The German University in Cairo

Faculty of Management Technology

Students Name:

Hana Anous 52-6617

Mariam El Sabak 52-3453

Nayera Khalaf 52-1699

Tutorial Number: 4

Article Name:

“The Rise and Fall of Nokia”

Date: 2/25/2024
Summary of the main points of the article

Nokia's early success in the mobile phone market was attributed to the company's innovative
products, strong brand presence, investment in research and development. However, there are
several factors that contributed to its fall. Firstly, the company’s over investment in merger
and acquisition activities resulted in loss of its net income. Added to that, the shortage of
production capability limited Nokia’s ability to cope with the unforecasted growth of the
mobile market. Moreover, the increase in rivalry caused Nokia to struggle in adapting to the
rapidly evolving smartphone market, particularly with the emergence of touchscreen devices
and the growing popularity of app-based platforms such as iOS and Android. Nokia's
inability to embrace these technological shifts and its focus on traditional feature phones and
holding on to its Symbian operating system had led to its inevitable failure. Due to inefficient
management and inability to adapt, Nokia's device and services industry was acquired by
Microsoft. Lastly, after a huge loss in several divisions, Nokia’s only profit source came from
the company’s network equipment.

Question 1: How did Nokia’s business strategy change under the leadership of Ollila?
Jorma Ollila took a back-to-basics strategy by doing small things efficiently. He focused on
specific areas such as mobile phones, consumer electronics, networks, and cables. The
development of GSM networking equipment for Europe, as well as the holding of crucial
patents for GSM standards, secured a steady income flow from technological licensing. He
expanded Nokia's global presence, being the first to enter new countries like Japan through
smart partnerships with mobile operators.

Question 2: What was Nokia's business strategy in targeting the Emerging market?

Targeting emerging markets, rapid expansion, product innovation, and focused marketing
were the key elements of Nokia's business strategy. The business concluded that Asia had
great potential and arranged agreements for operators to construct GSM infrastructure. Nokia
made significant local market advertising investments in addition to customising features and
costs to meet local demand. The company's ability to quickly adapt to changes in the market
and innovate new products helped it expand internationally. Nokia's success in emerging
regions can also be attributed to its focus on selling marginally profitable low-end phones in
Asia.

Question 3: How did it adapt its business model in response to the industry's
transformation towards an 'experience industry'?

Nokia changed their business strategy to become more service-focused. The business opened
up its web store, Ovi, to sell games, music, and maps that work with Symbian-powered Nokia
phones. They also created the mobile operating system MeeGo and purchased the digital map
database Navteq as an attempt to profit from the industry's transition from one of devices to
one of experiences. Furthermore, Nokia declared that it would buy out all of its partners'
shares in Symbian and spin the company out into the Symbian Foundation, a non-profit
organisation that will operate as an open, royalty-free platform. With this change in approach,
Nokia expected to be able to innovate faster on a larger platform and bring new products to
market sooner.

Question 4: Elaborate on the burning platform and how did they plan to deal with?

During the Burning Platform, the company struggled to compete with the rapid
advancements as Apple and Android. As a result, Nokia experienced a decline in its profits
and market share as they failed to adapt to the changing landscape around them. so, They
decided to abandon Symbian and instead adopted Microsoft Windows. They also got the
support of management consultancy in the implementation of the OS on their phones. They
planned to adopt Android but never did as they were concerned that it would compromise
their identity as distributors.Yet, Nokia continued to suffer losses, leading to layoffs and
exiting many markets. so, the company made the decision to sell itself to Microsoft.

6. Question 5: In your own words elaborate what were the main reasons for the decline
in Nokia's performance

Nokia's declining performance can be attributed to both internal and external factors.
Internally, the company faced challenges such as inefficient decision making and a rigid
organisational structure. Having a status quo bias within Nokia hindered its ability to adapt
and innovate. This bias resulted in a reliance on the Symbian operating system, which
eventually became outdated and inefficient compared to newer systems. Externally, Nokia
faced intense competition from new players like Apple and Android companies. These
competitors entered the market with innovative offerings which quickly gained popularity
among consumers while Nokia struggled to meet the evolving demands and preferences of
consumers.