OUTLINE

INTRODUCTION…………………………………………………………………………... 2
CHAPTER I. THE ESSENCE, CONTENT AND IMPORTANCY OF THE
STRATEGIC MANAGEMENT…………………………………………………………….4
1.1 Strategic management - A concept with complex exegesis
1.2 The characteristics of the strategic management
1.3 The link between planning the strategy and the strategic management
1.4 Tasks, skills and responsibilities in strategic management
CHAPTER II. STAGES OF THE FOUNDATION OF THE STRATEGY OF THE
ORGANIZATION………………………………………………………………………….13
2.1 The strategy: concepts and components
2.2 Implementation, control and the evaluation of the strategy
CHAPTER III. INSIDE OF ERICSSON TELECOMMUNICATIONS ROMANIA:
MANAGEMENT ACTIVITIES…………………………………………………………...19
3.1 Short history and presentation of Ericsson Telecommunications Romania strategic vision
3.2 Description of the services and products delivered by Ericsson Telecommunication
Romania
3.3 Market analysis and trends
3.4 Analysis of the microenvironment of the company
3.5 SWOT analysis
CHAPTER IV: STRATEGIC MANAGEMENT OF ERICSSON
TELECOMMUNICATIONS ROMANIA………………………………………………...30
4.1. The focused strategy within Ericsson
4.2. Implementation of the focused strategy
4.3. Is the new strategy the best way for Ericsson to be back again on profit?
CONCLUSIONS…………………………………………………………………………….42
BIBLIOGRAPHY………………………………………………………………………….. 44
ANEXA………………………………………………………………………………………46

1
 INTRODUCTION

Strategic management is the detailed organizing of the sources from different categories
within the following departments: financial, manufacturing, marketing, technological, labor.
It's about using all the resources that can be used to reach the goals. The strategy refers to
whenever decisions are made that determine the course of the evolution of a company or
organization. Any company, with its specific origins, know-how and skills, with its previous
choices, is a dynamic system of relationships and recurrent exchanges between its constituent
parts.
The implementation of a well-established concept can result in a system that is
characterized by stable and harmonious links between different parts, links that can be adjusted
in accordance with economic reality. This system has can lead to success and is the engine of
values and motivation shared by all its members. Such a system guarantees the development
of an adequate strategy that leads unequivocally to the achievement of the proposed goals. A
company that fails to create a strategic system capable of executing an appropriate market
strategy will be condemned sooner or later to disappear. In fact, economic rivalry is always
disputed between strategic systems with different properties, thus possessing various skills and
capacities.
This paper, “The strategic management in telecommunications industries”, presents
the current state of telecommunications as well as telecommunication management strategies,
with reference to ERICSSON TELECOMMUNICATIONS ROMANIA. Thus the work was
divided into three parts as follows:
The first part deals with the essence and content of strategic management and its
dimensions, the link between planning the strategy and the strategic management and
concluding with the attributions, competencies and responsibilities of strategic management.
The second chapter refers to the foundation and implementation of the organization's
strategy.
Chapter three includes information on Strategic Telecommunication Management, the
strategic vision of ERICSSON TELECOMMUNICATIONS ROMANIA, the management
strategy being of a significant importance in conducting an organization, in order to achieve its
goals.
In the chapter number four, I will present the focused strategy within Ericsson, it’s
implementation and we will have the answer to the question if Ericsson can return to
profitability with new strategy.
2
 My work brings as novelty, the different way of action from Ericsson
Telecommunication Romania towards its competitors, as a result of the fact that the new
developments in the telecommunication market, technological factors and computer
technologies appears at a highspeed and trigger new actions in this field.
The need to approach this topic results from the facts that economic events of recent
years have influenced and continue to substantially influence the theory and practice of the
management process. The current business environment is different and much more complex
than in the previous years.
Currently all industries are experiencing the effects of essential demographic changes
(migration of labor to developed countries, enlargement outsourcing, globalization,
consolidation within different industries, growth competition), and environmental factors such
as global warming and pollution, that's why we need an analysis in line with the changes that
have taken place lately.

3
CHAPTER I. THE ESSENCE, CONTENT AND IMPORTANCY OF THE
STRATEGIC MANAGEMENT

Management is an external manifestation of global economic reality. It is a very common

term used in all areas of activity. All companies no matter the field in which they operate, are
directly involved in management because is helping in guiding various approaches for a clear
purpose. Management is the sum of all the activities of organizing and coordinating a business
with the unique purpose of achieving its goals.
Management is frequently seen as a production proxy beside with equipment, physical and
cash. The well-known Peter Drucker highlights the fact that the main role of management is
both innovation and marketing. Leadership is the interconnection of corporate policy-making
and organizational, planning, controlling, and targeting means of an organization to accomplish
the goals of that method.1

1.1Strategic management: a concept with complex exegesis

The objective of the management is human activity, management being a process of
directing and orientating human resources activity to accomplish some targets. "Management
is a system of concepts and methods by which the leadership of a micro or macro entity:
economic, cultural, scientific, political and social in order to achieve high and sustainable
performance".2
The interest of management is as follow:
 Helping to accomplish the targets:
- By giving a common direction to the individual effort
- Maximizing the output allow the employees to fulfil their target and the
organizational scope too.
 Increasing efficiency:
- By minimizing the cost and increasing the outlay throughout effective preparation,
organizing, directing, controlling etc.
 Creating a vigourous organization:
- An organization has to modify itself and its goal according the necessity and

1
http://www.businessdictionary.com accessed at 14th of January 2019
2
Alexandru.Puiu, Nicoleta.Belu, Geanina Ciorăşteanu, Denisa Elena.Parpandel -
Management-Applicative course, Economic Independence Publishing House, 2010, p.12
4
 aspirations of the environment. Management helps to adjust to these changes in
order to be thriving.
 Helping in the evolution of the community:
- An organization has many obligations toward the groups that constitute it. The
process of carrying out all the objectives must help in increasing and enlargement
of the organization as well as society.
In defining management, we must take into account the following essential
requirements:3
 Correct setting of objectives;
 Selecting methods and scientific instruments to achieve them;
 Pursuing rigorously the achievement of high and sustainable performance;
 Defining management as a management science provides general principles and
methods, but to enhance its functionality, it is necessary to customize the leadership
modalities by fields of activity.
The management success of an enterprise, no matter the profile and activity, is defined
and sustained by the improvement of strategic management. Also, "management is the science
of leadership and innovation in all areas of activity".4
In a world of accelerated change, the survival and prosperity of a company rely on the
development of managerial strategy. In this context, strategic management ensures strategic
direction, generating significant performance through superior management of all
organizational resources.
Strategic management expression got entered into theoretical language since 1973, the
First International Conference of Strategic Management organized by I.H. Ansoff at Vanderbilt
University, the concepts given to this notion by different authors are generally not the same,
strategic management being considered as:
 "The managerial process of formulating and implementing a strategy";5
 "The process by which the organization's leading leadership determines long-term
evolution and performance, ensuring rigorous formulation, appropriate
implementation, and ongoing evaluation of the established strategy." (Corneliu

3
http://www.businessdictionary.com accessed at 14th January 2019
4
Alexandru.Puiu, Nicoleta.Belu, Geanina Ciorăşteanu, Denisa Elena.Parpandel, , p.12
5
Bacanu Bogdan, - Strategic Management, Teora Publishing House, Bucharest, 1997, p. 17
5
 Russu 1993).6
The diversity of concepts and conceptual constructions used by authors sometimes
signifies not only differences in language but also in substance, depending on the different
perceptions of the phenomena and the sphere of coverage that each of them gives to this tactic.
Strategic management is "a managerial process of formulating and implementing the
strategy".7
"Strategic management is the science and the art of creating, developing and
maintaining profitably an organizational structure of a functional economic type in an ever
changing environment".8
However, as the examples cited, it can be appreciated an obvious unanimity between
the opinions expressed by some authors who gather in recognizing that strategic management
is the newest type of enterprise leadership layed on the anticipation of changes in the
environment , on the estimation of the inside capacity of the enterprise and on the operation of
the necessary changings in order to accommodate it with the climate to which it belongs, to
fulfill the mission and the objectives set, to ensure its survival and its perennially.
By signifying enterprise-wide fructification of the foresight management, strategic
management is an elaborate process, prefiguring its future, its long-term development, process
in which its strategy formulation, implementation, evaluation, and permanent control combine
and complement reciprocally, in a continuous and vigorous flow. Therefore, strategic
management is not a process of formulating the strategy that overlaps the enterprise
management system, but a new form of strategy-based management. It involves a consistent
converge of external factors and internal factors that have or can affect the enterprise, can
influence its existence and, therefore, the enlargement and performance of meticulous and
explicit strategies that permit the enterprise to successfully cope with the changes that could
occur in the environment, adapts to survive and develop9.
Strategic management demands beside the determination of the position of the
enterprise on the market, also the position it intends to reach in the future, which requires not
only the analysis but also the prognosis of the evolution of all the factors that may affect the

