group 1 ericsson mo
DESCRIPTION
A report on Organisational Design of Ericsson. The views are personal.TRANSCRIPT
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Group Members:
Ajay Kumar 1411211
G Nitin 1411224
Krubakar M 1411237
Nikhil Kumar Choudhary 1411251
Shipra Agrawal 1411265
Anand Krishnan 1411278
The members of Group 1 take pleasure in submitting the report on Organizational facets of Ericsson.
We by the means of this study made an attempt to apply the theoretical concepts taught in the class
into the real world. Our reason of taking up Ericsson was its legacy. It is a 140 year old organization,
and over the course of over an century it has found out a structure that helps it best to cope up with its
environment. In the process of this study we would like to thank Ericsson for its support in terms of
organizational charts, the teacher of the subject at IIM Bangalore Mr. Sourav Mukherjee for whetting
our brains to explore further the dimensions of the subject, and the group members who stood thick
and thin throughout the term 1.
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TABLE OF CONTENTS
INTRODUCTION ................................................................................................................................................................ 3
Brief History ................................................................................................................................................. 3
Structural Dimensions of Ericsson....................................................................................................... 3
Contextual Dimension .............................................................................................................................. 4
IMPACTs OF ENVIRONMENT ...................................................................................................................................... 4
Major environmental factors ................................................................................................................. 4
GLOBAL ORGANIZATION DESIGN ............................................................................................................................. 6
Global Organization Structure............................................................................................................... 6
Ericsson Global Co-ordination Mechanisms ..................................................................................... 9
Complex-Dynamic Matrix ...................................................................................................................... 10
Natural System Design of Ericsson: ................................................................................................... 10
RELATIONSHIP WITH OTHER ORGANIZATIONS ............................................................................................ 11
Resource dependency............................................................................................................................. 11
Establishing relationships .................................................................................................................... 12
Influencing key sectors .......................................................................................................................... 12
Collaborative network ........................................................................................................................... 12
Institutional isomorphism .................................................................................................................... 12
Emergence of new companies to serve niche environments ................................................... 12
INFORMATION AND CONTROL PROCESSES ...................................................................................................... 13
Control levels ............................................................................................................................................. 13
Knowledge Management ....................................................................................................................... 13
Knowledge Sharing .................................................................................................................................. 14
External Coordination ............................................................................................................................ 14
Customer relationship system ............................................................................................................ 14
Overview of IT impact on the department ...................................................................................... 14
ORGANIZATIONAL CONFLICT & POWER EQUATIONS ................................................................................. 15
CORPORATE CULTURE AND VALUES ................................................................................................................... 16
COMPETITOR ANALYSIS & ERICSSON’S STRATEGY ...................................................................................... 17
Porter’s analysis of competitive forces ............................................................................................ 17
Miles and Snow’s Strategy Typology ................................................................................................. 18
Ericsson’s strategy ................................................................................................................................... 18
Long term strategy framework ........................................................................................................... 19
Goal Effectiveness .................................................................................................................................... 19
Observations and Conclusion: .................................................................................................................................. 20
REFERENCES ................................................................................................................................................................... 20
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INTRODUCTION
BRIEF HISTORY
Ericsson started in 1876, when Lars Magnus Ericsson opened telegraph repair shop. It started
with a group of three people Lars Magnus Ericsson himself, a 12- year old boy Gabriel
Bildsten who used to run errands, and Carl Johan Andersson, a colleague who soon became
Ericsson’s partner1. Today Ericsson employs more than 100,000 people and work with
customers in more than 180 countries,2, 3
Over a period of close to 138 years Ericsson has been able to:
Bring together the best knowledge and expertise to move closer to fulfilling its vision.
It has a presence in 180 countries and annually it does a business of $35 billion
annually.
It has a huge client list. Only in India the client list includes Bharti, Idea, Vodafone,
Aircel, Reliance and Uninor.4
It has not only been a facilitator of innovations, but also it is the organisation that
defines the way ahead for telecommunication. For eg, Bluetooth is an invention of
Ericsson5.
The burgeoning data usage in developed countries and huge population of developing
countries calls for modern manufacturing and usage of developed information
technologies. Presently Ericsson is aiming towards interconnecting humans with
devices, and taking the nodal points of communication to 50 billion6.
If you don’t change with changing times you are going to perish. Ericsson has a
strong Research and Development wing, and a very strong presence in nearly all
regions.
Airtel, Idea, Vodafone, Sprint, Etisalat are brands in itself. People have a sense of
reverence for these companies. Ericsson is the value creator for these companies.
When Ericsson tries to move ahead in technology it directly impacts 1/3rd
of the
telecom world . Its way of working impacts societies, motivation and definition of
ethics.
