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May 2004.
Rajko BaleticSiniša Soro Milan Lecic
Milan Vlatkovic
United Business Institute Brussels
IIM-Euro Novi Sad
MBA Studies-Corporate Intelligence
1
HistoryEricsson
• 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• 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 Kabel-
manufactured 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
130140Active ( no. of countries )
15201-Year Employees Decline ( % )
60.48651.5832003 Employees
8795Other Markets ( % )
13 ( France )5 ( Sweden )Domestic Sales ( % )
22191- Year Sales Decline ( % )
12.51312.8012003 Sales ( mil Euro )
AlcatelEricsson
3
Sales by Product Segment
377174Inter segment sales (mil)
12181-Year Decline (%)
3.6433.174Others ( mil)
27321-Year Decline (%)
5.708870Fixed communication (mil)
27191-Year Decline ( %)
3.5398.928Mobile communications (mil)
AlcatelEricsson
4
Sales-Geographical Diversification
18101-Year Decline (%)
1727Rest of World ( % of sales)
74241-Year Decline ( %)
1515North America ( % of sales)
20241-Year Decline (%)a
1823Asia & Pacific (%of sales)
21211-Year Decline (%)
5035Europe ( % of sales)
AlcatelEricsson
5
R & D
7501.000Number of patent 2003
2225Number of R&D sites
21201-Year Decline (%)
14.70016.500Employees 2003
1320% of Sales
28211-Year Decline (%)
1.5932.320Investment in R&D 2003 ( mil )
AlcatelEricsson
6
Employees by Regions
12281- Year Decline (%)
3.3464.984Rest of World
3171-Year Decline
8.7166.468Asia
10301- Year Decline (%)
9.0754.460North America
21211- Year Decline (%)
20.36011.263Rest of Europe
15191- Year Decline (%)
18.989 (France)24.408 (Sweden)Domestic
AlcatelEricsson
7
Presence in Growing Markets
Ghana
Afghanistan
Nigeria
Iraq
Ukraine
India
Russia
Thailand
China
AlcatelEricsson
8
•Fixed communications.
•Mobile communications.
•Private communications.
•Systems
•Phones
•Other operations Activities
•To be creator of high value-added communicationssolutions.
•Sustainable development.
•To be a market, technology and operational leader.
•Create economies of scale.
•Develop superior product and services.
•Offer customers competitive advantages.Strategy
A Communications solutions Company-connected everywhere, anytime to broaden your life and enabling successful multimedia services, architects of an Internet World.
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.
Mission/Vision
AlcatelEricsson
Competitive Fact Sheet
9
Alcatel (ADR)54 Rue La BoetieParis, 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 Employees60,486
LM Ericsson (ADR)Telefonplan SE - 126 25 StockholmLM 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 Employees51,583
10
STOCK EXCHANGE TICKER SYMBOL
ERICY ALA
STOCK OVERVIEW
Current value30.56 $
Current value15.78 $
FINANCIAL SUMMARYFiscal 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.
11
Organizational Structure
Grow Strategy
Products
Market Image
Research & DevelopmentGlobal Presence
EricssonAlcatel
Competitive estimation
12
Ericsson
13
Sweden19 Subsidiaries
Austria1 Subsidiaries
Denmark1 Subsidiaries
Germany1 Subsidiaries
Finland1 Subsidiaries
Italy2 Subsidiaries
France2 Subsidiaries
Hungary1 Subsidiaries
Ireland4 Subsidiaries
Russia1 Subsidiaries
Spain1 Subsidiaries
Turkey1 Subsidiaries
Netherlands3 Subsidiaries
Norway1 Subsidiaries
Switzerland1 Subsidiaries
United Kingdom3 Subsidiaries
Croatia1 Subsidiaries
14
Ericsson Subsidiaries in EuropeSweden•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
Austria•Ericsson Austria GmbH¹
Denmark•LM Ericsson A/S
Norway•Ericssocross-n A/S
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
Turkey•Ericsson telekomunikasyom S.A¹ a
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
CroatiaEricsson Nikola Tesla
1- Manufacturing , distribution and development companies2- Holding companies3- Finance companies 15
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
-Canada•Ericsson Canada Inc¹
Australia•Ericsson Australia Pty.Ltd¹•Teleric Pty Ltd²
Asia And Pacific
-China•Ericsson Ltd¹•Ericsson Company Ltd¹•Nanjing Ericsson Panda Comm. Co.Ltd¹•Beijing Ericsson Mobile Comm.Co.Ltd¹
-India•Ericsson India Private Ltd¹
-Malaysia•Ericsson Sdu.Bhd¹•Ericsson Mobile Comm. Sdu.Bhd²
-Singapore•Ericsson Telecomm. Pte.Ltd¹•Ericsson Consumer ProductAsia Pacific Pte.Ltd¹
-Taiwan•Ericsson Taiwan Ltd¹
-Thailand•Ericsson (Thailand) Ltd¹
-Japan•Nippon EricssonK.k¹
Central end South America
-Mexico•Teleindustria Ericsson S.A¹•Ericsson Telecom S.A¹
-Argentina•Cia Ericsson S.A.C.I. ¹
-Brazil•Ericsson Telecomunicacoes S.A²•Ericsson Services de Telecom. ¹
16
Alcatel
17
Austria1 Subsidiaries
Belgium1 Subsidiaries
Germany4 Subsidiaries
Poland1 Subsidiaries
Italy2 Subsidiaries
France14 Subsidiaries
Portugal1 Subsidiaries
Spain1 Subsidiaries
Netherlands2 Subsidiaries
Norway1 Subsidiaries
Switzerland1 Subsidiaries
United Kingdom3 Subsidiaries
Luxemburg1 Subsidiaries
18
Alcatel Subsidiaries in EuropeFrance
•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
Austria •Alcatel Austria AG¹
