INTRODUCTION

Nokia is a world leader in mobile communications, driving the growth and

sustainability of the broader mobility industry. Nokia connects people to each other and the
information that matters to them with easy-to-use and innovative products like mobile
phones, devices and solutions for imaging, games, media and businesses. Nokia provides
equipment, solutions and services for network operators and corporations. Nokia is a
broadly held company with listings on four major exchanges.

Nokia Corporation (Nokia) is a manufacturer of mobile devices and mobile networks.

Nokia connects people to each other and the information that matters to them with mobile
devices and solutions for voice, data, and imaging, games, multimedia and business
applications. The Company also provides equipment, solutions and services for its operator
and enterprise customers. Effective January 1, 2004, Nokia reorganized its structure into
four business groups: Mobile Phones, Multimedia, Enterprise Solutions and Networks.
During the year ended December 31, 2004, Nokia announced a total of 36 new mobile
devices in a wide variety of designs and technologies for all segments and at all price
points. Of the products launched, 34 had color screens and 23 were camera phones,
including its first mega-pixel camera phone, the Nokia 7610. In 2004, Nokia sold 10
million phones with integrated music players.

The company includes four business groups:

• Mobile Phones
• Multimedia
• Enterprise Solutions and
• Network.

Nokia also includes two horizontal groups that support the mobile device business
groups:

• Customer and Market Operations

• Technology Platforms.

Nokia, the Finnish telecom giant is today one of the world’s most admired companies.
Fortune magazine1 has referred to Nokia as the “least hierarchical big company in the
world". Nokia generates revenues of $19.9 billion and employs about 55,000 people. Its
shares are listed on the New York, Helsinki, Stockholm, London, Frankfurt and Paris stock
exchanges. Networks deals with data, video and voice network solutions. Mobile Phones
are the clear global leader. Many of the standard features of today's mobile phones, such
as large graphic displays, signal and battery indicators, colored covers and ringing tones
were originally developed by Nokia. Communication products include multimedia
terminals for digital TV and interactive services via satellite, cable and terrestrial networks.
 HISTORY

Nokia was set up in 1865, when a Finnish mining engineer, Fredrik Idestam established a
wood pulp mill on the banks of the Nokia river in southern Finland to manufacture paper.
In 1967, three companies, the Nokia Forest Products Company, Finnish Cable Works and
Finnish Rubber Works merged. As Cable Works had expertise in power transmission
cables and phone lines, Nokia decided to start an electronics division to diversify into
telecom products in 1960.

The decision to move into electronics was well timed. Semi conductor technology was just
evolving and Nokia, despite being a newcomer, was not seriously handicapped in any way.
It was Bjorn Westerlund, president of Cable Works who mooted the idea. Westerland tied
up with colleges and universities and hired technically competent people to implement the
project.

In the early 1970s, Nokia began developing a switch equipped with computer software and
Intel's microprocessors. Called the DX 200, the switch evolved into a multifaceted
platform, still the basis of Nokia's network infrastructure. The leadership of Kari Kairamo,
who became Nokia’s CEO in 1977, played a crucial role in Nokia’s evolution as a leader in
mobile phones. Kairamo, himself had little knowledge of the business, having been
associated with the forest products division. He, however, showed extraordinary initiative,
by recruiting outside talent and empowering the young engineers in the electronics
division.

In 1981, the Scandinavian countries came together to set up a multinational cellular

network, called Nordic Mobile Telephony (NMT). Many other countries also accepted
NMT. The system offered competitive prices, and international roaming facilities, and
quickly gained popularity the world over. While Swedish company Ericsson rapidly
emerged as the global leader in the cellular network equipment business, Nokia gradually
strengthened its capabilities in the mobile handsets segment. Soon mobile phones began to
evolve as an affordable communication medium even for the common man.

In the late 1980s, the European conference of Postal and Telecommunications

Administration (CEPT) decided to develop a common standard for digital mobile
telephony. This standard came to be known as GSM* (Global System for Mobile
Communications). Nokia committed itself to GSM technology very early on and signed
agreements to supply GSM networks to nine other European countries.
MISSION: CONNECTING PEOPLE

By connecting people, nokia help fulfill a fundamental human need for social connections
and contact. Nokia builds bridges between people – both when they are far apart and face-
to-face – and also bridges the gap between people and the information they need.

