assignment 5

Running head: NOKIA TECHNOLOGY COMPANY 1

NOKIA TECHNOLOGY COMPANY 3

Nokia Technology Company

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Nokia Technology Company

Nokia Technology Company is one of the oldest and most renowned mobile manufacturers in the world. Although the company's performance has slightly been impacted by global trends and increasing competition from companies such as Samsung and Apple, it still maintains its position as one of the world's most iconic mobile phone companies. Nokia Corporation was established in 1865 in Espoo, Finland ("Nokia," n.d.). The company managed to achieve considerable growth and expansion over the years due to implementing the right strategies. As of 2018, the Nokia corporation was employing approximately 103 000 people sourced from about 100 countries (Kapko, 2021). The company had operations in 130 countries around the world. Nokia also reported annual sales of around 23 billion pounds.

Nokia technology started as a pulp mill before moving into the rubber and cable industries. It was not until the 1990s when the company ventured into large-scale telecommunication infrastructure (Wang, Hedman, & Tuunainen, 2016). The company focused on technology development and licensing, contributing immensely to the mobile telephony sector. Over the years, the company has managed to release different Nokia phone brands, most of which were revolutionary. In 2014, Nokia sold its mobile phone business to Microsoft, creating Microsoft mobile (Wang et al., 2016). The sale of its mobile business enabled the company to focus more on its telecommunications infrastructure business and improve the internet of things technologies (IoT). The company further diversified into other areas such as virtual reality and digital health (Wang et al., 2016). Despite exploring new horizons in technology, the company was still struggling to make profits. Its dwindling profits forced the company to lay-off hundreds of employees and closed various operations in different countries. In 2016, Nokia announced the Nokia brand's return after reviewing the opportunities existing in the mobile phone industry (Simon, 2016). A licensing arrangement with HMD Global facilitated the return of the Nokia mobile phone.

The company's success over the years and the ability to persevere through time can be attributed to its motto and vision. Nokia's mission statement is to connect people. The company's vision statement states that Nokia wants to create a new world, to transform a big planet into a small village. The company's vision is to create, build, and encourage people from all countries to communicate with each other to create a world where everybody is connected ("Nokia," n.d.). Nokia states that its culture is driven forward based on its values such as respect, challenge, achievement, and renewal ("Nokia," n.d.). The vision, mission, and values serve as an anchor to Nokia and maintain positive performance even during tough economic times. Although the company has suffered major setbacks in the past, it has overcome its challenges and bounces back even stronger than before.

Some of Nokia's major competitors are Apple, Samsung, Huawei, Blackberry, Sony mobile, and Palm. Nokia has to constantly come up with effective competitive strategies to ensure that it stays in the market and maintain sits competitive advantage.

Challenges Affecting Nokia

A decline in business in 2020 forced Nokia to lay off more than 6,000 employees which is approximately 6.4% of its workforce. In 2019, the company had laid off another 5,000 employees representing approximately 4.6% of its workforce (Kapko, 2021). The company ended 2020 with 92,039 employees after cutting off approximately 6,283 jobs in the same year. There are indications that the company will lay off more workers in the coming years as part of its three year turnaround plan which was started by CEO Pekka Lundmark (Kapko, 2021). The CEO also increased pressure on various business units in the company to grow in their respective segments or face cuts. The job cuts are consequences of the poor performance posted by the company in recent years. Much of the company's decline has been attributed to poor leadership that lacked the courage to make important decisions (Kapko, 2021). The previous leadership at the company forced various business segments to come up with technologies under pressure to perform. As a result, the company could not come up with competitive innovations to compete with other companies like Samsung and apple. In a bid to cut operational costs, the company embarked on a program to reduce its workforce. In 2020, the company also reduced the size of its executive from 17 to 11 people (Kapko, 2021). The company further relocated 14,000 employees from corporate functions to its four business groups.

