Rajko Baletic
Siniša Soro
Milan Lecic
Milan Vlatkovic
United Business Institute Brussels
IIM-Euro Novi Sad
MBA Studies-Corporate Intelligence
May 2004.
1
History
Ericsson
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1876 Lars Magnus Ericsson opens a telegraph
repair workshop with three employees.
1878 Ericsson sells improved version of Bell
telephone. Total production 22 telephones a year.
1892 First desk telephone introduced.
1956 Ericsson launches the Ericofon.
1971 First Ericsson picture phones.
1978 First digital AXE exchange installed in Turku.
1981 Firs AXE cut over in Mexico. Ericsson
Information Systems (EIS) is set up.
1986 First Ericsson implementation of Intelligent
Network.
1987 First handheld mobile telephone produced for
NMT 900
1991 Has 3 percent of world market for mobile
phones.
1995 World` s first GSM 1900 mobile system in
service.
1999 Takes about 50 per cent of the orders for
GPRS
2002 First 3G WCDMA call on public networks.
2003 Restructuring consumed a total of 44 jobs.
Alcatel
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1898 Pierre Azaria sets up the Compagnie
General d`Electricite.
1925 Absorption by CGE of Compagnie des
Cables de Lyon.
1966 Absorption by CGE of the Alsacienne de
Constructions Atomiques (Alcatel).
1985 Merger between CIT-Alcatel and
Thomson Telecommunications.
1987 Privatization of CGE.
1988 Link-up with GE Company (UK)
1990 CGE-Fiat agreement.
1991 CGE changes its name to Alcatel
Alsthom.
1992 Alcatel Alsthom acquired AEG Kabelmanufactured in Germany .
1993 Acquisition of STC Submarine Sistems.
1998 Alcatel Alsthom is renamed Alcatel
2000 Acquisition of the Canadian Newbridge,
worldwide leader in ATM tehnology networks.
2002 front-runner in next generation SONET
Metro Optical Sistems.
2003 Sales 50% shareholding in Antlinks
2
2003 FACTS AND FIGURES
Ericsson
Alcatel
12.801
12.513
19
22
Domestic Sales ( % )
5 ( Sweden )
13 ( France )
Other Markets ( % )
95
87
Active ( no. of countries )
140
130
51.583
60.486
20
15
2003 Sales ( mil Euro )
1- Year Sales Decline ( % )
2003 Employees
1-Year Employees Decline ( % )
3
Sales by Product Segment
Ericsson
Alcatel
8.928
3.539
1-Year Decline ( %)
19
27
Fixed communication (mil)
870
5.708
1-Year Decline (%)
32
27
3.174
3.643
1-Year Decline (%)
18
12
Inter segment sales (mil)
174
377
Mobile communications (mil)
Others ( mil)
4
Sales-Geographical Diversification
Ericsson
Alcatel
Europe ( % of sales)
35
50
1-Year Decline (%)
21
21
Asia & Pacific (%of sales)
23
18
1-Year Decline (%)a
24
20
North America ( % of sales)
15
15
1-Year Decline ( %)
24
74
Rest of World ( % of sales)
27
17
1-Year Decline (%)
10
18
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R&D
Ericsson
Alcatel
2.320
1.593
1-Year Decline (%)
21
28
% of Sales
20
13
16.500
14.700
1-Year Decline (%)
20
21
Number of R&D sites
25
22
1.000
750
Investment in R&D 2003 ( mil )
Employees 2003
Number of patent 2003
6
Employees by Regions
Ericsson
Alcatel
24.408 (Sweden)
18.989 (France)
19
15
11.263
20.360
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21
4.460
9.075
30
10
6.468
8.716
1-Year Decline
17
3
Rest of World
4.984
3.346
28
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Domestic
1- Year Decline (%)
Rest of Europe
1- Year Decline (%)
North America
1- Year Decline (%)
Asia
1- Year Decline (%)
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Presence in Growing Markets
Ericsson
Alcatel
China
Thailand
Russia
India
Ukraine
Iraq
Nigeria
Ghana
Afghanistan
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Competitive Fact Sheet
Ericsson
Mission/
Vision
Strategy
Activities
All Communicating world, voice data, images,
conveniently communicated anywhere and anytime
in the world, increasing Both quality-of-life,
productivity and enabling a more resource-efficient
world and be the global leader in providing
communicates solutions, to be the prime innovator
of industry.
Alcatel
A Communications solutions Company-connected
everywhere, anytime to broaden your life and enabling
successful multimedia services, architects of an Internet
World.
•To be a market, technology and operational leader.
•Create economies of scale.
•Develop superior product and services.
•Offer customers competitive advantages.
•To be creator of high value-added communications
solutions.
•Sustainable development.
