DEPARTMENT OF BUSINESS ADMINISTRATION Diversity in the Process of Internationalization A Case Study on Ericsson Cen Chen & Xiuting Li May 2009 Bachelor Thesis Supervisor: Akmal Hyder Diversity in the Process of Internationalization: A Case Study on Ericsson Title Page Title: Diversity in the Process of Internationalization: A Case Study on Ericsson Level: Thesis for Bachelor Degree in Business Administration Authors: Cen Chen 860108-T105 Xiuting Li 860405-T089 Supervisor: Akmal Hyder Date: 2009-05-20 Abstract: Research on the diversity in the context of internationalization process is rare. Our purpose of this thesis is to conduct a good understanding on diversity of internationalization process in telecommunication industry. Based on Uppsala Internationalization Model (U-Model) of Johanson and Vahlne (1977), we applied a qualitative research method, primary and secondary data collection to perform an empirical study. Afterward we discuss about how organizational diversity, marketing strategy diversity and diversity of core values on Ericsson show up in the process of internationalization. In the conclusion, we put forward our comments on the research problems. Then we also issued a direction on further research. Key Words: diversity, internationalization, marketing, Ericsson 1 Diversity in the Process of Internationalization: A Case Study on Ericsson Table of Contents 1. Introduction...........................................................................................................4 1.1 Background.......................................................................................................4 1.2 Research Problem .............................................................................................5 1.3 Purpose..............................................................................................................5 1.4 Limitation..........................................................................................................6 1.5 Disposition ........................................................................................................6 2. Theoretical Framework...........................................................................................7 2.1 Dimensions of Internationalization...................................................................7 2.2 Uppsala Internationalization Model (U-Model) ...............................................8 2.2.1 Market commitment................................................................................9 2.2.2 Market knowledge ..................................................................................9 2.2.3 Current activities...................................................................................10 2.2.4 Commitment decision ...........................................................................10 2.3 Ericsson in Uppsala Internationalization Model ..................................11 2.4 Diversity Management of Internationalization ....................................12 2.4.1 Dynamic Diversification and Coordination Model...............................12 2.4.2 Organizational Diversity.......................................................................14 2.5 The Relationship of the Theories.............................................................15 3. Methodology ...........................................................................................................17 3.1 Research approach ..........................................................................................17 3.1.1 Quantitative...........................................................................................17 3.1.2 Qualitative.............................................................................................17 3.2 Data Collection ...............................................................................................18 3.2.1 Primary data..........................................................................................19 2 Diversity in the Process of Internationalization: A Case Study on Ericsson 3.2.2 Secondary data......................................................................................19 3.3 Methods applied for our study ........................................................................20 3.4 Critical reflection ............................................................................................22 4. Empirical Study......................................................................................................24 4.1 General Information on Ericsson....................................................................24 4.2 Process of Internationalization........................................................................25 4.3 Diversity on Organizational Structures...........................................................27 4.3.1 R&D Organization ................................................................................27 4.3.2 Market Unit...........................................................................................28 4.3.3 Business Units..............................................................................................29 4.3.3.1 Business unit for network ..................................................................29 4.3.3.2 Business unit for global service .........................................................30 4.3.3.3 Business unit for Multimedia.............................................................30 4.4 Diversity on Marketing Strategy.....................................................................30 4.5 Three code values of Ericsson ........................................................................33 4.6 Advantages of diversity in Ericsson’s internationalization..................34 5. Analysis ...................................................................................................................37 5.1 Diversity on Market Knowledge & Market Commitment.......................37 5.2 Diversity on Current Activities & Commitment Decisions .....................38 5.3 Diversity & Three Code Values ...............................................................39 5.4 Discussion................................................................................................40 6. Conclusion ..............................................................................................................42 6.1 Recommendations for Further Research..................................................43 7. List of References...................................................................................................44 3 Diversity in the Process of Internationalization: A Case Study on Ericsson 1. Introduction In this introduction we would like to give a brief background of diversity in the process of internationalization on Ericsson in telecommunication industry which is our research area. And then present why we are interested in it. Further we describe the problem definition, purpose and limitation in this chapter. 1.1 Background Research on the diversity in the context of internationalization process is rare and difficult due to complexity of economic condition and variability of telecommunication industry. Communication is a basic human need. Telecom Company first develops in the domestic market and that the internalization is the consequence of series incremental decisions. The severe obstacles to internationalizations are lack of knowledge and resources. Diversity is the effective approach to reduce such problems in the process of internationalization. Diversity may refer to different kinds of areas, but here we talk about diversity in business: the business tactic which encourages diversity to better serve a heterogeneous customer base.1 For example, in a global marketplace, a company that employs a diverse workforce: both men and women, people of many generations, people from ethnically and racially diverse backgrounds etc. Ericsson is a representative international company in telecom industry. From 1876 it established till 2008, over1000 networks in more than 175 countries utilize Ericsson’s network equipment and 40 percent of all mobile calls are made through Ericsson’s 1 http://en.wikipedia.org/wiki/Diversity 4 Diversity in the Process of Internationalization: A Case Study on Ericsson systems. And one of the essential elements that Ericsson gained such a great success is its diversity management in the process of internationalization. Diversity in business means a business tactic which encourages diversity to better serve a heterogeneous customer base.2 Marketing strategy diversification is a corporate strategy to increase market penetration.3 Diversity in the work field, work unit, work location could create multiple organizational structures in company. How to think globally and act locally on marketing events, how do multiple organizational structure improve company’s internationalization, does diversity change its function when a company stays in a saturated market are interesting questions to deal with. Meanwhile, those three perspectives connected to the knowledge which we’ve learned closely, and so we choose those three perspectives to study the elements of diversity in the process of internationalization. We would like to concentrate on such success in a multiple perspectives and which diversity could be carefully considered on this process, it probably plays an important role for Ericsson to keep going on in the future. 1.2 Research Problem For Ericsson’s multiple management,