Your SlideShare is downloading. ×
A case study of Nokia Corporation leading to the acquisition by Microsoft.
Upcoming SlideShare
Loading in...5

Thanks for flagging this SlideShare!

Oops! An error has occurred.

Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

A case study of Nokia Corporation leading to the acquisition by Microsoft.


Published on

Published in: Business, Technology
  • Be the first to comment

No Downloads
Total Views
On Slideshare
From Embeds
Number of Embeds
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

No notes for slide


  • 1. A case study of Nokia Corporation leading to the acquisition by Microsoft The significance of Nokia case study to leadership shows how a giant technology communication that permeated today’s organizational systems can easily be acquired by Microsoft for $7.2 billion US dollars (Versace, 2013; Swisher, 2013). In this analysis, did Nokia Corporation deviate from its core competences in terms of technology? Did pedagogical historical data that catapulted Nokia from local to national, international, then into a saturated global wireless communication giant, now unable to reinvent itself? Despite Nokia’s promenade of innovative technologies, why was Technological Situational Happenstances (T.S.H.) not applied to then organization? These myriads of questions will be analyzed, explored and synthesized. To start, understanding the historical background of Nokia in a global continuous changing environment of technology is necessary for learners. Nokia was a multinational corporation in the late 21st century headquartered in Finland. Nokia was structured into three main business segments. Markedly, the segments included (a) Nokia Mobile Phones, (b) Nokia Networks, and (c) Nokia Ventures Organization. Mobile Phone segment included the development, manufacture, and supply of wireless data products and mobile phones. Globally, Nokia segments’ services wide range of mobile phones for the arcade analog systems to digital standards and to Jigsaw. Most recent advanced research was on Jigsaw emulated pattern-recognition algorithms that can identify wide range of behaviors and logs detailed than past similar applications (Hong, 2010).
  • 2. More than 1.2 billion, over 5% of the world population uses Nokia’s device from mobile phones to advanced smartphones and high-performance mobile computers (Aluya, 2013; Versace, 2013). Nokia integrates its devices with innovative services through Ovi, which includes music, maps, apps, email and more. Nokia's NAVTEQ is a leader in comprehensive digital mapping and navigation services, while Nokia Siemens Networks provides equipment, services and solutions for communications networks globally (Nokia Corporation, 2010a). In the network segment, Nokia engaged in providing services related to the network infrastructure of mobile and Internet Protocols (IP). Ubiquitously, the network segment was entrenched in the areas of radio, broadband access for network providers, operators, and to core of the internet protocol mobility. Nokia Ventures Organization was formed for the purpose of creating new businesses outside the company's natural growth path and core segment of operation. This segment engaged in venture capital activities associated with a portfolio of new ventures. Essentially, these ventures included the commercial enterprises of Nokia Internet Communications and Nokia Home Communications (Reuters Investor, 2004). Company background In terms of communication, Nokia was one of the world leaders in mobile communications. Nokia dedication enhanced people’s living standard from exotic products to populist ubiquitous aesthetic seductive newbies. As a disrupter, it consistently and persistently was disrupting the disruptors during its halcyonic days. Nokia conjecturally have gone into hiatus and hypodermically under the Apple spell. Productivity through easy-to-use and secure products like mobile phones, solutions for imaging, games, media, mobile network operators and businesses were enhanced by
  • 3. Nokia. Without any doubt, Nokia sells three of every 10 mobile handsets manufactured (Brown-Humes, 1999). Nokia now, unfortunately falls on the categories of Ericson and Motorola. Why? Nokia failed to effectively and officiously use ─Technological Situational Happenstances (T.S.H.) illustrated below (see Vignette 1) to reinvent itself, particularly understanding the situations on the global terrain. This is despite the company’s success in establishing a strong brand recognized throughout the world (Kipp, 2001). Vignette 1: Global impact of TSH Source: (Aluya, 2013b) Illuminated in the above vignette, critical components in this saga indicated why Nokia failed to take into deep consideration the following: a) adaptation, b) culture, c) economic environment, d) creative destruction, f) leadership and above all, g) sustainability. Contra-analyzing the above factors were what led to the flaring and flaming out of major technology companies irrespective of how solid or robust their