6
Nicoleta Belu - Strategic Management, Economic Independence Publishing House, 2006,
p.21
7
Bacanu Bogdan - Strategic Management, Teora Publishing House, Bucharest, 1997, p. 17
8
Ciocarlan Doiniţa - Strategic Management, University Publishing House, Bucharest, 2009,
p. 33
9
John A. Pearce, Richard Braden Robinson - Strategic management: strategy formulation and
implementation, Irwin Publications in Economics, 1988, p.11
6
enterprise. It implies a good knowledge of competition and market demand, but also the
consideration of stakeholders' goals and interests, and the need to develop the company's
internal skills and competences that are likely to encourage to the successful performance of
the tactics and to ensure its flexibility and invulnerability. Also, given the high dynamics of
change, strategic management requires critical review of the previously defined strategies,
taking into account the new context, their modification and adaptation to ensure consistency
and coherence with the strategy followed with the actual configuration of the internal and
external factors determines and, of course, obtains and maintains competitive advantages for
the enterprise.10

1.2 The characteristics of the strategic management

Taking into account the complexity of the modern enterprise and its important
responsibilities, many of the strategic management's promoters (Thietart 1990 and Martinet
1984) on enterprise strategy are more or less explicitly opposed, but rightly, that the procedure
of its formulation and implementation, strategic management in general is a process that
includes three dimensions, namely11:
- Rational and analytical (economic dimension)
- Socio-political (social dimension)
- Bureaucratic (administrative dimension)
The economic dimension. Its main mission is to formulate major external technical
and economic guidelines taking into account the opportunities and constraints of the
environment, on one side and on the other side, the forces and deficiency of the enterprise. This
process is articulated around the below questions, namely12:
 What the company wants?
- Defining strategic areas of activity;
- Mission statement;
- Setting goals
- Choosing the portfolio of activities;

10
John A. Pearce, Richard Braden Robinson - Strategic management: strategy formulation
and implementation, Irwin Publications in Economics, 1988, p.12
11
Raymond-Alain Thietart – The strategy of enterprises. 2nd edition. Paris (France) :
McGraw-Hill Higher Education, 1990, p.47
12
Alain Charles Martinet – The strategic management: organization and politic Paris:
McGraw-Hill Higher Education, 1984, p.20
7
  Who is it? (what is the situation?)
- Environmental analysis;
- Evaluation of resources;
- Determining planning;
 What it wants to do?
- Formulation of strategies and policies;
- Evaluating strategies and policies;
 What will do?
- Choice of strategy;
- Establish programs, action plan and budget;
- Search for an adapted management system;
It is, therefore, a formal process involving several stages and essentially aimed at
ensuring, in a progressive and iterative manner, the adequacy between the company's
competences and intrinsic characteristics, the strategies adopted for competition and the
requirements of the external environment ( technical and economic).
The human (social) dimension. The privilege offered to the technical-economic area
in the strategic investigation is coming from a technocratic vision of the functioning of the
company, appropriate, to a certain extent, at a time when the organizational and socio-political
variables could be administered by an exact nature.13
The socio-political process of formulating the strategy is complementary to the rational
and analytical one, since it can be concretized only through people, running parallel and in a
manner somewhat similar to that described for the elaboration of the economic strategy.
This process is articulated around four main questions, namely14:
 Who are the "actors”?
- Identification of "actors";
- Dynamic analysis of the link between the enterprise and "actors";
- Searching for a political basis and evaluating the opposition.
 What can "actors" do?
- Analysis of internal and external political influences;
- Evaluating the political system of "actors";
- Anticipating the "actors" reaction.

13
Peter F. Drucker – The practice of management, New York : Harper & Row, 1954, p.52
14
Bryson, J. M. . Strategic Planning for Public and Nonprofit Organizations, , 3rd edition .
San Francisco, 2004, p.27-28
8
  What can be done with or against "actors"?
- Seeking the independence of "actors";
- Select alliances and correlations;
 What does he decide to do?
- Formulating the political strategy;
- Anticipating the reactions of the opponents.
Regarding the socio-political relations between the enterprise and the environment there
are two parts: functional environment; residual environment.
Organizational dimension. Is the total of the individuals and departments within a
company in a specific arrangement, but also from all the connections made between them to
be able to reach the target of the company, the structural configuration coherently unite the
social particle which can be found at the level of leadership and leading system and assist to
the definition of the roles and their status. It is a regulated space that obliges, constrains and
sanctions the practices of "actors". Within this compacted area there is a structural culture
composed of an aggregate of appraisal, concepts, expression and rationality. These are the
implicit norms that the individual intrudes and towards whom he intentionally reports his
behavior15.
The organizational process of formulating the strategy articulates around four
questions, namely16:
 What kind of organization?
- Choosing the degree of decentralization;
- Determining the size of operational units;
-Division of labor;
- Developing the information system.
 What decision-making process?
- Choosing the type of plan;
- Choosing the horizon;
- Explain the content of the plans;
- Develop the decision-making process.

15
Nicoleta Belu - Strategic Management, Economic Independence Publishing House, Pitesti,
2006, p.39
16 Ion Popa - Strategic Management, Economic Independence Publishing House, 2004, p.60

9
  What style of motivation?
- Determining the level of participation;
- Elaboration of evaluation system and rewards;
- Choosing the degree of freedom of operations.
 What control procedures?
- Choosing the degree of concentration of control;
- Determining the frequency and level of control;
- Choosing the detail of the control;
In conclusion, strategic management is a new way to run a company successfully and
to be able to handle with the situation raised. Below are few characteristics:
 Systematic and organized approach: Strategic Management is a systematic way of
organizing of running a company and implicates two phases, planning and execution.
 Build on construction of plans: strategic project, functional schemes, operating
methods, and organizational projections.
 Strategic management conception is based on system accost. In this scheme, the
organizing goals have priority over departmental objectives.
 Oriented towards a futuristic approach, the decisions are being made today for the
future products of the company.
 It’s an active process that has continuity and continuously analyzes the entire planning
stage.
 If the strategic planning is too long, then the company has to plan a longer time, between
five to ten years.17
Being an advanced form of enterprise management, whose main objective is the
profitable adaptation of the latter to change and optimal insertion into its environment, strategic
management attempts to meet the many requirements that this goal includes in general, good
functioning of businesses in a context characterized by multiple challenges.

1.3. The link between planning the strategy and the strategic management
The terms of strategic planning and strategic management are not synonyms, and their
scope is different. "Strategic management immediately reflects any change generated by a

17
http://www.businessdictionary.com accessed at 14th January 2019
10
special event, as opposed to strategic planning that is inadequate."18
While strategic planning describes the company's periodic activities to cope with
changes in its environment and has a sequential nature, an unexpected event that occurs outside
a phase of strategic reflection is taken into consideration only in the next phase, strategic
management is a vivid and iterative process of reviewing, updating and constantly adapting
strategic decisions according to the various important elements that emerge along the way.
If tactical preparation is limited to business relations with its climate, strategic
management considers both the enterprise's behavior in its external ambiance and its
processes, structure and internal decisions, the development of skills and competencies
capable of giving the enterprise the flexibility to adapt to new situations, to ensure its efficient
operation and optimal integration in the environment it is part of19.
If the product of strategic planning is a plan that can leave the enterprise culture,
organization, behaviors, etc., of strategic management, it is formulated in a number of different
actions and decisions, in a new strategic behavior that involves the transformation of the
organization itself into the harmonization its external environment.
Unlike strategic planning, which involves formulating and evaluating strategic
alternatives, strategy selection and planning and strategic control, which is to ensure that the
strategy chosen is correctly implemented and brings the expected results.
From the perspective of what has been said, it is clear that strategic management has a
wider content and a broaden area than the strategic planning that, in fact, includes as a tool of
achievement.20

1.4. Tasks, skills and responsibilities in strategic management

In large companies, strategic management involves the co-operation of several
hierarchical levels, strategic decisions being consequently the result of inputs and actions
initiated by a number of individuals and structures within them.
At the level of the big companies, three hierarchical levels and three categories of
managers are involved21:

