Principles and Practice
Case study A: the Rise and Fall of Nokia
Nokia appears to be the world’s leading mobile handset manufacturer from 1998 to 2011. For acquiring and keeping this position it has had many successful ideas.
1- What did Nokia do right?
Concerning R&D, Nokia took advantage of the efficiency of global manufacturing and produced worldwide volume to reduce high costs. In the 1970s, The company maintained research and development (R&D) investments of close to 4% of net sales through most of the decade, it even reached 7% of its net sales from the electronic sector (€210 million) in the 1980's. Nokia also had very smart R&D investments : channelled into a number of key areas where Nokia knew it could create a competitive edge. For example in 1992, Nokia launched the first mass-produced digital phone, Nokia 1011, for GSM. Nokia was a visionary company. They were the first to understand that design was essential in this business and to segment their product line. In the 1990s, Nokia’s competitors began to outsource manufacturing, while Nokia continued to produce its handsets internally. Nokia protected its technological developments and handset features by continuing to aggressively file patents. Focusing on customer requirements is also one of the key points that allowed Nokia to maintain its competitive edge ( Nokia 9000 Communicator in 1996 : a GSM phone with fax, e-mail, short message service, address-book, calendar and Internet connections. It created an entirely new category of digital all-in-one communications device) HR :
In 1997, Nokia employed more than 36,000 people from all nationalities, ethnic groups, ages, sexes and backgrounds. Nokia continues to cherish this diversity and views it as a core strength in helping to generate a variety of local and global solutions. Nokia managed to create a shared vision of how the organisation can become the global leader in telecommunications. By empowering its employees, Nokia has created a workforce that fights to win rather than sitting back and letting others do the work. Nokia sees itself as a learning organisation, it does not rest on its existing strengths but seeks to add to them and encourages employees to take on more responsibilities and acquire new knowledge and skills. The company has created a set of values which enables the organisation to adapt to the rapidly changing environment of telecommunications : customer satisfaction, respect of the individual, achievement, continious learning. Network and telephones :
For decades Nokia led the telecommunications industry in handsets and networking. They provided the first wireless phones in Scandinavia for government services. It supplied networking and infrastructures. In 1987, they launched the first mobile phone. Nokia was influential in establishing the second generation network (or “2G”) and the European digital network Global System for Mobile (GSM), which came to replace the dozens of incompatible analog network systems and allowed phones to work throughout Europe. Nokia identified the opportunity for digital developments before anyone else, introducing its first digital transmissions systems in 1969. Nokia was able to deliver the first GSM network in 1991
Nokia also had a head start on competitors because the Finnish telecom infrastructure sector had been deregulated sooner than those in most European countries. Nokia’s networking unit negotiated deals to install GSM infrastructure for 17 operators : they were the only company in the world selling phones that work in every major cellular standard.
Emerging and new markets :
Nokia soon learned what it would need to succeed in a global telecommunications industry : whereas in some industries organisations focus upon domestic markets within limited geographical boundaries, Nokia made a key decision in 1991 to increase its global marketing. This was a critical decision, which set a pathway for the whole...
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