•Systems
•Phones
•Other operations
•Fixed communications.
•Mobile communications.
•Private communications.
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LM Ericsson (ADR)
Telefonplan SE - 126 25
Stockholm
LM Ericsson (Ericsson) is a supplier of mobile systems
worldwide. The Company provides total solutions covering
everything from systems and applications to services and
core technology for mobile handsets. With Sony Ericsson, it
also is a supplier of complete mobile multimedia products.
Ericsson has been active worldwide since 1876. Products
and services include mobile systems, multi-service
networks, enterprise services, transmission and transport
technologies, advisory services, management and
optimization services, third-generation (3-G) mobile
telephony, multimedia messaging services, general packet
radio services (GPRS) and Bluetooth wireless technologies.
Total Employees
51,583
Alcatel (ADR)
54 Rue La Boetie
Paris, 75008
Alcatel is a provider of end-to-end communications
solutions, enabling carriers, service providers and
enterprises to deliver content to any type of user. The
Company provides products such as digital subscriber line
(DSL) and fiber to the user, asynchronous transfer mode
(ATM) switches and Internet protocol (IP) core routers,
private branch exchanges (PBX), local area network (LAN)
switches, data communication equipment and global
systems for mobile communications (GSM) and general
packet radio service (GPRS) handsets, space-based systems
for the high-speed transport of voice, data and multimedia
communications, batteries and components and subsystems.
Total Employees
60,486
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STOCK EXCHANGE TICKER SYMBOL
ERICY
ALA
STOCK OVERVIEW
Current value
30.56 $
Current value
15.78 $
FINANCIAL SUMMARY
Fiscal year ended 12/31/03, revenues fell 19%, Net loss
decreased 43% to EUR 1.178 billion. Results reflect
lower volume of mobile and fixed network systems.
Net loss reflected lower operating profit margins
Fiscal year ended 12/31/03, net sale fell 24% to EUR
12.51 billion. Net loss fell 85% to EUR 1.72 billion.
Revenues reflect sales declines across all businesses and
all geographic markets. Net losses were offset by
improved gross margins and fewer operating expenses.
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Competitive estimation
Organizational
Structure
Products
Global Presence
Market
Image
Ericsson
Alcatel
Grow
Strategy
Research &
Development
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Ericsson
13
Austria
1 Subsidiaries
Denmark
1 Subsidiaries
Finland
1 Subsidiaries
France
2 Subsidiaries
Sweden
19 Subsidiaries
Germany
1 Subsidiaries
Hungary
1 Subsidiaries
Ireland
4 Subsidiaries
Italy
2 Subsidiaries
Norway
1 Subsidiaries
Russia
1 Subsidiaries
Netherlands
3 Subsidiaries
Spain
1 Subsidiaries
Turkey
1 Subsidiaries
Switzerland
1 Subsidiaries
United Kingdom
3 Subsidiaries
Croatia
1 Subsidiaries
14
Ericsson Subsidiaries in Europe
Sweden
Norway
•Ericsson AB
•Ericsson Shared Services AB
•Ericsson Shared Services AB
•Ericsson Network Technologies AB
•Ericsson Business Innovation AB¹
•Ericsson Enterprise AB¹
•Ercisson Microwave Systems AB¹
•Ericsson Severige AB¹
•Ericsson Telecom AB²
•SRA Communications AB²
•AB Aulus ²
•LM Ericsson Holding AB²
•Ericsson Cables Holding AB²
•Ericsson Gamsta AB³
•Ericsson treasury Services AB³
•Ericsson Credit AB³
•Ericsson Project Finance AB³
•AB LM Ericsson Finans³
•Sony Ericsson Mobile Communications¹
•Ericssocross-n A/S
Austria
Finland
•Oy LM Ericsson AB
France
•Ericsson Participations S.A
•Ericsson France¹
Germany
•Ericsson GmbH
Hungary
•Ericsson Hungary Ltd
Ireland
•LM Ericsson Ltd
•LM Ericsson Holdings Ltd
•Ericsson Treasury Ireland Ltd
•Ericsson Financial Services Ireland
Italy
•Ericsson Telecommunicazioni S.P.A
•Ericsson S.P.A
Russia
•Ericsson Corporatio AO
Switzerland
•Ericsson AG
United Kingdom
•Ericsson Ltd¹
•Ericsson Mobile Communications Ltd
•Ericsson Holding Ltd²
The Netherlands
•Ericsson Holding International B.V²
•Ericsson Nederland B.V²
•Ericsson Telecommunicatie B.V²a
• Spain
•Ericsson Espana S.A
•Ericsson Austria GmbH¹
Turkey
Croatia
Denmark
•Ericsson telekomunikasyom S.A¹ a
Ericsson Nikola Tesla
•LM Ericsson A/S
1- Manufacturing , distribution and development companies
2- Holding companies
3- Finance companies
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Ericsson Subsidiaries ROW
North America
-USA
•Ericsson Inc¹
