There are times when organizations need strategic change in the highly competitive market. In order to go smoothly with the constantly changing industry, customer needs, preferences and market values, organizations observe the theories of strategic organizational change and try to implement in the operational levels of the organizations. Among the various legendary theorists of strategic change, Peter Drucker is one. His contribution in the organizational change theories are highly significant. According to his views strategic changes are required due to four discontinuities – cultural pluralism, globalization, new technologies and knowledge capital. Alvin Toffler is another famous management thinker who stood with the idea of different paradigms intersection, multiplying the rates of change and their subsequent impact on the businesses. The term ‘future shock’ he coined and used to focus how technology change can lead to resource constraints and globalism.
One important aspect has been noted by Malcolm Gladwell who also initiated a new term ‘Tripping Point’. He defined that the business process and the society nowadays are determined by the phenomenon of trends which captures a huge portion of the people. In this respect another concept has been postulated by Gary Hamel who explains how with the passing of time, the value of strategies also declines. He further argues that every organization must renew their business strategies at regular intervals in order to increase sales and achieve customer satisfaction. The present report will take the Nokia company to highlight the strategic and operational challenges they have been facing through the past years and how they have made suitable decisions and changes in order to cope up with the challenges. It has been found that the company has been suffering from high recession that has caused it decrease in the demand level of the customers. The firm is going through tough challenges in the international level and there is a need to pass the company through a new and strong strategic change. The management has applied suitable modifications in so that it an easily comply with the market. The report will also focus on the innovative changes of the organization and provide recommendations for better results. The report will conclude by giving an overview of the entire paper illuminating the important points.
The full name of the organization is Nokia Corporation which is multinational telecommunication with Finnish background. The company also deals with the consumer electronics and information technology services. In the year 1865, the company had begun holding the hands of Frederick Idestam and Leo Mechelin. The main headquarters of the company are located in Espoo, greater Helsinki metropolitan area. According to a latest survey in the year 2017, the company has employed almost 102,000 people from more than 100 countries all over the world (Wollaston, 2018). The company has dealt and has done business with 130 countries. The current annual revenue of the company is 23 billion Euros. It has been found that Nokia is world’s 415th largest company measured on the level of revenues which had peaked to 85th in the year 2009. Since the 1990s, the company is focused on the telecommunications infrastructure which are large scale (Doz, and Wilson, 2018). The Nokia company is a significant contributor to the development of the GSM, 3G, LTE and recently in the 5G standards. In the year 2014, the company bought by the Microsoft company (Doz, 2018).
The Nokia company has gone through significant positive changes in the decade 1990s. These positive changes have set the foundation for the growth in future for the company. Among the useful business strategies that the company used, the initiation of the information system project is important. The information system has enabled the decision making process easier in all the functional departments. The various information systems of the company include Decision Support System (DSS), Management Information System (MIS), Executive Information System and Transaction Processing System (TPS) The organization has been managing efficiently and effectively the various operational activities even the R&D departments of the long and wide distribution networks. The previous logo of the company consisted of the “three arrows” that was created in the year 1966. After few years, the main organizational slogan of the company was devised that is “connecting people “by Ove’ Strandberg. The company’s ideal values, mission, supportive culture and obviously the employees and the customers has earned the company its position (Ward, 2018). The vision statement of the company is “our promise is to help people feel close to what is important for them”. It has been observed that the company makes best use of the customer relationships. The trust they have built with their customers has proved to be their strongest weapon.
The Nokia company uses the two types of branding strategies for their products because the company’s target market consists of two kinds: the upscale buyers and the economy seekers. The company has launched its high-tech multimedia handsets and for the economy seekers, there are the cost-friendly economic handsets. The company has its own pricing strategy. The predict pricing of the company varies from situation to situation. The company applies the skimming marketing strategy and then it decreases the price off that product after some times. The company also applies the penetrating pricing strategy for the cost –effective products. There are various promotional campaigns conducted by the company at regular intervals. Theses campaigns effectively communicates the brands name in different regions of the world. The world has become highly digitalized and subsequently it has become necessary for every organization to adopt the changing atmosphere to sustain in the industry. Hence, the Nokia company has their own e-business strategy which is designed to add extra value to the marketing strategy. Apart from the web presence the company has utilized the collective power of the IT and internet in order to strengthen the business processes and strategies.