  • 4. financial indicates. Scholarship discussions continue with the concatenations of Nokia historical events leading to Microsoft acquisition pro anon. Moving along, misconception about Nokia was that the name connotes a Japanese company. Far from it, the company background showed European, a company pigmented and entrenched with European culture- Finnish Group Company. Toted up, the company has managed growth and innovation exceptionally well through the use of TSH back in embryonic stage. Staff numbers increased from 25,000 in 1993 to more than 44,000 in 2013. Bureaucracy then did not stifle the culture of innovation or deep capital creative destruction. Transmuted, the company was Europe's fifth largest and single-handedly accounts for more than 50% of the Helsinki exchange and a substantial chunk of Finnish GDP growth (Brown-Humes, 1999). Robustness of Nokia’s successes then propelled the Finnish group to be one of the world's most respected and reputable companies. Socio-psychological view and background Holistically, Nokia's business sojourn began in 1865, when engineer Fredrik Idestam established a wood-pulp mill in southern Finland and started manufacturing paper. In the European industrialization and the general consumption of paper and cardboard, Nokia became successful. This was a slight pendulum shift toward the fabianic economic doctrine. Nokia's products were exported first to Russia, to the UK and finally France. As a quintessential company, it became a major employer and the employees evolved into a paternalistic community. Presently, there remains a community called Nokia that existed on the riverbank of Emäkoski in southern Finland (Nokia, 2008).
  • 5. Nokia’s social, economic and historical analysis continued after World War II when the Finnish Rubber-Works bought majority shares in the Finnish Cable Works. Due to the quixotic need for power transmission, telegraph, telephone networks, the Finnish Cable Works Company grew and expanded. Eventually, Rubber Works and the Cable Works companies consolidated and a creative destruction machination eschewed. In 1967, the companies merged to form the Nokia Group. Later, seed money was planted into making Nokia a global success in telecommunications. Electronics generated 3% of the Group's net sales and provided work for 460 people (Nokia, 2008). At the end of the 1980s a common standard for digital mobile telephony was developed through innovative method of using TSH. Present technology standard now commonly referred to as the GSM (Global System for Mobile Communications) was innovatively created. In 1991, Nokia made agreements to supply GSM networks to nine European countries and by August 1997 Nokia had supplied GSM systems to 59 operators in 31 countries (Nokia, 2008). Stephen Elop was the president and chief executive officer (CEO) who led the company into the hands of Microsoft. Markedly, many scholarship critics’ contraposes how Elop made so many gaffs by not understanding the changing environment; however, Elop is still the most interoperable person in the world today. No need to be ad hominem against his character. Stephen Elop was appointed the CEO on September 21, 2010, a day after the former CEO Ollila-Pekka Kallasvuo resigned (Nokia Corporation, 2010). To understand the political and social historical background, it becomes imperative to mention former CEOs who have led the organization to significant successes. In the embryonic stage, Kari Kairamo was the CEO who transformed the company. Kari Kairamo ideological eruption led the company in the acquisition and
  • 6. expansion of 80 subsidiary companies with an estimated 26,000 employees spreading over nine countries before his death in 1980. Simo Vuorilehto became the successor to Kari Kairamo in occupying the seat of the CEO. According to Mayo and Tony (1994), one of the biggest acquisitions of the 1980s was the Datachecker (USA Based) and the Unixtelecomms, Danish Company Regnecdentalen-ICL. In the 1980s during the recession, the CEO made some strategic moves to liquidate the unprofitable business ventures and subsidiaries Nokia Data bought Ericsson. This group extended the technical capabilities to the continental Europe during the same period of political liberalization of the European market. In 2010, Nokia acquired Motally's mobile analytics service that enables developers and publishers to optimize the development of their mobile applications through increased understanding of how users engage. Speciously, the service offered planned to be adapted for Qt, Symbian, MeeGo and Java developers (Nokia Corporation, 2010a). In 1992, Jorma Ollila, the former President and CEO critically examined the company's technological capabilities and realized the need for a stronger R&D department through TSH. Aptly, the CEO analysis led to the acquisition of the Matra Nortel Communications' GSM Terminals in Ulm, Germany. Streamlining and concentrating on the company's strengths became paramount to the Jorma Ollila. Within a decade, refusing to kowtow to the big labor, the company shielded itself from unprofitable businesses. Matra Nortel Communication GSM in Ulm, Germany was used as a stepping-stone to transform Nokia into one of the world's largest mobile phone suppliers. And this was a shifting sand of economic integration and deepening of capitalization.