STRUCTURAL DIMENSIONS OF ERICSSON
Formalization: Ericsson is a process oriented company. There is comprehensive amount of
documentation available on employee scope, responsibility, Ethics, Installation/Upgrade
procedures etc. The technical aspect of Formalization is covered in a repository called
“ALEX”. It is a library of technical information of Ericsson’s portfolio. The scope of every
engineer is defined prior to assigning him to a project. During the case of emergency when
there are huge revenue losses there is a defined protocol to be followed.
Specialization: Ericsson has a vast and diverse portfolio. It has its presence starting from the
equipments on towers that receives the encoded signal from users over the air medium to the
database that maintains the records of the subscribers. The whole process has too many
intermediate products and every product is a technology in itself. The amount of
specialization is huge. It takes close to 18-24 months to develop mastery over one product.
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Hierarchy of authority: There exists a certain hierarchal order when seen from a CEO
perspective; however when it comes to a department the hierarchy is not tall. For instance in
Business Support System department, there is a Solution Integrator who reports to a manager
and the manager in turn reports to the director.
Centralization: In day to day working the organization is fairly de-centralized. The regional
units are de-centralized in their ways of working. Employees are empowered to take informed
decisions, and employees are generally advised by their managers to work as per the scope of
the project. The sales team of India is fairly de-centralized and has some degree of freedom
from the Swedish sales team.
Professionalism: Till a decade ago the amount of formalization used to be very low.
However, cost cutting measures led to low morale in employees and hence an increased
attrition rate. To overcome the leverage enjoyed by employees there has been a huge push for
codification of knowledge. This has led to saving of money in training purposes, as
codification is anyways cheaper than personalization. However Ericsson still focuses a lot on
development of its employees in terms of trainings and certifications.
CONTEXTUAL DIMENSION
Size: Ericsson has a huge employee base which presently hovers close to 100,000. Its
revenue is $35 billion.
Environment: Environment has a very strong influence on decisions in Ericsson.
Government, TRAI in India, UN on radiations, customers, trends in technology all play an
important role.
Culture: Ericsson as opposed to its biggest competitor Huwaei has a fairly liberal culture.
The adaptive culture manifests itself in training provided to employees; every manager
advises to take some time out of the daily schedule for self-development and enhancing your
own knowledge.
Technology: Mobile phones were unheard of until 1991, and today the amount of data
promised by 4G is 100 Mbps. The growth of networks is a logarithmic functions.
IMPACTS OF ENVIRONMENT
The structure of the organization is affected to a great extent by the kind of environment the
firms chooses to operate in.
MAJOR ENVIRONMENTAL FACTORS
Technology: So rapid has been the advancement of technology that starting from 1991-92
when mobile phones were introduced, that right now over 6.5 billion7 is the penetration of
mobile phones. The expectations of people have been rising to such an extent that basic
features such as calling and texting is taken for granted as features by any operator. The
world has moved with a lightening pace from 1G, or the analog system, to 4G and beyond.
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Emergence of China and
India: China is the world’s
largest exporter of raw material.
The availability of cheap labor
in India and China have made
these two countries as favorable
investment destinations for
manufacturing, for operations
when it comes to support.
Ericsson has developed four
pools of fungible resources in
four different countries. These
four pools serve the service
needs of all countries of the
world. One of the four pools is
in India.
Demand for specialized
resources: When functioning in
a technology intensive sector the
amount of specialization needs to be fairly large. The time-span available for training
resources on 4G services has been very less as compared to the time that was available for
implementation and training of resources for 3G.
Cash Crunch for Indian Operators: The Indian telecom companies are sitting on a pile of
huge debt. That makes improvement in terms of telecom infrastructure, improvements in
bandwidth, and other spending a touchy issue.7
Bharti alone sits on a debt pile of $10.4
billion.
Enhanced competition: Huwaei has been fiercely gaining market share. Till half a decade
ago Ericsson’s biggest competitor was NSN (Nokia-Siemens Networks), however the present
day Huwaei is like a fairy tale story. Even in areas such as Database management and CDR
processing companies like IBM, Wipro have been eating the revenue pie.
Government Policies: Cancelled telecom licenses, billion dollar tax case of Vodafone, sky
high charges of frequency blocks; you name it and you have it in India.
Difference in Economic Development: The ability of Ericsson to provide solutions also
depends on the economic development of nations. The ARPU generated in developed
countries is more than that of developing economies; and ARPU of Nigeria is entirely
different. The higher the ARPU of a nation, the greater the is the ability of an operator to
upgrade his network. On this account Vodafone UK is better placed in terms of cash
resources as compared to Idea Cellular Limited.
