Implementation of Turnaround Strategy and Competitive Advantage of Ericsson Sub-saharan Africa
Mugo, Kabui J
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Ericsson Sub-Saharan Africa was implementing a turnaround strategy after its performance had been declining and its market share either threatened or ceded to competition. This showed there was a problem and the competitive advantage of Ericsson needed to be re-evaluated in line with the turnaround management thus the need for this study. The objective of the study was to establish the effect of the implementation of turnaround strategy on competitive advantage of Ericsson Sub-Saharan Africa. This study was guided by the following theories, resource based view, dynamic capability, population ecology theory and punctuated equilibrium. Based on the nature of the research where an in-depth study was done on one company, the research design selected was a case study. The study employed the use of both primary and secondary data. Primary data was collected through structured interviews using an interview guide conducted on the senior managers in various departments or their equivalents. Secondary data was collected from annual and investor reports since they provide information on strategy and performance, past interviews from accredited media and analysts, Ericsson’s strategic plan, industry and regulator reports, and any other publicly available credible sources of information. The method of data analysis was content analysis. From the findings, turnaround was defined as the process through which a previously well performing organisation, that is now faced with decline over a period of time, is lifted back to profitability. For this to happen, the struggling company must identify the causes of decline, acknowledge their existence and resolve to take the necessary actions to reverse the decline. From the findings, there was a positive correlation between the existence of strategic resources and the competitive advantage of an organisation. The more unique the resources are, from those of competitors, the more competitive advantage a firm has. From the findings, there was a positive link between the environment dynamism and the competitive advantage of an organisation. When an organisation is ready and agile enough to adapt to the environment or even strong enough to influence the environment, then it has competitive advantage. From the findings, rivalry with competitors impacts the competitive advantage of an organisation by making an organisation do business at price levels that are not profitable hoping it would help it retain market share. From the findings, there was a positive correlation between the flexibility of an organisation’s structure and its competitive advantage. The more flexible the structure is, the more agile and efficient the organisation becomes in meeting customer needs thus the more competitive advantage it attains. From the findings, retrenchment was found to be an effective tool of cost cutting and creating a leaner organisation that matches the declining sales levels and at the same time be lean enough for agility. This leads to savings on operating costs thus improving profitability. From the findings, the replacement of a leader helps in building more trust from the stakeholders thus increasing competitive advantage. This is because the new leader comes with fresh ideas and usually comes with an outside in perspective. From the findings, challenges of the implementation of turnaround strategy can impact negatively on the competitive advantage of an organisation if not well handled. It was concluded that a declining organisation can halt and reverse the decline, then return the organisation to profitability if the causes of decline are identified in time and the necessary actions taken to counter these causes. It was recommended that a firm facing decline should pursue and properly manage the implementation of a turnaround strategy. Since it is the unique resources that contribute to competitive advantage, it was recommended that every organisation that wants to remain competitive should strive to acquire and defend its own unique resources that are not easily replicable by competitors and should not let go of them even in times of decline.
University of Nairobi
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