Nokia: Important Markets

1999 1998

Sales in Sales in
Country Euro Million Euro Million

USA 3360 1996

China 2332 1753

UK 1855 1205

Germany 1679 1135

Italy 968 752

France 951 776

Brazil 600 250

Netherlands 544 269

Finland 479 465

Australia 437 293

• SOCIAL OBJECTIVES

Nokia with its mission to 'connect people' is the world leader in mobile communications.
The company is deeply concerned about ethical business practices and believes that
personal and organisational integrity is essential to long term relationships- whether with
customers, employees or stakeholders. The organisation is committed to development
initiatives and is supporting numerous projects in partnership with several community and
charitable organizations worldwide.
 1. The focus of its community initiatives are centered on education, corporate
giving and disaster relief.

2. Keeping in line with their international programmes of employee

volunteering called 'Helping Hands', Nokia India is involved with an NGO working
with children with disabilities in Delhi.

3. Nokia's employees provide support to the NGO in terms of help and

training in accounts, human resources, IT, working with children and other activities.
Environment is another issue that is high on the agenda of the company.

4. The packagings of all their phones are made from recycled paper. Clear
instructions are also provided for correct disposal of used batteries with every handset.

5. Nokia is also set to launch its volunteering programmes involving all its
employees.

A market leader in the cellular industry in Asia Pacific, Nokia provides innovative,
industry- leading and market relevant technology and products to around 20 diverse
markets in the region.

Backed by its experience, innovation, user-friendliness and reliable solutions, the company
has become the leading supplier of mobile phones and a major supplier of broadband and
IP networks. By adding mobility to the internet, Nokia creates new opportunities for
companies and further enriches the daily lives of the people. Nokia is a broadly held
company with listings on six major exchanges.

• PARITY BETWEEN SOCIAL AND ECONOMIC OBJECTIVES

Mission at Nokia is, foremostly, to drive a profitable and growing business, but that does
not mean business at any cost. Conducting our business in an environmentally responsible
way is one very important way to ensuring and enhances long-term profitability.

 Sound environmental principles make business sense by helping minimize risk,

ensuring legal compliance, decreasing costs, and building reputation amongst
stakeholders.
 By conducting business in a responsible way, Nokia can make a significant
contribution to sustainable development, at the same time building a strong
foundation for economic growth.
 A strong spirit of cooperation, an ongoing open dialogue, and a determination to
learn from each other – be it the public sector, civil society or the private sector - is
imperative in steering the best course of action as we go forward.
 Nokia’s goal – responsibility – is to ensure that information and communication
technologies continue to create sustainable economic growth, foster social cohesion
and sustain free markets.
Just as the mobile communications industry has contributed to the wealth creation in the
industrialised countries over the last ten years, it is imperative that we do not lose sight of
the opportunity this offers for the rest of the world. Through providing low-cost access to
communication networks - offering service at a substantially lower cost than fixed
connectivity - the overall good this will bring to the global community is immeasurable.

It is important for society that companies see the benefit themselves in being responsible,
so that they act proactively, integrate programs into core business and make a sustainable
effort. Doing business in a responsible way makes business sense to Nokia. It helps to
create a sustainable product life cycle, sustainable employment, sustainable corporate
reputation, ultimately sustainable economic growth
ITS CORPORATE CULTURE, ETHICAL BUSINESS PRACTICES AND
CORPORATE SOCIAL RESPONSIBILTY.

CORPORATE CULTURE:-

A team of five senior executives is generally credited with Nokia’s success. These are
Pekka Ala Pietila, president, Matti Alahuta, head of Mobile phones, Sari Baldant, head of
Nokia Networks, Olli Pekka Kallasuvo, finance director and Ollila himself. The team has
been remarkably stable, having worked with the company for more than 15 years.

Nokia’s informal work culture lays emphasis on the empowerment of frontline employees.
A production manager at Nokia’s factory in FortWorth, USA remarks1: “That’s unique to
Nokia – the freedom a group is allowed to take. There are certain shared systems we keep
as standard, but you’re allowed to be creative.” A senior executive explains: “The
objective is to always have decisions made by the people who have the best knowledge.”
Indeed, Nokia’s organisation structure seems to be so loose and flexible that a human
resource manager at Nokia’s US headquarters in Texas has commented: “People who join
Nokia spend a few months trying to figure it out. You really have to figure out a network
of people to get things done.”

According to Nokia's 1999 Annual Report, "Despite our growing size, our culture remains
that of an independent, innovative and creative start-up. We aim to maintain this culture
no matter how large we may become. We believe that the best way to achieve this is less
through traditional management and more through leadership." According to Industry
Week, “At Nokia, there is a palpable culture of tolerating mistakes and encouraging people
to learn and develop.”