Kapko (2021) states that poor leadership strategies and a lack of innovation are among the reasons that caused Nokia to lose its competitive advantage and control of the mobile phone market. The company needs to attract young and innovative leaders with a proven track record if it has to bounce back and reclaim its market share.

The analysis of Nokia's history and recent performance reveals that it is an important player in the technology industry. The company needs to come up with strategies that can enable it be a leader in mobile innovation and other technologies. The company could also borrow a leaf from what other companies like Samsung and Apple are doing.

Nokia's Organizational Design

Although Nokia is considered one of the pioneers and leaders of the mobile manufacturing industry, it has undergone various phases to lose its market position. The company's decision to sell its mobile manufacturing section to Microsoft and the presence of leaders who are not innovative led to the slowed progress and performance of the company. Although Nokia went back to the mobile manufacturing industry, it still struggles to compete with well-established companies like Apple, Samsung, and Huawei. The analysis of Nokia's organizational design and structure and the description and discussion of its challenges will go a long way in identifying the solutions that can be adopted to get the company back on track.

Nokia's success in the last few decades was achieved due to its effective organizational design and structure. Juha-Antti Lamberg (2019) observes that Nokia uses a horizontal or flat organizational structure that is more effective in decision-making and the elimination of barriers created by bureaucracy. The Horizontal structure at Nokia eliminates the hierarchical layers that usually present challenges such as poor communication flow and a lack of collaboration among employees (Juha-Antti Lamberg, 2019). The chains of command at Nokia are not more than three, meaning that the top management can easily communicate and maintain touch with other employees. Nokia's organizational structure is only made up of the top leadership, followed by managers and other employees. Nokia adopted the flat organizational structure because it wanted to give employees more power and autonomy to be innovative and develop localized solutions to their problems (Wang, Hedman, & Tuunainen, 2016). The adoption of the flat organizational structure has presented Nokia with several advantages. Foremost, the adoption of a horizontal organizational structure has helped Nokia to maintain employee autonomy. Over the years, Nokia employees enjoyed freedom and control, allowing them to specialize in certain areas. Another advantage of the horizontal structure used by Nokia is that it provides the optimum use of resources. The fact that there are a few layers of hierarchy means that the company spends less on labor costs. In 2020, the company reduced its executive and still managed to function optimally (Wang et al., 2019). From the analysis, it is evident that the adoption of a horizontal structure has effectively ensured that Nokia maintains its position as one of the leading technology companies in the world.

Despite its recent resurgence and relative improvement in performance, Nokia still faces several challenges that must be addressed for it to compete with other companies. Juha-Antti Lamberg (2019) states that poor leadership is the main factor that made Nokia lose its market position. Initially, Nokia had young and innovative leaders who were not afraid of taking risks. The leaders inspired creativity among employees, helping Nokia to come up with new and innovative ideas regularly. For example, Nokia revolutionized the mobile manufacturing sector by creating its first smartphone (Wang et al., 2016). As the company grew, it started onboarding leaders who were more concerned about performance. The leaders did not inspire innovation and instead demanded creativity and innovation within strict deadlines. Employees were given pressure and a strict deadline to develop innovative ideas, which discouraged most of them. The desire to grow at a much faster rate saw the company create more departments, ending with a bloated workforce (Juha-Antti Lamberg, 2019). Declining profits and a bloated workforce served as ticking time bombs which eventually exploded in 2019 and 2020 when the company laid off approximately 6.45 of its workforce.

Nokia should, therefore, look at its organizational structure and its current challenges and look for a way to address them. Identifying the right strategies can go a long way in ensuring that the company regains its position among the most valuable and profitable technology companies in the world.

Nokia’s SWOT Analysis

Nokia is one of the leading manufacturers of telecommunication infrastructure and mobile phones in the world. Although the company was once the leading mobile manufacturing company globally, it took a break from mobile manufacturing to the development and manufacture of telecommunication infrastructure used by mobile phones and other network devices. Although the company has recently announced plans to move back to the mobile manufacturing industry, it faces an uphill task fighting for market control over companies like Apple and Samsung. Carrying out a SWOT analysis will be important in identifying Nokia’s current market position and the opportunities that it needs to seize if it is to retain its position as a leader in mobile manufacturing.