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GLOBAL ORGANIZATION DESIGN
In this section we will be talking about the evolution of Ericsson from a mechanical
engineering workshop launched by Lars Magnus Ericsson and Carl Johan Andersson in a
workshop in Stockholm to a global telecomm service provider with over 100,000 employees
with operations in over 180 countries.
The company started off as a mechanical engineering workshop and due to Mr. Ericsson
affiliation towards telephony systems, ended up in repair & servicing of telephone equipment,
but seeing an opportunity to expand he studied existing telephone and started manufacturing
and selling of his own equipment. Ericsson remained relevant in the market by constant
innovation and reached almost 25,000 sales by the mid of 1890s. With Swedish market
almost saturated, it was time to expand geographically hence began the International stage in
1890s.
Export to Britain and Russia were early markets for Ericsson and with a transformation to a
limited liability company in 1896, the expansion process was in full throttle. The company
also increased its exports to Australia and New Zealand till 1907.
The next step of multinational expansion started happening in 1907 with the plans to start
manufacturing plants in Buffalo, New York and in Mexico during the 1909. This continued
till 1945 when the company decided to go truly Global.
In response to multiple competitors and changing manufacturing laws in major markets like
Brazil, Mexico, Australia Ericsson started large-scale manufacturing plants overseas. Also
Landmark deals such as the AXE system deal with Saudi-Arabia to increase her telephony
services by 200%. An increase in interest from the U.S market in 1980s and the emergence of
the mobile telephony service in the 1990s has led the company to where they are today.
En-route all the above-mentioned organic expansion; Ericsson also expanded inorganically
via mergers and acquisition, which started as early as 1918 with Stockholms Almänna
Telefonaktiebolag (SAT) and then moved onto joint ventures with huge market players such
as Microsoft, Sony, HP etc
GLOBAL ORGANIZATION STRUCTURE
Ericsson global has now become a colossus of an organization and we have made an attempt
to understand the global structure and the level of interaction between the units in the
organizations. Ericsson provides telecom services in over 180 countries so they work in a
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highly complex & unstable environment so there will be a good amount of customizability in
the customer facing units of the organization.
The structure can be broken down into two different parts for the purpose of studying.
First is the geographic structure. Ericsson has regional offices in 10 geographies to cater to
the specific client requirements in countries in the respective regions. These are customer-
facing units and each region’s head reports directly to the CEO.
The second part of the organization is the global product structure. Ericsson has four major
product teams highlighted in green in the above picture. Each team is responsible for
developing new products and software in their respective product lines. For example BU
Multimedia is responsible for all media technologies; BU Global Services develops products
related to revenue management services. Business Unit Networks works in developing
technologies and products for the radio networks. It encompasses the equipments on towers,
the microwave equipments for transferring data from towers to the Base Station Controller,
electromagnetic to electric convertors from BSC to Master Switching Centers. Each of these
product unit’s head also directly report to the CEO of Ericsson.
The other common functionalities like HR, Legal Affairs, Branding etc. are kept as separate
functional teams globally.
Whenever a product team like for instance BU Global Services (BUGS) develops a new
product, it makes a detail document of instructions for its installation, configuration,
operation and maintenance. It trains a team from each of the regions on operations of the
product and the respective team takes care of implementation and maintenance in their
respective geographies. There are Line Managers in every regional geographic office to
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ensure that there is smooth transfer of information between the products team and their
respective region.
The hardware used to provide the network are either assembled in Sweden, or sourced from
China and are done in such a way that they can be utilized in any of the operating locations
with changes in software parameters. Hence when it comes to hardware Ericsson has a global
product strategy. Hardware technology like Databases, Servers, Charging Control Nodes etc
are sourced in such a way that they are available and can be utilized across different geo-
operations.
Taking the example of Etisalat, a Middle East company (Emirates Group) that announced its
interest in Operations in India and purchased products from Ericsson. Their infrastructure
was in place and ready to go live when a Supreme Court Ruling cancelled 12 telecom
licenses in the 2G spectrum scam that made them shut their shop in India. As a testament to
the standardization of Ericsson, the same equipment installed in India was dismantled and re-
installed in middle-east to continue their operations with little design changes.
The company has chosen this hybrid organizational structure due to the following
advantages.
