Ericsson is a leading Swedish-based provider of telecommunication and data communication systems, and related services covering a range of technologies, including handset technology platforms. It was founded in 1876 as a telegraph equipment repair shop by Lars Magnus Ericsson; it was incorporated on August 18, 1918. Headquartered in Kista, Stockholm Municipality, since 2003, LM Ericsson is considered to be part of the so-called “Wireless Valley”. Since the mid 1990s, Ericsson’s extensive presence in Stockholm helped transform the capital into one of Europe’s hubs of information technology (IT) research.
The handsets division was given a fresh start in the form of a joint venture with Sony called Sony Ericsson in 2001. LM Ericsson is a major provider of handsets and an infrastructure supplier for all major wireless technologies. A smartphone consists of most digital requirement all packed into one device. From devices with the best specification, a smartphone consists of a good camera, music player and etc all in built in one device which in turn saves the stress of carrying a typical mobile phone, camera, memo planner and etc individually which can take a lot of pocket space and can be stressful.
This proposal will give steps in order to create a new division that can maintain the pace at which the environment is changing in terms of handheld devices. Since there is an increase in demand for smartphone devices, this proposal will aid Sony Ericsson to set up a division that can create more advanced devices than what is currently in the market. In order to create a new division, the following steps would be followed: (1) Considering the external factors which include the macro and micro factors the company is facing. (2) How the factors above has affected the company in about 18 months
(3) The strategic analysis which includes how the new division will cope in the future. (4) The marketing plans which will provide a description on how the organization can use the marketing mix to ensure that diversification into the new product are successful. Using the steps mentioned above, the company can create this new division in producing high- tech smartphones. This division will be responsible for producing smartphones with in built mobile broadband (in conjunction with a mobile service provider), touch screen interface, cybershot camera with 5 or more mega pixel, Bluetooth, WIFI and etc.
In order to determine the feasibility of this product to the consumers, steps will be carried out to target consumer satisfaction. A questionnaire will be given to different consumers in all age ranges and profession. This will aid in determining the main target of this product. The External Analysis of Ericsson (1) The macro factors that Ericsson faces – In terms of the macro factors, Ericsson faces Political/legal forces, economic forces, social/cultural forces and technological forces.
Political/Legal forces- This involves elections, consumer protection, war, terrorism, trends in politics, taxes, legislation, governmental leadership, industry-specific regulations and etc. This can affect Ericsson to move into a new products or services because (1) The stability of the political system can affect the attractiveness of the business environment. This can occur when the country of interest has an unstable government therefore there will be fear that the law can’t protect the investment. (2) The government can pass a legislation which can directly or indirectly affect the new product.
Economic Forces- The economic growth in different countries around the world is a varying factor in the terms of taxes, levels of government spending, disposable income, gross domestic product (GDP), unemployment, inflation, the exchange rates, production levels and etc. In the process of selecting a new product, research and figures will be noted in terms of demand on that category of technology. An analysis of the economic environment indicates the level of competitor activities in which an oversupply of products in the market sector can result in an increased pressure on prices and profitability.
Social/Cultural Forces- Business organisations will need to understand the diversity in people in the society in terms of cultural background, age, race, family size, health, gender and etc. This factor of culture will be strongly considered when Ericsson is seeking to do business with a different country. In terms of social factors, technologies like a mast will be a problem because of the public believe it is harmful therefore this factor can limit the selection range on new products. Technological Factors- There is a rapid growth in technological change and Ericsson needs to understand how it can be affected by technological development.
The production of new technologies can allow new goods and services to be offered to the consumers, can cause a fall in price in existing products, can allow different methods of distribution in order to cut overheads and etc. This can influence the decision on a new product area because Ericsson will have to target newer technologies and developments in order to maximise profit. The micro factors that Ericsson face- In terms on the micro factors, Ericsson faces customers, suppliers and competitors
Customers- The customers play an important role to every business organisation because no customers = no business. In order for Ericsson to succeed in the new product sector, the company will have to understand the changes in it consumers by monitoring the environment. A change in a customers behaviour towards an existing product= Ericsson creating new products that suits the trends of the consumers Suppliers- are known as individuals or organisations that provide goods and services that are transformed by an organisation into value added products for the customers.
Ericsson has a supplier environmental requirement which can be simplified as a supplier code of conduct. This can affect a new product area if Ericsson is unable to get a supplier that can meet up with the demand of a product. Competitors- This factor has a crucial part in terms of new product area development. It plays a crucial role because of leading companies which have a good reputation compared to Ericsson, can be a strong rival if both companies produce the same product.