Nokia International Business

Nokia – The Success Enablers
From the standpoint of innovation policy and supporting institutions the success of Nokia could be related to the Nordic decision to create the common standard Nordic Mobile Telephony (NMT).
This provided Nokia with a common Nordic market of 20 million techno savvy customers before anywhere else in the world. And it provided a perfect platform for ‘infant industry development’ .

When Nokia had grown sufficiently large on the back of this market it was blessed by the European Union’s decision to create a common European standard for mobile telephony – GSM. GSM grew in rapidly both in geographical scope and functions offered.

Nokia was among the best positioned companies to take advantage of this the then world’s largest uniform market for mobile hand sets -
Moreover, the US market didn’t manage to develop a common standard, which prevented US companies like Motorola from competing on par with Nokia globally.

The Nokia Management understood that design and being user friendly was more important than being over-engineered and Nokia mobiles appealed to more age groups and customer segments than any of its competitors. It pursued the policy of design and adoption of common platform principle which provided for the growth in product portfolio by allowing economies of scale. It also enabled vigorous investment in R&D.
Analog communication technology gradually gave way to digital technology , enabling operators to host new services and creating a steadily expanding market. Most of all, Nokia’s timing at this transition point in 1991 was ideal. In the 1990s, the company managed to capitalize on the rising demand in European markets, then repeat its success globally. The position achieved in technology, production efficiency, design and marketing can partly be explained by the experience Nokia and its wireless communication acquisition Mobira had in cellular phone markets since early 1980s.

The Role of Management – Nokia operations in the 1990s were dogged by 3 crises and recovery from each of them improved its competiveness. Roles of share ownership and executive management became mingled distorting the corporate governance – Nokia bounced back with improved efficiency.
A crises in logistics led to re-evaluation and reorganization of production, sourcing, internal communication, financial management and other critical factors
Similar problems happened in the telecommunication division which led to shifting of experienced telecom people to the emerging GSM markets, which paid handsomely.

The Management created a corporate culture and modus operandi that provided a structure for successful R&D as well as efficient production and sales. Open an early communication with employees and investors has been the mantra at Nokia.
Nokia – The Finnish Connection
Finland’s innovation policy was a good match with a long history of supporting and nurturing design innovation and a world-class business framework conditions
Finnish national innovation system in which cluster approach played a key role is also behind this success experience.
The Cluster Approach - For promoting innovation, close, formal and informal, interactions and collaborations among private sector firms, universities and research institutions in a region are the key features.
Nokia – Porters Diamond
Factor Conditions :
One of the world’s most homogenous, united and stable nations (Scandinavian)
National Competitive Strategy
Tradition of innovative engineering
Sophisticated education and university system
Related and Supportive Industries:
Local supply for highly customized inputs
Telecom cluster with more than 4000 specialized firms
High public R&D spend in Europe
Venture capital forum
Demand Conditions
NMT created the world’s largest single mobile market
Extreme weather conditions
Finland is a member of European common market since 1995
A market of early adopters with very high standards
Mobile phone is a national symbol
Wireless telephony - birth of GSM and its growing acceptability created new demands

Firm Strategy, Structure and Rivalry :
Finnish telephone network not monopolized by state
Traditionally, operators engage actively with equipment manufacturers
Open market with multiple players– No restriction for foreign ownership
Serve distinct customer needs without constraints on standards
Export oriented market
Part of EU
Relationship with neighbors

Government was very responsive to local company needs and looked for targeted support opportunities to embed and retail companies in local economy

Nokia’s top management and the technological expertise were homegrown. The executive board was comprised of Finns, thus, creating a homogeneous working culture.

Finland also provided a receptive market place for the company’s pioneering products. Finland is one of the leading nations in mobile phone penetration along with other Scandinavian nations. The sophisticated customers of the region demanded good value for money in the handsets the used. This acted as a catalyst for Nokia to constantly innovate and improve its efficiencies. This helped it later on in markets such as India.