Finland and Nokia: A Case Study of Innovation and Growth

Finland and Nokia
CASE ANALYSIS
Group Members
 Abaid Ullah
 Ammara Atta
 Anam Farooq
 Fahad Butt
 Hassan Zulqarnain
Case: Finland & Nokia

Presentation Plan
 Case Summary Anam Farooq

 Issues & Problems Anam Farooq
 Case Analysis
 Finland Ammara Atta
 Nokia Fahad Butt
 Nokia at Corporate level Fahad Butt
 Nokia at Global level Hassan Zulqarnain
 Finland & Nokia 2001-2010 Abaid Ullah
Case: Finland & Nokia

Case Summary
 In the 1980s, a process started of moving out of an

investment-driven economy into an innovation-
driven one.
 With the collapse of the Soviet Union around 1990,
Finland reached a crisis.
 Finland became the member of the European Union
with fiscal stability.
 Finnish constitution had the semi-presidential form
of government that plays a significant role in forming
the good foreign relations.
Case: Finland & Nokia Anam

Cont...
 Nokia accounting for some 70% to 80% of the cluster

exports and the world leader in mobile phones.
 Finnish government plays an important role in the
leading companies of the Finland industry.
 Positive influence of Finnish exports, R&D
expenditures and market capitalization.

Issues & Problems
 Slowdown of global telecommunication.

 Overall growth rates were also on the way out with
the major export markets weakening.
 The telecommunication cluster was at its peak and
was also facing severe downturn.
 Demand for skilled labor was increasing whereas
Nokia had shortage of skilled labor engineers and
scientists.
 Unemployment was also increasing in Finnish
society among young and unskilled.
Case Analysis
FINLAND
Case: Finland & Nokia Ammara

Levels of Fitness
 Simple consistency:
 Finland’s overall economy was consistent in innovation in
telecommunication and IT industry.
 Reinforcement:
 New universities were opened
 Huge investments in R&D
 Acquisitions for latest technology and market developments
 Government was monitoring mergers and acquisitions in

private sectors to harmonize and reinforce overall R&D efforts.

Cont...
 Optimization:
A telecommunication cluster was emerged in Finland in which

smaller companies merged in large conglomerates like Nokia.
The best combination for innovation in telecommunication

was formed in Finland.

Major Business
 The 3 largest clusters in Finnish economy were;
 Pulp & paper (accounted for 40% of exports)
 Wood products (accounted for 16% of exports)
 Engineered metal (accounted for 23% of exports)

Economic Conditions
 The real GDP fell by 6.2%.

 Finnish exports came down.
 Overall interest rate increased in the economy.
 The prices of the property were increasing.
 With the betterment in the Finland economy and
when it got stable, it started spending more on R&D
and did more innovation.

Telecom Sector
 In 2001, over 200 million mobile phones were sold

worldwide.
 Telecom industry was divided into two parts:
 Mobile communication infrastructure

 Mobile handsets

SWOT
STRENGTHS WEAKNESSES
Early adopters of mobile phones Unskilled employees and scientists

Leader in mobile penetration Difficulties in relation to attractiveness; small domestic
High involvement of government in leading companies market area, limited number of inhabitants, a small
A high literacy rate language area
Problems with venture capital (amount, availability,
matching of demand and supply)
OPPORTUNITIES THREATS
Going beyond EU, looking for best competence globally Intense competition
Open minded and sufficient support for creativity and Unemployment (2001)
innovation Decreasing sales

Business Conditions
 Telecommunication was the major sector

contributing to the business economy with the
increasing innovation with growth and stability of
the economy.
 In 2001, the mobile service providers also faced the
intense competition throughout the world. This had
forced the handset manufacturers to develop
handsets focused on segments.
 Mobile handsets were sold through service operators
as well as through independent dealers.

Cluster
 The Finnish telecommunication cluster started in

1970s and by 2000 it showed the tremendous growth
by employing some 83000 people under 4% of
national employment.
 It gave 6.9% of GDP.
 The cluster had grown on average annual rate of

20%.

