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Ericsson Budapest (Ivey School of Business, Canada)
Ericsson Budapest (Ivey School of Business, Canada)
Ericsson Budapest (Ivey School of Business, Canada)
Ericsson Budapest (Ivey School of Business, Canada)
Ericsson Budapest (Ivey School of Business, Canada)
Ericsson Budapest (Ivey School of Business, Canada)
Ericsson Budapest (Ivey School of Business, Canada)
Ericsson Budapest (Ivey School of Business, Canada)
Ericsson Budapest (Ivey School of Business, Canada)
Ericsson Budapest (Ivey School of Business, Canada)
Ericsson Budapest (Ivey School of Business, Canada)
Ericsson Budapest (Ivey School of Business, Canada)
Ericsson Budapest (Ivey School of Business, Canada)
Ericsson Budapest (Ivey School of Business, Canada)
Ericsson Budapest (Ivey School of Business, Canada)
Ericsson Budapest (Ivey School of Business, Canada)
Ericsson Budapest (Ivey School of Business, Canada)
Ericsson Budapest (Ivey School of Business, Canada)
Ericsson Budapest (Ivey School of Business, Canada)
Ericsson Budapest (Ivey School of Business, Canada)
Ericsson Budapest (Ivey School of Business, Canada)
Ericsson Budapest (Ivey School of Business, Canada)
Ericsson Budapest (Ivey School of Business, Canada)
Ericsson Budapest (Ivey School of Business, Canada)
Ericsson Budapest (Ivey School of Business, Canada)
Ericsson Budapest (Ivey School of Business, Canada)
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Ericsson Budapest (Ivey School of Business, Canada)

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  • Health Care Notes (http://www.bspcn.com/2009/04/16/20-disturbing-facts-on-us-healthcare-everybody-should-know/)Health Care - $7651 / US residentritten by molly1) 46 Million American have NO health insurance.2) 9.4 Million children have No health insurance.3) Insurance costs are outpacing income by eight-fold.4) Every year one Million Americans lose their coverage.5) The cost of health care causes bankruptcy every 30 seconds.6) By the end of 2009 1.5 Million people are going to lose their homes due to illness.7) America spends twice as much per person on health care as other rich countries.8) Americans spent $2.2 Trillion on health care in 2008.9) 1/3 of the US population under age 65 has NO health insurance.10) US Health care costs are twice the GDP of India.11) Americans life expectancy is 2 years less than Europeans.12) Projected health care costs by 2012 are $3.1 Trillion a year.13) Health care cost are 4 times higher than our national defense.14) America spent 17% of it’s GDP on health care in 2008.15) By 2017 Americans will be spending 20% of GDP on health care.16) France spends 9.5% of GDP on health care, Switzerland spends 10.9%, Canada spends 9.7%, every person in those countries has health insurance.17) Premiums for employer based health care went up by 5% in 2008, small employers premiums went up 5.5%, small business with less than 24 workers went up 6.8%.18) Annual premiums for family coverage eclipsed the gross earnings for a full time, minimum wage worker ($10, 712) per year.19) Health insurance is the fastest growing expense cost component for employers, health care costs will over take profits.20) Health insurance premiums have grown four times faster than wages.
  • Difference in R&D represents a 37million difference.. Understand that there are scale economies and effectiveness differences, but this is something to watch moving forward.. Innovation and design critical
  • Transcript

    • 1. Enhancing Quality of Life Through Technology Convergence Team Budapest 2011 Boston University Case CompetitionHussein Govani | James Larsen | Daniel Moro | Paul von Martels
    • 2. Review of Situation Why are we meeting with you today? Ericsson must leverage its position to; Global Mobile Broadband Subscriptions (bns) 1 Find unique opportunities to 1. enhance people’s lives through a networked society 0.5 ~ 40% 6 Yr CAGR 0.4 2 Create new, sustainable business 2. 0.3 4.1 opportunities 0.2 3.0 0.2 0.1 2.1 1.1 1.6 0.6 0.8 Define a Business 2010 2011 2012 2013 2014 2015 2016 Roadmap to 2015 Handheld Devices Mobile PC and Tablets1 40% annual CAGR extrapolated from 2011 - 2015 Source: Ericsson Annual Report 2010 2
    • 3. Summary of Key Recommendations As the market leader in broadband connection services, Ericsson is positioned to become the Architect of the Networked Society Summary of Business Strategy Recommendations 1. Up & Downstream: Become End-to-End ICT Manager 1 End-to-End • Build out data management capabilities (cloud integration) • Leverage partnership with Akamai • Strategic vertical partnerships and acquisitions 3. Expand Market Share Positions in Key Business Areas1 2 Core Business • Expand market share through large and small M&A • Expansion of consulting capabilities to support new offerings Emerging 3. Integrate Emerging Markets with Developed 3 Markets • Convergence of developed market networks with emerging market networks (geographic convergence)1Assume maintenance of operational and financial performance metrics 3
