Case 1- Nokia I: early success in the mobile phone industry (20 Marks) Nokia is a multinational communications and inf
Posted: Sun Jun 05, 2022 10:10 pm
Case 1- Nokia I: early success in the mobile phone
industry (20 Marks)
Nokia is a multinational communications and information company
that was founded in Finland in 1865 and for 57 years was primarily
engaged in forestry-related products including electricity
generation. In 1922 it formed a joint partnership with the Finnish
Cable Works and Finnish Rubber Works and in 1967 the three
companies merged to form the new Nokia Corporation; a conglomerate
active in the rubber, forestry, cable, electricity and electronics
industries. During the 1970s Nokia became increasingly involved in
the electronics industry and in the 1990s focused its operations on
the communications business.
In the first decade of the twenty-first century Nokia was a
dominant force in the newly emerging mobile phone market and became
a major contributor to the growth of the Finnish economy. By 2007
Nokia had become a world leader in the mobile phone industry,
peaking with its 3310 model. Over the next seven years sales fell
away alarmingly, despite a programme of continuous innovation that
extended battery life, and in 2014 Microsoft acquired the company’s
mobile phone business. The effect in Finland was devastating and
thousands of employees lost their jobs and unemployment escalated
to over 14 per cent. However, though devastated, the rump of the
company lived on to fight another day.
What went wrong?
Nokia was not a technological laggard and invested heavily in
R&D, developed a smartphone in 1996 and had built a prototype
touch screen Internet-enabled phone by the end of the decade. The
company was essentially a hardware operation that underestimated
the importance of specially designed software that would run on
smartphones. In contrast, Apple saw hardware and software as
equally important. In essence, the senior management at Nokia
failed to realise that smartphones would become dominant. At the
time Nokia was an established global brand that was achieving
healthy profits from its mobile phone business. A late decision to
develop its own smartphone operating system resulted in teething
problems and so in 2011 Nokia embraced the Windows phone. However,
the company’s smartphones failed to live up to consumer
expectations and the Nokia brand lost its appeal.
Questions
industry (20 Marks)
Nokia is a multinational communications and information company
that was founded in Finland in 1865 and for 57 years was primarily
engaged in forestry-related products including electricity
generation. In 1922 it formed a joint partnership with the Finnish
Cable Works and Finnish Rubber Works and in 1967 the three
companies merged to form the new Nokia Corporation; a conglomerate
active in the rubber, forestry, cable, electricity and electronics
industries. During the 1970s Nokia became increasingly involved in
the electronics industry and in the 1990s focused its operations on
the communications business.
In the first decade of the twenty-first century Nokia was a
dominant force in the newly emerging mobile phone market and became
a major contributor to the growth of the Finnish economy. By 2007
Nokia had become a world leader in the mobile phone industry,
peaking with its 3310 model. Over the next seven years sales fell
away alarmingly, despite a programme of continuous innovation that
extended battery life, and in 2014 Microsoft acquired the company’s
mobile phone business. The effect in Finland was devastating and
thousands of employees lost their jobs and unemployment escalated
to over 14 per cent. However, though devastated, the rump of the
company lived on to fight another day.
What went wrong?
Nokia was not a technological laggard and invested heavily in
R&D, developed a smartphone in 1996 and had built a prototype
touch screen Internet-enabled phone by the end of the decade. The
company was essentially a hardware operation that underestimated
the importance of specially designed software that would run on
smartphones. In contrast, Apple saw hardware and software as
equally important. In essence, the senior management at Nokia
failed to realise that smartphones would become dominant. At the
time Nokia was an established global brand that was achieving
healthy profits from its mobile phone business. A late decision to
develop its own smartphone operating system resulted in teething
problems and so in 2011 Nokia embraced the Windows phone. However,
the company’s smartphones failed to live up to consumer
expectations and the Nokia brand lost its appeal.
Questions