Background of Nokia
Discuss about the Fundamentals of Management for Finnish Telecommunication.
Nokia-Connecting People is a Finnish multinational telecommunication, information technology and consumer electronics company which was founded in the year 1865 in Espo. The company which employees over 100,000 people spread across 100 countries earned revenues around €23 Billion in the year 2017. The company was one of the first movers in the mobile handset manufacturing, and has created some landmark mobile phones for its users. The company however went down the hill post 2003-2004 due to evolution of a new software platform (Android) and rise of IPhones. Ever since, Nokia has been struggling hard to keep up the expectation of its consumers and earn sizable revenue in the evolving industry (Aspara et. al., 2013).
The report here will identify and discuss the problem faced by the Finnish giant and the same would be understood using the concepts of leadership and strategic management. Further in the report, a change program will be designed to solve or improve the problems faced by Nokia. Thus, this report will help the reader in understanding the real life situation of one of the world’s largest consumer electronics company.
Nokia was sitting at the pinnacle of success, until Android was official launched and integrated with smartphones and IPhone was launched. Ever since, Nokia can be seen stuck between focussing on its software capabilities and maintaining a positive working environment in the organization. The trouble for Nokia further intensified in the year 2016 when the deal between Nokia and Microsoft was called off. Some of the key problems facing Nokia are:
- Nokia has been facing a lot of trouble due to its ailing performance in the high end phone portfolio. The company which was operating on the Symbian platform earlier upgraded to Microsoft and recently it came up with new android based phones. However, the company has yet to travel a lot of miles before it could match up to the existing smart phone technology (McGrath, 2013).
- Implosion in the US market is a major concern area for Nokia as US market back in 1990 was the most profitable market for Nokia. But, at present the US market is exploded with IPhones, Samsung and other Chinese mobile phones, this leaves Nokia a very little space to make an impact in the market (Ciesielska, 2017).
- The leadership of Nokia was quite old, until 2014, when Rajiv Suri came on Board. However, the situation in the organization has still not improved and the new CEO will still take quite some time in clear the earlier mess of Nokia.
- The workforce in the organization is highly demotivated as they do not have any assurance about their jobs (Nummela, Saarenketo & Loane, 2016).
- Falling market share in another problem at Nokia.
- Nokia is also under the scanner for high employee turnover. Most of its senior engineers have joined the competitor’s firm (Burgelman, 2018).
- The company failed to meet the failing losses in smartphones by service push through its Ovi Web Site, but the app store was not successful and was unable to attract a large number of users (Van Rooij, 2015).
These are some of the problems faced by Nokia; the problems are related to operational, strategical, financial, managerial, human resources and leadership.
This section will focus on analysis of the problems mentioned above and will analyse them using some of the concepts and models in management.
SWOT analysis in a model used for micro-environmental scan and it helps the organization to identify the strength and weakness which are internal to the organization, and helps to ascertain the opportunities and threats which are external to the firm. The SWOT analysis will help Nokia in creating strategies to minimize the weakness and combat the threats.
- Good brand name and brand recognition worldwide.
- Global presence
- Enriched and long experience in the industry.
- Higher re-sale value of Nokia’s products (Boda & Zsolnai, 2016).
- Nokia’s phones can easily be coupled with accessories.
- Products fall across all price range.
- Products are perceived with high durability, strength and larger battery life.
- Poor after sales services
- Inability to beat the threat of android software.
- Failed Lumia products.
- High turnover and falling motivation in the organization
- Shortage of funds
- Falling revenue and dripping profits
- Took a long time in foraying into the Smartphone market, pushing the company to weaker financial position (LeFloch & Scaringella, 2017).
- Increasing smartphone penetration across the globe.
- Opportunity to expand into other global markets.
- Rapid proliferation of technologies
- Growing euphoria around the Bothe concept of Nokia (Majonoja, Linko & Leppanen, 2017).
- Increasing integration of AI and Machine learning in phones for better utility.
- Phones have transformed from a communication device to an essential device.
- Rising competition from Samsung and Apple.
- Growth in Chinese manufacturers producing low range smartphones.
- Rapidly obsolete technology.
- Increasing price wars (Ajwani et. al., 2018).
- Growth in open ended software platform.
Thus, the SWOT analysis further delves into the problem of Nokia and clearly states that the company has to focus on its technology and have to come up with creative and innovative products for its customers.
Problems Faced by Nokia
Leadership is both a practical area and skill encompassing the ability of an individual to influence, motivate, and lead the organization and its individuals to achieve the goals of the organization. The old leadership of Nokia, under Kallasvuo has been seriously criticised not only by the veterans at Nokia, but also by industry experts. It was the inability of the CEO and the management team to foresee the future of smartphones, which lead the company to a downward trajectory. The CEO completely failed to understand the pulse of the customers and stopped innovation and creativity in the organization. The CEO also failed to stop Nokia from stumbling into the path of darkness; he even failed to ensure a positive working environment in the company. It was the failed leadership which was the reason for all the troubles at Nokia (Vuori & Huy, 2016).