  • 7. Historically, Nokia grew to national recognition from the 1960s and through the 1980s. During this period, Nokia bought various companies, such as Finnish Rubber Works, Finnish Cable Works, a Finnish telecom company, Luxor (Sweden owned electronics and computer firm), and Ericson's Data Division, to become a powerful conglomerate in Finland. Jorma Ollila (former CEO and later Chairman) developed the company strategy to focus more on the telecommunications business during the 1990s. Nokia, from the pedagogical cognitive and effective antiseptic experiences, successfully developed the first fully digital smart telephone exchange system in Europe and the first phone anchored inside a car. Subsequently, the stage was set for uncloaking the digital telephone deployment to customers or end-users. In Nokia's (2002 Annual Report), Nokia "made a strategic decision to concentrate on telecommunications as the core business, with the goal of establishing a market-leading presence in every major global market" (p. 19). Nokia was pouring fountain of creative newbies from golden chalice. Nokia divested non-core businesses that were previously acquired—paper, personal computer, rubber, footwear’s, chemicals, and power plant, aluminum, and television businesses. In order to infiltrate the U.S. market and other countries globally, Nokia collaborated seamlessly with other companies in the telecommunications industry to supply phones and networks to potential new markets. For example, "in 1999, Nokia penned deals to put its wireless application protocol (WAP) software into Hewlett-Packard's and IBM's network servers" (Nokia Corporation— History from Hoover's Online). Nokia high-risk strategic decision-TSH on telecommunication business led to gaining market shares and profits (Bernstein, 1996). Remarkably, the nonlinear technological methodology and realignment led Nokia to be the world leader in
  • 8. seductive mobile phones. "Nokia became a world leader in mobile, communicationsworld's leading supplier of mobile phones and a leading provider of mobile and IP networks" (Nokia's 2002 Annual Report, p. 20). Based on the 2002 and 2003 financial information for Nokia, mobile phones and Nokia's network make up approximately 99% of all net sales for the company. Not resting on its laurels, Nokia continue to gain substantial market share in disruptive mobile phones. In 2010, Nokia reports Q3 2010 net sales of EUR 10.3 billion ($13.6 billion), with non-IFRS EPS of EUR 0.14 Mobile device ASP up EUR 4 from Q2 2010 (Nokia’s 2010 Annual Report). According to a Nokia press release dated January 27, 2004, TELESTET, who was prime leader in mobile communications in Europe, introduced commercial 3G services to Greece. Actions of this purchase launched the country's first WCDMA (wideband code division multiple access) network, enabling top-of-the-line mobile services such as advanced multimedia messaging, high-quality streaming, browsing and video calls with speed of up to 384 kbps" (Nokia press release, 2004, January 27, p.2). Gallantly, Nokia provided the equipment used for 3G WCDMA network so that customers can access the network via the Nokia 6650 and 7600 mobile devices. In a capitalistic market, in the domain of creative destruction, most recently, time have overtaken some of the Nokia mobile phones. Surreptitiously, this is where Nokia lost its mojo or its whizbang technological du jour. Comparing Nokia to other competitors (Ericsson, Motorola, and Siemens), Nokia’s annual sales bypass all competitors except Siemens. Nokia, however, was a better-performed company than Siemens as outlined below:  Gross profit margin was four times greater than Siemens;  Nokia has A-1 debt rating and very little debt outstanding;
