The Nokia Story
Nokia was set up in 1865 by a mining engineer named Fredrik Idestam at the Tammerkoski Rapids in South-Western Finland. The company started as a wood pulp mill, and in 1960, the company started a mobile phone manufacturing business. In 1998, Nokia produced 100 million mobile phones and became the world’s largest phone makers. Now, Nokia is a leading multinational company engaged in producing mobile communication products, and is the world’s third largest mobile phone manufacturer. At the last count, the Nokia Group has employed approximately 139,000 people around the world. (Nokia Corporation, 2012) In February 2011, Nokia entered into a strategic alliance with Microsoft to launch Windows Phone. Since 2008, Nokia’s shares have in succession delisted from the stock market of London, Frankfurt, Paris and Stockholm. On June 15, 2012, due to lack of funds, Nokia sold their assets on a large scale. As a result, the stock continuously slumped, and the market value shrunk massively; it fell back to the 1980’s levels. On June 15, 2012, Nokia announced to lay off 10,000 employees in a worldwide range and shut down many global mobile phone factories, in order to restructure the senior management team. And until now, the only two regions of Nokia’s mobile phone manufacturing plants are Mainland China and South Korea. (baidu.com, 2012) Central Problem of Nokia
The failure of the software development and loss of competitiveness As of the early 2000s, Nokia’s home-made software, Symbian, Meego, and Maemo, were announced as failures. This is the central problem for this company. Without its own unique software system, the phone producer has lost its competitive edge in the marketplace. Faced with the decision of revamping one of their old software systems (timely and expensive) or partnering with Microsoft or Android, Nokia chose to form a partnership and adopt a software platform. Now, a strategic partner of Microsoft, Nokia cooperated to launch Windows Phone. Because of the loss of competitiveness due to the lack of having a private software system, Nokia suffered the following pitfalls: 1.
Market share dwindling
Since 1996, Nokia had occupied the top of the global market share for 15 consecutive years, but in the second quarter of 2012, Nokia fell down landing third in sales worldwide. Apple and Samsung have taken Nokia’s place. Apple sold 20.3 million iPhone and Samsung sold 19 million smart phones, leaving Nokia with only 16.7 million mobile phones for that year. 2.
Accompanied by a series of bad news, Nokia’s stock plunged 19 percent, to ＄6.70, which was already selling at a 13-year low. 3.
Persistent takeover talk
In the last four years, Nokia has shed 75 percent of its market value, leading to widespread speculation that it might be a takeover target. One of the rumors was Microsoft buying the company for 19 billion. Environmental Scan
At any point in time, whether a company is rising or falling, there are microenvironment factors that influence a firm. Particularly in this case, there are significant environmental issues that impacted Nokia’s performance. Demographic factors: Demographically Nokia targets to meet the needs of different market segments. By targeting the youth and young adult segments Nokia can try to revive its brand name and promote its new fun, bold, and youthful image. There is a growing population of young people and young adults in African and Asian markets. However, when dealing with the younger generations of the world, Nokia has to be careful. Today’s youth are highly educated and aware of most products in the marketplace, and therefore are knowledgeable of the wide variety of products they could purchase. This knowledge base is a potential threat to Nokia because consumers could simply purchase other telecommunication options available in the market place. Environmental/Socio-cultural factors: The socio-cultural view...
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