Belgium•Alcatel Bell NV¹
Germany•Alcatel Contracting GmbH¹•Alcatel Optical fiber GmbH¹•Alcatel SEL A.G¹
Italy•Alcatel Italia S.p.A¹
Poland•Alcatel Polska S.A¹
Portugal•Alcatel Portugal S.A¹
Switzerland•Alcatel Schweiz AG¹
Norway•Alcatel Telecom Norway B.V¹
United Kingdom•Alcatel Submarine Limited Networks¹•Alcatel Telecom Limited¹•Alcatel UK Limited²
Nederland •Alcatel Telecom Nederland B.V¹•Alcatel NV²
Luxembourg•Electro Re³
Spain•Alcatel Espana S.A¹
1- Manufacturing , Distribution and Development companies2- Holding Companies3- Finance companies
19
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
-Taiwan•Taiwan International StandardElectronic System CO¹
Australia
•Alcatel Australia Limited¹
20
Executive Management
R & D Business Units Market Unit & GCA’s Other Business UnitsGroup Functions & Common Units
•Radio NetworkDevelopment
•Core NetworkDevelopment
•Service LayerDevelopment
•Research
•Access
•Systems
• Mobile SystemsCDMA
•Transmission & Transport Networks
•Global Services
•Market Unit
•Global CustomerAccount
•Enterprise
•Microwave Systems
•Mobile Platforms
•Network Technology
•Other BusinessOperation
21
Executive Management
FixedCommunications
MobileCommunications
PrivateCommunications
Group Functions & Common Units
•Fixed Solutions
•Access Networks
•Voice Networks
•IP
•Optical Networks
•Optical Fiber
•Power System
•Mobile Solutions
•Mobile Radio
• Mobile Phones
• Wireless Transmission
•Radio FrequencySystems
•Solutions for Vertical Market:
1. Enterprise Solutions
2. Space Solutions 3. Transport
Solutions4. Integration &
Services
•Industrial Components
22
Company Presence in Different Sectors
EricssonSystems
• Mobile Networks
• Fixed Networks
• Professional services
Phones
Other Operations• Defense Systems
• Microwave Systems
• Network Technologies
• Enterprise Systems
• Mobile Platforms
• Technology Licencing
AlcatelFixed Communications
• Fixed Solutions
• Access Networks
• Voice Networks
• IP
• Optical Network
• Optical Fiber
• Power Systems
Mobile communications• Mobile Solutions
• Mobile Radio
• Mobile Phones
• Wireless Transmission
• Radio Frequency System
Private Communications• Solution For Vertical Markets ( Enterprise solution, Space
solution, Transport solutions, Integration&services
• Industrial Components
23
Ericsson SWOT Analysis
Threats:•Fast market changing
•Technically complicated
•Telecommunications environment
•Limited protection of intellectual property rights
•Highly competitive telecommunications markets
Opportunities:•New emerging markets
•Service application
•Network management services
Weaknesses:•Variability in operating results
•Credit and other risk regarding customers
Strength:•Flexibility
•Mobile Systems
•Economies of scale
•Global presence
•R&D
24
Alcatel SWOT Analysis
Threats:•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
Opportunities:•New emerging markets
Weaknesses:•Additional source to finance business
•International presence
Strengths:•Line with evolution of the telecommunications market
•Fixed communications
•Broadband
•Flexible and responsive organization
•Presence in the most dynamic markets
•R&D
25
Risk Factors of CT Industry
26
medmed•Problematic outside suppliers.
highmed•Long – term contracts which leads to risk cost overruns and extended payment terms.
highhigh•Developing new products which are complex and may not be successful in the market.
highlow•Dependence on key customers.
highhigh•CT industry has substantial cash requirements and additional sources of funds.
lowlow•Engaging in customer finance which leads to certain credit and other risk.
highmed•The new technologies may not become commercially successful
highmed•Depended upon hiring and retaining highly qualified management and other employees.
medmed•Negatively impact of the regulatory environment for telecommunications systems.
highlowProblematic joint venture and acquisitions
lowlow•Protection of intellectual property rights or unauthorized third party use.
highmed•The impact of economic conditions in different countries.
highmed•Currency fluctuations in world markets
highhigh•Competitive telecommunications markets
AlcatelEricssonRisk Factors
Key Competitors
20.509
8.600
12.801
29.387
12.513
7.600
21.473
0,00
5.000,00
10.000,00
15.000,00
20.000,00
25.000,00
30.000,00
2003
SIEMENSNORTELERICSSONNOKIAALCATELLUCENTMOTOROLA
27
28
Nokia
Ericsson
Lucent
Siemens Motorola
Alcatel
Nortel
New PlayersASIAN TIGERS
Probably acquired
Today
Tomorrow
1 GAnalogue
2 GDigital
2.5 GGPRS (GSM)
3 GBroadband Digital
Voice and Extended Data (MMS)
Faster than mindYesterday
Beyond tomorrow
29
Five Years Forecast
• 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. 30
Sign
ific
ance
Time
Go Ahead
Great Step
More quickly
Don't wait
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!!!31
Sources
• www.hovers.com
• www.finance.com
• Global Information Inc.
• Global Industry Analysts
• www.reuters.com
• Business Week
32
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