    • 4. Vision 2015: Health Care and Energy The Business Strategy Recommendations enable Ericsson to embark on its Vision 2015 mission: make a difference! Vision 2015 Industry Focus Examples: Health Care Access and Energy Management 1. US Health Care market • Total annual expenditure > $2.3 trillion1 • Stakeholders want better access to care • Massive push for cost reduction 2. US Energy Distribution market • Total spend of $1.2 trillion2 • 4% 5-year CAGR on total expenditure12008 total expenditures in US Health Care22010 total spend, Residential, Commercial, Industrial $618M Source: eia.gov Source: PriceWaterhouseCoopers, US Energy Administration 4
    • 5. Appendix: Health Care Sector AlliancesUnderstanding the dynamics of the US healthcare market tooptimize interactivity Doctors Information • Claims Data • Prescriptions Care Facilities • Medical Records • Analytics • Data processing • Inventory Mgmt Patients • Insured • Uninsured 5
    • 6. Vision 2015: Health Care Opportunity Data Management - Analytics- proactive care Patient Information - Real-time data • Claims Data management • Prescriptions System Benefits • Medical Records • Convenience • Efficiency • Lower cost Drug Distribution - Partnership with National and local pharmacies Doctors Devices - Laptop supported - Tablet / Smartphone - Specialized devices Pharmacies Patients 6
    • 7. Vision 2015: Health Care OpportunityThe A-W and Ericsson partnership could be one of great synergy;A-W with the platform and Ericsson with the mobile capabilities American Well Business Model How could this business work? • Seamless patient experience- integration of handheld devices, cloud analytics, pharmacies • Data management capabilities • American Well continues to sell model to Insurers / payors1designed to lower overall medical costs • Develop medical devices that integrate with the “cloud” and with A-W • Integration of medical communities • Opportunity to deploy similar networks in developing markets 1I.e., Wellpoint, United Health Group, Aetna etc. Potential Partners 7
    • 8. Vision 2015: Health Care OpportunityHealth Care CompetitionAmerican Well has a unique business model in a highly fragmented market OPPORTUNITY • Different Business Model • Highly fragmented • Nascent ventures 8
    • 9. Vision 2015: Energy UsageSmart meter penetration is approximately 40% across all sectorsbut two-way communication meter penetration is less than 10% Avg. Retail Cost of Energy (Cents Per Kilowatt hour) Smart Meter Penetration Source: US Energy Information Administration 9
    • 10. Vision 2015: Energy AcquisitionsAcquisition Plan For Energy OpportunityCavet Technologies created disruptive patented technology which allows for the instantreduction in lighting consumption by 30% Analysis Service s Ericsson EMA 10
    • 11. Vision 2015: Energy Business ModelEnergy Consumption Management and Reduction ModelAcquisition of Cavet Technologies and development of complimentary energy consumptionmanagement system will provide additional EV of $1.3B Database Analysis Ericsson Remote Access Portal EMA Services 11
    • 12. Vision 2015: Energy OpportunityEnergy Management CompetitionEnergy management market lacks differentiation, is highly fragmented and has greatpricing flexibility OPPORTUNITY • Highly fragmented • Lack of customer focus • Pricing flexibility • No I.P. 12
    • 13. Vision 2015: Focus on Core BusinessEricsson is well positioned to capitalize on organic growthopportunities but can finance more aggressive venturesGrow Faster than the Market Best in Class Operating Margins• R&D expense lower than major STRONG STRONG • Industry leading and stable competitor (14.7% vs. 16.6%) operating and NI margins• ALU’s quarterly revenue growth • Mature organization (stable at 23% vs. ERIC’s at 7.6% earnings)• Competitors exiting market • 5 Year PEG at 1.59• Huge opportunity in emerging • Opportunity to markets (network LTE) strategically deploy cash (ROIC>WACC)Strong Cash Conversion Growth in JV Earnings • 2 new partnerships • High debt capacity (currently low • 25% decrease in unit sales on debt) Sony Ericsson handsets • Estimated to have $17B in cash • New JV with ST-Ericsson in 20121 (WACC at 10%) ROIC producing cutting edge devices should be greater • New partnership with Akamai STRONG Concern1110,000M SEK, Santander 2011 Projections Source: Hoovers, 2010 Ericsson Annual Report, Santander, Yahoo Finance 13