The e-commerce solutions are properly used by the company. The Nokia Payment Solution has enabled the company to conduct their payment services smoothly. This is a unique platform that helps the company to collect and manage clear payments with the financial institutions, distributors and the consumers. The Nokia Signet Server is another service that serves the purpose of verification by taking the digital signature of the client. It is an effective way of knowing whether the clients are satisfied with the wireless Public Key Infrastructure. Another point is, the company has built strategic partnership with the popular social; media sites such as Facebook. This partnership with the social network has helped the company a lot in working as a link between all. It has been found that more than 150 countries around the world are connected through this social media network with the Nokia company. The opportunities for the company has significantly ben uplifted.
In spite of being one of the leading telecommunications companies, having the best strategic agility a fearful and emotional climate has been prevailing in the organization. During the rise of iPhone, the coordination between the top managers of the company got frozen. The situation threatened the company to lose its position and resources. The company was on the verge of losing the battle before it actually began. The downfall of the Nokia company can be ascribed to three factors by some executives. First of all, the Nokia company was less in superiority than Apple. Secondly, the company was more complacent. Thirdly, the coming disruption of iPhone was not perceived by the leaders of the company.
A more detailed view of the issue would discard the previous speculations and establish the idea that Nokia company lost the battle of smartphones because the fear among the top and middle managers in the company spread a kind of inertia. This inertia resulted in the powerlessness and loss of response against the game changing behavior of Apple. There have been various investigations regarding what was the root cause of the Nokia company top managers (Basadur, Gelade & Basadur, 2014). It has been found that it grew from a culture of temperamental leaders who were scared of revealing the truth. c It also focused on the growth of suitable operating systems needed to compete equally with the soaring Apple company.
In the year 2007, the N95 smartphones were launched by the company having declined the quality of the high-end phones. This new launched handset had full music features, large screen (not touchpads), GPS navigation. For some times, it was a good success but few quality problems emerged soon. After that, in the year 2008, the Nokia company launched Nokia 5800, the first touchscreen phone at comparably lower prices (V3.uk, 2018). This product earned the company success but only after one year because there were initial software development issues. In 2009, the N97 phone was launched by the company to give tough competition to the iPhone. However, in terms of quality it was considered to be a complete fiasco. Then in the year 2010, came the ‘iPhone Killer’ with a more modified touchscreen which also underperformed in its usability. It ultimately failed to match the standards of IOS and Android. As a remedy, the CEO of the Nokia company in the year 2011, decided to fir alliance with the Microsoft company in the hope of improvement. As a result, the decline of Nokia was getting worsen, so the Microsoft company completely acquired the business in the year 2013.
After going through various research papers on this topic, it has been found that Stephen Elop’s decision was the last and foremost contributory factor to the complete downfall of the Nokia company. According to some in-depth investigation, it appears that there were some conspiracy factors in the entire process. The conspiracy theory suggests that the CEO of the company Stephen Elop himself came from the Microsoft company and thereby taking all the decisions those were in favor of the Microsoft company (Bloomberg, 2018). Various relevant data when checked, shows that the CEO went against the rules of ethics and professionalism. c His decision in terms of carrying the Windows operating system in every Nokia phone discarding other operating systems did a blunder to the company and its performance. Researchers suggest that had the company been sold to the biggest smartphone operating system, the Nokia company would have raised in value and position in a greater way than today.
There was a time when the Nokia company was the only face of mobile phones. The Finnish company had the best choice of designs and held the position of world’s most respected brand. The Nokia company also wanted to become what Apple and Google are today. In the year 2010, the Nokia N8 was an outstanding phone. The IPhone company is now soaring with a success by gathering the plaudits is nothing but a fulfillment of the vision Nokia had visualized almost 20 years back but could not fulfill it. The mission of the company was to satisfy the people of the word with the best possible service and connect them altogether. The company valued the customer preferences and tried their best to design the products according to that. Their vision was to create a phone that would provide the best camera with supreme quality build material.
