Mergers, Acquisitions, Alliances and Synergies Case Study

Case Title:

Sony Ericsson's Alliance : The Synergies

Abstract:
Sony Ericsson Mobile Communications, AB was formed as a 50-50 joint venture between Japan's Sony Corporation and Sweden's Ericsson in August 2001. The company, with its headquarters in London, commenced its operations in October 2001. With Sony's experience in consumer electronics and Ericsson's expertise in mobile handset manufacturing, the company envisaged dominating the global mobile handset market. However, since its inception, Sony Ericsson had been making losses and could grab only a meagre 5.5% global market share by mid-2003. In the third quarter of 2003, with the introduction of camera phones, Sony Ericsson clocked the first ever profit in its history, of 62 million euros. Still, Sony Ericsson was ranked 5 th in the mobile market worldwide. By then, with the saturation of the European and the American mobile markets, the focus of the global handset manufacturers had shifted to the emerging markets of Asia where the second hand phone market had hit the market for new phones hard. Under such circumstances, Sony Ericsson reconsidered its initial strategy of targeting the high-end, low-volume segment by announcing its foray into the low-end, high-volume segment in the fourth quarter of 2003.

Pedagogical Objectives:

• To discuss the expected synergies that prompted Sony and Ericsson to strike a 50-50 joint venture in 2001
• The reason behind the alliance’s troubled beginning and how it bounced back to profitability.

Keywords : Sony; Ericsson; Sony Ericsson; Mergers, Acquisitions, Alliances Case Study ;History of Sony; History of Ericsson; Sony Ericsson joint venture; Sony Ericsson's losses; Global mobile market; Sony Ericsson T68I; 3G technology; Low priced handsets; Sony Ericsson's restructuring; Profits of Sony Ericsson; Business performance of Sony Ericsson; Global imaging phone market