    • 14. Financials (I)$300 million in incremental EBITDA by 2015, $1.6 billion inadditional enterprise value, and a 65% overall IRR Incremental EBITDA 1,800,000,000 1,600,000,000 1,400,000,000 LumiSmart Device EBITDA 1,200,000,000 U.S. Dollars LumiSmart Service EBITDA 1,000,000,000 800,000,000 mHealth EBITDA 600,000,000 400,000,000 200,000,000 - 2012 2013 2014 2015 2016 2017 2018 2019 2020 Year 14
    • 15. Financials (II)$300 million in incremental EBITDA by 2015, $1.6 billion inadditional enterprise value, and a 65% overall IRR Additional enterprise value 1,800 1,500 Millions of U.S. Dollars 405 1,200 900 1,575 890 600 300 280 - Total LumiSmart Device LumiSmart Service mHealth Service*Based on DCF analysis, and trading multiples 15
    • 16. Execution Roadmap PHASE 1 PHASE 2 PHASE 3 Partnerships and Enhanced Core Offering Developing Markets Acquisitions 1 2011 2012 2013 2014 2015 Phase 1 Due Diligence 1st Agreement On-going process for identifying Partners and Acg. targets Phase 2 Hard focus on developed market Developing market infrastructure infrastructure upgrades (4G) Phase 3 Further development Focus shift to China of India market Due Diligence: Market profiling, target screening 16
    • 17. Questions and Answers
    • 18. Appendix Control Panel Risks and Mitigation Plan Porter’s 5 Forces Competitor Facts – Energy Sector Competitor Facts – Health Care US Health Care – Wait Times Financial Projections LumiSmart Adoption American Well Adoption
    • 19. Risks and Mitigation StrategiesRisks of End-To-End Role Out For Health and Energy OpportunitiesPrimary risks concern the ability to scale and overall network security PRIMARY RISKS MITIGATION STRATEGIES1. Scalability • Develop appropriate partnerships to gain access • Data = Analysis = Services • Perfect model in developed economies2. Network failure • Default power position for energy • Consumer reliance on systems • “Safety” servers for health system • Limited margin for error • Develop premium customer support services3. Security and Privacy • Continuously invest to ensure best practices • Consumer sensitive data • Avoid sale of personal consumer data • Major cloud computing concern • Develop premium customer support services4. Competitive Reaction • Communicate value add differentiation • Fragmented market • Increase barriers to entry through partnerships and • Low barriers to entry for development of intellectual property applications 19
    • 20. Appendix: Porters 5 Forces Health Care Energy 10 10 Threat of New Threat of New Entrants Entrants 5 5 Supplier Buyer Supplier Buyer Power Power Power Power 0 0-10 -5 0 5 10 -10 -5 0 5 10 Competitive Competitive Rivalry -5 Rivalry -5 Substitutes Substitutes -10 -10 Source: 20
    • 21. Appendix: Competitor FactsEnergy Management CompetitionEnergy management market lacks differentiation, is highly fragmented and has greatpricing flexibility KEY FACTS • Open Source Google • Free PowerMeter • Home use • Free Microsoft • Home use Hohm • BlueLine Hardware ($270 MSRP) • Industrial, Commercial and Home EnergyCAP • Fee = 0.5%-1.5% of utilities cost • Partnership with Cisco (Vancouver) Pulse Energy • Commercial and Home • Fee = <50% of annual energy savings CISCO Home • Home use • Fee for service and handset EM 21
    • 22. Appendix: Health Care OpportunityHealth Care CompetitionAmerican Well is a rare combination of real-time response, complete service offering, andonline & telephone capability KEY FACTS • 28000 physicians, 4000 practices Intuit Health • Telephone and virtual site • Same functionality • Real-time response time Cisco • All functionality • Based in waiting rooms • 8 hour response time Relay Health • Only basic functionality Minute • Pharmacy/grocery chain locations • 15 minute diagnosis Clinic • 25 states • Telephone and virtual site TelaDoc • 1 hour response time 22
    • 23. Appendix: US Medical Wait Times by States American Well’s organizational structure and end product flexibility enable the company to meet the diverse demands of the US market Wait times between 1 – 10 days Wait times between 10 – 20 days Wait times greater than 20 daysHarvard Case: American Well: The Doctor Will E-See You Now 23 23
    • 24. Appendix: Summary financial projections 24
    • 25. Appendix: Bass curve (I) LumiSmart (U.S. Market) – Projected Adoption15,000,000 100.00%11,250,000 75.00% 7,500,000 50.00% 3,750,000 25.00% 0 0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 25
    • 26. Appendix: Bass curve (II) mHealth (U.S. Market) – Projected Adoption150,000,000 100.00%112,500,000 75.00% 75,000,000 50.00% 37,500,000 25.00% 0 0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 26

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