However, the Nokia N8 phone was perfect from every aspect, but the software that was chosen for this phone was wrong or unsuitable. The N8 phone was ready to be launched in the market but there was a continuous delay in the Symbian Version. As a result, the software kneecapped the hardware. It can be said that there was a lack of vision in the leadership of the company which could not see the coming decline of the company. The greatest failure of the Nokia company can be attributed to the unwillingness to embrace or welcome the drastic change that the company must have underwent. It feared that by changing too much, it might problematize the regular users of the company. Hence, the company compromised with an operating system which had no future at all. Records are there that it was highly suggested that it would be extremely beneficial for the Nokia company to jump to Android. It was a shorter way to transform the Nokia software competitive. Overall, every decision that was taken for positive outcome turned out to be sheer failure. The vision the company had seen once and the mission which was set could not actualize, rather destroyed.
Figure 1- Market share of Smartphones
Source – (Bandible.com, 2018)
Figure 2- Sales decline of Nokia Company
Source – (Statistica.com, 2018)
The first table shows that the Nokia company windows mobile has faced the biggest downfall in the US market share. Whereas, the Windows phone 7 and Symbian have remained linear to through the years. The second graph shows that Nokia has visibly lost it market share in the smartphone segment that is much more profitable. It has become profitable due to Apple’ iPhone and Android phone of Google. Through the past years Symbian has been significantly replaced by the Samsung and HTC android phones. The global market of the android phones has become more than 38.5% whereas Symbian has the market share of only 19.2 % as the reports till 2011 evidence (Nummela, Saarenketo & Loane, 2016).
One of the most potential competitors of Nokia company is Apple. Nokia operates in an industry which demands constant innovation and brand establishment. It is well known that the Apple company stands alone in the market of cellphones, rather say smartphones. It is a multinational corporation which designs, manufactures and markets the electronic products and software basically. According to a latest survey, the employees have increased up to 7% and it earns revenues of $265.6b per annum. The gross profit of the company is $101.8b and net profit is $59.5b. Another strong competitor of Nokia company is Samsung. It has recently gained more attention due to its latest Android Operating Systems. The latest survey suggests it has revenues of 668.4b and the net income is 476.4 b.
The external factors that are related to the issue can be measured using the Porter’s five Forces. The Porter’s five force is a tool that is used to analyze the external factors of a company affecting its business. The initiator of this tool is Michael Porter. The measurement is done on the basis of five factors including the Threat of new entrants, threat of substitutes, bargaining power of buyers, bargaining power of suppliers and the industry rivalry. The above mentioned issue of the Nokia company has affected the entire external environment of the company. The threat of new entrants has obviously increased. The relatively younger companies like Samsung, Lenovo, MI are flourishing fast and occupying maximum of the smartphone industry. They are providing advanced handsets and diverting the customer focus from the Nokia mobiles. The decline in the popularity has caused the company to bear the bargaining power of the buyers and the suppliers. Since, there is a considerable number of options, rather better options available in the market with modified technology and software in reasonable price, the Nokia Company is always under pressure.
The various industry rivals such as iPhone and others are taking the advantage of the company’s decline and gaining the competitive advantage as much as possible. Overall, the marketing, brand popularity and financial profits of the company is clearly going towards declination since the customers are attracted by the other brands. Hence, it can be seen that the failure of the Nokia company to compete with the smartphones has caused the company a huge loss both in the operational and marketing aspect.
The decline in the Nokia performance has caused the caused the internal factors of the company also get affected up to greater extent. The structure of the company has undergone change due to the entire operational decline. There was a time when the Nokia Company used to be world’s peace setting and dominant mobile –phone maker. Today’s scenario is thus, the company now occupies only three per cent of the market share of the international smartphone market. The coot company structure and business processes completely got crushed by Android and Apple. The first cause behind the decline of the Nokia Company has been considered to be its lack of adaptability to the changing phenomenon of smartphone trend.