Case Analysis
NOKIA
Case: Finland & Nokia Fahad

Origin of Strategic Positioning
 “need based positioning” as sophisticated demand

was there in Army which acted as a seed for the
innovation in radio technology.

Operating system focus
1. Flexibility (Innovation)
2. Quality (Nokia 2100 was Nokia’s first consumer
targeted model and was sold mainly due to high
quality)
3. Delivery speed
4. Service
5. Cost

SWOT
Strengths Weakness
Innovation
Market leader
Increasing sales Could not create monopoly as government
Acquisitions and JVs for new technology forbade doing so.
Backward integration
Captured markets of different standards
Opportunities Threats
Motorola’s first mover advantage in mobile
infrastructure and analog phones’
Emerging telecommunication sector in third Joint venture of Sony and Ericsson
world countries Downturn in telecommunication sector

Porter’s Five Forces Model
Bargaining Low as customers

have no/less
power of other option to
compare with
customers
High because High as overall

related industry Intensive because technology was Threats of
Threats of competitors were of many local and changing and
shifting towards global digital standards
substitutes
new telecommunicatio
n
competitors. were emerging
(TDMA, CDMA)
entrants
Low as large
number of
Bargaining
contract
manufacturers
power of
dependent upon
Nokia
Suppliers
BCG Matrix

Nokia at Corporate Level

Culture and Core Values
 Nokia suffered a crisis situation in late 1980s.
 New CEO introduced four fundamentals values of Nokia

named them “Nokia Way”.
 Customer satisfaction
 Respect for the individual
 Achievement
 Continuous learning

Transferring Skills & Sharing Activities
 In 1979, Nokia and Salora created a 50-50 owned

joint venture (named as Mobira) to market and
develop radio technology.
 Mobira expanded through global alliances and

established joint ventures in Korea and US.

Cont...
 In 1990s, Nokia reorganized its supply chain to

include contract manufacturers and began to
contract for some software development and R&D.
 Acquired several electronics companies including

PC and office electronics business of Ericsson
Information Systems.

Diversification
 Nokia did related diversification and invested in

making mobile handsets.
 Nokia was among top three companies which were

active in both, infrastructure and handsets in 2001.
(Other two were Ericsson and Motorola)

Big picture of overall growth
In 2001:
 Nokia networks: (Multiple setups)
 5 plants in Finland
 5 in China
 1 in Malaysia.
 Nokia Mobile Phones had production units in

eight countries.

Nokia at Global Level
Case: Finland & Nokia Hassan

Cont...
 Size of Organization
 Manufacturing facilities
 World leader in Digital Phones
 Technology

 Brand recognition
 Market channels
 Adaptability
 Industry structure
 Competitive advantage
OLI

Porter’s Diamond model

Recommendations for issues
 NOKIA should focus on high potential Asian and

third world countries to give a boost to its overall
global sales.
 Finland universities should market them as Global

IT & Telecommunication specialized universities to
attract more foreign students. NOKIA should get
skilled labor from its global existing markets to cope
up with skilled labor shortage.

Finland
2001-2010
Case: Finland & Nokia Abaid

Cont...
 2002-2004: Finnish Government adopted a

resolution on the national broadband strategy.
 2005-2007: The Government of Finland granted an
operating license to build a new digital mobile
communications network. Flash-OFDM was chosen
as the technology for the network.
 In 2007 Finland’s research and development
expenditure represented 3.5% of the gross domestic
product, which put Finland among the OECD top.

Cont...
 2008-2010: New frequencies were allocated to

telecommunications companies allowing them to
build 4G mobile networks which made Finland the
first country in Europe to allow the use of 4G LTE
technology at such low frequencies.
 Over the past decade, the number of R&D personnel
has grown from 40,000 to nearly 80,000. This
makes over 2% of the overall labor force.

