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The Ericsson Report
It is important for Ericsson to monitor its business macro environment so that it does not loose ground on its competitors. The macro environment is very volatile and changes all the time.
Political and legal considerations are likely to be of prime concern for to many companies. Firms involved in international operations are faced with the international political developments. In Developing Nations the domestic political and economic situation is usually less stable than in the UK, if you are a firm operating in one of these countries then the local political system must be monitored closely.
Economic factors are of concern to marketing firms because they are likely to influence, demand, costs, prices and profits. Changes in world economic forces are potentially highly significant to marketing firms, particularly those engaged in international marketing. However, An understanding of economic changes and forces in the domestic economy is also of vital importance as such forces have the most immediate impact.
Social and Cultural factors consist mainly of changing tastes, purchasing behaviour and changing priorities, the type of goods and services demanded by consumers. Cultural values are those firmly established within a society and are therefore difficult to change. Institutions such as the Church, Education can act as boundaries in which marketing firms are forced to operate.
The main concern is the technological environment, where changes happen very rapidly and affects Ericsson in a major way. If Ericsson pays no attention to changes in their business environment rival companies such as Nokia, Motorola and Samsung are going to take advantage. Often many companies delay action when a change in environmental factors has been recognised. According to Jobber such organisations have a bureaucratic decision process. As a result, they suffer from what is termed as Marketing Myopia. (Levitt, T., Marketing Myopia Harvard Business Review, 160) Another familiar response is retrenchment. This is where companies take actions, but only actions concerned with cutting costs as sales and profit decline. However this will only delay the inevitability of going out of business. Another response cited by Jobber is gradual strategic repositioning. This means that management make gradual and planned adaptations to the business as environmental changes happen. After applying these factors the business is still struggling and in crisis, then it is time for a radical strategic response. This means making a radical shift in strategic positioning. If you are unsuccessful with this step then it is likely that the business will go bust.
There are many macro environmental factors that can benefit Ericsson in the mobile phone industry. The technological environment provides new designs and possibilities for Ericsson. Technology has a large impact on every industry. Technology can be defined as the application of knowledge in a practical form to industry or commercial use. New technology when applied can create new products or services. Ericsson has applied new technology throughout the years. That is why Ericsson is still a major part of the mobile phone industry. Examples of new technology are photogenic technology. Multimedia messaging is where you can send and receive picture or videos from your mobile phones. WAP has also been introduced to mobile phones, the ability to go onto the Internet from your phone.
Social and Cultural issues can affect Ericsson as the try to conquer the International market. Businesses that have a presence internationally must take into account the different cultures that exist. They will have to take into consideration that there will be barriers to trade. These are known as trade embargoes, where a country refuses to import a certain good or product from a particular country. These may have a negative effect on the business.
"Ericsson has recently become an active participant in the United Nations World Summit on sustainable development. They put forward concrete proposals to work with African countries. They also plan continued development of new business models that will give people access to telecommunications in areas that are currently unable to afford this service. In implementing Ericsson's ecology management service globally it enables them to provide their customers with regional and global support." (www.ericsson.com)
As technology is advancing all the time it is important that Ericsson keeps up with the changes. Ericsson must keep up with the likes of Nokia and Motorola if it wants to stay in the mobile phone market. Companies like Nokia and Motorola control almost half of the market between them. The likes of Ericsson and Siemans must improve on the technological issues, as Nokia seems to make that its key strategy, "Our business objective is to strengthen our position as a leading communication systems and products provider. Our strategic intent, as the trusted brand, is to create personalized communication technology that enables people to shape their own mobile world."
"We intend to capitalize on our leadership role by continuing to target and enter segments of the communications market that we believe will experience rapid growth or grow faster than the industry as a whole."
(www.nokia.com, Company strategy)
According to a recent IDC release, worldwide mobile phone shipments were up 1.% for the rd quarter vs. the same quarter a year ago. The total number of phones shipped was an impressive 10 million. Here are the standings [from Mobile Tracker] (www.textually.com)
Nokia control 5% of the market with Motorola in second with 15.5%, Samsung have 11.5, Siemens 8.7, and G.L. Electronics takes over from Ericsson in fifth with 5.8% of the market, where Ericsson now only have 5.5% of the market.
Ericsson only made a growth of between 0% to 5% in the network industry for 00. This is a big disappointment for Ericsson since the market expected some recovery in the second half of 00. For the first time in four decades Ericsson posts its first annual loss. It also will not meet its long-term goals of operating profit at 10%of sales growth of 0% before 004. It is predicted that recovery from this will take many years.
Ericsson should focus on all of the macro-environmental aspects of the industry. They are all very important to the success of the business; slackness in one factor could be disastrous. Socially and politically factors such as trade embargoes and culture differences will affect Ericsson as it continues to compete in the global market, as the different countries they compete in will all have different cultures and sub-cultures which Ericsson will have to take into account.
Legal and Political factors will bring opportunities and threats to company's such as Ericsson. As many firms export and may have joint ventures with companies abroad, whatever industry the marketing firm is involved in, changes in the political and legal environments at both the domestic and international levels can affect the company and therefore needs to be fully understood.
Economic aspects on Ericsson could affect the profits they make in different countries, as all countries have a different economy. This could be the difference between making a profit or loss in a market. Ericsson must gain an understanding of economic changes and forces in the domestic economy as it is also of vital importance as such forces have the most immediate impact.
The most important factor to Ericsson however is the technological aspects of the market. As long as Ericsson are monitoring and applying new technology to their products, then they will be able to keep up in the global market scale, with the likes of Nokia. However Ericsson must take on board some of the technologies being enforced by some new Asian companies, which are breaking into the market. They are developing new, fancier mobile designs at cheaper costs. Ericsson must take this on board for the future of their mobile industry, which they have done.
As Chinas communications sector grows rapidly, China has become Ericssons most important partner. Today, Ericsson has joint ventures, 4 wholly owned companies and 4 representative offices in China, providing Chinese customers with a full range of communications solutions and services. "China as a part of Ericssons global program Ericsson Mobility World, to foster the development of innovative Mobile Internet applications and services, and build the future." In mid December 001, "Ericsson fulfilled Chinas first WCDMA terminal call on its trial system in Beijing.". Ericsson sees a bright future for Chinas telecom market in the new millennium. With its deep involvement and its 110-year presence in China, Ericsson will continue to partner with China and grow with Chinas communications industry.
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