ADVANTAGES
i) The presence of regional customer facing units, who implement the project and stay
in touch with customers make Ericsson, suited to better responsiveness to the
customer. For instance, in 2012, Idea was growing rapidly in the data segment. They
were using NSN charging system for deducting money from customers for data
usage. Ericsson regional unit RINA, realized the flank, and proposed real time
charging solution to Idea. It also made USSD (the charge deduction message at the
end of call) feasible which was not feasible in the NSN system.
ii) The advantage of having a regional unit at the customer site leads to customer
satisfaction, as she thinks that the people who can solve her problems are a stone’s
throw away distance. It also leads to communication clarity, as co-ordination and
contact points are clear. As an example, Ericsson has an office with 60 personnel in
Pune as Idea has their largest database server HUB in Pune.
iii) Business requirement in every country is very different from another. Hence having a
dedicated regional office is highly beneficial. Just to give an example Idea India
offers 1500+ tariff plans, each having distinct features and requirements. Plus
majority of the plans used in India are Prepaid whereas it is the opposite in the US.
Ericsson has to create provisions accordingly and this is the case for each of the 10
regions Ericsson is working in.
iv) Autonomy regarding how to run the project is de-centralized to the respective
geographic heads who decides the Project Manager and the Project Team. This avoids
a lot of piling up of decisions and the bureaucratic lethargy that comes along with
vertical hierarchy.
v) The common processes units such as BUGS, BUN provide economies of scale; R &
D, Product Development & Purchasing happens centrally through the use of IT tools.
This also helps in developing in-depth expertise within Ericsson.
vi) Since their products are more or less similar for every region, the organization
follows a global product strategy. Common Business Units across regions facilitates
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knowledge and experience sharing. The product that is being used in India is the same
that is being installed in North America. Use of IT tool further facilitates knowledge
sharing.
DISADVANTAGES
i) The co-ordination between product lines is poor. For instance the product team of
Charging has no Idea about the product division of Radio Access Networks.
ii) There is high attrition rate among the lower levels in the regional units of Ericsson.
This is mainly due to the monotonous nature of the job as they are given complete set
of instructions and procedures to be followed for each product.
iii) The problem of having a geographic division doesn’t give acknowledgeable access to
in-depth knowledge; such as R & D units having no knowledge sharing with the
project implementation team. To overcome this, the department Directors keep
knowledge sessions and training. People from various countries travel to Sweden on a
regular basis to get acquainted with new technologies and to have hands on
experience before snow-balling the knowledge to the regional units.
iv) This type of structure has high need for coordination and Integration and thus this
leads to higher cost of maintaining a fully qualified and PMP certified Project
Manager.
v) Mutual adjustments and collaboration is necessary to make the structure work, and
seeing this most of the Region Heads, and Heads of important money making units
are Swedish.
ERICSSON GLOBAL CO-ORDINATION MECHANISMS
The vastness of the organization offers major issues- the possibility of lack of communication
and co-ordination between global units. To prevent the “US Vs Them” feeling creeping into
the organization Ericsson uses techniques such as global teams, expanded co-ordination roles
and excellent informal communication lines.
Formation of Global teams in Ericsson is almost always need based, in-case there is a skill
requirement for a particular undertaking that is missing in the regional units the Project
Management Office (PMO) will initiate a request in an internal tool “MORE” which with
the help of BUGS units will find and pullout resources from different geographical locations
all over the world and they work together with units present in multiple locations to deliver
the project.
Despite the large size of the organization the organization maintains personal relations using
tools like Ericoll which is a Knowledge Repository updated by employees for best practices
etc and can be searched and queried for solutions with options to talk to document owners via
Lync Communicator tool, ensuring that transfer is completed successfully.
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COMPLEX-DYNAMIC MATRIX
Ericsson as a whole works in a complex
environment, as there are too many
external factors to deal with. The
organization from a broad perspective is
divided into two parts. The regional units
of Ericsson which are customer facing
units, and the product units which
develop the technologies and pass it on to
regional units to implement. The product
development Units such as BU-GS, BU-
M, BU-NW are responsible for delving
their efforts into customer research and
fulfilling them. They need to develop
newer technologies and are hence
required to work organically. On the
other hand, the regional units work in a
comparatively stable environment as the
methodology, and documentation of implementation is presecribed by the Product team.
When working with a huge organization, with huge number of departments it requires a full
time integrator to co-ordinate between Ericsson and Customer, and between various
departments.
NATURAL SYSTEM DESIGN OF ERICSSON:
Horizontal Structure: A horizontal structure is
more suited for being a learning organization. The
Vertical structure creates distance between
managers at the top of the organization and
workers in the technical core. In Ericsson working
culture is horizontal, the hierarchy is flattened (it is
virtually impossible to eliminate it). Self-directed
teams who implement the projects have their scope
defined and they work as the fundamental unit.
Empowered Roles: Ericsson empowers its people
to play roles in its development. The employees
are encouraged to work with the customers, deal
with them and locate their problems. Even when it
comes to implementation of projects, the employees find a good amount of leeway in
providing the solution.
For instance, the Project Manager and the Solution Architect, responsible for developing the
solution, wanted to do a Data Migration Project for Idea Cellular Limited in three phases.
