Developed Country and Nokia

Suggestions for answering the questions
1. What are the trends in the mobile handset industry? What is Nokia's strategy and how has globalisation changed its way of operation?
Where is the market for mobile handsets? In the developed markets? In the emerging economies?
What is the nature of demand in these markets? What kinds of handsets do people want?
What are the costs of manufacturing? How can these costs be reduced?
Has globalisation shifted economic activity between and within regions? In what way?
Look up a concept called "value chain". Is it relevant here?
Nokia opened its factory in Germany in 1987, why do you think it made that decision then and what about the costs that it must have incurred till now?
Is Nokia's decision to relocate its factory is legitimate? Why or why not?
Could Nokia have made the Bochum plant more competitive? How?

2. Was the German backlash against Nokia justified? How can nations make themselves more competitive?

What are the factors that make a country competitive? Evaluate these factors for Germany. On what factor(s) was Germany competitive or uncompetitive?

How will Nokia's exit affect Germany's reputation? How will it affect other companies wanting to move to Germany?

What should Germany do to make itself more competitive?

3. What, if any, were the flaws in Nokia's approach to announce and handle its plant closure? What can the company do now for damage control?

What are the problems that can arise in closing a plant?

What measures should a company take to manage a successful exit?

What did Nokia not do well? What did it do well?

Should Nokia have followed the "The German way" in closing its plant? What would have been the advantages and disadvantages?

What should Nokia do to handle the crisis?

Does Nokia come across as a value-driven company with a human touch?

Backlash against capitalism and rekindling of nationalism.
Examples of (a) the backlash against capitalism/rekindling of nationalism and (b) increased protectionism of high-demand resources:
• US hostility toward an attempted takeover of the British P&O by Dubai Ports in 2006
• Nationalization of energy resources in Venezuela

Benefits of globalism
Access to more markets
Growth of developing economies
Opportunities for flexibility and efficiency
Opportunities for small and medium-sized enterprises (SMEs)
Greater international investment by global companies means greater transfer of financial, technological, and managerial resources around the world. In turn, the latter leads to the growth of developing economies, which opens up potential markets and locations for operations for global companies. As they are no longer tied to specific locations and can locate their activities in the most suitable areas, the companies have opportunities for flexibility and efficiency.

Globalization of Human Capital
Increasing trend in the offshoring of manufacturing jobs and outsourcing of white-color jobs
Prediction that 3.3 million U.S. jobs in service sector may be lost/outsourced by 2015
The world’s human capital is becoming increasingly mobile as jobs easily move around the globe. Further examples:
IBM’s India staff increased from 9,000 to 43,000 between 2004 and 2006
In 2006, Dell announced plans to double the size of its Indian workforce to 20,000

Social Responsibility
Corporate social responsibility concerns the benefits versus harm wrought by MNCs, especially in less developed countries (LDCs). Issues of social responsibility tend to center on poverty and lack of equal opportunity, the environment, consumer concerns, and employee safety and welfare. The question is, how much should MNCs concern themselves with the social and economic effects of their decisions? At one extreme, the answer to this question is that MNCs are only responsible for earning profits. At the other extreme is the notion that MNCs should anticipate and solve social needs. Of course, firms can take a stance anywhere between these two extremes.

International CSR is more complex than domestic CSR because there are additional stakeholders in the firm’s activities. Managers must weigh the rights of domestic stakeholders versus those of host country stakeholders. Most decisions will involve a trade-off between the rights of various stakeholders—at least in the short-term.

The majority (sometimes even 100 percent) of the stock of most subsidiaries is owned by the parent company. Consequently, host-country people do not have much control over the operations of corporations within their borders.
MNCs are not accountable to their host nations but only respond to home-country governments; they are not concerned with host-country plans for development.