Ericsson's other businesses were also affected. Finally the company adopted some tough measures to restrict the downslide in its sales. It cut its manpower by half to reduce costs and identified the core areas in which the company could specialise. Ericsson also identified its weaknesses and its strengths. It understood that it was a company that was good at manufacturing good quality and high technology equipment, but was not good at marketing its products to individual customers. Therefore Ericsson entered into a joint venture with Sony to form Sony Ericsson, as its new mobile handset unit. Ericsson also restructured itself, unprofitable or unmanageable businesses were sold off and some new companies were acquired to fill in the gaps in its product range. Eventually, in 2003, the company once again registered profits.

Teaching and learning

This item is suitable for postgraduate courses.

Settings

Location:
Industry:
Size:
Large
Other setting(s):
1970-2004

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