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Nokia

Nokia

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Published by: robinkapoor on Apr 08, 2009
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Introduction
 The Nokia Group (Nokia) is the world’s largest mobile manufacturer and a leadingsupplier of digital mobile and fixed networks. The company’s increasing focus oncellular products and wireless services is responsible for the Nokia success duringthe last decade. Headquartered in Helsinki, Nokia is the largest and most successfulorganization in Finland.By reviewing the market in the 1980’s, analog telecommunication products andservices dominated the market. In the beginning of 1990, the increase of wirelessphone systems resulted in new standards for future mobile communications. Digitalnetworks where developed with more potential in traffic rate and roamingcapabilities. In the end of 1990 the increased demand is focused on wirelessinformation exchange, connecting people and computers to interact with differentparts of the world.
The Organization
 The Nokia Group has during the last decades experienced major organizationalchanges and shifted its focus to new market and product segments. In 1994 Nokiaconsisted of five business groups; Consumer Electronics, Telecommunications,Cables and Machinery, Mobile Phones and Other Operations, with its core focustowards telecommunications. Later Nokia merged the Consumer Electronics and theCables and Machinery business groups with the Other Operation business group(Nokia 1997). There are many elements and organizational factors in the company’s outstandingsuccess. The company was established in 1865 and has over a long periodestablished strong relations with different vendors and manufacturers in differentparts of the world. From the early days of the mobile industry, Nokia produced andmanufactured multiple standards and cellular products. The firm acquired a widebase of knowledge and with its continued research and development (R&D) effort,the result was production of superior cellular products and wireless services. The Nokia Group is represented with sales in 130 countries. Most of the company’sexecutive management and board are with Finnish origin. In each country thecompany is represented with a local management, which is responsible for variousoperations in its country. Due to the majority of Finnish leadership, it resolvessimilarities to an organization with polycentric management with geocentricoperations (Keegan 1998:11-16; Rahul 1996).Nokia has increased total sale with more than 60 percent since 1994. The mobilephone group’s share of the total sale has increased from 35 percent in 1994, to 56percent in 1997. The profit from the group has increased from 44 percent, to 61percent the same period. The net profit of the total sale has more than doubledsince 1995, to 12 percent in 1997. The R&D costs have increased 2 percent for thesame period, to 9.3 percent of the total sale in 1997.
 
The Nordic markets
As the most successful organizations in the history of Finland, Nokia is successful indifferent markets. In 1996 it estimated 6 % of net sales and a 46 % penetration ratein the Finnish market for cellular mobile products. In Scandinavia, the marketpenetration rate reached 44 % in Norway and 29 % in Denmark. Sweden wasranked as Nokia’s 8 major market with sales estimated to 8 billion FIM (Nokia 1997).As the company increased its knowledge in telecommunications in the late eighties,it entered the European and world arena. All these indications demonstrate the localadaptation and usage of the cultural differences Nokia adopted in the Nordiccountries during the eighties and nineties. Today, Norway is the only Scandinavian country that not is a member of theEuropean Union (EU). The other Scandinavian countries, Sweden and Denmark,have been members since 1995 and 1974. Finland became a member in 1994. Theimportance of Finland’s participation in the EU is obvious to the global localization of the Nokia Group today. Nokia is represented with sales offices in every Europeancountry, US and in Asia. Nokia has production facilities in Europe, Asia and the USand R&D departments in 11 counties. The organization’s economic developmentresolved in heavy foreign capital investment and is today represented in Europeanand US stock exchanges. In some respects, Nokia as a Finnish company could beidentified as a Baltic country, rather than the belongings to the western Europeanculture and economy (Guttman 1994; Rahul 1996; Nokia 1997).
The Core Competence
Part of Nokia’s core competence is the knowledge and experience in the wirelesscellular and network services industry. By focusing on superior products andservices, Nokia has gained several national and international awards. Introducingnew product modifications and technological enhancements is part of thecompany’s product leadership. With a wide range of products, Nokia has appliedproducts independently of technical standard or geographical location. Nokia alsoparticipates in developing new global standards for future telecommunication needsand trends. With its leading position as mobile phone manufacturer and supplier of digital mobile networks, Nokia’s participation in development of future technologiesenables them to deliver excellent products for the next decade. The Nokia products are targeting to specific market segments. The Nokia design onportable cellular phones is characterized by lifestyle, freedom, opportunities of choice, technology and urbanization (Nokia 1997). The product design bothemphasizes consumer behavior and technical industry standards.Nokia was the first cellular mobile manufacturer who adopted models for new waysof thinking into their marketing operations. The general management urgedmarketing managers to think of companies as repositories of skills, rather thanportfolios of products. A marketing team from Nokia went to Venice Beach in
 
California and the King’s Road in London, to observe the way that mobile phoneswere becoming fashion accessories (Economist March 1997:77). This unusual approach resulted in a superior product design and control of consumer segment. Nokia attached a unique value of trends, lifestyles, freedom,power, and technology among others, into their products. This unique valueperceived by the customers resulted into a leading brand well-positioned (Keegan1999:8-7; Quelch and Kenny 1994:153-154 and 158-160).
The Unique Value
Nokia saw that the customer preferences were starting to change, and appliedthese changes to their products. To spot the needs in the market, and to tell thecustomers that this is the phone they need, are some of Nokia’s strengths.Nokia has for many years had a focus on design, customer adaptation, and userfriendliness. This has turned out to be a success, as they passed Motorola in 1998as the world-leading supplier of mobile phones (Nokia 1998). The unique value seen by consumer’s is identified in the products unique value. Theunique value can be viewed as the customer’s perception on its benefit preferencesdivided by actual price
A Global Winner
 The outstanding growth and success of Nokia can be summarized as the overallperformance, focus and strategic decisions made in the early days of the mobilestrategic decisions made in the early days of the mobile cellular industry.Nokia is characterized as a global winner for several reasons (Appendix I);
Product leadership
 The operational excellency by the top ManagementIdentification of the internal processes from production to distribution (TQM) The success in own countryKeeping the global focus on segments.As the company grew, they identified new need, for a maturing markets and createdcustomer needs as the products where launched (Lamb et al. 1994:728-740).
The Global Cellular Mobile Industry:
 The global mobile phone industry is based on many different manufacturers andoperators. The industry is based on advanced technology and many of themanufacturers are operating in different industries, where they use theirtechnological skills, distribution network, market knowledge and brand name. Threelarge manufacturers of mobile phones are today dominating the global mobile

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