Alarm Ringing: Nokia in 2010 “[...JNokia's problems are still fixable but the window is closing. lam not optimistic that they will be fixed in 2010 because there isn't much time left, and if they aren’ fixed in 2011, Nokia will be in big trouble.” Market Leader In Trouble In September 2010, Stephen Elop (Elop) joined Nokia Corporations (Nokia) as the President and CEO. Elop, former head of Microsoft’s Business Division® (MBD), ‘was brought in to fix the numerous problems faced by the world’s leading mobile phone company. His tasks included the onerous job of reversing not only Nokia’s eroding market share in the high-end smartphone seg- ment but also its slumping profits. “My role, as the leader of Nokia, isto lead this team through this period of change, take the organization through a period of disruption. My job is to create an environment where those opportunities are properly captured, to ultimately, ensure we are meeting the needs of our customers, while delivering superior financial result," said Elop. The Finland-based Nokia had a presence in over 1160 countries as of 2010. Though it was the world’s largest mobile phone maker with a market share of 35% in the first quarter of 2010, Nokia had been los- ing market share consistently in the high-end mobile phone market. According to analysts, problems be- gan for the company with the increase in the global demand for smartphones, a segment in which Nokia was unable to find its footing compared to rivals like Research In Motion’ (RIM) and Apple.* Nokia was not only slow in launching smartphones with the latest version of its Symbian” operating system (0S), but also in catching up with the touch-screen technology, they said. Nokia’s major problems were development of new software services, hardware de- sign, and North American distribution. The plunging market share price and dwindling investor confidence —Nick Jones, vice president, Gartner, Inc.? in 2010. ultimately led to Elop replacing Olli-Pekka Kallasvuo (Kallasvuo), who had been CEO since mid-2006. Experts opined that under Kallasvuo, Nokia had struggled to keep up with rivals in the smartphone segment, the most profitable and fastest-growing seg- ment in the global mobile phone market. Analysts felt that Elop had a tough road ahead as he had to establish the company’s presence in the smartphone segment and increase its profits. More- over, he would have to revitalize the-Nokia brand and stand up against the competition. What made the assignment even more challenging for Elop was the deeply-entrenched culture at Nokia. Being a Canadian, who had spent most of his time managing the affairs of US-based companies, he was expected to face resistance from the management team with a strong Finnish cultural bias. Elop’s appointment elic- ited mixed reactions from analysts. However, they were unanimous in their view that the decisions he took would determine whether Nokia would be able to regain its past glory or whether it would capitu- Tate to the fast emerging competition. About Nokia As of 2010, Nokia employed about 123,553 employ- ees and operated under three business segments— Devices & Services, NAVTEQ (a leader in comprehensive digital mapping and navigation ser vices), and Nokia Siemens Networks. It operated 15 ‘manufacturing facilities in nine countries and main- tained R&D facilities in 12 countries. Nokia had been ‘market leader in the mobile phone market since 1998. (© 2011, 18S Center for Management Research. Al sights reserved. This cere was writen by Syeda Masecha Quien under the direction of Debaprasim Purkayasth, IBS Center foc Managersent Reseach, It was compiled from published sources and is intended to be used as 1 basis for class discussion rathee chan to illustrat either effective or ineffective handling of a management sitcation.