The formation and evolution of Sony Ericsson alliance
Creativity and flexibility is required in order to succeed in the mobile-phone industry. No other industry changes faster, or experiences more sudden and rapid changes to fortunes (Bowman 2006, pg 1). The industry was shaken by the alliance of two consumer electronic giants in October 2001, Sony Corporations and Ericsson AB. Sony Ericsson mobile communications is a fifty-fifty joint venture between Japan’s Sony Corp. and Sweden’s Ericsson AB. Their mission is to establish Sony Ericsson as the most attractive and innovative global brand in the mobile handset industry (Sony Ericsson website) through combining Ericsson’s mobile technology alongside Sony’s expertise in consumer electronics (Kristine 2005). With headquarters located in London, Sony Ericsson became the sixth largest global mobile phone corporation in 2005 following closely behind competitor Nokia (Kristine 2005). Motivations for the joint venture alliance as well alternatives to a joint venture will be explored, concluding with an examination of the problems and strategies used throughout the alliance to aid Sony Ericsson to become a world renowned mobile supplier.
Complementary asset sharing and knowledge transfers were among several reasons motivating the alliance. Ericsson was heavily criticized in the past for poor manufacturing capabilities (Manuel 2002) as Ericsson previously outsourced its production procedures to Flextronics in order to reduce costs (Electronic Times, 2001). Alongside that, Ericsson was associated with poor designs in terms of aesthetics and was unable to attract a large pool of consumers especially teenagers and young adults. Furthermore, due to the ever changing industrial environment of the mobile-phone industry, Ericsson was forced behind due to its inability to keep up-to-date with the market and as a consequent, slowly loosing its already minimal market share (Manuel 2002).