Finland and Nokia: Creating the World’s Most Competitive Economy

Topics: Mobile phone, Smartphone, Nokia Pages: 12 (3626 words) Published: June 23, 2013
Internationalization drivers of Nokia
Here presented are the main factors causing Nokia to internationalize after its own market was saturated.

Push factors:
-A penetration level of 70% in the existing saturating markets motivated Nokia to expand business elsewhere. -The 1990 Crisis in Finland made the real GDP and exports drop, unemployment rose. -Exports to former crucial areas (Soviet Union) dissolved due to the fall of the berlin wall, causing German reunification and independence of a lot of Soviet States. -Telecommunications and services act allowed competition to grow: Increase in competitive firms in the communication industry in Europe.

Pull factors:
-Extensive cooperation and long-term commitments between manufactures and suppliers: networking risk control. -Increased outsourcing which lead to access to key resources. -Finnish government lacks control on competition movements.

Facilitating factors:
-Becoming a member of the EEA eliminated many trade and investment barriers to other European countries. -High private and public R&D expenditures in Finland.
-Merging with Swedish firms increased focus in Finnish firms with global reach. -30% of venture capital in Finland was towards the telecommunications industry -Finland has highly skilled IT professionals

-Finland 2001: declining growth rates, weak export markets, shortage skilled labour.

1. Porter’s diamond of Finland and its mobile phone sector for the last decade

Factor conditions
Finnish education is mainly based on efficiency, quality and internationalisation. They see it as a factor of competitiveness of the country, therefore they want to raise the level of education. In graph 1 it shows that most people who did a bachelor degree also did a master degree. This was the case until 2004, then the amount of master students decreased and more people only did a bachelor study. The amount drastically dropped between the years 2007-2008, with 50.000 students. From then on the amount of people doing a master’s degree have increased a little. The way of teaching has changed a lot since the internationalisation, nowadays there is a higher focus on extra curriculum activities then before 2000. According to different surveys, the finish educational system has outperformed all other countries until 2006, after that there is no data given in the report.

Furthermore, the workers in Finland seem to have the same qualifications needed for their jobs, 19% were over-qualified and 22% under qualified (data from 2005). Another important thing in Finland are the centres of excellence in research. Finland launched a six year program in 2000 to promote research and training environments in order to do international research.

As can be seen in graph 2, Finland has seen an increase in GDP per capita over the last decade. There was a dip from 2008 onwards due to the financial crisis but in 2011 it was almost at the same level as in 2008. This shows that the citizens have an increasing amount of money to spend on consumer goods. This will be good for companies, as this shows that the market is expanding.

If we look at the real growth rate (graph 3), we can see that this has not been stable over the last decade. However, it has remained positive for most years except for 2008 and 2009, which is due to the financial world crisis. When comparing investments in % (graph 4) with the growth in GDP (graph 3), we see that the amount of investments follows the fluctuations in the growth in GDP, but has a lag of 2 years. The amount of investments has been the highest in 2008, after that we see a downward sloping trend till 2011, where it increases again.

Furthermore, we see that the amount of R&D expenditures by business enterprises has gone up till 2008, after that it has decreased. Furthermore, there is a continuous trend of increasing R&D expenditures by the higher education sector and the public sector (See graph 5)....
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