•Ericsson Net Qual Inc¹
•Ericsson Wireless Comm. Inc¹
•Ericsson IP Infrastructure ¹
•Ericsson Amplified Teshnologies¹
•Ericsson Holding II Inc²
Asia And Pacific
Central end South America
-China
-Mexico
•Ericsson Ltd¹
•Ericsson Company Ltd¹
•Nanjing Ericsson Panda Comm. Co.Ltd¹
•Beijing Ericsson Mobile Comm.Co.Ltd¹
-India
-Argentina
•Cia Ericsson S.A.C.I. ¹
•Ericsson India Private Ltd¹
-Canada
-Malaysia
•Ericsson Canada Inc¹
•Ericsson Sdu.Bhd¹
•Ericsson Mobile Comm. Sdu.Bhd²
Australia
-Singapore
•Ericsson Australia Pty.Ltd¹
•Teleric Pty Ltd²
•Teleindustria Ericsson S.A¹
•Ericsson Telecom S.A¹
-Brazil
•Ericsson Telecomunicacoes S.A²
•Ericsson Services de Telecom. ¹
•Ericsson Telecomm. Pte.Ltd¹
•Ericsson Consumer Product
Asia Pacific Pte.Ltd¹
-Taiwan
•Ericsson Taiwan Ltd¹
-Thailand
•Ericsson (Thailand) Ltd¹
-Japan
•Nippon EricssonK.k¹
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Alcatel
17
Austria
1 Subsidiaries
Belgium
1 Subsidiaries
Poland
1 Subsidiaries
France
14 Subsidiaries
Italy
2 Subsidiaries
Switzerland
1 Subsidiaries
United Kingdom
3 Subsidiaries
Spain
1 Subsidiaries
Germany
4 Subsidiaries
Norway
1 Subsidiaries
Portugal
1 Subsidiaries
Netherlands
2 Subsidiaries
Luxemburg
1 Subsidiaries
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Alcatel Subsidiaries in Europe
France
Germany
United Kingdom
•Alcatel Business Systems S.A¹
•Alcatel CIT¹
•Alcatel Cable France¹
•Alcatel Space¹
•Alcatel Submarine Networks S.A¹
•Alda Marine¹
•Evolium Holding SAS¹
•Thales¹
•Alcatel Participations²
•Compagnie Financiere Alcatel²
•Coracel²
•Lubelec²
•Saft Participations²
•Electro Bancue³
•Alcatel Contracting GmbH¹
•Alcatel Optical fiber GmbH¹
•Alcatel SEL A.G¹
•Alcatel Submarine Limited Networks¹
•Alcatel Telecom Limited¹
•Alcatel UK Limited²
Italy
Nederland
•Alcatel Italia S.p.A¹
•Alcatel Telecom Nederland B.V¹
•Alcatel NV²
Austria
•Alcatel Austria AG¹
Belgium
Poland
•Alcatel Polska S.A¹
Portugal
Luxembourg
•Electro Re³
•Alcatel Portugal S.A¹
Spain
Switzerland
•Alcatel Espana S.A¹
•Alcatel Schweiz AG¹
Norway
•Alcatel Telecom Norway B.V¹
•Alcatel Bell NV¹
1- Manufacturing , Distribution and Development companies
2- Holding Companies
3- Finance companies
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Alcatel Subsidiaries ROW
North America
- Canada
•Alcatel Canada Inc¹
•Alcatel Holding Canada Corp.²
-USA
•Alcatel USA Inc¹
•Radio Frequency Systems Inc¹
Asia and Pacific
-China
•Alcatel China investment CO Ltd¹
•Alcatel Shangai Bell¹
•Alcatel Suzou Telecommunications CO Ltd¹
•Shangai Bell Alcatel Mobile
Communication System CO Co. Ltd¹
Australia
•Alcatel Australia Limited¹
-Taiwan
•Taiwan International Standard
Electronic System CO¹
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Executive Management
R&D
Business Units
Market Unit & GCA’s
Other Business Units
Group Functions
& Common Units
•Access
•Radio Network
Development
•Systems
•Core Network
Development
• Mobile Systems
CDMA
•Service Layer
Development
•Transmission &
Transport Networks
•Research
•Global Services
•Enterprise
•Microwave Systems
•Market Unit
•Mobile Platforms
•Global Customer
Account
•Network Technology
•Other Business
Operation
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Executive Management
Fixed
Communications
Mobile
Communications
•Fixed Solutions
•Mobile Solutions
•Access Networks
•Mobile Radio
•Voice Networks
• Mobile Phones
•IP
• Wireless
Transmission
•Optical Networks
•Optical Fiber
•Power System
•Radio Frequency
Systems
Private
Communications
Group Functions
& Common Units
•Solutions for
Vertical Market:
1. Enterprise
Solutions
2. Space Solutions
3. Transport
Solutions
4. Integration &
Services
•Industrial Components
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Company Presence in Different Sectors
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Ericsson
Alcatel
Systems
Fixed Communications
Mobile Networks
Fixed Networks
Professional services
Phones
Other Operations
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Defense Systems
Microwave Systems
Network Technologies
Enterprise Systems
Mobile Platforms
Technology Licencing
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Fixed Solutions
Access Networks
Voice Networks
IP
Optical Network
Optical Fiber
Power Systems
Mobile communications
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Mobile Solutions
Mobile Radio
Mobile Phones
Wireless Transmission
Radio Frequency System
Private Communications