  • 9.  Market valuation was approximately 25% greater than Siemens although Siemens’ annual sales almost triple Nokia’s sales;  Nokia hordes cash, $US 14 billion at the end of 2007.  In 2010, Nokia reports Q3 2010 net sales of EUR 10.3 billion ($13.6 billion), with non-IFRS EPS of EUR 0.14 Mobile device ASP up EUR 4 from Q2 2010 (See the table and graph for 2012 net revenue). Nokia relied upon creative innovative products from its R&D groups. Risingly, the company also maintained a high cash balance conjecturally to purchase start-up businesses horizontally or vertically to enhance its telecommunication products. For example, in 2007, Nokia acquired Avvenu, Enpocket and Twango (Nokia, 2008). Most relevantly, Masalin (2003) stated that Nokia engaged with various leading business schools, universities and consulting firms to stimulate the employees’ minds, thence enhanced thinking outside the normal boundaries-pedagogically (learning the unthinkable possibilities). Strategically, Nokia does not appear to quash or suppressed competitors, unlike the formal management philosophy that was once outlined as one of Bill Gates and Microsoft’s strategy that sees Microsoft suffocating competitors. Nokia was backed by experience, innovation and user-friendliness-secure solutions. Unpolemically, the company was the leading supplier of mobile phones, a leading supplier of mobile, fixed broadband and IP networks. By adding mobility to the Internet, Nokia created innovative new opportunities for companies and thus further enrich the daily life of people globally. Nokia was a broadly and publicly held company with listings on six major exchanges (Activision, 2003). Nokia invested in 1998 HUF 25 billion (approx. EUR 100 million) in Greenfield Hungary to increase capacity of phones manufactured. Ascendly, the notion to maximize
  • 10. and increase manufacturing capacity was due to enabling infrastructure established in Hungary and the Komárom. Another reason for the massive infusion of cash and investment was the already human capital availability within the region. Scholastically, the region had the presence of a well-educated workforce. Financially, in the third quarter of 2007, Nokia's net sales totaled EUR 12.8 billion (USD 24.9 billion). Apparently this was a tale-tale sign of what is yet to come. Headquartered in Finland Nokia was listed on the New York (NOK), Helsinki, Stockholm, London, Frankfurt and Paris stock exchanges and employs more than 68, 041 people (Nokia, 2007). In a rapidly growing mobile phone industry, efficient, flexible logistics processes and manufacturing capabilities were benchmarks for success. Losing sight of this significant process, Nokia was indirectly undermining its own existence. For example, the new Komárom site within Nokia's global logistics structure was significant. "Nokia has always had well-established historical ties with Hungary, which was amongst Nokia's key countries today. Thanks to the central geographic location, positive corporate environment and the availability of well-educated workforce; Nokia has expanded its activities” (Nokia, 2007, p.3). Nokia was then able to tap into the historic technological trends to establish essentially a new market. Concomitantly, Nokia leadership however lost sight of the changing marketing trends even when it was glaring obvious. Sad! Nokia through historic technological trends and the use of TSH did then set new industrial innovative standard that got lost in the shuffled. Competition amongst competitors is at par and all navigating through the turbulence of the white Water. Nokia should have learned the “strategies for survival in a world of permanent white water” (Veil, 1996, p.1).