However, one of the engineers suggested a method to merge first and second stage and it
made sense from cost saving point of view. The suggestion was included and the final
solution had first and second stage merged as one.
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Another example that can illustrate this point is, the concept of “Lead Generation”. An
engineer working on the site finds a requirement at the customer’s site, he can put it
internally as a “Sales Lead” to the sales team. In case it has merit and can bring additional
revenue to the company, the site engineer is given a share of the total revenue.
Shared Information: A company that wants to be a learning organization needs to follow a
shared information methodology to see the results of the liberal culture. Information serves as
one of the cornerstone. A learning organization serves to exploit the advantages of big a huge
company, a huge brand and simultaneously function as a small and quick learning
organization. Morning meetings, group emails, handover when joining are few of the ways to
share information.
Adaptive Culture: The only constant thing in this world is change. Those that didn’t change
its culture with changing times faced troubled waters like Xerox Corporation. Even Ericsson
faced difficult times during dotcom Bubble, however Ericsson has learned its lesson well.
Adaptive Culture encourages openness, equality, continous improvement and change.
Moreover, activities, symbols that create status differences such as executive dining or
reserved parking spaces are discarded. Each person is a valued contributor.
Collaborative Structure: Experimentations with competitors, technical counterparts, mobile
phone companies (the sony-ericsson deal), collaborations with universities has been a
hallmark of Ericsson. Gone are the days when independence was the buzz word, these days
inter-dependence is the norm.
RELATIONSHIP WITH OTHER ORGANIZATIONS
Relationship between organizations can be analyzed by looking at four perspectives.
1. Resource dependency
2. Collaborative network
3. Institutional Isomorphism
4. Emergence of new companies to serve niche environments.
RESOURCE DEPENDENCY
The need for scarce resources in the environment is necessary for any organization’s survival.
Organizations typically try to gain control of the scare resources to be more independent or
they establish links with other organizations to reduce vulnerability. The later reduces the
level in independence.
To influence resources, a firm can adopt two strategies:
1. Establish favorable relationships with key elements
2. Shape the domain by influencing key sectors
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Ericsson has signed “anti-poaching” deals with companies like Idea Cellular Limited,
Vodafone to disallow movement of critical engineers and resources from Ericsson to the
operators.
ESTABLISHING RELATIONSHIPS
Ericsson is referred as the telecom shark. The reason being the number of acquisitions carried
out by them to control the business.7
In 2014, they have already made two acquisitions
namely “Red Bee Media” and “Azuki Systems”. It has been making acquisitions strongly to
expand its reach.
INFLUENCING KEY SECTORS
Ericsson acquisition of LHS is a clear example of using acquisition as a strategy to enter into
new business segments. The major reason behind the acquisition of LHS is to enter the post-
paid billing solutions business, which had always been a weak segment of Ericsson before
that. One of the main key sector for Ericsson has been technology. It has a lot many
collaboration with many universities in Europe to influence and develop technology.
COLLABORATIVE NETWORK
Ericsson partnered with General Electric as Ericsson Mobile communications to establish a
US presence and to leverage GE’s brand recognition.
Ericsson has a strong Knowledge management system called Ericoll. It is a pure codification
based Knowledge management database as many functions that the firm operates are highly
repetitive in nature.
Not all Collaboration see good days, Sony-Ericsson the hugely talked about joint venture
came to an end in 2012 when the mobile-phone unit was into heavy losses. Ericsson
partnered with Sony and formed the joint venture Sony Ericsson to venture into the fast
growing mobile phone market in 2001. Sony bought out Ericsson’s share in 2012 for $1.5
billion to end the joint venture and get complete hold on the mobile phone business.
INSTITUTIONAL ISOMORPHISM
When the environment of business is uncertain, organization follow each other blindly. A
good example can be the investment in Indian CDMA sector. Huge amount of investment
was made by both operators and OEMs however the lackluster performance of CDMA as
compared to the European 2G/3G standard forced Ericsson to close down its CDMA unit in
India.
EMERGENCE OF NEW COMPANIES TO SERVE NICHE ENVIRONMENTS
Ericsson has always used its resources to venture into new business environments. Post-paid
was a fast growing but a weak zone for Ericsson. To get a strong hold in that business it
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acquired LHS. From time to time Ericsson has been gathering patents from various out of
business companies like Motorola.
INFORMATION AND CONTROL PROCESSES
CONTROL LEVELS
DEPARTMENT LEVEL
Lower level managers focus on the performance of people at the department level. They see
that the department goals and standards are met, to ensure that the organization attain its
overall goal. The unit BSS, responsible for implementing Charging and Billing Solutions
follow highly process/behavioral oriented control systems.
