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Business Transformation of Operations & Business Control From Cost Center to a Business Driven Profit and Loss Unit

Andersson, Peter and Gustavsson, Per (2010) MIO920
Production Management
Abstract
The objective for all businesses is to maximize long-term shareholder value by optimizing all activities and utilization of resources. To comply with this objective, all functions need to be business driven; develop and maintain internal activities and structures to align with market requirements.
ST-Ericsson is a 50/50 joint venture; created by bringing together ST-NXP Wireless (ST-NXP) and Ericsson Mobile Platforms (EMP), and was undergoing radical organizational changes at the time this case study was conducted. A new organizational structure was set and roles and responsibilities were yet to be defined. The purpose of the joint venture was to increase the companies’ competitiveness by utilizing synergies and combining hardware and... (More)
The objective for all businesses is to maximize long-term shareholder value by optimizing all activities and utilization of resources. To comply with this objective, all functions need to be business driven; develop and maintain internal activities and structures to align with market requirements.
ST-Ericsson is a 50/50 joint venture; created by bringing together ST-NXP Wireless (ST-NXP) and Ericsson Mobile Platforms (EMP), and was undergoing radical organizational changes at the time this case study was conducted. A new organizational structure was set and roles and responsibilities were yet to be defined. The purpose of the joint venture was to increase the companies’ competitiveness by utilizing synergies and combining hardware and software into a complete mobile platform solution.
The studied division historically had a great focus on technology and product innovation. Accordingly, the activities within it were R&D-driven and were lacking in market alignment. The division was to have Profit & Loss responsibilities and needed to transform into a business minded, market oriented unit. All functions within the division needed to secure that it could manage hardware product ownership, report according to the new responsibilities and develop to support increased profitability.
Outsourcing has become a contemporary trend and most businesses do this to focus on its core activities. However, when one chooses to outsource activities one loses control. Accordingly, one needs to monitor the supplier to make sure that they comply with satisfying market requirements. The studied division outsources a major part of its operations function, e.g. to a sister division and a corporate parent. The function risks market misalignment and a decline in competitiveness if it fails to govern the outsourced activities; it fails to support the long-term objectives of the organization.
To avoid this, the operations within the division needs to continuously acquire knowledge of its targeted markets and find what criterion is used by the customer to differentiate the products on them. These criterions should then be translated to metrics that are relevant for the function. By using these metrics, one can measure performance to see whether activities are market aligned. This will allow for continuous development where the benefits, value creation, are the greatest; making ST-Ericsson an attractive and successful supplier of mobile platforms, in alignment with the long-term objectives. (Less)
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author
Andersson, Peter and Gustavsson, Per
supervisor
organization
course
MIO920
year
type
M1 - University Diploma
subject
other publication id
11/5348
language
English
id
1971745
date added to LUP
2011-06-17 08:10:36
date last changed
2011-06-20 12:18:47
@misc{1971745,
  abstract     = {The objective for all businesses is to maximize long-term shareholder value by optimizing all activities and utilization of resources. To comply with this objective, all functions need to be business driven; develop and maintain internal activities and structures to align with market requirements.
ST-Ericsson is a 50/50 joint venture; created by bringing together ST-NXP Wireless (ST-NXP) and Ericsson Mobile Platforms (EMP), and was undergoing radical organizational changes at the time this case study was conducted. A new organizational structure was set and roles and responsibilities were yet to be defined. The purpose of the joint venture was to increase the companies’ competitiveness by utilizing synergies and combining hardware and software into a complete mobile platform solution.
The studied division historically had a great focus on technology and product innovation. Accordingly, the activities within it were R&D-driven and were lacking in market alignment. The division was to have Profit & Loss responsibilities and needed to transform into a business minded, market oriented unit. All functions within the division needed to secure that it could manage hardware product ownership, report according to the new responsibilities and develop to support increased profitability.
Outsourcing has become a contemporary trend and most businesses do this to focus on its core activities. However, when one chooses to outsource activities one loses control. Accordingly, one needs to monitor the supplier to make sure that they comply with satisfying market requirements. The studied division outsources a major part of its operations function, e.g. to a sister division and a corporate parent. The function risks market misalignment and a decline in competitiveness if it fails to govern the outsourced activities; it fails to support the long-term objectives of the organization.
To avoid this, the operations within the division needs to continuously acquire knowledge of its targeted markets and find what criterion is used by the customer to differentiate the products on them. These criterions should then be translated to metrics that are relevant for the function. By using these metrics, one can measure performance to see whether activities are market aligned. This will allow for continuous development where the benefits, value creation, are the greatest; making ST-Ericsson an attractive and successful supplier of mobile platforms, in alignment with the long-term objectives.},
  author       = {Andersson, Peter and Gustavsson, Per},
  language     = {eng},
  note         = {Student Paper},
  title        = {Business Transformation of Operations & Business Control From Cost Center to a Business Driven Profit and Loss Unit},
  year         = {2010},
}