Strategic Change at Nokia Based in Finland, Nokia transformed from being a diver
ID: 418648 • Letter: S
Question
Strategic Change at Nokia
Based in Finland, Nokia transformed from being a diverse conglomerate into a world-leading mobile phone producer in the 1990s. Since then, the company has experienced very tough operating conditions in the face of competition from Samsung and products like the Apple iPhone. Substantial layoffs and plant closures took place across the world as Nokia missed out on consumers who were turning to smartphones. By concentrating on mobile phones, Nokia also faced intense competition from large volume producers in China with lower cost structures.
A new CEO was appointed from Microsoft in 2010 and he quickly sent a memo to all employees. The memo, rich in metaphor, became known as the ‘burning platform’ memo and basically said that Nokia had missed out on some big consumer trends and was now years behind the market and, while that was happening, top managers in Nokia thought they were doing the right thing and making good decisions.
The new CEO accused Nokia of lacking accountability and leadership. Of not collaborating enough internally and not innovating fast enough. He likened the situation that the company faced with being on a burning oil platform, the implication being that Nokia could stay where it is and perish in the flames, or jump into icy waters and have a chance of survival. Despite the new CEO’s ‘call to arms’, market share, revenues, profits and share price continued to fall.
In 2013, Microsoft purchased Nokia’s mobile phone business and the CEO moved to Microsoft as part of the deal.
If Nokia continues to lose share in the market then the Finnish economy will suffer further. The company had helped put Finland on the map as a technological leader and employer of a lot of people.
QUESTIONS
1. Explain how different elements of the temporal and competitive environments interact to influence the situation at Nokia.
2. Consider how you could use multiple-cause diagrams to ‘picture’ the multiple and interacting causes that bring pressure for change where you work, or in an organization that you know well.
Explanation / Answer
Nokia was one of the biggest brands in the market to produce consumer mobile phones and it was a market leader in the multimedia mobile segment. As the time grew, nokia's failure in management directly lead into a disaster.
Nokia's product diversification were mainly mobile phone focused. This specific practice was also include Symbian OS which was very backward for the specific time. Android operating system and improvement over the apples operating system as well as integration of the newer services in BlackBerry implemented into the market people started to shift to the other operating systems rather than using the complex Symbian OS.
Nokia didn't pay attention to the Marketplace and stuck with the Symbian OS and it also invested in enterprise solutions as well as networking. Other than paying attention to the domain selling points, nokia kept ignoring the situation and widely invested in their networking as well as enterprise solution segment. This specific ignorance and rigidity to change according to the needs of the market lead company to a great failure.
Their product diversification and division of the different departments of the company was not properly managed. This mismanagement played an important role in decreasing the overall brand value and reduced brand value directly resulted in reduced revenues for the company. This kind of product diversification with extremely bad management played an important role in failure of Nokia.