Formulating a Proactive Entry Strategy for Ericsson in India New Site Leasing Industry
Abstract: Ericsson India is looking into the possibility to enter a new business in the country. The business is a “telecom site leasing” service which would be included in Ericsson’s service portfolio. Services are an increasingly important part of the company’s total revenues. Demand for so called turn-key services, meaning full implementation and control over a customer’s network, is an example of a service which is increasing in developing countries like India. Ericsson finds it therefore natural to grow within the service segment in these markets. The idea to expand the service offerings with an entrance to the so called tower industry emerged from identified new opportunities and a noted market demand. This thesis has investigated how Ericsson should enter this “site leasing” business in India. The business is expected to take off with or without Ericsson, as regulators and the Indian government see many benefits to the economy with the concept. Since the aim of the concept is to achieve as many tenants as possible per tower, infrastructure costs are expected to decrease per operator. The cost reductions is the main reason for the belief that the service is expected to improve coverage in rural areas, which at the present have a network penetration of less than 2%. The service is also supported by the government and the regulators because it is estimated to improve countryside and city esthetics and network capacity in urban areas, which are facing problems with insufficient space. It was found through various analyses that Ericsson should invest in a pilot project initially to minimize risks. After an evaluation of the pilot project it is recommended to start an aggressive investment strategy. In this way it is believed that Ericsson will raise barriers for entering competitors and thus create a more profitable business. The strategy is also believed to overcome the weakness of the Ericsson non-associated tower brand easier through faster implementation of the business on a wider scale than competitors. Moreover, it was also found that Ericsson should differentiate the service compared to competitors. Ericsson has the capability to supply customers with a service with perceived benefits, thereof the strategy. It is estimated that Ericsson will alone be able to hold such a position in the industry and thus the incentive to price their service slightly higher than competitors. It is furthermore recommended that Ericsson should monitor the new business closely to correct dissatisfying performance in time.
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