  • 11. Moving along the historical lane, epistemologically, the consensual belief indicated that the average age of Nokia employees was then around 30 years old. Crafty young employees’ perspectives were inherently geared toward a global changing environment mindset. Energetic, innovative, and meritocratic employees of these age calibers conjecturally placed the company at competitive vim. Crafty young employees with creative minds for new invention tend to adopt, change and were technologically innovative with the use of T.S.H. Nokia uses certain criteria in hiring young employees at the beginning of their career with the company; these actions were deliberate avenue of promoting the company culture (Gupta & Govindarajan, 2004). Now, a culture that equally inhibited Nokia inability to shake itself off the cobweb or move the great titanic ship to a different direction, vis-a-vis reinventing itself using TSH. To elaborate and expatiate, during the political disintegration of the Soviet Union, and the tearing down of the famous Berlin Wall, Nokia management plunged right into the political quagmire by hiring redundant Soviet technicians and scientists to develop the third generation mobile phones (Anonymous, 2001). Without any dot, Nokia leadership at that time understood the strategic change in the global environment. Ibid, Nokia hired these expatriate workers to perform, innovate, and reengineer the new creative generational mobile phones. Reasonably, these expatriates were given the political and authoritative power to discharge duties without any interference from corporate offices. Basically, these expatriates were then divided into five groups: (a) middle managers, (b) business managers, (c) establishers, (d) customer project employees, (d) research and development personnel. In continuation, Nokia took advantage of the political liberalization of the European market by acquiring ICL
  • 12. information technology group that later formed the basis for research and development into the 4G (fourth generation) mobile phones (Aluya, 2008). Practically, the incentive, the motivation and spirit that drove this small Finland community group to embark on mobile phones, was one of necessity. Basically, the real possibility of digging underground cable with landlines was very remote; the country was strategically located in the north cold poll of Europe. Bubbled up with the exigencies of the circumstances, this group of individuals became the pioneers of the early invention of mobile phones in the 1980s. Politically, the spirit of Nokia collaborating and contributing to political parties as a good corporate citizenry helped booster the company’s interest. Without hesitation, Nokia continues to contribute funds to political campaigns inside and outside of Finland in order to protect its interest from the Nationalists within and its financial interest outside of the country. Nokia culture to organization leadership Poignantly, Nokia remain the symbol of Finland's prowess in the mobile Internet. Blau (2003) proffered that the source of Nokia's transformation anchored on its core intrinsic values. Despite the acquisition of Nokia by Microsoft, these values of (a) customer focus, (b) respect for the individual, (c) achievement, and (d) continuous learning, have been translated into an unprecedented entrepreneurial spirit still remain high. Entrepreneurial spirit or behaviors were embedded directly into the selection process of new staff and the performance of management systems set in place. TSH enables curiosity, openness, and imaginative futuristic ideas reflected on Nokia’s attitude with respect to the telecommunications field. Not musing, these elements were then mirrored in the company’s personality makeup. Like other elements of personality, Nokia antecedents and historic makeup in the early developmental stages formed an
  • 13. anchored unshakable culture of the company. Nokia does not have maneuvering room to further cultivate curiosity, openness amongst existing employee because Nokia’s greatest degree of freedom lies in the spiritual culture of the founders. And at the same token, the intrinsic anchored culture of the founders became the achille’s heels that was exhausted, that inhibited and clouded the vision of the leaders for creative innovation. Fortuitously, an interesting selection of employees at the time and it illustrated how the company manages its demographic makeup for future growth and development that then gave the company competitive edge over its competitors (Gupta & Govindarajan, 2004). According to Yates and Skarzynski (1999), Nokia used situational happenstances in technology to lead in creative telecommunications-creative destruction doctrine. Creative destruction was the concept advocated by Joseph Schumpeter in 1942. An erudite and witty economic thinker, in his typology, he indicated that the semi perennial gale and objective of creative destructiveness is the idyllicta purpose of scrapping off the old and failing existing technological products and systems and replacing them with newly creative ones(Aluya, 2013b). Creativity led to the development of innovative technologies integrated into the mobile phones and network market segments. Blau and Wolff (1996) suggested that Nokia's past success was due to "flat hierarchy and youthfulness to beat the competition" (¶ 14). Average age of the Research and Development (R&D) at Nokia was approximately 30 years old at this time. Creating new and innovative products was an impetus to success. Yates and Skarzynski espoused that companies that extrapolate from historical trends do not lead to better products. Young employees in Nokia were inventive, creative and adaptive to the changing times. They created their own history. Ambitious young employees brought the new products to the
