Joint Venture

handset production

Content
1.
2.
3.
4.
5.
6.

Introduction of Sony Ericsson

Strategic plan
Competitive advantage
Financial figures
Questions
Analysis

Ericsson Mobile Communications

19891993

1999

2001

2000

European telecom
crisis
Ericsson GE
Mobile
Communicatio
ns

Handset market share Fire in Philips RFC

factory (Ericsson single
supplier)
Annual losses of
b$1.68
3% loss of market share

Product Development
Strategic Decision

Telecom technology leader

Knowledge and experience in cell
phone
Lost market share, Negative revenue

Consumer electronic expertise

Brands

Products

Battery, high resolution screen, camera, entertainment will help

development of future cell phones

No expertise in cell phone

technology
<1% of handset market share before 2001

A 50:50 joint venture established in 2001

Consumer electronic expertise

Cell phone
technology
knowledge

Sony Ericsson strategic

plan
1. Mission: to be the most innovative
and attractive global brand in the
mobile handset industry
2. Vision: to become the
communication entertainment brand
3. Strategy: to produce new models
with digital photography function
and other multimedia capabilities

Competitive advantages of
Sony Ericsson
1.
2.
3.
4.
5.
6.

Compatible partnership
Innovative products
Diversified product portfolio
Transaction cost economics
Resource-based view
Know-how transfer

Sony Ericsson Brand

Hierarchy

Sony Ericsson- Financial

Figures

Profit share of eight vendors

Market share

Weaker financial muscle from 2008 => Market share

degradation

Questions
1. What chances did the joint venture
have of becoming a successful
player on the market?
2. Which factors were not taken into
account in this joint venture?

Product Development
Dear Customer
Sorry! we do not have time to investigate
what makes value for you.
We are too busy to implant PlayStation,
Cyber- shot and Walkman to Ericsson
phone

Consider value for customers or products

integration ?

Price trend

e.g. In US the average price for smartphones fallen by 50% in

3 years

Price trend and Market

Dynamic
Q2-2011

ST Ericsson vs Qualcomm
ST-Ericsson was a 50/50 joint venture of Ericsson and
STMicroelectronics established on February 2009 and dissolved
August 2013.

Solar-UK-Conference

ST-Ericsson

Does Ericsson give major competitive advantages to Sony-Ericsson?

Sony and Ericsson financial situation

Degraded Net Margin: No interest for extra operation

cost
2008: Laid-off 5000 out of 8500 employees, closed
several R&D centers around the world.

The End

Joint venture without aligned Goal

Sony needed market share,
same as Consumer electronic

Ericsson wanted to get reputation back

October, 2011: Sony acquired

Ericsson's stake

Current Market Share