Nokia
2001-2010

Cont...
 2002: Nokia Networks, and Redback Networks Inc.

announced strategic agreement to increase
broadband solution.
 2003: Nokia built Eizel's foundation to make
wireless Internet access interactive and highly
satisfying for business users.
 2004: Nokia and Metrowerks completed transaction
on transfer of application development technology to
Nokia

Cont...
 2005: Nokia Corporation sold all of the

approximately 3.2 million Nextrom holding shares it
owned.
 2006: Nokia acquired Intellisync, a leader in
platform-independent wireless messaging and
applications for mobile devices.
 2007: Nokia acquired Twango to offer a
comprehensive media sharing experience:Share
photos, video and other media through virtually any
connected device.

Cont...
 2008: Nokia completed its acquisition of Trolltech,

a recognized software provider with world-class
software development platforms and frameworks.
 Nokia acquired Symbian Limited .
 2009: Microsoft and Nokia formed global alliance to
design, develop and market mobile productivity
solutions.
 2010: Nokia completes acquisition of Novarra to
enhance internet experience in Nokia series 40
mobile phones.

Market Share of Nokia in 2010
 Nokia products accounted for 34% of the global

market for cell phones, compared with 38%
previously announced. The company blamed a flood
of Chinese and fake phones — devices often
marketed under a brand close to Nokia’s but
manufactured by others.

Thank You

Finland and Nokia: A Case Study of Innovation and Growth

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Finland and Nokia: A Case Study of Innovation and Growth

Uploaded by

Copyright:

Available Formats

Finland and Nokia

Case: Finland & Nokia

 Case Summary Anam Farooq

Case: Finland & Nokia

 In the 1980s, a process started of moving out of an

Case: Finland & Nokia Anam

 Nokia accounting for some 70% to 80% of the cluster

Case: Finland & Nokia Anam

 Slowdown of global telecommunication.

Case: Finland & Nokia Ammara

 Huge investments in R&D

 Acquisitions for latest technology and market developments

 Government was monitoring mergers and acquisitions in

Case: Finland & Nokia Ammara

A telecommunication cluster was emerged in Finland in which

The best combination for innovation in telecommunication

Case: Finland & Nokia Ammara

 The 3 largest clusters in Finnish economy were;

 Pulp & paper (accounted for 40% of exports)

 Wood products (accounted for 16% of exports)

 Engineered metal (accounted for 23% of exports)

Case: Finland & Nokia Ammara

 The real GDP fell by 6.2%.

Case: Finland & Nokia Ammara

 In 2001, over 200 million mobile phones were sold

 Telecom industry was divided into two parts:

 Mobile communication infrastructure

Case: Finland & Nokia Ammara

Early adopters of mobile phones Unskilled employees and scientists

Case: Finland & Nokia Ammara

 Telecommunication was the major sector

Case: Finland & Nokia Ammara

 The Finnish telecommunication cluster started in

 It gave 6.9% of GDP.

 The cluster had grown on average annual rate of

Case: Finland & Nokia Ammara

Case: Finland & Nokia Fahad

 “need based positioning” as sophisticated demand

Case: Finland & Nokia Fahad

Case: Finland & Nokia Fahad

Case: Finland & Nokia Fahad

Bargaining Low as customers

High because High as overall

Case: Finland & Nokia Fahad

Case: Finland & Nokia Fahad

 Nokia suffered a crisis situation in late 1980s.

 New CEO introduced four fundamentals values of Nokia

Case: Finland & Nokia Fahad

 In 1979, Nokia and Salora created a 50-50 owned

 Mobira expanded through global alliances and

Case: Finland & Nokia Fahad

 In 1990s, Nokia reorganized its supply chain to

 Acquired several electronics companies including

Case: Finland & Nokia Fahad

 Nokia did related diversification and invested in

 Nokia was among top three companies which were

Case: Finland & Nokia Fahad

 Nokia Mobile Phones had production units in

Case: Finland & Nokia Fahad

Case: Finland & Nokia Hassan

 World leader in Digital Phones

Case: Finland & Nokia Hassan