Nokia: Business Interests vs German Pressures
Nokia: Business Interests vs German Pressures
Nokia is the largest mobile handset maker in the world with a 40% market share. The mobile handset industry is marked by declining prices and depressed margins making companies look at low-cost production options. Nokia, to be more competitive, is relocating its German plant to Romania where the wages are 10 times lower. This abrupt announcement however stirs a wave of resentment with employees, trade unions, politicians and business leaders who condemned Nokia's move. Nokia is also accused of being insensitive to German culture and greedy for misusing state subsidies. However, Nokia while refusing to alter its decision says that in a repeat scenario, the company would follow exactly the same policy. This case study is the second in a two part series on Nokia. Providing a brief outlook on the mobile handset industry trends and the competitiveness of Germany, it details the furor created after Nokia's plant closure announcement. While debating on whether global companies should follow country specific approaches or a company-specific approach when handling large scale restructuring moves, it brings out lessons on how to manage complexities in global issues, whether global firms should adopt local practices or use a company-specific approach across different countries, and how to handle large-scale restructuring moves like plant closure and relocation.
Q1.1: What are the trends in the mobile handset industry?
Nokia is the largest mobile handset manufacturer in the world with a 40% market share. Industry enjoyed healthy margins however since 2001, industry is marked by declining prices and week margins making companies look at low-cost production options.
Outsourced manufacturing of handsets Demands in the developed markets like US & Europe has saturated Significant growth has been noticed in the Middle East, Southeast Asia, Africa, China, India and South Korea. Demands of low cost phone in the emerging market has
Nokia is the largest mobile handset maker in the world with a 40% market share. The mobile handset industry is marked by declining prices and depressed margins making companies look at low-cost production options. Nokia, to be more competitive, is relocating its German plant to Romania where the wages are 10 times lower. This abrupt announcement however stirs a wave of resentment with employees, trade unions, politicians and business leaders who condemned Nokia's move. Nokia is also accused of being insensitive to German culture and greedy for misusing state subsidies. However, Nokia while refusing to alter its decision says that in a repeat scenario, the company would follow exactly the same policy. This case study is the second in a two part series on Nokia. Providing a brief outlook on the mobile handset industry trends and the competitiveness of Germany, it details the furor created after Nokia's plant closure announcement. While debating on whether global companies should follow country specific approaches or a company-specific approach when handling large scale restructuring moves, it brings out lessons on how to manage complexities in global issues, whether global firms should adopt local practices or use a company-specific approach across different countries, and how to handle large-scale restructuring moves like plant closure and relocation.
Q1.1: What are the trends in the mobile handset industry?
Nokia is the largest mobile handset manufacturer in the world with a 40% market share. Industry enjoyed healthy margins however since 2001, industry is marked by declining prices and week margins making companies look at low-cost production options.
Outsourced manufacturing of handsets Demands in the developed markets like US & Europe has saturated Significant growth has been noticed in the Middle East, Southeast Asia, Africa, China, India and South Korea. Demands of low cost phone in the emerging market has