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Solution For Vertical Markets ( Enterprise solution, Space
solution, Transport solutions, Integration&services
Industrial Components
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Ericsson SWOT Analysis
Strength:
Weaknesses:
•Flexibility
•Mobile Systems
•Economies of scale
•Global presence
•R&D
•Variability in operating results
•Credit and other risk regarding customers
Opportunities:
Threats:
•New emerging markets
•Service application
•Network management services
•Fast market changing
•Technically complicated
•Telecommunications environment
•Limited protection of intellectual property rights
•Highly competitive telecommunications markets
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Alcatel SWOT Analysis
Strengths:
Weaknesses:
•Line with evolution of the telecommunications market
•Fixed communications
•Broadband
•Flexible and responsive organization
•Presence in the most dynamic markets
•R&D
•Additional source to finance business
•International presence
Opportunities:
Threats:
•New emerging markets
•Weakening dollar
•Weakness in the telecommunications market
•Rapid changes in technology
•Limited number of large customers
•Limited protection of intellectual property rights
•Weakness its thinness in America and on the Net
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Risk Factors of CT Industry
Risk Factors
Ericsson
Alcatel
•Competitive telecommunications markets
high
high
•Currency fluctuations in world markets
med
high
•The impact of economic conditions in different countries.
med
high
•Protection of intellectual property rights or unauthorized third party use.
low
low
Problematic joint venture and acquisitions
low
high
•Negatively impact of the regulatory environment for telecommunications systems.
med
med
•Depended upon hiring and retaining highly qualified management and other employees.
med
high
•The new technologies may not become commercially successful
med
high
•Engaging in customer finance which leads to certain credit and other risk.
low
low
•CT industry has substantial cash requirements and additional sources of funds.
high
high
•Dependence on key customers.
low
high
•Developing new products which are complex and may not be successful in the market.
high
high
•Long – term contracts which leads to risk cost overruns and extended payment terms.
med
high
•Problematic outside suppliers.
med
med
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Key Competitors
29.387
30.000,00
25.000,00
21.473
20.509
20.000,00
15.000,00
10.000,00
12.801
8.600
12.513
7.600
5.000,00
SIEMENS
NORTEL
ERICSSON
NOKIA
ALCATEL
LUCENT
MOTOROLA
0,00
2003
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Nokia
Siemens
New Players
ASIAN TIGERS
Motorola
Alcatel
Ericsson
Lucent
Nortel
Probably acquired
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3G
Broadband Digital
Voice and Extended Data (MMS)
Beyond tomorrow
2.5 G
GPRS (GSM)
2G
Digital
Tomorrow
Today
1G
Analogue
Faster than mind
Yesterday
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Five Years Forecast
Go Ahead
Significance
Great Step
More quickly
Don't wait
Time
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Broadband & Video – Providing:
Broadband service will reach 128 billion $ sale in 2008.
Key factors: availability , functionality, quality, convenience, price.
Global GSM service revenue will reach 229,7billion $ in 2008. Comparing 93,4 billion $ in 2002
Seamless Service- connected anytime and everywhere
IP Telephony is expected to represent 44% of market in 2008.
Mobile users will reach second billion within 2008
Real challenge is knowledge management-unlock and share critical information, turn information into
actionable business knowledge, leverage human to human interactions.
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Makes things happen
Watch things happening
…FURTHER
’’ONCE YOU START TO UNDERSTAND THIS PATTERN YOU START
TO SEE IT ANYWHERE. I’M CONVINCED THAT IDEAS AND
BEHAVIOURS AND NEW PRODUCTS MOVE THROUGHT A
POPULATION VERY MUCH LIKE A DISEASE DOES.’’
’’The tipping Point’’ by Malcolm Gladwell
CT – spreading like a disease!!!
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Sources
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www.hovers.com
www.finance.com
Global Information Inc.
Global Industry Analysts
www.reuters.com
Business Week
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