The reasons for this are of course numerous. One of the reasons was that both companies only had a minor market share, Ericson 10% and Sony 1,5% of the world market, whereas as the leader Nooks had 30,6%. This giving Nooks a huge advantage in existing customers as well as strong brand awareness. Another main reason for the fusion of both the mobile departments of the company was that both had problems in managing their departments. Sony had so many different sectors it was in that mobile was Just one more and was ;t paid enough attention.
Ericson had the technology to be a leader, but they were always criticized for only being a group of engineers, developing good products, but not paying as much attention to customers desires as Nooks did. Therefore being significantly less successful than their Finnish rival. Both companies needed to restructure their efforts in the mobile development and that Is why it made sense for them both to start this partnership. Ericson would provide people and their expertise In telecommunications and Sony it 's expertise In consumer electronics products as well as $500 million.
Both were able to cut costs significantly and still able to become a global player on this prosperous market In the future. 2) What was needed to succeed in this market? The main attributes that were needed to succeed in the market was the knowledge to develop in the direction of the technology that would be used in the future, as well as knowing and offering your customers what they were looking for. In fact one can say that Nooks did everything one needed to do to succeed. They listen to what their clients where looking/expecting from their mobile phones, and built a product portfolio accordingly.
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Due to this approach they were able to offer a specific product to every customer profile they had. Concerning technology they also did good work being the clear leaders In the 26 markets, which gave them a age head start. The management also did an excellent work, having a better-cost extra effort on not becoming a huge corporation with 100,000 employees, staying rather small gave them the advantage that decision could be taken quickly and that changes and adoptions to the products were able to be done immediately. ) Compare Ionians and Sony Ericson Mobile Communication's situations (activities, competences, finances) SEEM had a clear goal, which was to become the global number one player for multimedia products. This was supposed to be achieved by combining their forces in R&D, marketing, sales, distribution and customer services. The Joint force should give them the resources to overcome their seemingly untouchable competitor Nooks. The soft activities they were planning and adapting were: being responsive to the market, analyzing the behavior of the consumers and of their competitors.
Nooks on the other hand wanted to keep their activities in the mobile sector at the same high level they had been over the sass's, strengthening their position in the market today and constantly investing in R. Even increasing the percentage of net sales being reinvested to R, which were around 8,9% in the late sass's, the goal being to maintain the strong market position for the 36 generation phones. From a financial point of view, we can only compare the individual financial statements of Ericson, Sony and Nooks from the appendix of the case.
In a first look at the data available we can deduct that the financial situation of Nooks is clearly the most advantageous one. To be able to analyses financial statements that are comparable, I will only look at the ones of Nooks and Ericson. The Sony Corporation has so many different activities going on that from this financial statement I can't detect which revenues are from the mobile industry. The only observations I would like to mention about the company is that their revenue has been increasing over the years, but net income has been decreasing.
This showing that in the core business we are talking about Nooks has made the biggest step by increasing net sales in this sector by offer having a 80% growth per year between 1998 and 2000. These numbers are also reflected in the market share Nooks has on the world mobile market. 4) What are the potential risks for this alliance? The risks for this alliance are of course numerous. First of all Sony Ericson has to find a proper way to communicate to the public/customers why they have merged heir mobile departments and explain what profits this results in for them in the tend to which to other brands.
This is the main risk, that they have to manage, which has to be dealt with proper attention and experienced marketing experts, so that a clear message is sent out to the public and current/future customers. Another potential risk is the management that consists of managers from both Ericson and Sony. It provides conflict potential when two corporate cultures clash. Managers from both sides are used to doing business their way but now they have to adapt to the managing methods of one another.
This might make it difficult to find a common strategy, with which they want to market their brand. The responsibilities and decision fields have to be clearly defined to avoid these kinds of occurrences as good as possible. A further threat would be that both sides could quickly get frustrated if results are not as good or worse than expected. This could lead to one accusing the other of bad management, insufficient research and so on, resulting in a bad atmosphere in the company. This would further complicate the merger and might even lead to the decision to go separate ways again.
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