Creative organisations promote entrepreneurship among frontline employees and empower

them. Yet, without discipline, an informal and flexible work culture can easily degenerate
into chaos. At Nokia, a few senior executives have been given the responsibility for global
coordination and ensuring that core standards are uniformly imposed across subsidiaries.
For example, all new design ideas are scrutinized by the chief designer, Frank Nuovo,
who is responsible for the continuity – the ‘face and soul’ of the product. Ollila himself
believes in strong financial discipline and is prepared to exit from businesses which are
growing at a rate of less than 25% a year.
Besides these formal mechanisms, Nokia’s annual meetings, referred to as the ‘Nokia
way,’ are used to exchange notes and set priorities. After a brainstorming exercise, top
managers define the company’s vision, which is communicated to the lower layers of
management through formal presentations. These meetings also come up with appropriate
slogans that help in conveying the company’s corporate purpose across the organisation. In
1992, Nokia declared that it would be in ‘telecom oriented, focused, global, value added’
businesses. Four years later, Nokia’s goal was to play ‘a leading, brand recognized role in
creating the mobile information society.' A more recent slogan has been to “bring the
Internet to everybody’s pocket.”

In mid 1998, Ollila shuffled his top team. In an interview with Business Week he said: "I
want to remove people from their comfort areas, to remove stubbornness that gets built
into the minds of the people. We want to build a certain amount of chaos and a sense of
urgency. Switching also helps people learn from one another. Infrastructure can learn from
handsets about the speed and product life cycle of consumer electronics. And the phone
people can learn customer relations from infrastructure. It's cross fertilization."

Great leaders set Big Hairy Audacious Goals for their employees. To achieve these goals,
they are prepared to take big risks. In the early 1990s, Ollila bet heavily on branding and
consumer friendly designs to popularise the use of mobile phones. Nokia also made major
commitments ahead of time, in the wake of the European Community’s attempts to
deregulate the telecom industry. It tied up with smaller players such as Orange in Britain
and E-plus in Germany to grab market share from traditional telecom suppliers.

As Nokia enters the new millennium, it faces new challenges in an industry where
technological change can be devastating. However, it can proudly look back at its past
achievements. As a report on its website mentions: “Nokia’s history has shown that the
right decisions made at the right time breed success. We are confident that this vision and
the courage to create new opportunities will help us achieve our targets as we move into a
new era in communications.”

ETHICAL BUSINESS PRACTICES:-

Nokia has been and continues to be deeply committed to being an ethically sound business;
no long term customer, employee or other stakeholder relation can exist without
organization and personal integrity. Nokia is committed to the highest standards of ethical
conduct and full compliance with all applicable national and international laws. Nokia's
goal is to be an industry leader in these areas as well as a good corporate citizen wherever
it does business.

Ethics and Law

Nokia is strongly committed to the highest standards of ethical conduct, and full
compliance with all applicable national and international laws. This includes, for example,
those relating to antitrust and promoting fair competition, corporate governance,
preventing bribery, illicit payments and corruption, publicly traded securities, safety in the
intended use of the products and services Nokia delivers to customers, labor laws and
practices, the environment, human rights laws and internationally recognized standards,
and protecting copyright, company assets and other forms of intellectual property. Nokia's
goal is not mere minimum legal compliance, but as an industry leader to be among the
world’s best in corporate responsibility, practicing good corporate citizenship wherever it
does business.

Nokia respects the privacy and integrity of its stakeholders and endeavors to adhere to
strict standards when processing personal data and product information. All personal data
collected and held by Nokia will be processed fairly, lawfully and carefully and in a way
that protects the privacy of individuals.

CORPORATE SOCIAL RESPONSIBILITY

Corporate responsibility reflects the way in which companies impact on the world around
them; economically, socially, and environmentally.

Corporate responsibility for Nokia means acknowledging and responding to the impacts of
our business on society and the environment. As market leader and a global company,
Nokia takes its responsibilities seriously. Sound company ethics makes business sense by
helping to minimize risk, ensuring legal compliance, enhancing company efficiency and
building reputation amongst stakeholders.

By conducting business in a responsible way, Nokia can make a significant contribution to

sustainable development, at the same time building a strong foundation for economic
growth." Nokia Chairman and CEO, Jorma Ollila Mobile communications is now an
established force for social and economic development.