The present CEO Rajiv Suri has a lot of rich experience and can be seen as a leader of change at Nokia. The prime responsibility of Suri has to build a culture of innovation and creativity in the organization He has to make changes in the organization which would take it to the path of growth and sustainability. In order to do so, Rajiv Suri has to adopt transformational leadership style, where he has to lead the change in the organization. He also has to empower the employees on the path of change in the organization. He also has to put efforts in translating the vision of Nokia into the culture of the organization. An effective leadership will help Nokia in doing away the troubles it has been facing for quite some time; it will also put the company on the trajectory of upward moment to regain the lost market share (Wang et. al., 2014).
The intervention or change program will help Nokia to alleviate its present day troubles and help the company to focus on the goal of sustainability. Some of the key activities which would ensure the same are:
- The first change the management has to bring in the organization is to motivate the employees to stay focussed on the goals of the organization. This can be done by using various theories of motivation such as Maslow, McGregor Theory, McClelland theory of motivation, Hygiene factor theory and more so to motivate the employees. Motivation would bring the employees closer to the organization and help them in performing with enhanced productivity (Jia & Yin, 2015).
- The leadership in the organization has to be dynamic and flexible according to the changing trends in the business environment. Rajiv Suri, the Present CEO of Nokia has to allow for practices which would nurture the culture of innovation and creativity in the organization. The leadership of Suri has to be transformation so that he can effectively lead the change whilst handling the resistance of the employees towards the change.
- It has been mentioned that the major plight of Nokia is its inability to step up its technology to match the existing competition. This has been due to high attrition of the senior most tech team and lax in marketing research. Thus, if the company has to get up on its feet, it has to focus on these two aspects. Nokia is required to get into a head hunting mode and get the best tech team on the planet on board with them. The company also has to build its marketing data and based on it, come up with the future of smartphones and work on the mission.
- At marketing front, Nokia has to rebuild its image and earn back its tagline – Connecting people. Nokia spends very little amount towards its digital spend, whereas most of the people involved in game changing in the millennial generation. The company has to focus on creating a campaign and get back to its esteemed customer with much better offering and a value proposition. The company has to design the campaign in such a comprehensive manner that it takes care of its entire customer segment. Only then, Nokia would be in a position to strengthen its image in the market and get back the lost market share (Seo, Lin & Kim, 2016).
References
Ajwani, D., Dutta, S., Nicholson, P., Aiello, L.M. and Sala, A., 2018, July. Efficient Auto-Generation of Taxonomies for Structured Knowledge Discovery and Organization. In Proceedings of the 29th on Hypertext and Social Media (pp. 251-252). ACM.
Aspara, J., Lamberg, J.A., Laukia, A. and Tikkanen, H., 2013. Corporate business model transformation and inter-organizational cognition: The case of Nokia. Long Range Planning, 46(6), pp.459-474.
Boda, Z. and Zsolnai, L., 2016. The failure of business ethics. Society and Business Review, 11(1), pp.93-104.
Burgelman, R.A., 2018. Yves L. Doz and Keeley Wilson: Ringtone: Exploring the Rise and Fall of Nokia in Mobile Phones.
Ciesielska, M., 2017. Nokia on the slope: The failure of a hybrid open/closed source model. The International Journal of Entrepreneurship and Innovation, p.146
Jia, J. and Yin, Y., 2015. Analysis of Nokia’s decline from marketing perspective. Open Journal of Business and Management, 3(04), p.446.
Le Floc’h, G. and Scaringella, L., 2017. Another failed M&A: misaligned business models as culprit. Journal of Business Strategy, 38(5), pp.18-26.
Majanoja, A.M., Linko, L. and Leppänen, V., 2017. Global corrective action preventive action process and solution: insights at the Nokia Devices operation unit. International Journal of Productivity and Quality Management, 20(1), pp.29-47.
McGrath, R.G., 2013. The end of competitive advantage: How to keep your strategy moving as fast as your business. Harvard Business Review Press.
Nummela, N., Saarenketo, S. and Loane, S., 2016. The dynamics of failure in international new ventures: A case study of Finnish and Irish software companies. International Small Business Journal, 34(1), pp.51-69.
Seo, B., Lee, S.W. and Kim, H., 2016. Authenticated key agreement based on NFC for mobile payment. International Journal of Computer and Communication Engineering, 5(1), p.71.
Van Rooij, A., 2015. Sisyphus in business: Success, failure and the different types of failure. Business History, 57(2), pp.203-223.
Vuori, T.O. and Huy, Q.N., 2016. Distributed attention and shared emotions in the innovation process: How Nokia lost the smartphone battle. Administrative Science Quarterly, 61(1), pp.9-51.
Wang, C.X., Haider, F., Gao, X., You, X.H., Yang, Y., Yuan, D., Aggoune, H., Haas, H., Fletcher, S. and Hepsaydir, E., 2014. Cellular architecture and key technologies for 5G wireless communication networks. IEEE Communications Magazine, 52(2), pp.122-130.
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