18
Bogdan Băcanu - Anti strategic Management, Polirom Publishing House, Bucharest, 2014,
p.67
19
www.mindtools.com
20
Corneliu Russu - Strategic Management, All Beck Publishing House, Bucharest, 1999,
p.22
21
www.referenceforbusiness.com accessed at 14th January 2019
11
  Top managers at the corporate level, dealing in particular with issues of broader
time horizons, the setting of fundamental objectives and the adoption of decisions
with extensive and profound implications on the firm's business;
 Medium-level managers who provide the link between senior managers and those
at the lower level of the hierarchy pyramid;
 Lower level managers, whose tasks are to carry out current, operational tasks over
short time horizons and to coordinate operational or functional sectors.
Some authors believe that the involvement of the board of directors in the strategic
management process in terms of establishing the company's mission, business decision, long-
term strategic objectives, and periodic analysis of the strategy would be an unnecessary effort.
The main arguments are:
 Involvement of the Board leads to full knowledge and awareness of the affairs of
society, as well as means of analyzing and evaluating the activity;
 Familiarizing the Board of Directors with the company strategy can give it a
benchmark for the other decisions it has to take and for assessing its impact;
 Understanding the content of corporate strategy gives the Board the opportunity to
assess performance.
Management of an organization determines a certain level of economic performance
through managerial performance, which in the majority of cases is expressed qualitatively. 22
In conclusion, the most important person in the exercise of management and
management processes is the manager. Manager's concerns within the organization are the
adoption of decisions and the initiation of actions aimed at implementing the decisions adopted
to achieve the proposed destination . Withal, they are the "product" of the management
processes and of each function (forecasting, organization, coordination and control-
evaluation).

22
Ion Verboncu - Management Efficiency, Efficiency Performance, University Publishing
House., Bucharest, 2013, p.85
12
CHAPTER II. THE FOUNDATION STEPS OF THE STRATEGY IN AN
ORGANIZATION

Under the conditions of today's rapid changes, any company needs a strategy.
Developing and implementing strategies is not an end in itself, but a major management tool
to professionalize leadership and increase the competitiveness of organizations. The term itself
has a multimillenary history. In ancient Greece, the term "strategos" referred to the role of the
general who commanded an army, later acquiring the meaning of "the art of the general."
During Pericle (450 BC) the strategy was management (management, power) and during the
time of Alexander the Great (330 BC) the strategy is the activity of deploying an army to
overwhelm the enemy and create a unitary system of global governance23.

2.1 The strategy: concepts and components

In Romanian literature, conceptions about strategy are varied. "All the major objectives
of the company, on a long-term basis, the main ways of realization, together with the resources
allocated for achieving the competitive advantage according to the company's mission"24.
"Economic strategy is a complex concept that determines how to achieve the objectives
adopted by the firm, the actions to be undertaken, how to allocate the resources, the ways to
respond in optimal conditions to the changes in the environment and to be competitive with the
companies competing "25.
Choosing the best strategy is a complex approach that has to take into account the
characteristics of the company as a whole: strengths, weaknesses, competitive advantages - but
also by the external environment, by its impact. Generally, the elements of a tactic are26:
purpose; basic objectives; tactical options; means; deadlines; the advantage in front of
competition.
Once the strategic alternatives have been established, the final strategic option has to
be made. At the company level there is a comparison of the different variants and the selection

23
Steven J. Kahl, Brian S. Silverman - History and Strategy, Emerald Group Publishing
Limited, 2012, p.2
24
Ovidiu Nicolescu, Ion Verboncu, Corporate Management Strategies, Economica
Publishing House, Bucharest, 1996,
25
Constantin Barbulescu- Strategic Systems of the Enterprise, Economica Publishing House,
Bucharest, 1999
26
Belu Nicoleta-Strategic Management, Ed. Independenta Economica, Pitesti, 2006, p.43
13
of the one that offers the best chances for achieving the objectives and the company's mission.
The criteria for choosing are:
 Possible scenario regarding the evolution of the environment;
 Advantages offered by each alternative (economic and / or social);
 The risks associated with each alternative.
The same goes for the business level, with the indication that the chosen option should
be consistent with the company's overall strategy.
Experts in the field appreciate that strategic choice, regardless of the level at which it
is achieved, is determined by three factors27:
 The dependence of the company on the external environment. It is appreciated that
the degree of dependence of the company towards customers, suppliers, creditors is
high, the possibility of choosing decreases, the optional act is less flexible. The
dependence of a company on the external environment, appreciated both
quantitatively and qualitatively, implies a certain impact on its business;
 Risk managers' attitude depends on managers, how they perceive the risk and how
it impacts on the future of the firm. Some managers are at an extreme, avoiding the
adaptation of risk-taking decisions, and others are at risk.
 Power in the firm and its structure. This factor is of particular importance, because
the strategic alternative to which the top manager opts is also taken up by the other
managerial levels.
After many studies, Henry Mintzberg concluded that there are three ways to make
strategic choices: based on judgment; by negotiation; based of analysis. In the case of strategic
choice based on judgment, the manager decides on his own, based on his / her own reasoning.
In the second case, the choice is made by a group of decision-makers with different objectives,
and in the third case the choice is made by a group of specialists following an evaluation
process of the information held28.
In addition to the factors mentioned, Charles Werner Hofer also highlighted the
influence of the company's position on their life curves, meaning that most changes in business
strategies take place in three stages of life: birth, maturity and decline29.

27
Marian C. Burke - Strategic Choice and Marketing Managers, Nov 1984, Sage
Publications, Inc., p.15
28
Henry Mintzberg –The rise and fall of strategic planning, Free Press, Toronto, p. 24–25.
29
Hofer, C. W. & Schendel, D. (1978). Strategy formulation: Analytical concepts. St. Paul,
MN: West., p.103
14
  In the launch phase, the determinative of the tactic is: the novelty of the
merchandise; shopping needs; the percentage of technological shift.
 In the maturity stage, the determining factors are: shopping needs; the percentage
difference of goods; market segmentation degree.
 In the decline phase, the determining factors are: fidelity of shopping; price /
demand elasticity; market share held; product quality.
Many combinations are made between several strategic options and here the articulation
strategy as a whole company. Naturally, there is a need for resources, namely material, human,
financial and informational resources. Starting from the strategic options for each type of firm,
there are three types of sources: own sources; attracted sources (strategic alliances, leasing);
sources borrowed (money, capital market, financial institutions). Most of the time, own sources
are insufficient, in which case, in order to ensure the implementation of the strategy, resort to
attracted sources or loans, with the emphasis that the medium and long-term profitability of the
firm must be taken into account the interests of shareholders.

2.2. Implementation, control and the evaluation of the strategy

Naturally, after the strategy formulation phase, implementation follows, a very complex
process on which strategic success depends. The emphasis is on this stage of action and
experimentation, on the level of staff involvement, because if the strategy is the key task in the
top management, in the implementation phase the success depends on the entire staff of the
company, how it understands the need for strategic changes. Several measures are needed to
transpose into practice30:
 Adaptation of the organizational structure to the strategy's demands, because it
is well known that "the structure follows the strategy". The organizational structure
ensures the division of the activities to be carried out, the distribution of the
responsibility of these activities to the persons, the establishment of relations
between individuals and groups and the specification of the performances to be
achieved.
 Motivating staff to engage them in the implementation process and thus reduce
resistance to strategic change. Given the particular role played by the human
resource in any company, successful implementation of the strategy implies the
superior motivation of the staff, i.e. the application of an adequate reward system.

30
Bogdan Băcanu - Strategic Management, Teora Publishing House, Bucharest, 1999, p.197
15
  Defining useful strategies (tactical approach in market, production strategies,
human resources strategy; financial strategies; development research strategies)
and ensuring consistency with the overall strategy;
 The overall change of the organizational culture in order to facilitate the
implementation process. Organizational culture is the system of values, rules, and
rules of conduct that dominate within a firm that strengthens confidence in it,
ensuring that individuals are identified with the company.
In Stevenson Howard's vision, in strategy-effectiveness relationship, the emphasis is
on three conditions that our words and deeds must fulfill to achieve efficiency: "clarity,
competence and consistency31."
 Clarity. It is absolutely necessary to make each other understand each other in order
to lay the foundations for that pool of collective experiences that allow for efficient
collaboration.
 Consistency. It means consistently adhering to high-order principles. By doing so,
they understand values that cannot be negotiated and which you want to
recommend. They could be; "The most important thing for us is to thank our
customers," or "we outweigh our own products and not make others", "I will never
refuse a superior technology."
 Competence. Becoming better in what you do is the last cornerstone of mutual
predictability. Where there is no competence there is no predictability. The world
is clearly changing, and both companies and individuals need to be able to change
accordingly if they want to compete with reality.
Permanent adaptation is absolutely necessary, and this is true in all areas. Today we
must use tools that did not exist yesterday. We need to invent new languages, agree on their
meaning, and encourage us and others to start using them.
Strategic control has the role of highlighting and ensuring the correction of deviations
that occur between achievements and standards, and by evaluating the strategy, it is intended
to assess globally its effects and the extent to which it proves to be appropriate for the
company's development. Strategic control is the sequence of the strategic management process
that tracks the strategy that is being applied, identifies the (emerging and potential) issues and
makes the necessary adjustments to ensure compliance with the established standards.