It is astonishing that Nokia has the most adaptive history. The company has evolved from many businesses such as paper, electricity, galoshes, rubber and others. The Nokia Company has also dealt with the Umbrella business but in the early ninety nineties, till it anticipated the up rise of cell phones. Another striking fact is that Nokia Company was not a technological laggard but it came up with the first smartphone in 1996. The company also spent a considerable amount of money on the R & D department. The company also won recognition due to the marketing strategy they had (Boylan & Turner, 2017). The company deeply underestimated the growing importance of software. It also underestimated the necessity of transition to the smartphones. It also failed to identify that the market rivals would not stay resilient as before.
In order to survive in the highly competitive market, the key is to adapt to change. Hence, it is required that people, business and organisms do adopt this uncertainty and change as it will enable them to overcome the challenges, solve the problem and deal with the problem of attrition. Adaptability is the key to sustain in the industry. The leader’s/ organization’s effectiveness is limited without adapting a change (Vertakova et al., 2016). The major reason behind the decline and failure of the Nokia company was the inability to change and adapt to the transforming scenario of the world of cellphones. It is recommended that the amalgamation of speed and technology is needed to face the complexity of a transforming environment. In order to turn the rigidity of the company into adaptability, the inner willingness to adapt needs to be there.
The motivation must be redefined. Once the company/individual has redefined the problem, it can easily see the problems in a better way (Bouwman et al., 2014). Having realized the inner motivation, the next step is to observe the change. Along with observing the change occurring, it is also recommended to anticipate the pros and cons of the transformation in future and adapt accordingly. The change and the adaptability to change must start with setting small goals (Majanoja et al., 2014). It would be relevant to say that if a huge mass of tasks is fragmented into comparably smaller ones, it is accomplished easily. The breaking down of an apparently non-attainable objective into smaller ones, reduces the mental pressure of the task and the unfathomable is turned easily into something manageable. An organization and the members of the organization must adapt to the unpredictable opportunities of the moment by embracing the mindset of improvement.
It is true that change is uncomfortable and the adaptation ton change is messier. In order to adopt the change, from the leadership perspective, I would have at first start by asking myself regarding what is actually changing and why is it changing. I would have tried to know what exactly the outcome of the change must be. First of all, the Nokia company should have the will to sacrifice their first priority and profitable cash cows to pave way for the future (Salehi, Mirsepasi & Farhangi, 2015). It is the rule of business, it the organization itself does not cannibalizes itself, some other company will do it. Next step is, they must have pruned and added innovation keeping in mind the red tape and bureaucracy which choked the innovative spirit from inside (Bouwman et al., 2014). The need for change must have been communicated with the employees and the members of the organization who were the foundation of Nokia. The profits of the change and the consequences of staying rigid must have been clearly communicated in the workforce so that it could have been supported.
Conclusion
Therefore, from the above discussion, it can be said that the Nokia company had all the necessary abilities and qualities to become world’s one of the top mobile companies. However, the major reason behind their failure to deal with the smartphone phenomenon and almost every attempt they committed proved to be failures. The most essential quality that the Nokia company lacked that led the company to completely decline was their rigidness and unwillingness to change and adapt to the changing era. The report has well demonstrated the issue strategic and operational issues the Nokia company has faced and still has been facing in the current market. The report also further mentions some recommendation for the company following which the company could have avoided such failure.
Reference
Bandible.com. (2018). Nokia Financial Statement – band ible. [online] Available at: https://bandible.com/nokia-financial-statement/ [Accessed 15 Nov. 2018].
Basadur, M., Gelade, G., & Basadur, T. (2014). Creative problem-solving process styles, cognitive work demands, and organizational adaptability. The Journal of Applied Behavioral Science, 50(1), 80-115.
Bloomberg, (2018). Browder’s laundering complaint shows $97 million Nokia payment. Retrieved from https://www.financialexpress.com/industry/browders-laundering-complaint-shows-97-million-nokia-payment/1364636/
Bouwman, H., Carlsson, C., Carlsson, J., Nikou, S., Sell, A., & Walden, P. (2014). How Nokia failed to nail the Smartphone market.
