Ericsson's new organization

Ericsson's new organization Ericsson is introducing a new organization which was approved by the Board of Directors at its meeting today. This is one of the results of a comprehensive review of Ericsson's business strategy, technology focus, organization and management, which Sven-Christer Nilsson initiated upon assuming the position of President and CEO this spring. The new Corporate Executive Team has been appointed, and the change program will start immediately. The new organization will be fully implemented as of January 1, 1999. The new organization will mean an increased focus on markets and customers. Under the heads of three business segments profit responsibility is being decentralized to smaller units, while decisions in certain strategic areas will be taken by to the Corporate Executive Team. In addition to Sweden, the Corporate Executive Team will be based in four different geographical areas. The present organization has served Ericsson extremely well and has brought the company to a leading position in the market. The new organization is introduced in order to meet the dynamics of the market and the rapidly changing environment in a way that will achieve continued strong growth and continued good results. Customer focus To reflect these changes in the market place Ericsson's operations will be divided into three business segments. These will serve different customer categories. Each business segment will be headed by an Executive Vice President, with consolidated profit and loss responsibility and who will be a member of the Corporate Executive Team. The three segments are: Network Operators This segment will include operations for both wireless and fixed solutions for data- and telecommunications. The current Mobile Systems Business Area will account for the major share of this segment's operations, complemented by operations from the current Infocom Systems Business Area. Consumer Products Today's mobile phone operations will be the core of this segment. Enterprise Solutions This segment is focused on comprehensive solutions for business communication requirements and will include operations from the current Infocom Systems and Mobile Systems Business Areas. The business segments consist of some 20 Business Units which in turn consist of a number of Product Units, which will have a global responsibility for developing and delivering products. Ericsson's operations in the area of defense electronics, cables and components will continue as important activities with unchanged mission and structure. Four new corporate offices In order to ensure a strong focus on customers and markets, customer responsibility will be established at both the local and global levels. The Corporate Executive Team will focus more sharply on markets and customers by operating from four new corporate offices, besides Sweden. Establishing new corporate offices will also enable Ericsson to ensure international recruitment of corporate executives. The new offices will be established in Europe, Africa and the Middle East; North America; Latin America; and Asia and Oceania. These new corporate offices will be managed by an Executive Vice President, who will be a member of the Corporate Executive Team. This person will be responsible for customers and for optimizing resources within the geographical market area. Parts of corporate management will be relocated from Stockholm to the new corporate offices. Details regarding the scope and exact locations for these changes will be made available at a later date. The corporate office for Europe, Africa and the Middle East will be located in London. Other parts of the corporate management such as finance will eventually be located in the London office facility. The London office will in this way assume a growing role for the corporate management as a whole. The president and CEO will therefore have an office in London in addition to Stockholm. The objective of the division into geographical market areas is to ensure that operations are conducted quickly, with optimal utilization of resources and focus on customers. Corporate management strengthened The new Corporate Executive Team will include members located close to important customers and markets. In addition to the three managers responsible for the business segments and the four managers responsible for the geographical market areas, there will be managers for each of the following six Corporate Functions: Finance Technology Supply Marketing and Strategic Business Development Human Resources Information The new organization will mean a strengthening coordinating role of Corporate Functions. As part of a strengthening of corporate management, Ericsson is implementing a cohesive research strategy headed by the Senior Vice President Technology. Another Corporate Function will have responsibility for the entire supply chain and be headed by a Senior Vice President Supply. The intention is to utilize resources more efficiently within Ericsson by applying a unified strategy. A new Corporate Function, Marketing, will be responsible for global marketing, brand management, business development and market coordination. Coordination of Business and Market Units The new organization is based on business segments consisting of Business Units and on geographical market areas consisting of Market Units. Both dimensions will work close to the customer. In the simplest case, this can be regarded as a product specialist and a customer representative working side by side. The Market Units will be locally responsible for customer relations, marketing and sales. In most cases they will be the same as Ericsson's local companies. Financial reporting With the introduction of the new organization, Ericsson will change its financial reporting. Annual operating results for each business segment will be published beginning with pro forma for 1998. New Corporate Management President and CEO, Sven-Christer Nilsson Senior Executive Vice President, Finance, CFO, CW Ros Executive Vice President, Consumer Products, Johan Siberg Executive Vice President, Network Operators, Mats Dahlin Executive Vice President, Enterprise Solutions, Haijo Pietersma Executive Vice President, Europe, Africa and Middle East, Jan Wäreby Executive Vice President, North America, Bo Dimert Executive Vice President, Latin America, Bengt Forssberg Executive Vice President, Asia and Oceania, Kurt Hellström Senior Vice President, Technology, Jan Uddenfeldt Senior Vice President, Supply, Björn Boström Senior Vice President Marketing, and Strategic Business Development Torbjörn Nilsson Senior Vice President, Human Resources, Britt Reigo Senior Vice President, Information, Lars A. Stålberg Curriculum Vitae for the Members of the Corporate Executive Team will be available at: http://www.ericsson.se/Eripress/cv Press conference On October 12 at 10:00 a.m., Ericsson will hold a press conference at Telefonvägen 30 in Stockholm at which the company's strategy, as well as additional results of the strategic and organizational review conducted over the past six months, will be presented. For those who are not able to attend, it will be possible to follow the press conference via webcasting. Ericsson´s 100,000 employees are active in more than 130 countries. Their combined expertise in fixed and mobile networks, mobile phones and infocom systems makes Ericsson a world-leading supplier in telecommunications. FOR FURTHER INFORMATION, PLEASE CONTACT Lars A. Stålberg, Senior Vice President, Corporate Relations Phone: +46 8 719 31 62, +46 70 555 60 66 E-mail: lars.stalberg@lme.ericsson.se Pia Gideon, Manager External Relations Phone: +46 8 719 28 64, +46 70 519 28 64 E-mail: pia.gideon@lme.ericsson.se