Nokia Case Study

History: Nokia's history begins in 1865 when engineer Fredrik Idestam established a ground wood pulp mill on the banks of the Tammerkoski rapids in the town of Tampere, in southwestern Finland and started manufacturing paper. In 1868, Idestam built a second mill near the town of Nokia, by the Nokianvirta River, which had better resources for hydropower production. In 1871, with the help of his close friend statesman Leo Mechelin, Idestam renamed and transformed his firm into a share company, thereby founding the Nokia Company, the name it is still known by today. Through the years the Nokia Company partnered with Finnish Rubber Works Ltd and Finnish Cable Works Ltd. Eventually the three companies, which had been jointly owned since 1922, merged to form a new industrial conglomerate, Nokia Corporation in 1967 and pave the way for Nokia's future as a global corporation. The new company was involved in many industries, producing at one time or another paper products, car and bicycle tires, footwear (including rubber boots), communications cables, televisions and other consumer electronics, personal computers, electricity generation machinery, robotics, capacitors, military communications and equipment such as shortwave radios and gas masks, plastics, aluminum and chemicals. Each business unit had its own director who reported to the first Nokia Corporation President, Bjrn Westerlund. As the president of the Finnish Cable Works, he had been responsible for setting up the company's first electronics department in 1960, sowing the seeds of Nokia's future in telecommunications. Eventually, the company decided to divest itself of all of its non-telecommunications businesses in the 1990s and focus solely on its fastest growing segments in telecommunications. Financials: In 2008 the price per share was in the high $30s. Nokia stock prices are currently $5 per share, a substantial drop compared to 4 years ago this same time. The stock prices have been steadily dropping ever since. Nokia current market cap is at $22.88 Billion, thats less than 80% of what the conglomerate was worth in 2008 (~$150B). Nokia Corporation had revenues for the full year 2011 of $38.7B. This was -8.9% below the prior year's results. Nokia Corporation, which holds a market in 6 of the 7 continents, has sales in over 150 countries and employees approximately 130,000 full time employees in 120 different countries. Awards and accolades Heres a selection of other awards and accolades Nokia has picked up in recent years: 2011 Forbes Top 10 Worlds Most Sustainable Companies (#4) Top spot in Green peaces Guide to Greener Electronics 2010 (eight consecutive #1 positions since September 2008) Universums Top 50 Worlds Most Attractive Employers for Students 2011 NASSCOMs Excellence in Gender Inclusivity in India 2010

2010 Best Brand Award in Bangladesh (#1 for third consecutive year) 2010 Bloomberg Business Week Top 25 Most Innovative Companies Top 50 Macleans Socially Responsible Companies in Canada 2010 Economic Times Most Trusted Brand in India 2010 (#1) UK Nordic Business award for Research and Development 2010 Modern Consumer magazines 2010 Brazils Companies that Most Respect the Consumer (#1) Case Summary: From this case study I would say that the Finnish conglomerate, Nokia Corp, could have benefitted from a little cultural sensitivity and application of convergence in their management of the German plant. This would have allowed them to properly manage the city and governments expectations about their decision to move and kept some brand loyalty in an economically strong European nation. They also should have been more socially responsible, assessing not only the benefits and consequences to the corporation but also that of the German city, in which they operated in for 2 decades, if they were to move their plant to Romania. If they had, they may have come up with an innovative solution that would allow them to move and be competitive, while maintaining, if not uplifting the Nokia Corp. reputation. Case Questions: 1. What are the trends in the mobile handset industry? What is Nokias strategy and how has globalization changed its way of operation? a. Current trends in mobile handsets are shifting from regular cell phones to high tech smart phones. Some say that there is a shift from smart phones to super phones, where super phones are much faster and with way more apps, i.e. the iPhone. Along those lines you also have the introduction tablets which offer many apps and internet functionality. b. Nokia has tried to make less expensive phones to compete in markets that are beginning to expand such as India and China. They are moving their productions to more cost effect countries in order to increase their profit margins as they develop more advanced super phones to market to the more industrialized countries such as the US, Japan and the EU. They are also shifting their focus from mobile telecommunication to internet communication. 2. Was the German backlash against Nokia justified? How can nations make themselves more competitive? a. The German backlash was justified by Germans due to the way Germans do business. There were certain expectations of Nokia Corp by Germany and those expectations were not met. Germans felt the proper protocol or process was to inform Germany of the issues which require Nokia Corp to relocate and create a brainstorming session to find a resolution. Finnish business simply does not operate that way and they knew there was not going to be any solution. The numbers would never add up.

b. Nations have to understand that they must produce their own products or develop a system which protects their economy when a large corporation establishes a business in their country which creates economic dependency. This could be in the form of government or private transition or ownership of the plants in order to continue production of some product as opposed to paying unemployment and other fees. This allows employees or government an opportunity to find a contract with someone else for production and utilize the existing infrastructure. 3. What, if any, were the flaws in Nokias approach to announcing and handling its plant closure? What can the company do now for damage control? a. Personally I believe that after 20 years of operation in Germany, Nokia Corp should have done a better job of breaking the news to Germany. I think that even if they knew it was inevitable, they should have discussed the move and possibly setup programs in advance to help decrease the burden of their move. Germany should have been given an opportunity to discuss the fate of their city and overall economy. b. At this point since it has already been about 3-4 years since the plant shut down there is not much that Nokia can do to rectify the situation. Hopefully they returned some of the money they were given in subsidies and setup programs to help the unemployed transition into other forms of work.