The international engineering company


Around the turn of the preceding century, many Swedish engineering companies were given the opportunity to sell their products in an extensive international marketplace. Often, they produced and sold highly specialized products, such as ball bearings, separators, lighthouse equipment and so forth. In many instances, the substantial exports involved led to the establishment of sales and manufacturing subsidiaries in markets outside Sweden. Many companies took this step particularly during the 1920s, but the trend weakened and virtually dried up during the 1930s and 1940s. In subsequent decades the establishment of overseas operations again became popular, with 57 Swedish companies starting manufacturing operations abroad in the 1950s, a figure that rose to 252 in the 1960s.

Ericsson's largest markets were outside Sweden. Prior to the economic crises of the 1930s, approximately two thirds of Ericsson's production was sold in international markets and, after World War Two, the company was soon up in these proportions once again. Ericsson could thus be described an extremely international company. The question is, to what extent was Ericsson a multinational company, in the sense that it maintained subsidiaries in other countries?

At that time, Ericsson had three types of foreign subsidiaries: sales companies, concession companies and production companies. In regard to sales companies, it was vital for Ericsson, with its extensive marketplace, to be represented by sales personnel in many different countries. Agents were generally appointed to handle sales of the company's electrical engineering products that were sold to private customers. The agents stocked Ericsson goods together with the other products in their ranges. The private sector in Latin America was unique in being served by Ericsson's own sales companies When Ericsson was in the process of penetrating the public market, in the sense that it sold telephone plants to public authorities, the agents were replaced by the company's own sales companies.

Ericsson had established its own subsidiaries in all of the company's most important geographical markets prior to the Second World War. Plants linked to Ericsson existed in many European countries and these also functioned as sales bases. Companies engaging exclusively in sales had also been set up in Denmark, Finland, Germany, Romania and Yugoslavia.

Outside Europe, the company had established such companies in Brazil, Argentina, Mexico, Columbia and the US.

The number of foreign-based sales subsidiaries increased rapidly during the decades of the 1950s and 1960s. The way in which the subsidiaries were established continued to follow the traditional pattern, however. Wherever an expansion was expected or occurred in the public sector, the parent company decided on the necessity of an Ericsson company being established in that market. A study of the Ericsson organizational structure from 1970 shows that subsidiaries functioning as sales companies had been established in a total of 40 countries, either exclusively or in combination with production activities. In a further ten countries, Ericsson was represented solely by technical offices.

Author: Ulf Olsson




International trade exhibition. The stand of Emprésa de Teléfonos Ericsson S.A. (Mexeric).

© Telefonaktiebolaget LM Ericsson and Centre for Business History

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