Report on Study of Decline and Revival of Nokia
Managing People and Organisation
EC1 Experiential Learning
Work Integrated Learning Program
Birla Institute of Technology and Science
Submitted to: Submitted by:
Dr.Anjani Srikanth Koka S.Kaleeswaran
ID No: 2018HB79559
MBA Manufacturing Management
In less than a decade, Nokia started from Finland to lead global mobile phone revolution. It grew to recognise valuable brand in the world. Nokia covered height of 40 percent of global mobile phone market share (Cord, 2104). In this journey the around 2010 nokia shift from top and decline was equal and led to sale of mobile division to Microsoft. This paper focuses on exploring the challenges and reason for market crisis of nokia in the period of early 2010’s. As shown in graphs below we can predict that Nokia’s growth was good until 2007 but immediate after 2007 Nokia‘s turnover, market share, operating margin were declined continuously. So the purpose of the study is to analysis the organisational behaviour problem which was the reason for above downfall of Nokia and the theoretical concept that lead to cause of the problem. The actions implemented by the company to solve the problem in the organisation for bringing Nokia back to the market.
Source :< http://disruptiveinnovation.se/?p=131>
Source :< http://disruptiveinnovation.se/?p=131>
Theoretical causes of the problem
Nokia used symbian as its operating system. Nokia taught that touch screen mobiles will not survive in the market; people will be back to qwerty keypad mobiles. In 2007 IPhone was introduced by apple with its own OS called IOS. At the same time Google made the android operating system as the open source platform. Nokia acquired Symbian limited and developed to compete with apple and android. But symbian was not very popular its share value is declined in 2010. But Nokia’s executives were afraid to acknowledge the inferiority of symbian with android and IOS. Nokia’s OS was symbian till 2011. When nokia realised its mistake and decided to come back to existing trend it was too late with windows OS. Nokia can’t stand in the international market and sold its mobile sector to Microsoft. Then Microsoft is manufacturing mobiles with windows OS till today. Nokia could not respond to new innovations and did not take that into consideration the main reason behind this is lack of Leadership in the organisation.
The Nokia’s engineers and designers were well talented and they were not properly supported by the management for more innovations. Nokia still know how to innovate but failed in adopting themselves to desired market conditions. Nokia did not consider its marketing in United States. But apple and Google born in US and its global share were increased. According to Harvard Business Review 2011 one can’t be a genuine global innovator if he a loser in America. Nokia’s new deal with Microsoft was also not an essential turn. All the levels of managers were afraid of giving a ideas to their leader because of various reason like Target, inferiority, lack of technology etc. In Nokia employee’s interaction with each other was down to the earth. So there were no good organisational culture maintained in the Nokia this also a main reason for downfall of nokia.
Nokia’s deal with Microsoft was incorrect. Globally open source OS platform was android but Nokia failed to acknowledge the inability with symbian. So Nokia felt in the hands of Microsoft. It also concerned that Samsung is much stronger in android platform and Nokia’s executives afraid to compete with their eco system. They also knew that it would take many years to develop better OS compared to apple.
CEO’s of Nokia played a vital role in Nokia’s performance. In 1992 Jorma Ollila became the CEO of Nokia. He knew that mobile communication would be big and will paly important role in global technology. He is the most important reason to take Nokia as global leader of mobile phones during his period Nokia’s turnover raised from 6.5 billon EUR to 31 billion EUR and also covered global market share upto 40%. During that tenure nokia made lot of Money. But he failed to predict the changing consumer needs and new software development for future.
In 2006 he resigned his designation in Nokia and became chairman of Royal Dutch shell. Olli-Pekka Kallasvuo covered that place from June 2006.
As a CEO in his tenure between 2006-2010 he failed to inspire and mobilise various groups genuinely and honestly to cooperate with others to do innovative things to their consumers. He did not go with android platform. He cannot turn around the nokia’s market he himself realised to drop the position in Nokia.
In September 2010 Stephen Elop became New CEO to nokia and he is first non- Finnish director in Nokia’s history. Nokia's chairman Jorma Ollila commented: "Stephen has the right industry experience and leadership skills." But his statement were wrong. When he come to nokia he wrote to his employee that they are in burning platforms and to decide how to change their behaviour. But his steps were finally failed and lead the nokia to sell to Microsoft Corporation.
Leadership is the ability to influence a group towards achievement of a vision or goals. Not all leaders are managers but all leaders are managers. Organisation need strong leadership and strong management for optimal effectiveness in which nokia has failed to have good Leader.
Initiative of Nokia to solve problems
Even though the company was close towards shut down Nokia did not lose its confidence. In the year 2016 Microsoft sold its phone band to the HMD which was formed by farmer Nokia employee in Finland. Here is the turn begins; HMD announced that it interested to start of Nokia branded Smartphone and tablets that runs in android operating system.
They changed the working culture in the organisation they realised their weakness that lack of understanding customer needs. In April 2015 when nokia acquired Alcatel- Lucent its main purpose is to be powerful in network market Nokia wants to research and develop on 5G trails and it want to use this technology to re enter the global market.
Nokia focus on entirely technological research and development activities for the patenting of network and mobile devices with R&D announcement of new strategy in 2014. They mainly focus on resource and innovation sharing, understanding demand and need of employees in the organisation.
Until 2012 when nokia loses market leading position nokia had strong brand recognition and value for the company. Nowadays nokia uses its capability to gain position in network infrastructure market and to gain mobile device market.
The corporate system of nokia is based on Finnish regularity law. According to this law divided its managerial operations as shown in figure below
General governance scheme of Nokia
A general meeting of share holders is the primary function of this organisation for application of decision making process. Each member of this meeting has voting power to make a decision of election about a specific subject. Nokia leadership team have responsibility for operative management of nokia to develop and sustain operative strategies of Nokia.
Nokia has a significant strategical mistake in its past history. These mistakes were mainly related to lack of innovations. But Nokia created future vision for itself called technology vision 2020. Which includes six strategical goals which is created in purpose of increasing in infrastructure, network speed, customer experience. The other innovation focused area for nokia is 5G research it is working on new mobile broadband system.
In March 2017 Nokia announces changes in its organization and Group Leadership Team to improve the execution of company strategy. This change in group separate into two distinct one is mobile network focuses on product and solution and other is global service focuses on service sector.
The company chief innovating and operating officer (CIIO) has split into chief operating officer (COO) and chief technology officer.
These were the steps taken by the Nokia to bring back its brand and to implicate globally.
The above changes in the organisations made the Nokia to enter into the mobile market and lead to dramatic increase in its market share. It shipped 7.7million units of smart phones in 2017 when Nokia Joined with HMD and after a successful leadership in the year 2018 its shipment were increased to 17.5 million which has a increase of 126% within a year where many other leading Smartphone had significantly declined. And also it ranked to the 9th position at the end of year 2018. The global smartphone market share at the end of 2018 is 1%. According to counterpoint report 2018 Nokia is the fourth fastest growing smartphone brand in India its market share grew by 138% as shown in figure below. These data shows the successful and faster growth of Nokia HMD in the global market. Finally I conclude that the organisational behaviour is important in any organisation because it has capability to increase our growth to sky also to decline to the earth.
Source: < www.counterpointresearch.com >
Source: < www.counterpointresearch.com >
6. Cord, D. J. (2014). (2014). The decline and fall of Nokia. Schildt & Soderstrom