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Ericsson and the creation of the mobile telephony systems business

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  1. Put yourself in the position of Bjorn Lundvall in 1980. What do you think the situation was at that time for each of the subgroups and their management in terms of
    1. Their underlying assumptions about business development?
    2. What expectations they had about the future of the potential market for mobile telephony?
    3. The capabilities/competences of their business?
  2. What story would the same people (Bjorn Lundvall, Ericsson's CEO in 1980) now tell about the development of mobile phones?
  3. Explain what happened in terms of the three strategy lenses - design, experience and ideas

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.

[...] We may thus conclude that the business development of Ericsson is based on its core business (switching technology) whereas the business development of SRA is based on intuition. What expectations did they have from the future, of the potential market for mobile telephony? A company's environment always influences its choices. It must be ready to face any situation. This uncertainty does help companies predict exactly where technologies, especially digital technologies, are headed, with too much clarity. This may be termed the pace of change. [...]


[...] The role of renewing of the top management was played by the future CEO of Ericsson, Lars Ramqvist, who had a different perception of mobile technology, probably because he was from a different background. 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 [...]


[...] Why did Ericsson have difficulties in believing in the potential of the mobile telephony market in the 1980s? The major factor was that we had to face continuous tensions and conflicts between the employees of Ericsson and SRA about this potential engagement. First of all, there was a divergence of visions because of this existing opposition between the centre and the periphery. Ericsson and SRA were seen as two separate entities with different backgrounds in terms of people and competencies. [...]

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