  • 14. market as the disruptors and the market shift in their favor. Nokia could only be good as the product they produce today. Delphically, the core question to learners was what happened to the concatenation past-historical antecedents. Ostensibly, the past could be divulged or could be completely irrelevant to the future. Core to the research of this magnum opus work becomes apparent to where the epistemologists collide with the pedagogists. While Nokia has almost doubled their spending in R&D, they have reduced the numbers of R&D centers from 28 in 1996 down to 11 by 2003. Given these circumstances, the real issues of contention were (a) whether or not Nokia could continue to operate R&D with a youthful group (who age over time and were burn-out) who were able to continuously create new and innovative products to enhance the mobile phones and network business segments which will capture more market share or even create a new market demand; (b) the growing concern that the current global economic downturn may negatively affect the growths of both Nokia and the Finnish economy; and (c) the charges that Nokia was susceptible to inflexibility as it becomes more mature was apparent and why Microsoft acquired the company. These were the “ifs” that needed to be considered if the company would continue to have comparative and competitive advantage. Significance to leadership Nokia lost business opportunities during the Soviet Union’s 1980s era of closed iron curtain. This was an era of clicked, flicked, bubbled up and eventually busted up decade. There was recession during this period (Nokia, 2004). European market was impermeable with new innovative technologies triggered from changes in TSH. Despite the business losses, Nokia was able to develop and distribute one of the largest mobile phones in the world today, until Apple took the driver’s seat. Another folder for thought
  • 15. was how did Nokia become the largest mobile phones distributor in the world? Disintegration of the Soviet Union coupled with the liberalization of the European market during the 1980s and early 1990s provided the impetus that allowed Nokia to acquire and expand its markets through using TSH. Nokia expanded its markets by using the existing enabling and incubated technologies to maximize markets share in the late 1980s, thus increasing capabilities. According to Stephen Elop, the former CEO, maybe the new CEO to Microsoft, “In the five weeks since joining Nokia, I have found a company with many great strengths and a history of achievement that are second to none in the industry. And yet our company faces a remarkably disruptive time in the industry, with recent results demonstrating that we must reassess our role in and our approach to this industry. Some of our most recent product launches illustrate that we have the talent, the capacity to innovate, and the resources necessary to lead through this period of disruption. We will make both the strategic and operational improvements necessary to ensure that we continue to delight our customers and deliver superior financial results to our shareholders.”(Nokia Corporation, 2010a) Circuitously, Nokia’s corporate social responsibility involves acknowledging the company’s range of opportunities to be realized and the risks to be minimized. Acting responsibly brings the company improvements in risk management, legal compliance, enhanced reputation, and improvement in company efficiency issues like productivity, quality, and costs. Conspicuously, Nokia brand was one of the most valuable in the world, and it had a good reputation that was vital in order to maintain company standing among employees, investors, network operators and consumers (Nokia, 2004). More significantly was to maintain the company standards and good reputation that would lead to longevity. Longevity has become relative in the field of technology. Leaders in technology must be ahead of the curve, or at worst be clairvoyant about the strategic short-term changes. Imperatively, continued creativeness from scion of aesthetic seductive products would have led to the sustainability of the longevity, a beneficent future for Nokia.