Stevenson Howard – “To eat or to be eaten - The Risk of Strategic Decision in Modern
31

Management”, Economica Publishing House, 2003, p. 24

16
 Strategic control provides for the identification of errors or inaccuracies that could
arrive in performing the process, and as a result allows for corrections or revisions to be applied
to the strategy to ensure feed-back. In turn, strategic control can take several forms, namely:
anticipatory control, implementation control itself and strategic watchdog32:
A) The anticipatory control is the control of the premises or the underlying
hypotheses on the basis of which the action plans have been realized, the
objectives have been set and the chosen strategy has been based. Forward control
checks whether these preferences remain the same or have changed from baseline.
B) The actual control of the implementation aims, on the one hand, to determine
whether the implementation of the overall strategy is carried out as it has been set
and, on the other hand, to identify at the moment the critical moments that may
imply the necessity of revising the strategy.
C) The strategic wake-up system is a form of strategic control of increased complexity
that includes the actual control of implementation and the strategy formulation
process. The Strategic Watch system is designed to closely monitor the dynamics
and evolution of all the factors that have been taken into account when selecting
the strategic option throughout the strategy implementation period. Based on the
changes in the evolution of these factors (the external and internal environment of
the firm), the opportunity to keep or change the strategy is discussed
Strategy appraisal is a sequence of the strategic management operation that evaluates
whether the applied strategy fully meets the company's objectives, based on their comparison
with the results obtained. The evaluation of the strategy is continuous and permanent, as long
as implementation of the strategy takes place and its evaluation takes place. There is a direct
relationship between strategic evaluation and strategic control in the sense that strategic control
makes it possible to evaluate, providing a series of information of utmost importance for the
correct evaluation of the strategy.
The evaluation of the strategy effectively determines whether or not the applied strategy
is the right one, whether or not it permits the achievement of the organization's objectives. On
this basis, it is determined whether the strategy continues to be applied or whether it needs to
be changed. Top managers must accept the results of the evaluation and not deny the need to
improve the strategy when required.

32
Belu Nicoleta - Strategic Management, Independenta Economica Publishing House, Pitesti
2006, p. 110
17
 Another reason for the need to do so is when managers are remunerated by the results
obtained and the degree of achievement of the objectives. Leadership should not minimize the
results of the evaluation process when it highlights the inefficiency of the strategy because
seriously treating these results can save the organization from a disaster following the
implementation of an inappropriate strategy.
The importance of making a permanent assessment of the strategy is also related to the
fact that it will lead to the development of an appropriate information system, made available
to managers, which will provide them with the correct and complete information that will form
the basis for future decisions.
Given the importance of the evaluation of the strategy and the result of its performance,
it is necessary to achieve it according to certain criteria that ensure the highest accuracy and
precision assessment. In essence, the evaluation of the strategy must be finalized with
conclusions on the following elements:
 The judiciousness of the business objectives;
 The extent to which the plans and policies developed are adequate;
 The extent to which the results recorded so far, following the implementation of the
strategy, confirm or invalidate expectations. 33
It can be concluded that the main purpose of the assessment is to find out to what limit
the strategy is corresponding to the company's mission and tactical objectives, the current
assets, modifications in the internal and external climate of the firm.

33
Belu Nicoleta - Strategic Management Publishing House Independenta Economica, Pitesti
2006, p. 111
18
 CHAPTER III. INSIDE OF ERICSSON TELECOMMUNICATIONS
ROMANIA: MANAGEMENT ACTIVITIES

Lars Magnus Ericsson have founded the company who is carrying his name in the 19th
century, on the basis that approach to connections is an essential necessity for the human being.
Starting from that point, the company continuously delivered revolutionary solutions and
innovated new technologies for good.

3.1. Market analysis and trends

Telecoms are one of the most dynamic components of the service sector in national
economies around the world, the component that is facing a continuous growth. The
telecommunications industry has been marked in the last decade by a growing competition,
driven by market penetration of mobile voice and text applications that have become more
user-friendly substitutes.
This industry is one of the most competitive branches of the Romanian economy with
the highest growth rate and which has brought a significant percentage to the state budget. This
is largely due to the increased interest of the end-user, the Romanian consumer who has shown
a special appeal in terms of internet services and the acquisition of state-of-the-art mobile
terminals.
Obviously, due to the recent wage increases, the good economic conditions and the
increase in demand for mobile terminals and internet traffic, it was possible to develop a good
competition for both, the user and the companies, and of course this has led to a continue
development of the Romanian telecoms market.
The liberalization of the communications market on 1 January 2003 and the removal of
Romtelecom's monopoly in the fixed telephony market have led to an increase in the number
of suppliers of electronic devices for the communications networks and services operating on
this market. In the overall assessment of the IT&C market as an industrial market, the
proportion of different categories of consumers / users, which in the case of the developed
countries is represented by about 50% of the industrial and financial-banking sectors, about
34% of the trade fields and the public sector. In Romania, there are no such assessments that
could underpin the development / development of different IT&C firms34.

34
http://www.ancom.org.ro accessed at 16th January 2019
19
 The biggest technological and social event was the emergence of the internet. Users
access the internet for a wide variety of services and products, and companies use it to promote
their business. It is expected that e- commence will become an important market in the coming
years. Enhancing the security of electronic communications networks, adopting IT&C anti-
fraud solutions and promoting smart cards contribute to the development of e-business and e-
government, as well as to better use of IT&C by businesses.
Ensuring information security is a qualitative indicator of the level of use of information
technology. The domain of e-learning has started to develop in Romania. The most important
project in this field is the informatized Educational System, started in the period 2001-2004.
Due to discrepancies between the urban and the rural environment, the projects for the training
of teachers in the rural environment were initiated in the period 2005-2009 and continued until
2012 at national level.
These projects will generate a better-prepared, more flexible and more labor-friendly
labor force with positive effects on labor productivity, wages and employment. This education
system can also help sustain permanent training, still at a low level in Romania35.
In the short to medium term, one of the obvious trends in international telecom services
is convergence, in response to users' requirements to benefit from a wide range of services from
the same provider. Europe's main market where operators have made major advances in
telecom services convergence is France, where all operators offer mobile and fixed telephony
services: Bouygues, Orange, Free, Altice, SFR and Numericable (BMI Research, 2018).
Another important direction is the continuous evolution of the field due to innovations.
And in this case, a relevant example is the European market where, through the development
of the Internet of Things (IoT), new technologies and new business models characterized by a
high degree of innovation are generated. The most vital part in the enlargement of IoT on the
European piazza was played by mobile telephony operators, which also contributed to the
evolution of vertical areas, such as healthcare or the automotive industry. Practically, mobile
operators use the technology and infrastructure they have to provide subscribers with a wide
range of services across industries.
Under these circumstances, adapting telecoms to change becomes vital to keeping
customers. Also, customer orientation and change of the classic business model by adapting
the services offered to the current needs of users are today indispensable36.

35
https://www.comunicatii.gov.ro accessed at 16th January 2019
36
https://www.information-age.com accessed at 16th January 2019
20
 The appetite for data services has increased among customers and consumers which has
posed a challenge to industry players that have struggled to leverage that demand into good
business. In order for operators to be able to address the demand without affecting the
network’s quality, they need to find a way to reduce the cost of liberating the data.
This is what Ericsson is trying to tackle to support operators through its strategy.

