Organizations face rapid change due to globalization .

Globalization has

increased the markets and opportunities for more growth and revenues . Organizations can achieve a distinct advantage in the marketplace by strengthening the firm¶s overall strategy.Operations will provide a marketing edge through differentiation and innovation and unique technology

developments in processes that competitors can not match. A firm's operational strategy must be conducive to developing a set of policies in both process choice and infrastructure design (controls, procedures, systems, etc.) that are consistent with the firm's distinctive competency (West et al, 2010).


This paper aims to evaluate the main strategy and structural changes in MNC¶s under unstable market conditions. Firstly, it reviews the theoretical connotations of strategic and structural changes in today¶s business world. It goes ahead to describe the recent history of Finnish based Nokia. The strategies and business model of Nokia have been discussed in -depth in order to identify major changes as markets evolve. The impact of structural changes on financial performance is also critically analysed with the help of ratio analysis. Finally, recommendations are made on how best to strategise so as to yield positive results in No kia¶s ever-changing market environment.


3. Nokia N97 is much more advanced in features and reliability is very much higher than its rival¶s Blackberry &iPhones. Internet services provided on all Nokia devices will draw a large customer base to Nokia. Most high end devices have in ternet services but Nokia¶s promise to deliver these services to all its devices will attract a large user base especially in the emerging markets. More than 46. Further. Nokia has in the past made certain strategic changes which analysts have applauded. Kamran (2009) suggests that the business strategy of Nokia will be a success because. 2 . which achieves advantage in a changing environment through its con¿guration of resources and competences with the aim of ful¿lling stakeholder expectations.LITERATURE REVIEW: Johnson et al.7% of the mobile devices are operating on Symbian. Unique resources and core competences are the bases upon which an organisation achieves strategic advantage and is distinguished from competitors. 1. Innovative business solutions will attract the corporate users since Nokia devices are based upon a very stable platform . 2. Strategic capability is concerned with the resources and competences that an organisation can use to provide value to custome rs or clients. 2007 explicitly defined strategy a s the direction and scope of an organisation over the long term. Accordingly.

The new structure consisted of four vertical business units (Mobile Phones. Nokia came up with phones that focussed on multimedia applications such as games. In 2002. multimedia. In 2005 Nokia continued to develop its multimedia market sector which became popular all over the world.Nokia merged with Siemens and became Nokia Siemens 3 . Technology Platforms and Research. Enterprise Solutions and Multimedia) and four function units (Customer and Market Operations. Nokia¶s internet and research department created the 3G network. The company started in 1865 in Finland. 2011). The other striking feature of this phone was an integrated camera. the company had to change strategy to keep its market position. In 2006.MAIN STRATEGY AND STRUCTURAL CHANGES UNDERGONE BY NOKIA DURING THE LAST 10 YEARS (A RECENT HISTORY) Nokia is a world leader in tele-communication devices. In 2001. It is a huge multinational corporation that deals with mobile phones. Nokia changed its organisational structure in 2004. In 2003. In 2000 Nokia created its first coloured mobile phone and opened a new niche in the mobile phone market. To keep up with the market competition. operation systems and services. Venturing and Business Infrastructure). Nokia came up with new business units to provide internet access on all its devices. Networks. With the rapid development of technology during the last 10 years. that gave an opportunity for consumers to use internet with speed almost 3 mb ps. video and photo world (Nokia.

Nokia introduced new music and social networking phones (X6 and X3). music and video (Nokia.Thus. In the beginning of 2010. 2011). In 2009. However. It gave access for GPS navigation. In 2007. Nokia was recognised as 5 th most valued brand in the world. results and accountability (Nokia. Nokia Siemens network launched its internet services under the brand name OVI. E71 was much cheaper. Nokia released E71 with a QWERTY keyboard to compete with Blackberry phone. it was losing its corporate customers due to imperfect business solutions. The major reason being: Siemens lost its market position because of strong competition but still had big potential that was interesting for Nokia. compared to Blackberry. 2011). the new CEO. In 2011 both the companies have started their work to create new operation system o f mobile phones ± Windows Phone 7. 4 . operational s trategy and structural changes in the corporation increased their focus on speed. In 2008. However. Mr Stephen Elop made a new alliance with Microsoft. new leadership team.Networks.

