In the late 1990’s Ericsson faced major problems, selling their products to customers. Ericsson experienced a crash from being the market leader to rock bottom. To save Ericsson’s reputation, they needed to find a solution to their problem to survive in the market. Therefore Ericsson’s approach was to look for a company, which would provide the expertise, they lacked. They found an equal partner in Sony and built a Joint Venture with them. However, success is not automatically guaranteed when joining forces with another company. Success is a question of many aspects.
The change and turnaround at Ericsson is described in this work. Furthermore is the sucess of the change discussed, using theoretical models from the works of French/Bell "Organizational Development": The Congruence Model and The Litwin/Burke Model. Furthermore the approach of Innovative Organizations was used as well as Jackson/Carter's "Rethinking Organizational Behaviour" approach on Semiotics, Power and Knowledge.
Table of Contents
1. Summary
2. Introduction
2.1. Backround
2.2. Research question
3. Methods
4. Theory
4.1. Overview - Organizational Development
4.2. The Congruence Model
4.3. The Litwin Burke Model
4.4. Rafferty and Restebog’s approach on change
4.5. Research frontier – Organizational Development
4.6. Innovative Organization
4.6.1. Overview – Innovative Organizations
4.6.2. Innovative Organizations – creation and processes of innovation
4.7. Summary
5. Description
5.1. Decsription of Ericsson
5.2. Description of the change situation
6. Interpretation
6.1. The situation prior to the merger
6.1.1. The Congruence Model – Diagnosis of the situation at Ericsson
6.2. The situation during the merger
6.2.1. The Litwin and Burke Model – the change process at Ericsson
6.2.2. Rafferty and Restebog – the impact of change on the staff at Ericsson
6.4 Interpretation – Conclusion
7. Re-Interpretation
7.1. Re-Interpretation – Innovative Organizations
7.2. Re-Interpretation – Jackson and Carter
7.2.1. Overview Jackson and Carter
7.2.2. Semiotics
7.2.3. Knowledge
7.2.4. Power
8. Conclusion
Research Objectives & Topics
This paper examines the organizational development of Ericsson during its strategic shift and subsequent merger with Sony to form SonyEricsson. The central research question explores how change was successfully implemented from a management perspective, specifically analyzing the challenges of adapting from a technology-driven, premium market strategy to a consumer-driven, mass-market approach.
- Theoretical models for diagnosing organizational change (Congruence Model, Litwin and Burke).
- Challenges of merging two disparate corporate cultures (Swedish technology-focused vs. Japanese consumer-oriented).
- The role of innovation, management communication, and employee change history in restructuring.
- Post-structuralist critical analysis of power, knowledge, and semiotics within the organization.
Excerpt from the Book
5.2. Description of the change situation
“We don’t pay you for the systems until you make sure that we have mobile phones, because we can’t use the networks.” (Interview, 2010). Ericsson had the expertise in providing systems, but couldn’t use them due to the non-existence of phones. On the one hand Ericsson faced trouble not having phones operating in the system. On the other hand they found that the market presented a loophole. The customers demand exceeded the phone supply. Obviously “good money” can be made offering a product on a market that has a high demand for it (Interview, 2010). But this situation wasn’t made to last. Soon other mobile phone producers would step into the market to get their piece of the cake. The target group of mobile phones broadened. Operators started to concentrate on the mass market instead of premium customers. Ericsson’s focus lay primarily on the premium market. “The smaller, the better” was a key message of that time (Interview, 2010). The strategies to approach the mass market differed widely. Other operators were able to serve the mass markets needs, for instance providing phones with e.g. exchangeable shells and possibility to personalize the phone. Another disadvantage of Ericsson was its lack in strategically targeting point of sales.