3.2. Short history and presentation of Ericsson Telecommunications

Romania strategic vision
Lars Magnus Ericsson set the foundation for what the company was supposed to
become in 1876. The company was born as a workshop for the repair of telegraphic instruments
and the work of certain works at a lower level of mechanical engineering. When the devices
arrived for the first time in Sweden, Lars Magnus have begun to fix and assemble this new
discovery. He quickly realized the possibilities of the phone and began to improve and develop
his own versions of the device.
Two years after the company's launch, the first Ericsson phones were launched. In a
very short space of time, Ericsson's unique wall-mounted phones have become widely known
worldwide as the "Swedish model.". At the end of the 19th century, more precisely in 1896,
the company became a big enterprise having over 600 employees and produced more than
110,000 handsets (see Annex 1).
Ericsson Telecommunications Romania, founded in 1994, is one of the leading
providers of telecom equipment on the local market, among the company's clients being
Romtelecom, Cosmote Romania, Orange Romania, Vodafone Romania, and the Special
Telecommunications Service.
Global Site Romania in Bucharest opened in 2007 and is one of the four centers around
the world, being the only one in Europe and a particularly important part of Ericsson in terms
of global services. On a daily basis, the Center is providing services toward 45 global customers
across the globe, managing networks that, together, enable 200 million subscribers to
communicate.
Global Site Romania is currently relying on a team of over 1,900 strong and young
professionals with a lot of enthusiasm and is in a permanent development to succeed in meeting
its customers’ expectations. This team is determined and provides the best operator support to
improve benefits, streamline operational and network security. The Global Ericsson site in
Bucharest is remarkable by bringing added value by combining customer expertise with

21
technical services.
The company is providing the best top settlement for IT & Cloud, Media and Networks.
The enterprise supplies infrastructure, services and software to the telecom industry and other
sectors. Nowadays, Ericsson has nearly 110,000 employees with customers in over than 180
countries.
Strategic vision means the representation of what an organization desires to be in the
future. More specifically, this vision is made up of a set of abstract ideas that direct the future
evolution of the organization. If they do not innovate, no company can resist the market or
differentiate itself. I think innovation is to broaden horizons, try to anticipate customer needs
and provide them with products and services in a way that will delight them.
The purpose of this company is not just communication for all; more than that he wants
to bring the internet everywhere and for everyone. At the same time with the emergence of 5G
and IoT models, instant connectivity of devices, machines and other devices to smart grid
technology - will radically change the world. 5G will give birth to new businesses and fuel new
innovations hard to imagine today. 5G will change not only the way we communicate but also
enable new solutions to create a more sustainable world.37
Ericsson’s customers, the communications service providers, are looking to new
technologies to help them tap into new revenue streams, go fully digital and continuously be
more efficient in response to skyrocketing data traffic on their networks. For that to happen the
company must once again create technology that is easy to adopt, easy to use and easy to scale.
The purpose and vision at Ericsson are enabling an intelligent, supportable and
connected world which defines their role in community. No matter if we are talking about the
first phone call or turning the telecommunications industry based on digital infrastructure and
IoT, or by bringing innovations to the future AI systems, Ericsson takes constant action to make
sure that they are responsible for changing in good of this industry. (Why they exist?)
“Our purpose is to innovate technology for good. When technology is
simple to deploy and easy to adopt, it is more likely to scale and thus
bring positive change.”- Börje Ekholm, President and CEO, Ericsson.
They achieve these by delivering on our business strategy and enabling the clients to
capture the maximum value of connection. (What they do?)
Their brand promise, the quest for easy, creating game-changing technology that's easy
to use, adopt and scale, makes the business strategy come to life in the eyes of customers,

37
https://www.ericsson.com accessed at 15th January 2019
22
employees, the industry, and future talent. (How we do it?)

3.2. Description of the services and products delivered by Ericsson

Telecommunication Romania
Ericssons’s portfolio is ranging across Networks, Digital Services, Managed Services
and Emerging Business; powered by 5G and IoT platforms.
Networks
It carries out telecommunication network delivery and management activities by
procuring hardware, software and services that will enable it to maximize potential
connectivity. Through virtualization, IoT and 5G, the transition to digital transformation for
the next generation of mobile services is supported.
Digital Services
Transforming analog signals into digital signals has been a great thrust in all aspects of
a business. This helps service providers adopt this change through Operations and Network
Management (OSS), Customer and Revenue Management (BSS), Communications Services,
Network Function and Networking (NFV) Virtualization, Infrastructure, Maintenance and
Development applications (ADM).
Managed Services
By managing services, Ericsson brings added value and differentiates the business by
accepting an integrated solution designed to cover all customer business points. By optimizing
telecommunication networks and managing them as well as IT operations with highly
industrialized processes and a global delivery model, they increase operators' ability to please,
and more than that to surpass customer expectations.
Emerging Business
By leveraging new and long-lasting businesses, such as artificial intelligence,
automation, 5G, VR / AR and high-end computing, Ericsson has opened new opportunities for
partners, customers and the company itself. The actions that Ericsson is currently doing are
channeled to some high-growth markets where their technology is remarkable, connected
vehicles and intelligent production, security and marginal computation, industry 4.0, IoT
connectivity. Innovation is at their core, and Ericsson ONE is the place where the new ideas of

23
changing the game take shape.38

3.4. Analysis of the microenvironment of the company

The analysis of the microenvironment requires the review of those internal factors and
external forces that directly affect the company's activity and which can be said there is a certain
control.
Customers
Their mainly clients are the communication service providers – the operators (CSP).
This industry is provoking but in the same time it is a ample and expended industry. CSP
revenues are 5x larger than the Super7s combined and represent some 42% of total ICT
industry margins. They also connect everything and everyone - in 2018 Ericsson reached
more than 8 billion subscriptions globally – and going forward they are well positioned in
order to generate revenue needed to digitize other domains.

Source: https://www.ericsson.com
Fig. 3.1 Connection between the market and customers

Today, the service providers face a tough environment. Data growth in the networks is
exponential, but revenues are flat. There are three main challenges that service providers face
globally that Ericsson can help them address:
 Efficiency – they need to lower cost to deliver data - lower $ per Gigabit.
 End-customer experience – today’s end-customers demand a much more simple,

38
https://www.ericsson.com accessed at 15th January 2019
24
 flexible and faster experience. This is a key competitive challenge for the CSPs and
often hard to fulfil due to complex legacy environments. This challenge is addressed
through digitalization aiming to create the following advantages:
 To offer users personalized services and self-care.
 To make it faster to develop and deploy new services, by automation and fewer
human bottle-necks.
 To utilize data for marketing purposes.
 To offer service assurance and to follow-up service quality.
 New revenue streams – over the past few years growth has flattened out and
traditional services do not generate the same returns as they once did. However,
new usage related to IoT and industry digitalization in combination with network
capabilities such as 5G opens new growth opportunities for service providers.

Suppliers
The company collaborates with approximately 30,000 suppliers from all over the world,
and their services and products most of the times make up a significant portion of customer
deliveries. Sourcing has a very important part in delivering these furnishies according to their
severe expectancy of velocity, innovation and quality, also contributing to increased margins,
thus contributing to cost-effectiveness.
Moreover, supply is making its contribution to the top line by acting as a trading role,
taking into account the business opportunities by taking the most value from the relationship
with the suppliers, that enable a merchandise understanding of dealing, market, and supplier
potential.
In the idea of having an overview and better control over the vendor base, they were
segregated into about 300 classes. Each class has a leader who is responsible for optimizing
the category to which he belongs, and this can lead to the choice of the appropriate folders
according to their number, geographical spread, risk and price. The goal is to reduce the number
to make the most of the supplier’s ground on economic, risk and value perspective.
First, it has to focus on the top 30 categories, which together account for about 90% of
total spending. One of the most vital and most effective jobs is to "cut the tail"; meaning to
replace those low suppliers with bigger ones worldwide, simplifying negotiations and
permitting Ericsson to have a greater influence, also minimizing the costly and time-consuming
administration of many low providers. Putting this into practice has led to a 10% drop in

25
suppliers from year to year, generating larger margins at the same time39.

Competition
Ericsson, which was once one of the world's greatest supplier of mobile
communications devices, is confronting with several issues, including lower spending among
operators and strong competition from Huawei and Nokia.
In the area of telecommunications gear like base stations, switching center components,
the competitors of Ericsson are as follow:
1. Huawei
2. ZTE
3. Nokia Siemens Networks
4. Alcatel Lucent
In terms of routing and switching equipment (Ericsson has its own line of routers called
Smart Edge):40
1. Cisco
2. Juniper networks
3. Arista Networks
4. Extreme Networks
5. Huawei
As a result of all these circumstances, shares of Ericsson surged towards the top of the
European benchmark, up more than 4 percent.41

Other stakeholders
Ericsson Telecommunications Romania has a broad spectrum of mutual actions with
stakeholders. How these actions are managed as well as the stakeholder expectations is an
integral part of their work.
Involvement of stakeholders - individuals and organizations that affect their work or
who are impacted by their work - is essential to their long-term success.

39
https://www.ericsson.com accessed at 17th January 2019
40
https://www.quora.com/Who-are-the-competitors-of-Ericsson accessed at 17th January
2019
41
https://www.cnbc.com/2018/10/18/ericsson-earnings-q3-2018 accessed at 17th January
2019

26
 Involvement is also an integral part of their durableness tactic. They will not succeed if
they do not consider their clients' expectations or collaborate with them.
Other stakeholders besides customers or suppliers are:
- Public authorities
- Investors
- The press
- Employees
- Communities and NGOs
“For us, stakeholder engagement is not a process that happens from time to time, but
it is continuous. We have developed long-lasting partnerships with various stakeholder groups,
including NGOs, local communities, suppliers and the business sector. We regard this
approach as our permanent contribution.”- Börje Ekholm, President and CEO, Ericsson.