One example of this is the daily status report that is submitted by the department employees
to their managers. The managers need this report on daily basis for tracking the status of
work done by the employees. This control process enables managers to provide high
supervision and monitoring. They are kept aware of the methods and processes followed by
the people to accomplish their task. The managers are informed about the fact whether an
employee is on schedule regarding a particular task assigned to him and if he is not the
manager can take necessary corrective steps. The way of communication here is e-mail which
is a result of development of Information Technology. We can in some cases see daily status
reports as Output Control but it fits as a behavioral control more often.
Another example is the weekly update provided by the project managers to the higher level of
the organization. This is done using a tool called ‘PROP S-C’. The lower level managers are
required to provide the project status regarding the ongoing project through the given tool.
Higher level managers can then track the status of the project through this tool on weekly
basis so as to ensure that there are no delays.
KNOWLEDGE MANAGEMENT
The regional units use the tool ‘ERICOLL’ for codification of intellectual and creative
resources. The employees submit relevant information using this tool which can be utilized
by other employees when needed. ‘ERICOLL’ contains the contact details of the person
submitting the information in case people want further clarification regarding the submitted
data. The person is then contacted either through e-mail or phone for further questions. The
only issue here is the quality and quantity of data available on the tool. Since documentation
is not the primary task of engineers, the information available can be vague/incomplete or
difficult to comprehend for others. The issue can be resolved if some quality control
measures can be applied.
“ALEX” is the other tool used for sharing of procedures by the product Business Units to the
regional units. These documents are comprehensive in nature and contain everything starting
from specifications, installation, configuration, operations and maintenance. The quality and
authenticity of these documents are unquestionable. However, not everyone can comment or
modify these documents they are the prerogative of the Business Teams.
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KNOWLEDGE SHARING
Knowledge sharing forms an important part of the BSS unit. Mentoring and knowledge
sharing sessions are two major ways of knowledge transfer. The sessions are done either face
to face or virtually using the web (Skype). The department has increased its goal congruence
by including knowledge sharing as one of the bases for appraisals. Appraisals of employees
in BSS unit are based on inputs such as no. of sessions conducted and no. of knowledge
sharing documents submitted. This provides a good reason for the employees to participate in
knowledge sharing and thus improve the overall department knowledge.
EXTERNAL COORDINATION
CUSTOMER RELATIONSHIP SYSTEM
There are separate regional units under the BSS, which form the customer facing units. These
units are formed to handle customer interactions, project implementation and provide
operational support to the department. These smaller units strengthen the relationship of
organization with the customers and helps in smooth flow of operations.
OVERVIEW OF IT IMPACT ON THE DEPARTMENT
Codification: Documents with necessary information available in a central repository.
Both Time and Effort is saved when an already completed task is done again and
again by other employees.
IT Tools: Various tools such as ‘PROP S-C’, ‘ITM’ makes process based control
much easier. These tools enable efficient and convenient tracking of the tasks.
Knowledge Sharing: Introduction of new tools and applications have made knowledge
transfer much more convenient even when people are far away. The software and
hardware improvements have made online video conferences, video lectures very
easy to use.
Horizontal Linkages: Online portals like ‘MORE’ has made horizontal linkages
stronger. Project managers can mention their project’s resource requirements. This
information is shared with the support department responsible for providing the
necessary resources. Both the teams have access over the portal and sharing
information becomes much easier.
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ORGANIZATIONAL CONFLICT & POWER EQUATIONS
People from BSS develop issues with a host of departments, and at times even with the
customer organizations.
LOCATION OF CONFLICT
Inter-department These issues crop up between different members belonging to different
departments. A worthy example is issues with operations for handover of projects.
Implementation team after implementing the project hands over the responsibilities of the
project to the operations team. In case the Operator has a contract with Ericsson, the project is
handed over internally to Ericsson Operations team.
Intra-department:
“A huge project for Idea Cellular Limited involved migrating 50 million subscribers from
NSN Charging System to Ericsson Charging System. The project was a long running project
that ran for close to 18 months. It involved a lot of complexities as NSN and Ericsson have
different logics and databases management system for subscriber balances. In the last phase,
the Solution Architect requested for a replacement. However, when it came to handing over
the complex solution to the new Solution Architect, the old Architect showed a lukewarm
response. The old system was an ingenious system built under his guidance, and he was
uncomfortable in sharing the fine details of it with the new Architect.”
Inter-organization conflicts also arise when the customer tries to get features delivered
which he has not paid for. These conflicts at times snowballs and have to be resolved at the
Director or Vice-President level.
Another common source of inter-organization conflict is, cross hiring between industries.