Competitors would provide sales representatives with incentives. Ericsson was very good on producing technical advanced phones but the mass market demanded more consumer oriented phones. When market demand shifts from premium to mass markets, prices have to drop considerably. Turnover is generated through volume, not through pricing. A different business concept evolved. “Instead of being technology-driven or having the smallest mobile phone, you become consumer-, end consumer-, end-user-driven, which is a different business concept.” (Interview, 2010). It took Ericsson quite a long time to realize this. A cuffer for this was an Ericsson board meeting, were a 13-year old girl was invited, representing customers. She was supposed to give her point of view on Ericsson’s products. The girl told the board that her interests were design and the phone being a fashion statement. Unfortunately the board just laughed at her. When asking K.A. A. about this, he said, that he didn’t know just that story, but many more.
Summary of Chapters
4. Theory: Provides a theoretical foundation covering Organizational Development, the Congruence Model, the Litwin and Burke Model, Rafferty and Restebog’s approach, and the framework of Innovative Organizations.
5. Description: Offers a historical overview of Ericsson, its transition from a technology-focused systems provider to a mobile phone company, and the context of the merger with Sony.
6. Interpretation: Applies the previously discussed theoretical models to diagnose Ericsson’s performance before and during the merger, highlighting communication gaps and strategic missteps.
7. Re-Interpretation: Uses the framework of Jackson and Carter to critically examine organizational behavior through the lenses of semiotics, knowledge, and power dynamics within SonyEricsson.
8. Conclusion: Synthesizes the findings, arguing that while theoretical models are useful diagnostic tools, their real-world application is limited by legal constraints and the complexity of cultural change.
Keywords
Organizational Development, Change Management, Ericsson, SonyEricsson, Merger, Congruence Model, Litwin and Burke, Corporate Culture, Innovation, Mobile Phone Market, Strategic Change, Knowledge Management, Power Dynamics, Semiotics, Consumer Orientation.
Frequently Asked Questions
What is the primary focus of this research?
This paper investigates the organizational change processes at Ericsson, specifically focusing on the management-led strategy and the challenges faced during the merger with Sony to create the SonyEricsson joint venture.
What are the central thematic fields covered in the work?
The core themes include organizational diagnostics, cultural transformation, the transition from premium to mass-market strategies, and the critical analysis of organizational behavior through management communication and power dynamics.
What is the primary goal or research question of the study?
The research aims to determine how organizational change was successfully implemented at Ericsson during its merger with Sony, viewed from the specific perspective of the Ericsson management.
Which scientific methods are employed in this paper?
The study uses an analytical, theory-based approach, applying diagnostic models like the Congruence Model and the Litwin and Burke Model to the Ericsson case, complemented by a semi-structured interview with a former top manager.
What is covered in the main part of the document?
The main part encompasses an extensive literature review on Organizational Development, a historical description of Ericsson, and a dual-stage analysis—first using functional management theories and subsequently using a critical post-structuralist framework by Jackson and Carter.
Which keywords characterize the essence of the work?
Key terms include Organizational Development, Merger, Change Management, Corporate Culture, SonyEricsson, Innovation, and Strategic Adaptation.
Why did Ericsson struggle in the mobile phone market prior to the merger?
The research indicates that Ericsson failed to adapt to the shift from premium to mass-market demand, remaining stuck in a technology-driven mindset and failing to offer the "whole package" of consumer-oriented features and distribution channels.
How does the author evaluate the management's communication during the merger?
The author concludes that while the communication was criticized, the management was significantly constrained by legal regulations regarding stock-market-listed companies, making it difficult to inform employees as early as the theory might suggest.
What role does the "Congruence Model" play in the analysis?
It is used as a diagnostic tool to evaluate the alignment of Ericsson’s strategy, work processes, and organizational structure with its changing external environment, successfully identifying that the firm's initial strategy was incompatible with mass-market needs.
- Arbeit zitieren
- Anna Lena Bischoff (Autor:in), L. Sällström (Autor:in), P. Trimborn (Autor:in), 2010, Change and Renewal - Organizational Development, München, GRIN Verlag, https://www.hausarbeiten.de/document/163017