Corporate responsibility for Nokia means :-

 acknowledging and responding to the impacts of our business on society and the
environment.
 As market leader and a global company, Nokia takes its responsibilities seriously.
 Sound company ethics makes business sense by helping to minimize risk, ensuring
legal compliance, enhancing company efficiency and building reputation amongst
stakeholders.
Nokia believes that:-

 Economic, social and environmental responsibilities are not distinctly separate

issues. In addition to providing technology, products and services that have as little
environmental impact as possible.
 Nokia respects and promotes human rights and acts as a responsible member of the
society.
 Nokia sees ethical conduct and corporate citizenship issues as an integral part of
environmental thinking. This includes supporting charitable, educational, human
rights and community activities through donations and other resources.

• PARTICIPATION IN INDUSTRY COOPERATION

Aiming to develop closer cooperation between businesses, governments and other

organizations concerned with the environment and sustainable development, Nokia
participates actively in association work both at national and international level. Nokia
cooperates in creating a framework that allows businesses to contribute effectively to
sustainable development, to demonstrate progress in environmental and resource
management and to share best practices.
Membership in associations is a channel to contribute to the development of legislative
requirements and voluntary agreements. Nokia is e.g. a member of the European
Association of Consumer Electronic Manufactures (EACEM). It has also participated in
the pilot project of ECTEL for the take back of mobile phones. In Finland, Nokia has a
representative in an environmental working group under the Co-federation of Finnish
Industry and Employers. Nokia participated in a pilot project for take back of electronic
products arranged by the Federation of Finnish Electrical and Electronics Industry during
1997 - 1998. This project has progressed to its second phase to developing the take back
scheme further. In addition, a number of individual Nokia employees participate actively in
various associations and forums within in the
industry.

Basic principles in Nokia’s environmental policy include:

• A successful business requires solid product life cycle-based environmental

performance.

• The Nokia Way means an active, open and ethically sound approach to environmental
protection.

• The objective of Nokia’s environmental policy is sustainable development inaccordance

with the ICC (International Chamber of Commerce) business charter.

To implement these, Nokia applies the following principles:

• The environmental policy is a part of the general management process.

• Line organizations plan and implement the action programs by using environmental
specialists and the best available technology.

• The action programs are based on a thorough understanding of the environmental

impacts of a product throughout its life cycle.

• Minimizing the environmental impacts requires continuous efforts and follow-up of the
results; it is thereby a part of the total quality improvement process. Nokia uses the
international environmental management standard, ISO 14000 series, as guidelines for
environmental management. The results of environmental work are reviewed on an annual
basis, plans are updated and special goals are set where needed.

Goal areas within Nokia’s environmental management are :-

• Design for Environment is integrated into Nokia’s product development.

• Environmental management systems of all main Nokia production sites have to. Meet the
requirements of ISO 14001 by the end of year 2000.

• Environmental aspects are integrated into supply chain management.

• End-of-life practices are supported.

Corporate social responsibility involves:-

 Acknowledging the company’s range of opportunities to be realized and risks to be

minimized.
 Acting responsibly brings us improvements in risk management, legal compliance,
enhanced reputation and improvement in company efficiency issues like
productivity, quality and costs.
 The Nokia brand is one of the most valuable in the world, so a good reputation is
vital in order to maintain our standing among employees, investors, network
operators and consumers.

Nokia believes that it makes business sense to look after the markets we operate in, to
anticipate risks, demonstrate company values, work at increasing employee satisfaction,
enhance corporate governance principles, protect the Nokia brand and build a reputation
for citizenship.

The most obvious link to Nokia’s strategy can be found in the strategic intent, where
"trusted brand" clearly demands a good reputation. But there are other areas where
corporate responsibility directly supports company strategy. The "license to do business"
begins with legal compliance and good practice, to which environmental work and
employee programs contribute. Increased mobility and new marketing opportunities are
served by nurturing diverse, innovative teams, catering for accessibility in use of mobile
phones, digital bridging work and including developing countries in our market scope;
innovative and high-quality products cannot be created without attracting, retaining and
motivating employees, and efficient supply chain management; good reputation is helped
by, among other things, community involvement. Acting in a responsible way also
facilitates extensive cooperation across the industry and demonstrates the company values,
corporate transparency and responsiveness to stakeholder expectation.

Our future success demands responsible business. By acting responsibly in those issues
over which we have most influence, Nokia will make a positive difference to society, while
standing a better chance of achieving sustainable growth. In the long run, as the World
Council for Sustainable Business aptly puts it, "companies cannot succeed in societies that
fail".