Strengths

Strengths refer to the things that Nokia does exceptionally well compared to other companies in the market. One of Nokia’s main strengths is its experience as a mobile manufacturer. The fact that Nokia was a world leader in mobile manufacturing in the 90s and 2000s means that it understands the market and can use its knowledge over the years. Another major strength that sets Nokia apart from its competitors is its large budget for research and development. Singhal (2015) states that since 2017, Nokia’s research and development budget has never been less than four billion euros. Its huge investment in research and development means that the company can easily develop innovative solutions that translate to high revenues and sales.

Weaknesses

Weaknesses refer to Nokia’s shortcomings which give its competitors an upper hand. Although Nokia is one of the world's largest technology companies, it faces several weaknesses that must be addressed for it to reclaim its position as an industry leader. Nokia’s weak financial performance is one of the main weaknesses. Since the early 2000s, when the company exited the mobile manufacturing market, its performance has been on a steady decline. Singhal (2015) states that Nokia’s net income has been average around the 2% mark since 2016. The company has also witnessed a negative cash flow from 2017 to 2019. Poor performance scares away potential investors. Another major weakness is the low inventory turnover at Nokia. The company’s inventory turnover is below the industry’s average, which is an indicator of its sales function problems. The findings are important because they indicate some of the areas where Nokia needs to improve its market performance.

Opportunities

Opportunities refer to market openings that Nokia can capitalize on to improve its performance. Nokia’s main opportunity lies in the 5G network. The company has invested many resources in the research and development of 5G networks (Juha-Antti Lamberg, 2019). Therefore, the company should accelerate the development of its 5G networks and join the lucrative market. The company should also have a diverse product line stretching across different segments. Having a diverse product line prevents one segment's collapse from affecting other segments (Juha-Antti Lamberg, 2019). Identifying some of the main opportunities is important because it helps Nokia identify some of the areas where it could grow.

Threats

Threats refer to the things or factors that can have adverse effects on Nokia’s performance. The fact that Nokia’s profitability is heavily dependent on high-margin business means that any disruption could affect its performance (Singhal, 2015). Nokia could also lose its 5G Radio Access Network share to Samsung due to the challenges and miscalculations that led to the delayed launch of its low-cost 5g base station (Singhal, 2015). Identifying some of the significant threats to Nokia is important because it helps the company develop measures to address the threats.

In summation, it is evident that the findings are important because they present a clear picture of Nokia’s market position and some of the strategies that it should implement to improve its performance.

References

Kapko, M. (2021 March 6). Nokia slashed more than 6,000 jobs in 2020. SDX Central. Retrieved from https://www.sdxcentral.com/articles/news/nokia-slashed-more-than-6000-jobs-in-2020/2021/03/

Wang, J., Hedman, J., & Tuunainen, V. K. (2016). Path creation, path dependence and breaking away from the path: Re-examining the case of nokia. Journal of Theoretical and Applied Electronic Commerce Research, 11(2), 16-27. doi:http://dx.doi.org/10.4067/S0718-18762016000200003

Simon, J. P. (2016). How to catch a unicorn? an exploration of the universe of tech companies with high market capitalization. Communications & Strategies, (104), 99-116,127. Nokia (n.d.). About us. Retrieved from https://www.nokia.com/about-us/

Juha-Antti Lamberg. (2019). Ringtone: Exploring the rise and fall of Nokia in mobile phones. Journal of International Business Studies, 50(2), 292-294. doi:http://dx.doi.org/10.1057/s41267-018-0188-y

Singhal, N. (2015). Nokia ltd: Travails of a market leader. Vision, 19(3), 286-287. doi:http://dx.doi.org/10.1177/0972262915604913