In 1992 Nokia’s main business units were Nokia Consumer Electronics (31 per cent of total sales), Cables and Machinery (25%), Nokia Mobiles Phones (20%), Nokia Telecommunications (17%) and Other Operations (7%).
Nokia’s turnover was 3043 million €, and net losses 121 million €. (€ = EURO, 1€ ~ 1USD) “Nokia’s strategy is to invest in telecommunications and closely associated business operations. It focuses on industry segments and geographic regions that have good opportunities for growth and profitability” Jorma Ollila, the new chief executive officer, 1992. In 1999 Nokia had 100 per cent of its operations in the telecommunications and mobile phones, turnover was 19772 million € and net profit 2557 million €. In this assignment I focus on strategic analysis at Hefley Finland business unit level. Strategic Management
All firms are faced with the need to create strategies and engage in strategic management. According to Porter unclear strategy is a guarantee for failure. Strategic management is the management of the process of strategic decision making. It can be dived in three parts:
1. Strategic analysis
2. Strategic choice
3. Strategy implementation
In an organisation every person may (and should) has a strategy. But it is more common to classified organisational strategies in three levels:
1. Corporate level strategic decisions, which deal with
- Overall purpose and scope
- Portfolio issues. Adding value to shareholder’s investments - Corporate financial strategy
- Structure and control of strategic business units
- Resource allocation between strategic business units
2. Strategic Business Unit strategy, where the main issues are - Developing market opportunities
- Developing new products and services
- Resource allocation within the SBU
- Structure and control of the SBU
- Competitive strategy
3. Operational strategies, which are concern with
- to implement strategy and
- integration of resources, processes, skills and people
The Competitive Environment
According to Sidney Schoeffler “the laws of the marketplace” determine most of the observed variance in operating results across different businesses.
He claims that 80% of the reasons for success or failure are determined by the characteristics of the served market, of competitors and of the business itself. The skill or the luck of the management determines only 20%.
First step in scanning the environment is to take a look how uncertain is the nature of the business’s environment. In what extent it is stable or dynamic, and in other extent how simple or complex it is to comprehend.
Source Exploring Corporate Strategy: Prentice Hall
Pic 1. Approaches to making sense of the environment
Pic.1 shows different approaches to making sense of the environment according its extents. Mass production companies like Junipoly Hefley and raw material suppliers are good examples of organisations which live in simple or relatively low complexity / static environment. Production processes are fairly simple and markets are fixed over time. In such conditions, when trying to analyse the environment and forecast the future, historical analysis seems to fit best. Most likely future’s changes are rooted at the present. A multinational firm like Junipoly Hefley as a whole may be in complex condition because its diversity. It is difficult to handle complexity by analysis. In such position best is to give each SBU authority and responsibility for their own part of the environment i.e. decentralisation of organisation.
PEST Analysis and Scenario Building
Second step in environment analysis is the auditing of environmental influences. Organisation tries to identify which of the many macro environmental influences are likely to affect the organisation’s future.
This can be done by PEST analysis, by Porter’s diamond (especially in the context of global competition) or by scenario planning.
The PEST analysis is concerned with two questions
1. What political, economic,...
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