  • 16. Nokia core philosophy was using TSH innovate new technologies for the benefits of the society and the company. Social responsibility was cardinal. Nokia acts proactively while integrating programs into its core business activities as well as making a sustainable effort. Succinctly stated, doing business in a responsible way economically makes business sense to Nokia. Social responsibility that exemplified good corporate citizenship helped create a sustainable product life cycle, sustainable employment, sustainable corporate reputation, and ultimately sustainable economic growth (Nokia, 2004). Finland gradually lost competitive advantage as a home for the corporate headquarters of many parent companies. As Nokia ages, the tasks altered at higher levels, and the type of leadership that was needed also changed. In 1992, for example, the former CEO Ollila delineated the four key areas to the multinational's futuristic success. These keys areas challenged the firm to be (a) more telecom-oriented, (b) more globally focused, and (c) highly sensitive to the value-added effects of their ventures, (d) continuous innovative improvements-TSH. According to Masalin (2003), the uniqueness of Nokia's management approach was novel to its organization. "Nokia relies on a strong corporate culture and the company's values: customer satisfaction, respect for the individual, achievement, and pedagogical-value-based leadership was an integral element of the Nokia way" (Nokia, 2004, ¶ 4-5). Blau and Wolff (1996) described a flat organization structure enables companies to be flexible and quick in making decisions. Actually, this structure appears to be a good fit for Nokia. Overall, Nokia's management and leadership philosophy could be similar to that of Microsoft philosophy. Glaring obvious, Microsoft and Nokia
  • 17. have had similar culture, leadership styles, philosophy, all tested and meta-tested already in their previous partnerships. This case study purports to show how Nokia’s transformation from exotic to ubiquitously distribution of its mobile phones to individuals globally with TSH as enabler. It elaborated how technology companies are at par in the creation of newbies. Not musing, even the so-called giant companies like Apple must continue to innovate or they will have an Icarus fall like the Ericson or Motorola. Distribution of mobile phones globally was extrapolated from the company’s past experience, now bubbled to the surface as a mistake (Aluya, 2013b). Past anesthetic experiences of the company were used to predict future of technological innovativeness used to gauge trend. According to Davidson (2003), Nokia management and strategic planners were not only distributing mobile phones, but they were permeating into the rapidly growing games market, electronic Arts, the Sega market, and more recently into Jigsaw or smart phones (Hong, 2010). Nokia promotes a culture where good communications practice was integrated into every day interaction. The interactions were with and between employees. These interactions were ensconced in the shared vision and goals, shared knowledge, openness, speed and integrity to be at the top hierarchy. Nokia’s global mindset and how leadership could learn through extrapolation of past concatenation of experiences to predict the future was at the core of this case study. And this was an elegant idea that could be confuted. This analysis showed how development enhances curiosity about future telecommunications world, exposes diversity and novelty. Constructively, this analysis articulated current mindset, how integrated critical scholarship and the development of a new global mind shift of reasoning were applied (Gupta &
  • 18. Govindarajan, 2004). During this time a burgeoning demand for Nokia’s products resulted in profit maximization. But, concurrently past experiences do die like summer flies unfortunately for Nokia. Nokia's profit included 1.47% of Nokia's total sales that occurred in Finland and Americans hold a 90% share of the company. In 2010, Nokia reports Q3 2010 net sales of EUR 10.3 billion ($13.6 billion), with non-IFRS EPS of EUR 0.14 Mobile device ASP up EUR 4 from Q2 2010 (Nokia’s 2010 Annual Report). From this study, high taxes damper initiatives; however, high standards of education have been a key factor in Nokia's success. Studies failed to establish a correlation between high taxes and employees’ turnover among skilled foreign workers. Recently, studies have determined that Finland depended on the company to underpin the economy (Aluya, 2010). Overwhelmingly, operating profit for Nokia has been on a steady rise. In a study that more clearly specifies behaviors, Nokia enjoyed a healthier phone business, although lags in network sales, which hurts overall company performance. This leads to uncertainty about whether or not the industry and corporate structures that were established a decade ago were very different from what present business environment needed for sustainability. A cultural sea change triggered by creative destruction-TSH might breath fresh air into the organizational psychology hence; the management reshuffle with should be wise as the company struggles for growth has occurred in the replacement of the CEO (Nokia Corporation, 2010). Reshuffling of management has been addressed in more recent studies. Interestingly, despite changes in sales growth over the past decades, results have supported those latest earnings forecasts. Nokia was then quick to enter key markets, and the company strategically was
