Mini Paper 2 – The Case Of Nokia Corporation Case Study

ABSTRACT

This paper assesses the international organization of Nokia Corporation and the strategy used by it in order to achieve leadership on the global market. The objective of the paper is to analyze the organization of the company at the present time as well as during the past five years, to assess whether it has the resources necessary to become a market leader and to provide recommendations for achieving this goal. The research method used in this paper is a descriptive one. The data was collected from secondary sources, such as books, articles, studies, and the company website. This paper shows that Nokia Corporation, after being the second largest mobile phones manufacturer, was forced to sell the part of its business engaged in mobile phones production due to extremely high competition on the market; this decision allowed the company to focus on other perspective developing sectors where it can become a market leader. Furthermore, the paper investigates availability of the resources necessary to compete internationally and suggests the company to innovate, to take risks and to make quick actions to become a market leader in the near future.
Competition conditions are changing rapidly nowadays; markets and struggle for leadership become truly global. To remain competitive under such conditions, a company must be able to meet their challenges. In order to do that, multinational corporations (i.e. companies which have operations in more than one country) have to choose among three main international strategies, and namely: multidomestic, global, and transnational strategy. These strategies differ in their approach to development of efficiency in different countries, and in response to local conditions. Multidomestic strategy counts on being responsive to local requirements, offering products which are adjusted to the specific conditions in each country, but it does this at the cost of efficiency. Global strategy, to the contrary, puts more emphasis of efficiency but is less responsive the local requirements on its markets, offering essentially the same product with some minor modifications. Transnational strategy is an attempt to find a golden mean between the first two strategies. The company using this strategy strives to achieve balance between efficiency and the necessity to consider local preferences in different countries.
Nokia Corporation is a Finnish multinational company, one of the world leaders in the fields of network infrastructure, location-based technologies and advanced technologies, serving customers in more than 150 countries. Till 2012 it was the world’s second largest producer of mobile phones (after Samsung). Based on extensive experience, innovative technology and secure solutions, the company has become the world’s largest manufacturer and a leading supplier in the field of communication and information technologies, fixed broadband and IP networks. Nokia confidently leads the process of improvement in technology, presenting in all market segments a diverse line of its products. Functionality of Nokia products has developed from voice features to the features of multimedia, image, entertainment and business applications. New markets are created, and as a result of that new possibilities appear. To meet the needs of the consumers in various markets worldwide, the company uses a multidomestic strategy and customizes its products to every major market.
Till September 2013, when the major part of the company which produces mobile phones, was acquired by Microsoft, the organizational structure of Nokia Corporation was divided into four business groups: Mobile Phones, Multimedia, Enterprise Solutions, and Networks; each of these groups had its specific functions and responsibilities. The function of Mobile Phones group was manufacture of mobile phones and marketing of wireless voice and data products in consumer and corporate markets. The Multimedia segment was responsible for sales of mobile gaming devices, home satellite systems, and cable television set-top boxes. Wireless systems for the corporate sector were developed by the Enterprise Solutions. Networks division sold wireless switchers and transmissions. Nokia Corporation had 15 manufacturing facilities in 9 countries and research and development facilities in 12 countries. In September 2013, it was officially announced that Microsoft will acquire Nokia’s main production facilities. The total sum of the transaction was 7.2 billion US dollars, the major part of which was paid for the production of mobile phones itself; and the remaining amount was paid for patents and licenses for navigation services. This transaction released Nokia from the part of business where it had to struggle with other highly advanced competitors, and allowed it to focus on other business areas instead. In November 2014, Nokia started to license its product designs and technologies to third-party manufacturers in order to enable a continued presence for the Nokia brand in the consumer electronics hardware market.
The current structure and modus operandi of Nokia Corporation are relevant to its objectives to exploit global advantages and at the same time to remain responsive to local conditions. The company realized that in the field of mobile phones it could not win the struggle with the Apple iPhone and other strong and numerous competitors who were adopting Android as their operating system.  The company tried to cooperate with Microsoft, which helped it to revive its position, but it was not enough to compete with the top companies. So the decision to sell the part of the company the main occupation of which was mobile phones manufacturing was a proper decision. Now Nokia plans to focus on networks, mapping services, technology development and licenses. The company expects that within the next decade billions of devices will become interconnected across a number of sectors such as transportation, health and wellness. The fact that the connectivity is expected to increase constantly and the necessity to deal with the growing data traffic, improved location services as well as innovation in areas such as radio and low power technologies, will enable Nokia to pursue its strategy to become a market leader in these sectors.
The company has all the necessary resources to compete internationally. The most important in case of Nokia are human resources, especially those who are responsible for creation, improvement and development of new products and ideas. The company has highly skilled, qualified and experienced staff able to provide the solutions which satisfy current demands. Apart from that, the company has enough production facilities, marketing facilities and information technology in order to achieve its objectives. In order to finance chosen strategies and activities, it is necessary to have sufficient financial resources. Nokia has existing finance funds and it is also able to raise additional funds due to its reputation and attractiveness on the market. Reputation of the company, as well as its brand and intellectual property are its intangible resources which also play an important role in achieving the company’s objectives and competing on the global market.
In order to become a market leader in the next five years, it is necessary to innovate and to think “outside the frame”. Nowadays in order to have advantage over the competitors it is required to constantly apply new ideas and approaches, the less traditional and the more unexpected they are – the better. Instead of striving for minimal short-term advantages on the existing markets and in traditional branches, it is necessary to create new branches and to become a leader in those branches. Another recommendation is to make decisions and to act quickly. Thorough analysis is important too, but it is necessary to make actions, and to make them quickly. Nowadays, it is much better to do something 80% correct but now, than 100% correct but 3 months later. The competitors will not wait till you make the right decision. One more recommendation is to experiment and to be able to risk – this will help to adapt to changing conditions of competition in the XXI century.
In conclusion, although Nokia Corporation lost its position on the mobile phones market due to high competition, it managed to find the way out of this situation – to sell part of its business which could not retain its top position, and to focus on different products and markets instead. The company has all the resources and potential necessary to achieve its goal to become a market leader in the nearest years. It just needs to act quickly, to risk and to be innovative.

REFERENCES

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