Boylan, S. A., & Turner, K. A. (2017). Developing Organizational Adaptability for Complex Environment. Journal of Leadership Education, 16(2), 183-198.
Doz, Y. (2018). The Strategic Decisions That Caused Nokia’s Failure. [online] INSEAD Knowledge. Available at: https://knowledge.insead.edu/strategy/the-strategic-decisions-that-caused-nokias-failure-7766 [Accessed 8 Nov. 2018].
Doz, Y. and Wilson, K. (2018). Why the mighty fail – lessons from Nokia. [online] South China Morning Post. Available at: https://www.scmp.com/business/companies/article/2131615/why-mighty-fail-lessons-nokia [Accessed 8 Nov. 2018].
Majanoja, A. M., Loney, M. C., Wörlund, B., Linko, L., & Leppänen, V. (2014). A globally integrated supply chain delivery quality strategy: transformation insights at the Nokia devices unit. American Journal of Industrial and Business Management, 4(08), 413.
Nummela, N., Saarenketo, S., & Loane, S. (2016). The dynamics of failure in international new ventures: A case study of Finnish and Irish software companies. International Small Business Journal, 34(1), 51-69.
Salehi, S., Mirsepasi, N., & Farhangi, A. (2015). Investigating organizational culture adaptability of broadcasting firm in response to environmental changes. Management Science Letters, 5(11), 975-978.
Statistica.com. (2018). Topic: Nokia. Retrieved from https://www.statista.com/topics/1183/nokia/
Suominen, A., Hyrynsalmi, S., Seppänen, M., Still, K., & Aarikka-Stenroos, L. (2017, January). Software start-up failure: An exploratory study on the impact of investment. In Proceedings of International Workshop of Software Ecosystems (pp. 55-64).
V3.co.uk(2018). Microsoft’s $7.5bn acquisition of GiHub complete | V3. Retrieved from https://www.v3.co.uk/v3-uk/news/3065226/microsofts-usd75bn-acquisition-of-gihub-complete
Vertakova, Y. V., Rudakova, O. V., Shadrina, V. V., Kobersy, I. S., & Belova, I. N. (2016). Strategy of disruptive innovation in emerging regional markets: Factors of success and failure. International Journal of Economics and Financial Issues, 6(8S), 274-279.
Vuori, T. O., & Huy, Q. N. (2016). Distributed attention and shared emotions in the innovation process: How Nokia lost the smartphone battle. Administrative Science Quarterly, 61(1), 9-51.
Ward, J. (2018). Why Microsoft isn’t making a smartphone, even though you want one. [online] Windows Central. Available at: https://www.windowscentral.com/why-microsoft-isnt-making-smartphone-even-though-you-want-one [Accessed 8 Nov. 2018].
Wollaston, S. (2018). The Rise and Fall of Nokia review – fascinating insight into the Finnish, and now finished, tech firm. Retrieved from https://www.theguardian.com/tv-and-radio/2018/jul/10/the-rise-and-fall-of-nokia-review-fascinating-insight-into-the-finnish-and-now-finished-tech-firm
Essay Writing Service Features
Our Experience
No matter how complex your assignment is, we can find the right professional for your specific task. Contact Essay is an essay writing company that hires only the smartest minds to help you with your projects. Our expertise allows us to provide students with high-quality academic writing, editing & proofreading services.
Free Features
Free revision policy
$10Free bibliography & reference
$8Free title page
$8Free formatting
$8How Our Essay Writing Service Works
First, you will need to complete an order form. It's not difficult but, in case there is anything you find not to be clear, you may always call us so that we can guide you through it. On the order form, you will need to include some basic information concerning your order: subject, topic, number of pages, etc. We also encourage our clients to upload any relevant information or sources that will help.
Complete the order form
Once we have all the information and instructions that we need, we select the most suitable writer for your assignment. While everything seems to be clear, the writer, who has complete knowledge of the subject, may need clarification from you. It is at that point that you would receive a call or email from us.
Writer’s assignment
As soon as the writer has finished, it will be delivered both to the website and to your email address so that you will not miss it. If your deadline is close at hand, we will place a call to you to make sure that you receive the paper on time.
Completing the order and download