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Nokia case study – Reason for failures and Strategies for reinvention


Nokia case study – Reason for failures and Strategies for reinvention                                                                                   Word count 3084


Executive Summery
What went wrong?
Strategies for reinvention

Additional information


Executive Summery

Nokia, a Finnish telco giant which was once renowned for its far sighted and innovative use of telecommunications technology, is now the equivalent of dinosaurs in the mobile phone industry. Once the cornerstone of innovation, today the brand has entered into a partnership with Microsoft, yet finds it difficult to compete in the market with its previous counterparts such as Samsung and Apple.
This report aims to examine the evolution of Nokia in the global market, from being the market leader in the mobile phone industry to being taken over by Microsoft, and the possible causes for the said downfall. The report will then move on to evaluate the possible international business strategies that can be used by the brand to create a competitive strategy that will help the brand regain its market share and product loyalty.
In terms of strategic competitive advantage, it is important for companies to be able to adapt to the changes in the market, and use their existing strengths and resources to do so. (De Wit and Meyer, 2004, p249). Considering the definition of organizational strategy, where Hill et al (2014) defines strategy as the actions taken by its managers to attain the goals of the organization, the same remains relevant in a global context, even more so considering the effects of globalization that has transformed the global competitive market to an extent that product information, developments and innovation is interconnected as never before.
Looking at Nokia through this lens, Nokia can be considered as an organization that has been through the overall product cycle, and is currently at the decline stage, although trying desperately to regain its lost market share by adapting its strategies to compete in the global market a little too late. It’s a classic case of failing to respond to changes in consumer requirements and ignoring its key competitors, while holding on to a redundant strategy and not evolving to suit the market needs. These, in a nutshell can be identified as the key reasons for its massive fall, which we will explore in detail.
The Beginning of Nokia
A company that was initially a rubber business, Nokia has evolved over time to specialize in telecommunications, introducing the ground breaking GSM 2G in 1992. (Global System for Mobile Communications – 2nd Generation). Building on its vision to “create technology that connect the world”, Nokia was perhaps the first to introduce the commercial hand held mobile device, as well as many “can’t live without” features such as SMS (short message service). What enabled these breakthrough innovations is a commitment to its vision, and an organizational strategy that heavily focused on innovation. Nokia shifted its business model to completely focus on mobile phones in 1990, by selling off all its other business ventures and this focused approach made them become the largest phone manufacturer in the world by 1998, overthrowing Motorola.
Up until 2007, Nokia had a significant share in the market, being a household name as a mobile phone developer. However, its operating system, Symbian, saw quick decline after the introduction of the iOS (used by iphones) and the delay in responding to the challenge posed by the iOS can be considered as the starting point of Nokia’s decline. The internal strategy of the company, by then, was more oriented towards gaining top management favor than towards its actual vision of connecting people. According to Vuory and Huy (2015), they argue that the internal culture of Nokia, as the iPhone was introduced to the market, was one that did not encourage disruption, and there was no clear communication or coordination between the top and middle tier management.