  • 19. located within refined manufacturing centers capable of meeting rapid demand changes anywhere in the world and using Just-In-Time cryptic methods. Based on the literature coalesced and gleaned from the review and research materials, Nokia's leadership and management philosophy do not represent a new framework model in the general sense. Many of the attributes examined in the Nokia organization also existed in other companies such as Microsoft, Dell Computers, Hewlett-Packard, and General Electric. Technology companies have similarities in leadership styles, visions, business strategies, and corporate cultures. Flexibility, resilience and unencumbered by rigid internal regulations, Nokia appears to have the advantage in creativity, innovation, and entrepreneurial attributes due to their inclusionary philosophy. Global economy recession and recovery affected Nokia’s net sales Nokia like any other global industry was not immured nor inoculated from the global economy collapse that started from 2008. Nokia sales plummeted in the four quarters of 2008 and 2009. As the global economy recovery, consumers’ confident and purchases abated the sales decline. Vignette 2 graphically depicted below showed three quarters net sales in 2010, far exceeded the 2008, 2009, 2011 and 2012. Table 4: Global impact on Nokia’s sales in EUR in millions Years 2012 2011 2010 2009 Quarterly (Q1-Q4) (Q1-Q4) (Q1-Q4) (Q1-Q4) 30, 176 38,659 42,446 40,984 (Months) Net Sales Source: Nokia Corporation, 2013
  • 20. 50000 40000 30000 20000 10000 0 2012 2011 2010 2009 Net Sales Vignette 2: Global impact on Nokia’s sales in millions of EUR From the above vignette 2 graphically depicted revealed that the precipitated global recession that started in 2008 negatively affected Nokia net sales. There was a quarterly declined to 6% in total net sales. Combination of the total four quarters in 2009 illuminated Nokia’s net sales decreased of 19 % to EUR 40 984 million (EUR 50 710 million in 2008). Net sales of Devices & Services for 2009 decreased 21 % to EUR 27 853 million (EUR 35 099 million). Net sales of NAVTEQ * were EUR 670 million in 2009 (EUR 361 million for the six months ended December 31, 2008). Net sales of Nokia Siemens Networks decreased 18 % to EUR 12 574 million (EUR 15 309 million). Europe on the contrary, accounted for 36 % (37 %) of Nokia’s net sales, Asia-Pacific 22 % (22 %), Greater China 16 % (13 %), Middle East & Africa 14 % (14 %), Latin America 7 % (10 %), and North America 5 % (4 %). Ten markets in which Nokia generated the greatest net sales in 2009 were: China, India, the UK, Germany, the United States, Russia, Indonesia, Spain, Brazil and Italy, together representing approximately 52 % of total net sales in 2009. In comparison, the ten markets in which Nokia generated the greatest net sales in 2008 were China, India, the UK, Germany, Russia, Indonesia, the
  • 21. United States, Brazil, Italy and Spain, together representing approximately 50% of total net sales in 2008 (Nokia Corporation, 2013) As the global economy recovery begins, Nokia net sales increased from 1% to 7% on a quarterly basis, however this increase was unable to sustain the spiral decline in the company overall market. Lifted from Nokia financial statement(Ibid), last quarter of 2009 to the quarter of 2010, net sales increased Devices & Services EUR 7.2 billion, up 4% year-on-year and 6% sequentially (down 5% and up 2% at constant currency). Nokia services net sales of EUR 159 million, up 7% year-on-year and 1% sequentially; billings of EUR 325 million, up 89% year-on-year and 10% sequentially. Nokia total mobile device volumes of 110.4 million units, up 2% year-on-year and down 1% sequentially. Converged Mobile Device (smartphone and mobile computer) volumes of 26.5 million units went up 61% year-on-year and 10% sequentially. Nokia mobile device ASP (include services revenue) of EUR 65, up from EUR 64 in Q3 2009 and EUR 61 in Q2 2010 respectfully. Furthermore, Devices & Services gross margin of 29.0% was down from 30.9% in Q3 2009 and 30.2% in Q2 2010. Devices and services non-IFRS operating margin of 10.5%, down from 11.4% in Q3 2009 and up from 9.5% in Q2 2010. NAVTEQ non-IFRS net sales of EUR 252 million, up 52% year-on-year and flat sequentially (up 47% and down 2%). Nokia Siemens Networks net sales of EUR 2.9 billion up 7% year-on-year and down 3% sequentially (flat and down 4%). Nokia Siemens Networks non-IFRS operating margin of -3.9%, down from -1.9% in Q3 2009 and 1.7% in Q2 2010. Nokia operating cash flow of EUR 439 million, and cash generated from operations EUR 1 206 million. Total cash and other liquid assets of EUR 10.2 billion and net cash and other liquid assets of EUR 4.4 billion toward third quarter of 2010 (Nokia Corporation, 2010).
  • 22. PS: For references to the above study, and further reading logon to or purchase the entire book: Leadership, Real Estate and Disruptive Technology: Technological Situational Happenstances (2nd Edition).