2011). an emphasis was to regain their leadership in the smart phone space by building a broad strategic partnership with Microsoft to deliver differentiated and innovative products which are unique in brand. 5 . Nokia wanted to sustain the future as the world¶s leading mobile manufacturer. 2011). size and geographical reach. The elements emphasized and the importance attached to Nokia¶s international business had diverse reasons. Most importantly. operational structure and governance was constructed to drive the change in strategy (Eweek. By focusing future investments and assets development mainly on growth economies. Its international business was to provide the best mobile devices for everyone regardless the prices and geography.SIGNIFICANCE GIVEN TO THE INTERNATIONAL BUSINESS: Investing and ensuring a financially sound future is the main strategy of Nokia while taking advantage of the opportunity to innovate. and to use their expertise at optimum levels on developing hardware and software (All About Symbian. Due to the high level of emphasis pla ced on achieving its goals. management was concerned about maintaining the volume and value leadership in the mobile phone space . to differentiate and build new mobile products at a speed that will surpass what they have achieved in the past. It also hoped to make available internet services on all mobile devices. a new leadership team. This would lead to the use of the windows phone as the primary smart phone platform. Again.

Nokia Siemens Networks cut almost 15% of its global workforce. it reorganized by selling most of its unproductive business and directed its focus once again to its wireless technologies. China and India. Majority of Nokia¶s cell phone production is in lower cost countries like Hungary. An acquisition of Sega in 2003 and then merger with Siemens AB in 2006 put Nokia once again on its track where it could compete with its rivals (Scribd. The Finnish manufacturing site has been refocused to high end production and research and development. Nokia taps the rural markets. 6 . Romania. Nokia plans to sell its automotive accessory business and is in talks with India¶s Sasken Technologies to sell its research and development unit. However.OPERATIONS EMPHASIZED AND THEIR LOCATIONS: The company made a lot of strategic changes in various countries as market conditions continued to change. Around 2290 of them were from Germany. In 2008 Nokia exited from expensive Germany and moved its production to low cost countries like Romania where the labour costs was almost 10 times lower. Nokia lost nearly 39% of its market share to its competitors due to rapid expansion through acquisitions and mergers and lost its focus on wireless technologies. 2011). It has already introduced internet based service for the rural Indian market which will help it to position itself effectively in the non-urban markets. 2011). Bulgaria. Nokia provides its programmes for farmers in India which include providing solutions from information on market prices for agricultural products to weather updates to financing options (Nokia.

games and media. Mobile solutions unit is in charge of developing se rvices in areas of music. mobile phones and market (Nokia. SERVICES AND ORGANIZATIONAL STRUCTURE As the importance of organizational culture gained foothold. India. The new organization structure has board of directors on the top.Currently. Romania. 2011). to speed up innovation and execution of policies. the UK) and Asia (China. there are plans to establish a new manufacturing site in Hanoi in Northern Vietnam. Nokia revamp ed its organizational structure again in 2010. It aimed to develop a strong position to face competition. Vietnam is a country that has both the location and developing infrastructure that make a good choice for Nokia. JUSTIFICATION OF CHOICES MADE IN TERMS OF PRODUCTS. Nokia Siemens network provides a wide network by 7 . The mobile phones unit deals with the development of affordable mobile phones. Hunga ry. sales. The third unit of market carries on the tasks of marketing. 2011). delivering phones to the markets. It is followed by corporate development office that is responsible for stra tegy and planning. It came up with a flatter model of organization so as to be able to disseminate the vision and mission to its people and resources. Nokia has a global manufacturing network stretching from Latin America (Brazil and Mexico) to Europe (Finland. Its function is to provide service in an easy manner. It is further divided into three business units: Mobile solutions. Korea) (Nokia.

Nokia also introduced the Nokia Internet tablet to provide easy access to internet calling. 8 . emails. it provided cheaper smart phones to hold its market share. wi-fi connectivity. Nokia concentrated there in increasing its profit and attempted to cope with its competitors. 2011). an acquisition of Nokia. It introduced the OVI brand as it faced the threat of maturing handset market and tough competition from Apple. Nokia recognizes the need to continuously innovate and provide value products and services to consumers. This gave an added advantage to Nokia. 2010). The structure is justified as it ensures fluidity in the organization for its smooth functioning (Nokia. Nokia mini laptops were launched after a proper study to enter the market and targeting a particular segment that was waiting for a booklet type device. deals with government and business solutions along with helping users to download maps and controls navigation systems. Nokia aims to meet its strategic objectives of developing continuous consumer relationships and creating personalized services through some changes in products. It also holds responsibility to provide service to operators. services and organizational structure (Eweek. No other mobile company had ventured into this area. Though Nokia could not keep up to the smartphones provided by apple and android. As the market demanded Smartphones. Navteq.integrating fixed line networks with wireless.

Over the past ten years. The instability of market conditions in the telecommunications equipment industry gives relevance to these structural changes.CHANGES IN ITS FINANCIAL PERFORMANCE AND POSITION IN ITS TARGET MARKET(S): Strategic and structural changes made in any organisation have an effect on financial performance and position in the long run. 2009) 9 . An analysis is made below of how NOKIA¶s financial performance has been impacte d by the transformations. NOKIA¶s top management has made certain important strategic decisions in a bid to effectively compete and increase their market share. NET SALES 2009 COUNTRY EURm 2008 EURm China India UK Germany USA Russia Indonesia Spain Brazil Italy 5 990 2 809 1 916 1 733 1 731 1 528 1 458 1 408 1 333 1 252 5 916 3 719 2 382 2 294 1 907 2 083 2 046 1 497 1 902 1 774 (SOURCE: NOKIA FINANCIAL STATEMENTS.

