You are on page 1of 3

Case 7

Nokia Corporation
Innovation and Differentiation are at the Root of Success

Mobile phone market in Bangladesh is going through major changes. Key players are losing market share while new and young companies, mostly from Asian countries, are coming to the market. At the same time the market is slowly expanding when people are buying more phones than ever. The whole process of buying mobile phones has changed in the last few years. People no longer carry the same phone year in year out, but they change their phone every year, some even twice a year. One reason for this change is the fast technological development of the phones. But also consumers attitudes towards mobile phones have changed. Mobile phones are no longer seen as expensive, hi-tech products, but they have become accessories like jewelry or a piece of clothing. Nokia is still the largest mobile phone company in the world, but its long-term dominance is now challenged more than ever. Observers have begun asking whether the cutting edge that has turned Nokia into the No 1 vendor still exists, as Nokias market share and revenues have been on the decline. Falling average sales prices (ASPs) and market share have had an impact and forced Nokia to further re-think its strategy towards developed and emerging markets. Fredrik ldestam, a mining engineer of Finaland,3 established in 1871 Nokia Company with co-founder (his close friend statesman) Leo Mechelin. Nokia is a public limited-liability company, headquartered in Keilaniemi, Espoo, Finland and listed on the Helsinki, Frankfurt, and New York stock exchanges. As an industrial conglomerate, Nokia Corporation came into being in 1967. lt operated businesses in many industries, producing at one time or another paper products, car and bicycle tires, footwear, communications cables, televisions and other consumer electronics, personal computers, electricity generation machinery, robotics, capacitors, military communications and equipment, plastics, aluminum and chemicals. Each business unit had its own director who reported to the president of the Nokia Corporation. The company eventually decided to focus solely on the fastest growing segments in telecommunications. During 1990s, Nokia divested itself of all of its non-telecommunications businesses. Nokias first mobile phone got tremendous customer response, although the design of the mobile was odd-looking to many with a high price (around 4,56O). Initially, the mobile phone was a status symbol. Nokia was one of the key developers of the second-generation mobile technology known as Global System for Mobile Communications (GSM), which could cany data as well as voice traffic. The world's first commercial GSM call was made on 1 July 1991 in Finlands capital Helsinki, using a prototype Nokia GSM phone. ln 1992, the first GSM phone, the Nokia 1011, was launched. By 1998, Nokia's focus on telecommunications and its first-mover strategy for investment in GSM technologies earned the company the reputation of world's largest mobile phone manufacturer, a position it could hold for the next 14 consecutive years until 2012.

3 Helen, Tapio. "ldestam, Fredrik (18381916)". Biographical Centre of the Finnish Literature Society. Retrieved 22 March 2009 4 "Nokia Towards Telecommunications" (PDF). Nokia Corporation. August 2000. Retrieved 5 June 2008. 5 "Nokia ~ Jorma Ollila Mobile revolution Story of Nokia". Nokia Corporation. Retrieved 21 March 2009. 6 "Nokia's Pioneering GSM Research and Development to be Awarded by Eduard Rhein Foundation" (Press release). Nokia Corporation. 17 October 1997. Retrieved 7 April 2012.

Nokia House (Nokias headquarters in Espoo, Finland (left) and the first mobile phone of Nokia (Mobira Cityman 150, N0kia's NMT-900 mobile phone) Nokia over the years decreased the size of the mobile sets as its differentiation strategy to compete with the dominant global competitors like Samsung, Motorola, Ericsson, etc.

Gradual decrease in the size of Nokia phone sets.

Nokia launched its Nokia 1100 handset in 2003. lt was the best-selling mobile phone of all time and the world's top-selling consumer electronics product. ln May 2007, Nokia released its first touch screen phone (Nokia 7710). This innovated product captured a huge market. ln November 2007, Nokia released the Nokia N82, its first N-series phone with Xenon flash. ln 2008, Nokia released the Nokia E71 to directly compete with the other BlackBerry-type devices. On 2 September 2009, Nokia launched two new music and social networking phones, the X6 and X3. Nokia launched in the Indian market two new Asha range of handsets in August 2012. These handsets are equipped with cloud accelerated Nokia browser. The users can browse the lnternet faster with these sets. Nokia introduced two new smartphones in December 2012 - Lumia 620 and Lumia 920T. ln 2009 Nokia contributed 1.6% to Finland's GDP, and accounted for about 16% of Finland's exports in 2006. in 2011 Nokia had 130,000 employees in 120 countries, sales in more than 150 countries, global annual revenue ot over 38 billion, and operating loss of 1 billion. lt was the world's largest manufacturer of mobile phones in 2011, with global device market share of 23% in the second quarter. lt has nine production plants in Finland, With seven sites in Finland, China, India, Kenya, Switzerland, the United Kingdom and the United States, Nokia has a world-famous research center since 1986 manned by 500 researchers and scientists. Prior to 2010, Nokia was the market leader. However, since then competition emerged in the Asia Pacific region with brands such as Micromax, Nexian, and i-Mobile and chipped away at Nokia's market share. Android powered smartphones also gained momentum across the region at the expense of Nokia.

University-industry linkage
Nokia is is a pioneer in establishing university-industry linkage (UlL) for innovating its products. lt has research collaborations with major universities and institutions by sharing resources and leveraging ideas. Although the major research collaboration is with Finalnds Tampere University of Technology, UIL includes several universities worldwide: Aalto University (Finland), Ecole Polytechnique Fed-rale de Lausanne (Switzerland), ETH Zurich (Switzerland), Massachusetts institute of Technology (United States), Stanford University (United States), Tsinghua University (China), University of California (Berkeley, United States), University of Cambridge (United Kingdom), University of Southern California (United States), and Singularity University (United States). 7 The first hand-held mobile phone was demonstrated by John F. Mitchell and Dr Martin Cooper of Motorola in 1973, using a handset weighing around 2.2 pounds (1 kg). in 1983, the DynaTAC 8000x was the first to be commercially available. From 1990 to 2011, worldwide mobile phone subscriptions grew from 12.4 million to over 6 billion, penetrating about 87% of the global population and reaching the bottom of the economic pyramid (Wikipedia).

Thursday July 26, 2012 Nokia confirms plans to close last plant in Finland which is the country of origin of these manufacturers. The factory located in the Salo region that had stopped producing mobile phone the day before. According to the schedule, the plant will be officially closed in September. As a result, approximately 780 Nokia employees will lose their jobs. Nokia phones that had dominated the market for over a decade was no longer able to bear the label Made in Finland. V Nokia is trying to save money after continued losses over the last few quarters. In June of this mobile phone manufacturers announced plans to lay off about 3,700 workers in Finland. A total of 10,000 employees worldwide are threatened Nokia dismissed towards the end of 2013. Other savings plans involve the closure of Nokias research and development facilities in Canada and Germany. Nokia said that the closure of two facilities, along with the dissolution of the last factory in Finland, can save you money up to 2 billion dollars until the end of next year.