3.5. SWOT analysis

The SWOT analysis is the tactical planning way by which Ericsson's department heads
go thoroughly to analyze the situation within the company at each compartment level. It is a
necessary mechanism for better comprehension of the power, faintness, opportunities and
threats facing the company in the context of the business environment present on the market.
Ericsson is one of the most important companies in the industry. Ericsson is keeping its
prevailing place on the piazza by analyzing the SWOT technique critically. This review is a
very large process of interaction which requires exemplary coordination between different
offices inside the company, such as: - IT systems for strategic management and planning,
operations, marketing, finance.
 Strengths of Ericsson – elements of internal strategy
As one of the top companies in this industry, it has a lot of strong points that permit it
to prosper in the actual piazza. These strong points not only offer them protection in terms of
their market share in the current markets but also significantly contributes to penetration into
new markets of interest. Some of the strengths of Ericsson are:
 The success they had when new products were developed and implemented – product
innovation.
 Powerful Brand Portfolio – since the beginning of its existence, has invested heavily
in different constructions, maintaining and improving a powerful marque portfolio.
 Efficient distribution system – during of its existence has built a trustworthy

27
 dispensation system allowing penetration on most potential outlets.
 Trusty providers – has a powerful ground of trustworthy providers of staple.
 Automated activities have made cohesion in terms of product quality.

 Weakness of Ericsson – elements of internal strategy

There are certain deficiencies where the company, through the discovery of those weak
points, has the chance to improve or even eliminate them. The plan is to make certain decisions
and these weak points are the areas in which, through this SWOT analysis, they can be
identified and improved, thus enhancing the competitive advantage they have in front of their
competitors and positioning themselves tactically on the market.
 Due to the fact that the challenges encountered by new companies entering into this
market segment were not properly addressed by Ericsson, some losses were recorded
in these niche categories.
 The investment position of the R & D department is placed, given that companies in
the industry report a rapid increase, below these increases. Even though Ericsson is
allocating funds over the industry average for this piece of stuff, it still could not
compete with its main competitors when it comes to innovation.
 The gainfulness proportion and Net Contribution % of Ericsson are beneath the
manufacturing medium.
 It has failed to integrate companies whose working culture is different.
Except for basic businesses, the success rate is limited. - despite the fact that this
company is placed on the top of the pyramid companies in this industry, it facing with
some difficulties when it switched to another product segment.
 Opportunities for Ericsson – elements of external strategy
 Last time behavior and consumer appetite for technology can provide and open a new
market for the company. It can give the company a very big chance in setting up a new
source of revenue and the opportunity to develop and diversify new product categories.
 Improving transportation costs due to reduced transport costs can implicitly result in a
reduction in the cost of the company's products, thus making it possible - either to
increase profitability or to use the benefits of customers in order to gain a market share.
 Increasing purchasing power - is a factor that makes markets more stable and also
makes it easier to get a lower interest rate on loans to its customers.

28
  The latest technology in the industry is giving Ericsson the chance to put into practice
a differentiated pricing tactic on the newly emerging market.
 The increase in purchasing power reflected in customers' spending appetite, after this
industry has experienced a very slow growth pace since the recession that has lasted a
few years, is a great chance for the company to attract new clients, and significantly
growing market share.
 Threats Ericsson Facing - elements of external strategy
 One of the threats faced by the company's products is the presence on the market of
low-quality imitations, predominantly in emerging market areas and those markets
where incomes are reduced.
 The latest generation technologies developed by the competitor also represent a danger
in the future more or less distant.
 As the organization is present with operations in many countries, this makes it exposed
to fluctuations in the currency market, also taking into account the volatility of the
socio-political climate in those countries.
 The organization can have open certain lawsuits in court because of different laws and
standards in those markets.
 The deterioration in the online environment in terms of consumer purchasing behavior
could negatively impact the pattern of the supply system conceived on the current
infrastructure.

Even though this strategy planning strategy is frequently used, it still has some limits to
which it can go. The restraints of SWOT Analysis for Ericsson:

- It does not show the options to get a competitive advantage, so it should be

treated as such;
- This table is the basis for a discussion on how to develop and implement
strategies.42.
Bottom of line, in order to reach the proposed objective, Ericsson has looked at several
factors including the market trend, the products and services offered - improving existing ones
and developing new technologies - a rigorous analysis of the strengths it has in the relationship
with the competitors, the market opportunities, the weaknesses points from inside the company,
as well as the threats on different segments from the competition.

42
https://www.mbaskool.com accessed at 18th January 2019
29
 CHAPTER IV: STRATEGIC MANAGEMENT OF ERICSSON
TELECOMMUNICATIONS ROMANIA

To revitalize technology and consolidate its position in the market, Ericsson is relying
on a more focused strategy in order to improve its profits and ensure its success for its
customers. This global recipe allows service providers to expand their portfolio but also expand
their profits.

4.1. The focused strategy within Ericsson

Moving further, let’s have a look at the next step in executing on their focused strategy.
In this subchapter I will go through how, from how they started, where they are today, what
they will do next and what will enable them to get there.
First of all, I will start by looking back in time. Over the last two years they have gone
through one of the most difficult times since the foundation of the organization. They had to
rapidly be back on profit, and also to do the right thing from a long-term perspective. The result
was their focused business strategy.
"The growth strategy has been part of the problem" said Peter Laurin, Ericsson's head
of Business Area Managed Services. "We have taken in deals and risk we shouldn't have
taken."
He stated that the organization’s intention is to set some limits on some markets and to stop
technical support on the ground, but to impose more severe rules on sales. He also mentioned
that the company plans to transform or renegotiate 42 of the nearly 300 contracts by the end of
2019.
Strategies evolve over the years to cope with the emerging trends and developments
therefore Ericsson did a big strategic change in April 2017 when the focused business strategy
was launched. This strategy is built on three pillars:
o First pillar is supporting the business, improving customer experience;
o The second pillar is to position Ericsson for future growth which is not about
selling today but also making sure that their customers see them as a relevant
partner for the future;
o The final pillar is about restoring trust and confidence in the company because
if you go through a difficult patch, you have to be humble, prove your value and
show your stakeholders and customers that you’re back and you can be trusted

30
 because you have what it takes.43
These are few examples that can be mentioned regarding the progress and the impact
of their strategy execution.

Source: https://www.ericsson.com
Fig. 4.1 Key components of Ericsson’s strategy

Ericsson identified three core challenges that the service providers are facing and
established on how they can help them address: increase efficacy, make better their customers’
experience, and to find new income sources. Their focused strategy addresses these challenges
through four business areas – Networks, Digital Services, Managed Services, and Technologies
and New Businesses.
The turnaround plan had three key components:
1. Reduce non-strategic activities and focus on core activities;
2. Investing of more capital in R&D for new technics and cost leadership – stabilizing
the top line and improving gross margins;
3. Cutting the costs aggressively.
Reduce non-strategic activities and focus on core activities. Complexity in execution
was high and they needed to do many things at the same time but the results did not delay
appearing. They are now a slimmer and more focused company. They are a faster and more
agile company, a more customer-focused company. They have strengthened their product
portfolio. In short, they are now a more competitive company with a strong portfolio and good
cost position.

43
http://www.telecomreview.com accessed at 18th January 2019
31
 "Yet another restructuring more focused on streamlining the company rather than
expanding the product offerings" said Edward Snyder, managing director of Charter Equity
Research, a sell side research house in Colorado Springs, CO. "It was an excellent articulation
of what happened and what they learned from the past. But they still face the same end market,
same risk, the same competition and price erosion. So while they are focusing on stabilizing
margins to improve profitability, they have to do it in a declining market environment. That is
a difficult proposition that many companies before them have not mastered."

Source: https://www.ericsson.com
Fig. 4.2 Approach to growth

As shown above, there are two areas of growth: growth in their basic operations and
growth in new sector.
Getting even modest growth in the core business will add significant value to the
company given the scale of their business. This is the best way to create a stronger Ericsson.
Growth in the core business means capitalizing on their 5G and IoT-capabilities.
In new businesses they look for growth that builds on their technology and unique
skills within 5G and IoT. With more than 3.5 billion cellular IoT connections by the end of
2023, this is a big opportunity.

32
 Source: https://www.ericsson.com
Fig. 4.3 Disciplined growth in core business

In Digital Services, top focus is on returning to profitability. They will continue to

invest for the future in an all-cloud-native portfolio and double down on the management and
control layers. In the new portfolio can see growth opportunities – for instance in 5G core. In
Digital Services, Ericsson just recently announced the acquisition of CENX to strengthen their
offering in service assurance as they had a gap.
In Managed Services they are now shifting the focus from turnaround to disciplined
growth. Growth will also come through their new AI- driven offerings and innovation.