Vexed by cross-hiring Ericsson went onto to sign anti-poaching deals with Idea Cellular
Limited, barring employees to move across organizations.
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RESOLUTION OF CONFLICT
a) Most of the inter-department conflicts are resolved through the Project Manager.
Project Managers are Full-time Integrators who act as strong horizontal link. He co-
ordinates amongst various departments of Ericsson, say, Operations and BSS, BSS
and Sales, and BSS and Customer. He has the formal authority vested in him to take
up issues and escalate.
b) Intra-department conflicts are the most difficult to handle, as the buck stops at the
manager. He has to diligently take a call on how to handle the conflict. Mostly, the
shots are politically taken based on how critical is the resource. The more critical the
resource the more decisions tend to go in his favor.
c) A rational model resolves inter-organizational conflicts, as money and legality of the
issue act as threats. So generally both the parties work on a rational approach to
resolve the conflict at hand.
SOURCES OF POWER
a) Formal Positions: There is a well established hierarchy that provides formal
authority to people. A Sr. Manager is the reporting person of a Solution Integrator; A
Sr. Manager reports to a General Manager, who in directly reports to the head of BSS
team. Every movement up the hierarchy endorses more and more formal authority.
b) Resources: In the BSS team, resources working on Mediation and Call Detail Record
Processing are very rare, as most of them keep on changing jobs and companies like
IBM, and Wipro have huge demand for people in this field. They wield good amount
of power when it comes to working timings, getting increments and having a say over
things.
c) Network Centrality: Ericsson has the same curse as many service industries- they
are scattered throughout the world. The management team of BSS seats in Gurgaon,
and regional offices of BSS exist in Chennai, Pune and Kolkata. The people who sit at
Gurgaon have faster access to information, have proximity to the management and are
involved in a lot of interaction networks.
CORPORATE CULTURE AND VALUES
Ericsson is a process-oriented company. The advantage of being close to 140 year old, and
the survival of a bankruptcy makes it extremely good with processes. The people who work
on technology are empowered to bring out the output in the way they think it to be the best;
and on that account the culture is fairly open.
CORE VALUES
The core values of Ericsson are, Respect, Professionalism and Perseverance. Being from a
liberal country and of European origin Ericsson has a decentralised way of working.
Individuals are given their space of working, they are respected for the decisions they take,
and as a whole this leads to professionalism.
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ETHICAL VALUES
There is a code of ethics at Ericsson, called COBE (Code of Business Ethics) which every
new joinee has to go through. It lays down the basic level of Ethics that are expected out of
every employee. However majority of ethics value perpetuate from the leadership. BSS in
general has a Ethical based leadership, however in many of the decisions that require some
amount of autonomy there are processes how to go about. The code is surely not exhaustive,
and Ericsson takes care of that by protecting and promoting the whistleblower concept.
SOCIAL RESPONSIBILITIES
Ericsson as an organization is involved in loads of CSR activities. Telecom in today’s world
has become an emergency service. The massive landslides in Uttarakhand saw many units of
Ericsson moving to the devastation hit area to bring up emergency services back on foot.
COMPETITOR ANALYSIS & ERICSSON’S STRATEGY
PORTER’S ANALYSIS OF COMPETITIVE FORCES
1. Threat of new entrants: The threat of new entrants by completely new players is
very low due to the huge capital and technological investment that is required.
Although companies like Samsung and Oracle are looking for opportunities in the
telecom infrastructure space. The IT services companies like IBM and Wipro have
been eating a share of the revenue pie.
2. Power of Ericsson as a supplier: Ericsson being the No. 1 company in
telecommunication services can charge higher prices for its premium services, and
hence has considerable power price determination. They are price setters rather than
price takers. Product differentiation being the primary strategy of Ericsson, their high
investment in technology leads to better products with higher prices.
3. Power of Ericsson as a buyer: Ericsson sources all the electronic items from China
and other raw materials like cables from European countries. Purely on price point of
view, Huawei is better placed than Ericsson since they source all their raw materials
from China, and hence low cost. Although Ericsson is a major buyer from the above
mentioned sources, since the demand is ever growing for electronic items from
competitors, Ericsson doesn’t have much power over a buyer.
4. The threat of substitutes: The threat of substitutes for a telecom industry is very
low. Wifi can cause a dent in its revenues if its accessibility is increased. If the wifi
accessibility reaches such a level that one doesn’t require a cell phone tower at all to
communicate it can pose a threat to radio and RF units of the industry. However, OSS
and BSS are revenue monitoring units and they are here to stay. The threat is of better
and improved systems for OSS-BSS purposes.
