Robert answered on Dec 20 2021
Running Head: A Strategic Report on Ericsson Company
A Strategic Report on Ericsson Company
Running Head: A STRATEGIC REPORT ON ERICSSON COMPANY
A Strategic Report on Ericsson Company
In the modern economic world, the competitive nature in business means having the right information and efficient know how in running a business effectively. Therefore, having the right information on running the business is more valuable than the capital or the physical assets. Having the right information requires having a critical look at the right business strategy to adopt.
This report offers an analysis on Ericsson and its cu
ent position in the market. It also addresses on the growth and future strategic plans that Ericsson can adopt to further its objectives and aims. It also discusses Ericsson internal structure, management and the organisation in general. The core purpose of this report aims to explore the Icarus paradox with the Ericsson Company being the case study and the strategic strategies it follows. The report looks in detail at Ericsson strategy using SWOT, PESTEL, and the Porters 5 Forces Analysis. It highlights its decline due to the Icarus paradox and recommends a strategy that Ericsson should consider to avoid such a disaster again.
Table of Contents
61.4 Limitations to the Study
62.1 Background information on Ericsson Company
72.2 Decline of the Ericsson Company
82.3 PESTEL Analysis
82.3.1 Political Factors
82.3.2 Economic Factors
92.3.3 Social Factors
102.3.4 Technological Factors
102.3.5 Environmental Factors
102.3.6 Legal Factors
112.4 SWOT Analysis
132.5 Porters 5 Forces Analysis
132.5.1 Supplier Powe
142.5.2 Buyer’s Powe
142.5.3 The Threat Of Substitution
152.5.4 The Threat Of New Entrants
162.3.5 The Nature Of Competition In An Industry
173.0 Application Of The Strategy
173.1 What Went Wrong Using The Strategy?
184.1 Recommended New Strategy
In their quest for economic success, many managers have noticed that for some unknown reason, some companies always seem to flourish with less effort. There are other companies, despite their continuous struggle appear to always come at loss. What the managers do not seem to understand is that the successful businesses apply the most efficient strategies to operate their business (Fe
ell et al..,2011).
Furthermore, the key process for any competitive organisation requires the use of strategic knowledge of their resources and information of their assets and remembering to apply experience. The organisation ability to compete on the market increasingly depends on the knowledge and skills of the mangers and employees. The knowledge and skills will be regard to the intellectual capital while formulating, implementing, and adjusting the relevant strategies (Fe
ell et al.., 2011).
In the cu
ent business environment, knowledge in the business world has been evolving rapidly while the lifespan of organisational skills has decreased rapidly. The survival and competitiveness of any organisation looks at the ability and findings in the appropriate strategic management process.
However, over the years, the trend in some of the companies led them to focus on the thing that made them successful like the particular service, product, or production method. Initially, this method served them well to the extent of becoming global leaders in production of the product or service. However, this became costly to some of the companies as it came as an expense to their products and processes from the company’s viewpoints of the factors they considered less crucial and off the mark (Yusuf, 2003).
This would be too late for the company to adapt to the fundamental changes in the business atmosphere or implementing a work able strategy. The companies on the declining slope find it hard to deal with new competitors, radical technologies, customer demands, and emerging business models. The effect of the decline causes the organisations to take drastic measures that would affect the business negatively or positively. In spite of this, effort would still not help the company to rise to its former glory (Fe
ell et al..,2011).
This forms tales of once dominant companies that lost focus and plot at some point leading to a drop in the market. Some of the companies would soon recover but some went down further. The companies that went down assumed that what they did and what had earned them success would pull them up, only to be dragged further down. It was only after this that critical decisions have to be looked at and on the future of the company (Yusuf, 2003).
Purpose of this report is to explore the Icarus paradox with a case study of Ericsson Company as a company that declined due to the Icarus paradox.
This study will look at the strategy tools that went wrong for the Ericsson Company. It will also look at the essential micro economic issues in the environment that are relevant in the formulation of a strategy for Ericsson. It will also look at the Porters five forces, PESTEL and SWOT strategies critical in the formulation of strategy for this company. Issues from the strategies will be discussed in detail on what caused the decline and identification of opportunities. In addition, a new strategy will be recommended and its adoption to the company.
The information found in this report was collected from various journals and books that looks at formulation of strategy and data on the Ericsson company. In addition, other data was collected from consulting various independent reviews on the decline of companies due to the Icarus paradox. It also included contacting specified companies and organizations for additional information on the key aspects found in the formulation of strategies and their application.
1.4 Limitations to the Study
Limitations to the study involved finding of ample data on the decline of Ericsson Company and cause of the decline.
2.1 Background information on Ericsson Company
Ericsson grew to become one of the largest providers of telecommunications and communication data systems from Sweden. Ericsson also deals with other related services and covering a wide range of technologies that includes the mobile networks. Through subsidiaries and direct means, Ericsson has a relatively leading role in the mobile devices, IPTV and cable TV. In addition, Ericsson was the inventor of Bluetooth services (Isik-Vanelli, 2007).
Lars Magnus Ericsson founded the company as a telegraph repair shop in 1876. It was later incorporated in 1918. Ericsson grew to become a world telecommunications leader and introduced the first fully automated mobile system in 1956. It further released one of the worlds first hand free speaker phones and the Ericofon. The release of the crossbar switching equipment, become a mainstay to many of the telephone administrations around the globe. Its reputation grew based on the quality services it provided (Isik-Vanelli, 2007).
The company kept growing and in the mid 1990s its extensive presence was felt in Stockholm. It helped in transforming the city into one of the rapidly growing information technology hub in Europe. The company has its offices in over two hundred countries employing more than twenty thousand staff in Sweden and other countries. The company has its headquarters cu
ently in Kista, Stockholm municipality (Isik-Vanelli, 2007).
2.2 Decline of the Ericsson Company
Ericsson suffered heavy losses just like most of the Telecommunications industry in the early 2000s. The telecommunications crash led to tens of thousand of people to be laid off worldwide and Ericsson to suffer heavy losses. Ericsson opted to fire most of its staff in an attempt to manage the financial situation and return to financial glory (Yusuf, 2003).
The decline of Ericsson Company provides a perfect example in illustrating the Icarus paradox. The Icarus Paradox is a model that is adopted from the Greek mythology of Icarus. Icarus is a figure in the Greek methodology that tells the story of how he worked tirelessly to fashion a pair of wings he would use to fly. Armoured with his pair of wings, Icarus ignored warnings from his father not to fly close to the sun. He got excited of his newfound way to fly and upon getting close to the sun, the bees wax melted and he fell to his death (Hill & Jones, 2010).
This is what forms the Icarus paradox. The thing that made him successful is what caused his downfall. In his overconfidence of the fact that he could fly and escape from the island he was a prisoner, he became blind to the dangers that affected his success. This is what happened to the Ericsson Company. Ericsson became an instant success growing into higher heights in the telecommunications market. This led to it becoming overconfident and blind to the dangers that developments and changes in markets pose to them. Ericsson assumed they were invincible and this led to their downfall (Hill & Jones, 2010).
The excesses in the invested bu
les for Ericsson led to one of the greatest losses in the corporate history. Ericsson announced job cuts in their principal investments as well as in other subsidiary investments. The telecommunications crash affected Ericsson adversely leading to job loses, bankruptcies, changes in production and search for new strategic models to help the company move from the economic slump. The crisis also
ought about changes in the management and leadership in the company. Moreover, in 2002 Ericsson was forced to raise in excess of three...