Source: https://www.ericsson.com
Fig. 4.4 Disciplined growth in new business

Growing financing in R&D for new technics and cost management. In their
Networks business Ericsson will continue to grow the investing in R&D for new technics and
cost leadership. They will focus on key radio platforms, products, and serviceability. Growth
will come from increased market shares and market growth.

33
 5G to stimulate growth. Moreover, the company has made major investments in R&D
by employing 1100 new engineers. The basic growth pillar will focus on constructing the next
generation 5G telecommunication network on the Chinese piazza where growth is expected in
this segment and on emerging business investment, such as the Internet of Things.
Big investments were made into gaining insights for 5G for both consumers and
industry digitalization bringing operators some initial answers on what business potential there
might be in industry digitalization by 5G, including what are the top use cases and how to
capture this potential. “If the networks are not performing, they will not deliver the use cases
and if the operators are not set up to be a modern digital organization, they will not be able to
offer a good customer experience.”
In terms of 5G, Ericsson’s Chief Marketing and Communications Officer, Helena
Norman, mentioned that 5G technology is already a reality in North America and will become
a reality in more advanced markets in 2019, especially that networks are getting ready for the
technology and 5G-compatible devices will be launched soon. Consumers will be able to use
the technology and benefit from the limitless opportunities it offers.
Cost leadership. "We will run a very tight ship now and be much clearer on
accountability" said Chief Financial Officer Carl Mellander. "I believe we will be more
transparent than we have ever been. The transformation will take time, but I feel very confident
of the robustness of the plan."
He stated a less valuable krona in front of the dollar and the rapid collapse of the RAN
market resulted in a reduction in financial targets for operating margins by about 10% by 2020,
but a 12% long-term fix. The other financial objectives for 2020 are sales ranging between 190
billion crowns and 200 billion crowns, gross margin between 37% and 39%, and positive free
cash flow.
Ericsson has been aggressively cutting costs through the downturn, and the company
noted that it had achieved its target of cutting SEK 10 billion (~$1.1 billion) in run-rate costs
as of the end of Q2 of 2018.
Ericsson has also reduced its total workforce by over 15% since the last year. Further,
the company has been revisiting its managed services contracts to identify contracts to be
exited, renegotiated or transformed, in a move that should continue to aid profitability.
Ericsson is targeting gross margins of between 37-39% by 2020, with operating margins
projected to come in at over 10%44.

44
https://www.forbes.com accessed at 18th January 2019
34
 Reducing workforce and costs. Chief Executive Borje Ekholm said profitability was
conceived in a short-term plan by simplifying the company and stabilizing it at management
level, also by cutting costs with 10 billion crowns by mid-2018. This plan provides for the
elimination of 18% of managerial positions and other 2,500 positions, firing companies,
shutting down 83 sites, focusing on software-based solutions that drive the transformation of
digital services, and last but not least, the renegotiation of all contracts.
Following Ekbom’s new vision, the organization has dropped more than 20,000 jobs
(around 14,000 in direct employees) and cut more than 10 billion Swedish kronor — more than
$1.1bn — in costs, and in its quarterly results announced yesterday it recorded SEK 200m
($22.4m) operating profit - compared with a SEK 500m ($56.7m) loss at the same time last
year. Net sales for the quarter were SEK 43.4bn ($4.9bn - down 1 per cent year on year).
That’s the first time Ericsson has avoided a loss since 2016, and while the operating margin of
4.1 per cent is slim, Ekholm said it’s tracking towards the company’s 2020 target of 10 per
cent.
Snyder added that of particular interest was Ericsson's growth and profitability targets
for 2020. Most comes from better pricing, which is a pretty tall order in a market as competitive
as this one. "They have the right idea, but it's not clear they can make it happen considering
the industry peaked in 2008" he said.45
Helena Norrman, senior vice president, chief marketing and communications officer
and head of marketing & corporate relations at Ericsson explained that Ericsson’s focused
strategy is built on customers’ needs. 5G holds the potential of increasing revenues, while
operators need to have the best technology to be able to fulfill the high demand on data at the
lowest cost and also offer a pleasant end user experience.

4.2. Implementation of the focused strategy

Ericsson’s new strategy, which was launched in April 2017, has brought Ericsson back
on its feet again. The vendor registered growth in the third quarter of this year for the first time
since 2014 and achieved profitability for the first time since 2016.
Ericsson have more opportunities to leverage their assets – technologies and customer
relations - to grow beyond the core into new businesses.
1. The direction of our growth strategy for new businesses is to capture new revenues

45
https://www.gfmag.com/topics/capital-markets-and-corporate-finance accessed at 18th
January 2019
35
 through quick innovation constructing on their powerful in 5G and IoT and rising
their act of unlocking new value bases by bringing the network as close as possible
to the necessary information.
2. Their primary customers are service providers – Ericsson is making them succeed
in new value pools through win-win patterns.
3. They use a slope startup boarding and design thinking to confirm and measure ideas,
they will also energetically seek in-organic bets.
4. The current stakes are on connectivity platform, data management, edge delivery
and data insights.

How great customer experience is created:

- Everyone in the company is focused on customer experience;
- Collaboration across teams with focus on customer;
- Teams trusting each other to deliver what customer needs;
- Rapid prototyping to explore ideas through design thinking;
- Leaders empowering their teams to create greatness for customers.

The key differentiator is highly competitive environment is to be able to improve the

customers experience, in their business in general and in the relation with them in particular.
For this a few key enablers are needed. To start with everyone in the organization needs to have
deep curiosity for the customers - you have to go from knowledge and data about the customers
to creating insights about the customers than can give additional value.
Is needed teams to trust each other to deliver on customer’s needs and must collaborate
across borders to create the full Ericsson experience. They need to work close with the
customers using rapid prototyping. This leads both to better products as well as deeper insights
of their customers realities and needs today and tomorrow where they can use design thinking
as a method to accomplish this.
Leaders play a crucial role in creating the customer focus attitude, and to support their
teams to empower themselves to deliver a great customer experience.

36
 Source: https://www.ericsson.com
Fig. 4.5 Technology leadership

Analyzing, manufacturing and selling new top technologies in a faster way than
competitors to create new businesses and streamlining winnings by engaging customers can
also be called technological leadership. This is the core to succeed in normalization and
trustworthy associate and of course for business and cost leadership.
There are five key technology trends that will impact the evolution of all industries.
These trends will not only be of great importance for other industries, they will be key for their
ability to develop a competitive portfolio meeting the customers’ demands. The trends derive
from a number of underlying technology components, many of which Ericsson is already
exploring from a research point of view. In collaboration with strategic industry partners and
leading customers they are developing solutions for an augmented connected society.
Five industry wide technology trends that will augment the connected society:
1. Implementing Intelligent Networking Features by Setting a Set of Applications,
meaning the achieving of zero touch is the recipe for hiding the complexity of the
network;
2. The moment of the emergence of the internet of skills will lead to the delivery of
unlimited human senses and skills;
3. Very well adapted cyber-physical systems are a self-organizing expert system
concepted by the combination of models;
4. Confidence in security technologies results in data protection mechanisms.

37
 Ericsson have turned the company around. They have done it on their own, without
help from the market that has continued to decline during this period. They should all be very
proud of what they have accomplished.
Now it is time to take the next step and started to grow - with discipline – never letting
go of the strong cost position and competitive position they have worked so hard to achieve.
The starting point is their customers and their success. It must differentiate on technology
leadership and great customer value. They should bring that perspective with them in
everything they do and ask themselves. Does this create value for customers?
As team players and co-owners of Ericsson’s future they are all needed work seamlessly
together and all do their part to act on what they have decided to do.46

4.3. Is the new strategy the best way for Ericsson to be back again on profit?
Ericsson's top management stood before shareholders through its capital markets day
to make clear why the provider of communications technology posted five quarters of
successive casualty and how its new technic will turn the company around from one focused
on growth to one focused on profitability.
This organization from Sweden is planning to prune company structure and cut 10
billion Krona in costs by mid-2018 by eliminating posts, divesting businesses, closing 83 sites
and reviewing all existing contracts.
The new strategy is focusing on technology leadership, and maximizing gross margin,
capital efficiency and shareholder value by placing more emphasis on free cash flow and return
on capital.
Explaining loss, Ericson said that one of its main businesses has been building radio
access networks (RAN) for customers such as AT&T and Verizon. RAN provide a connection
between mobile devices and their core network. Anyway, the request for this equipment
dropped 8% in 2017, much faster than the decline of 2% to 6% that Ericsson had anticipated
in the first quarter. It also saw weaker performance in its IT and Cloud segments due to past
contract commitments.
The previous management team's strategy had emphasized growth through acquisitions
and scope expansion. It prioritized services-led revenue growth over profitability and risk.