5. Rivalry among existing competitors: The 3 major competitors for Ericsson are as
follows
Huawei Investment Holding Co., Ltd
Alcatel-Lucent
Nokia Networking Solutions
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PORTER’S COMPETITIVE STRATEGY
MILES AND SNOW’S STRATEGY TYPOLOGY
ERICSSON’S STRATEGY
Ericsson’s strategy is based on the below mentioned four points, which it calls as the “four
pillars” 12
Ericsson intends to excel in technological products that makes it capable of handling
surging traffic. Improved network equipments, faster processing and efficient
utilization of bandwidth.
Ericsson intends to expand into services and compete head on with IBM and other
service industries in the Information and Communications Technology landscape.
Ericsson intends to expands its presence and services in the support domain. It intends
to provide better reliability, and new solutions and technologies to improve support.
Ericsson has been to a greater extent successful and it intends to continue expanding
itself as a enabler to a more Networked Society through inter-communication of
devices.
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The following framework depicts its strategy better, taken from their website sited in reference
number 12
[The figure has been taken from their website sited in reference number 12]
LONG TERM STRATEGY FRAMEWORK
Huwaei recently knocked off Ericsson from the spot of top telecom vendor in terms of
revenue turnover14
. However, Ericsson expects to focus on areas such as OSS, BSS, media,
IP Networking and Cloud. For instance Ericsson has quit itself from the handset market as it
doesn’t see it fit to continue, and intends to make its core areas more profitable.
Ericsson focuses to support its long term strategy by judicial usage of resources in terms of
investments in services capabilities and product development. Ericsson plans to make more
use of it huge name and century old domain experience to enter new territories through the
means of growth, acquisitions and partnerships.
GOAL EFFECTIVENESS
Customer
expectation and
loyalty: The
customer retention
rate is high. Hence
we can assume that
they have scored
high in customer
satisfaction domain.
Learning and
growth: Ericsson
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has high employee retention rate in core development areas. There is high investment in
technology by the company, and hence there is continuous process improvement. Also, the
number of patents produced by Ericsson is high, and hence a sign of growth and innovation.
Internal business processes: Ericsson is a process oriented company. Through its vast
experience of 138 years it has developed business processes and tools of working that have
stood the tides of time. However, they don’t rest on their laurels and they make it a point to
be on their toes. Various IT processes such as MORE (Resource Requirement Tool), PROPS-
C (To track status of Projects), and ITM(Integrated Tool Management for continuous
appraisal)
OBSERVATIONS AND CONCLUSION:
1. The nature of knowledge transfer from Business Units to Geographic Units is limited
to how to go about installing the technology. The transfer of knowledge is superficial.
The geographical units work on implementing the technology, and don’t have access
to deeper knowledge on how the technology is built. This leads to geographical units
starting to feel their work as monotonous and repetitive and without depth. Deeper co-
ordination between the Product Business Units and Geographical Regions will go a
long way in motivating the engineers and enhancing learning curve.
2. The team which works on a project has to deal with dual reporting. He reports to his
permanent domain/Line manager, and during the tenure of the project also reports to
the Project Manager. There is no formalized mechanism of sending feedback to the
Domain Manager by the Project Manager and hence it has no role in the continual
increment process.
3. “Ericoll” is the codification of knowledge which employees gain while working on
projects. Good quality of the documents will not only attract loyal usage to the forum
but also bring forth many more worthwhile contributions. A person from each
department should be made in-charge of working on the quality of documents.
REFERENCES
1. http://www.ericssonhistory.com/company/from-birth-to-merger/
2. http://www.ericsson.com/thecompany/company_facts/facts_figures
3. http://www.ericsson.com/res/thecompany/docs/this-is-ericsson.pdf
4. http://www.ericsson.com/thecompany/our_publications/reference-stories-a-z
5. http://www.ericsson.com/news/120612_bluetooth_inventor_nominated_for_top_european_honor_
244159019_c
6. http://www.ericsson.com/news/1775026
7. http://mobithinking.com/mobile-marketing-tools/latest-mobile-stats/a#subscribers
8. http://articles.economictimes.indiatimes.com/2014-06-03/news/50301590_1_bharti-airtel-tower-
sale-african-towers
9. http://www.ericsson.com/thecompany/company_facts/facts_figures
10. http://www.ericssonhistory.com/company/
11. http://indiatoday.intoday.in/story/etisalat-india-operation-2g-licences/1/174854.html 12. (http://www.ericsson.com/thecompany/investors/financial_reports/2013/annual13/en/o
ur-business/our-strategy) 13. http://www.ericsson.com/thecompany/our_publications/reference-stories-a-z#a-to-z-
letter-I 14. http://www.rcrwireless.com/20130820/network-infrastructure/huawei-ericsson-and-
cisco-lead-in-telecom-vendor-rankings