Analysts have attributed this to intense competition provided by Apple¶s I-phone products.There has been a considerable fall in net sales between the years 2008 and 2009 in Nokia¶s major markets. Despite management¶s frantic efforts to salvage the situation by embarking on strategic measures. Structural changes made by nokia were not successful in boosting sales and this gravely affected the financial position of the company. where a slight increase in net sales was recorded. $77 billion US dollars was lost in market value between these years alone. Bloomberg reported in July 2010 that Nokia¶s share price had fallen by 67% since the I-phone by Apple was first launched. it was not until 2010 that a marginal rise in profit was recorded. Nokia¶s largest market. shareholders have been displeased by the poor financial 10 . 2010 The years between 2007 and 2010 saw Nokia ¶s financial performance fall tremendously. It was only in China. SOURCE: NOKIA FINANCIAL STATEMENTS. Although dividends per share has been consistent over the past three years since taking a dip in 2007.

11 . SOURCE: NOKIA FINANCIAL STATEMENTS. Despite relocating its manufacturing units from Germany in a bid to cut production costs. 2010). Thus. Nokia¶s poor financial performance resulting from failed structural and strategic changes is evident. 2010 From the graphs above. dissatisfied. the Finnish based multi-national organisation has not been success ful in improving its financial performance and position in its target markets. Owners of Nokia. 2011). low profits have been recorded as a significant part of its market share has been lost to rival companies. Low earnings per share have been recorded in previ ous years as profits have plummeted.performance of the company and the uncertainty about management ability to continue paying dividends in the future (Nokia. have called on top management to salvage the company¶s appalling financial performance by embarking on more goal oriented strategies that will better the finances of the company (Cellouts. The unstable market and fierce competition from rival companies like Apple has aggravated the situation as Nokia still struggles to find its feet.

skill development. The effects of the recession were felt round the world with global stock markets falling. The company has experienced changes in its micro as well as macro environment that has led to a series of changes that has swept thr ough all aspects of the Multinational Corporation. affecting areas such as the business environment. Nokia announced in late 2008 that its production costs had increased by 12% due to the energy crisis. Nokia as a business has also been affected by the recession and all five aspects of the business mentioned above have been hit hard during the recession. recruitment. large organisations going bankrupt. March 2011). In the UK as well as many other parts of the world.com. (FT. Jan 2009) 12 . This in turn increased the cost of product ion in many industrial sectors as energy prices soared. businesses have been dealing with recession.com. according to the survey conducted by Walters (2009). closing down or being taken over.com. The effects of the economic downturn on Nokia have produced the following effects: Increase in production costs: In 2008 the oil price rose above $100 per barrel.EFFECT OF THE ECONOMIC DOWNTURN OF THE LAST THREE YEARS ON NOKIA¶S PERFORMANCE: The downturn which started brewing in the mid 2007¶s began to show its effects in the early 2008. March 2011). and even governments in the wealthiest nations have had to develop bailout packages for their financial systems (FT. training and support (FT.

2011). Severe Job Loss: Nokia announced in 2009 that it was going to lay off about 1. These measures taken by Nokia were in a bid to reduce the effect of the increase of production cost and low sales volume as well as maintain or if possible increase pro fit levels. The MNC also closed dow n some of its production plants and changed the employment status of some of its staff. the downturn had severe effects on the telecoms industry because consumers preferred to keep their exist ing devices instead of purchasing new ones. (Nokia. Nokia sales plummeted by about 11% from its sales figures in 2008 to 2009.700 staff globally. 13 .Reduction in Sales Volume: The effects of the downturn also saw the company experience a reduction in the amount of products sold. Although this was the norm in most industries.

Finally. Operational structure and the governance approach will make a significant impact on its operations (Johnson et al. Their on-going market exploration of the next generation of devices and their expertise coupled with strength in technologies will drive them ahead of their competitors to a sustainable future. ensure that there are superior business solutions to corporate users than its rivals.CONCLUSION AND RECOMMENDATIONS Though it will not be easy for Nokia to grab a large market share in a short period of time. 2008). Introducing such products and structures will lead to appropriate strategic advancement in line with the new developments management already has in place. Provide internet services on all mobile devices. the new strategy. It is recommended that Nokia bases its business model on the following factors so as drive its performance up and achieve positive results . Implement low cost affordable best mobile devices for everyone regardless of geography . it has to provide its users with good experiences. To gain a competitive advantage and emerge as a leader . 14 .

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