46
https://www.ericsson.com/en/press-releases/2017/3/ericsson-presents-focused-business-
strategy accessed at 18th January 2019
38
Anyway, the acquisitions and purpose expansions did not deliver the wanted net sales growth,
which led to a lack of competitiveness and price pressures. In the meantime, consistent
dividend increases led to declining margins.
As shown in the table below, the strategy is working and we can see the results in good
momentum in 5G, increase in market share and gross margin improvements.
- Dell’oro predicts the RAN market (Radio Area Network) to come back to growth again
2020, driven by 5G, which gives new opportunity to grow.
- They have a good momentum in 5G and have grown overall RAN market share.
- In the last two Q-reports they stabilize top line, with strong improvements in gross
margin and operating margin as we see costs coming out.

Source: https://www.ericsson.com
Fig. 4.6 Returning to profitability

As a result of this strategy, Ericsson has avoided a loss for the first time in two years, after
18 months under the strict regime imposed by CEO Börje Ekholm, who took the reins at the
vendor at the start of 2017.
The profit result was in spite of that 1 per cent slide in total sales compared to the June
quarter last year, but the company’s network segment was more pleasing: its net sales grew by
2 per cent year-on-year, with a strong contribution from North America.
Excluding restructuring charges, the network segment showed an operating margin of
13.3 per cent, and managed services also showed a good margin of 6.5 per cent.
Elkhom attributed the company’s performance on a surprising acceleration in 5G
activity, which he said was “stronger than we anticipated just six to nine months ago”. In
Ericsson’s announcement, Elkhom said the company will commit to further investments in 5G

39
R&D, and plans to extend its footprint to reach more operators preparing for 5G.
“5G has been dramatically accelerated over the past 18 to 24 months” he said,
including the progress of standardization. As a result, he added, “we’re seeing more
traction with our customers than the overall market reports seem to indicate, so we’re
very excited”.
Elkhom could at least hope that the 5G business could also benefit from the US's
growing hostility to Chinese vendors, although he said "we should not think this is only a US
or North America opportunity".
While North America is going well, “we get a lot of engagement in other markets”.
Elkhom cited South East Asia, Australia, and the Middle East as examples.
The operator's shift to virtualization is changing Ericsson in a similar way to what is
happening at Cisco. Elkhom told the company’s results call “we see that the operators are
preparing their networks with virtualization … they basically depend on having programmable
networks.”
Changes in the packet core, the operational support systems, and IMS (IP multimedia
services) will be “converted more into software sales,” he explained. “We’ve been service-
heavy before — we’re trying to pre-integrate solutions to provide to our customers, and this
should translate to better growth with our customers.”47
In posting its third consecutive quarter of progress toward reaching its 2020 financial
targets, the company saw its net sales jump by 9 percent year-on-year and 8 percent since the
last quarter.
"We continued execution on our focused strategy that we laid out a year-and-a-half
ago, and it is starting to yield the results" Borje Ekholm, president and CEO of Ericsson, told
CNBC's "Street Signs" Thursday.
"It is still not good enough, we can do better. And that is why we are well on the way to
reach the targets for 2020" Ekholm said.
The mobile telecom provider posted an operating profit of 3.2 billion crowns ($356.5
million) as compared to a loss of 3.7 billion crowns in the third quarter of 2017.
Ericsson's shares have ascended more than 30 percent year-to-date, supported by
progress toward meeting its 2020 financial targets and hopes for a 5G-led industry growth
cycle.

47
https://www.theregister.co.uk/2018/07/19/ericsson_q2_2018_results accessed at 18th
January 2019
40
 The Swedish mobile telecom gear maker seems to be benefitting from growing
competition through the four top U.S. carriers, which are all desperately trying to be the first
to deliver 5G in dozens of American cities.
"We see very strong momentum in the 5G market and actually already today there are
commercial networks available in North America. So, 5G is not a buzzword anymore - it is
actually reality, it is happening" Ekhom said.
"We are well positioned (for 5G) and we continue to invest to provide our customers
with the best products to launch 5G as quickly as possible and as effortless as possible."
5G has become somewhat of a litmus test for technology leadership in America's
intensifying stand-off with China over trade and national security.
Considering the information presented so far, can be concluded that Ericsson has
focused closely on what it means to increase the quality of products and services offered to its
customers, to reduce losses on different segments and return to profit, but also to a close
relationship with the stakeholders as well on maintaining the global leadership position in
telecommunications.

41
 CONCLUSIONS

At the level of any firm, the practice of strategic management generates a series of
changes with major effects on its competitiveness. The exercise of strategic management within
the firm produces real mutations in the philosophy, climate and engine of its action that have
particularly advantageous result on its performances and competitiveness.
Thorough analyzes, carried out on representative samples of companies of different
profiles, sizes and economic and financial conditions, clearly highlighted the advantages of
strategic management and how they materialized in the activity of the respective companies.
Certainly, there are a number of limitations that all activities related to the formulation
and implementation of the strategy require a great deal of time to be spent, plus a certain
resistance to change from the employees of the firm if they are not involved in the
implementation of the strategy.
Extensive studies on this topic have highlighted the fact that firms applying strategic
management are meaningfully better than those for whom this form of management is of
interest and that the employees of the first category are superior to others. To conclude, the
most important person in the exercise of management and management processes is the
manager. Manager's concerns within the organization are the adoption of decisions and the
initiation of actions aimed at implementing the decisions adopted to achieve the proposed
targets. Also, they are the "product" of the management processes and of each function
(forecasting, organizing, coordination and control-evaluation).
Given the importance of the evaluation of the strategy and the result of its performance,
it is necessary to achieve it according to certain criteria that ensure the highest accuracy and
precision assessment. It can be concluded that the aggregate target of the assessment is to make
sure in which direction the strategy is fitting to the company's mission and strategic targets,
disposable means, modifications in the domestic and outside surroundings of the firm.
In order to reach the proposed objectives by applying the strategy, Ericsson has looked
before that to several factors including the market trend, the products and services offered -
improving existing ones and developing new technologies - a rigorous analysis of the strengths
it has in the relationship with the competitors, the market opportunities, the weaknesses points
from inside the company, as well as the threats on different segments from the competition.
Accordingly with this, can be observed that Ericsson has focused closely on what it

42
means to increase the quality of products and services offered to its customers, to reduce losses
on different segments and return to profit, but also to a close relationship with the stakeholders
as well on maintain global leadership in telecommunications.
As a result of this strategy, the company has avoided a casualty for the first time since
2016, after 18 months beneath the severe diet enforced by CEO Börje Ekholm and has returned
to profitability.
As own contribution to this work, I mention the research done in chapter three, the
synthesis of information related to the client, suppliers, competitors, the trend and market
analysis and the SWOT analysis.

43
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 Annex 1

The major events in Ericsson’s history are as follow:

 1876 - Lars Magnus Ericsson opens telegraph repair workshop
 1881 - First major contracts won in Norway, Russia and Sweden
 1900 - 1000 employees globally, SEK 4 million in sales and 50,000 telephones
produced
 1902 - Sales office opens in US
 1905 - First acquisition made in Mexico
 1923 - First automatic 500-point switches in service
 1946 - Foundation for research into television established
 1950 - LM Ericsson telephone exchange supports world's first international call
 1977 - First digital telephone exchange (AXE) installed
 1988 - First GSM system order from Vodafone, UK
 1991 - AXE lines exceed 105 million in 11 countries, serving 34 million
subscribers
 1994 - Ericsson Telecommunications Romania
 2000 - Ericsson becomes world's leading supplier of 3G mobile systems
 2001 - Ericsson conducts the first 3G call for Vodafone, UK
 2005 - Ericsson wins biggest contracts to date to manage operator 3's networks
in Italy and the UK
 2007 – Opening the Global Site Romania in Bucharest
 2008 - Research center established in Silicon Valley, USA
 2009 - Verizon and Ericsson collaborate to carry out first data call on 4G network
 2010 - Took over 400 employees of Romtelecom operator
 2011 - Ericsson completes the acquisition of Telcordia
 2012 - Ericsson completes the acquisition of BelAir
 2014 – The acquisition of the media management company Red Bee Media
 2016 - Ericsson acquired the location-based mobile data management platform
Placecast
 2018 – Partnership with Softbank to trial new radio technology.48

48
https://www.ericsson.com/en/about-us/history accessed at 15th January 2019
46