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Group 3A
Presenters
OutlineSituation Analysis in 2001: FinlandSituation Analysis in 2001: NokiaThe Nokia StoryCritical ChallengesEvaluations o...
Situation                                                           Analysis    Situation Analysis in 2001: Finland       ...
Situation                                                                  AnalysisSummary of Situation in 2001: Nokia   ...
Situation                                                            AnalysisCluster Program   The cluster program had an ...
Situation                                                                             Analysis   Porter’s Diamond ModelGov...
Situation                                                                            Analysis   Porter’s Five Forces Model...
Situation                                                               AnalysisCompetitor AnalysisEricsson               ...
The Nokia                                                                                Story  Core Competencies of Nokia...
Critical                                                            ChallengesCritical Challenges for FinlandThe 90’s     ...
Critical                                                        ChallengesCritical Challenges for Nokia2001               ...
Evaluation of                                              AlternativesEvaluation of alternativesFinland                  ...
Recommendatio                                                                   nsRecommendationsFor government in 2001  ...
Recommendatio                                                                nsRecommendationsFor Nokia in 2001   Continu...
Nokia and Finland_International management
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Nokia and Finland_International management

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Nokia and Finland_International management

  1. 1. Group 3A
  2. 2. Presenters
  3. 3. OutlineSituation Analysis in 2001: FinlandSituation Analysis in 2001: NokiaThe Nokia StoryCritical ChallengesEvaluations of AlternativesRecommendations
  4. 4. Situation Analysis Situation Analysis in 2001: Finland Finland - from a sleepy nation to a very competitive one Government Policies Huge investment in R&D Open Market Policy Joined EEA (European Economic Area) in 19932001 Declining GDP growth Increased unemployment among the low skilled labors Telecommunications cluster accounts for 6.9% of GDP Shortage of skilled Finnish workers
  5. 5. Situation AnalysisSummary of Situation in 2001: Nokia Nokia was the leader of the Telecom industry  Market share: handsets 31%, Infrastructure 10% Motorola lost mobile phone leadership to Nokia  Market share: handsets 15%, Infrastructure 13% Severe downturn in the Telecom  Slow/Delayed transition to 3G system  Nokia stock fell 38% during 2001  Revenue grew by 9% in 2001 (compared to 43% in 2000) Shortage of skilled Finnish workers  Nokia foreign employment grew 4 times faster than Finnish employment Finnish suppliers produce highly customized inputs
  6. 6. Situation AnalysisCluster Program The cluster program had an impact not only on industrial and technology policies, but also on science, educational and regional policies  Unmanageable Macroeconomic policies  Deepest recession  GDP fell by more than 10% in 1991–93  Unemployment rate had risen to almost 20%.  Weaknesses in production and export structures  Urgent need to study competitiveness and its origins  Cluster goal: Strengthen Finnish competitiveness  83,000 employees, >4,000 firms, 6.9% of GDP  R&D focused on technology and telecommunications
  7. 7. Situation Analysis Porter’s Diamond ModelGovernment Huge investment in Liberal and less research institutes Factor interference Sophisticated education Conditions Stability Abundance of natural Assurance of resources technological neutrality Demand Conditions Strategy, Structure Rivalry High demand for mobile in Nordic region Industrial message for national competitiveness Massive domestic mobile penetration Growth through acquisition and alliance A market of early adopters Heavy Exports and large FDI Venture capital forum Chance Highest public R&D spending More exports to EU in Europe due to disintegration Local supply for highly customized inputs Related and of Russia Joined EEA in 1993 Mobile Internet Supporting Industry
  8. 8. Situation Analysis Porter’s Five Forces Model MEDIUM Bargaining • Buyers choose brand power of • Low opportunity customers for suppliers •Large no of customers were loyal to brand MEDIUM MEDIUMThreats of •High investment •More than 100 Threats capital • No real local substitutes new •Non-existent operators available of entrants customer loyalty substitutes •Active local rivalry • Tablets and •Highly in wireless portable competitive computers market communications LOW • Large number of contract Bargaining manufacturers dependent upon power of Nokia • Long term Suppliers strategies with vendors
  9. 9. Situation AnalysisCompetitor AnalysisEricsson Motorola Worldwide leader in network  Leading worldwide supplier of technologies in 1980s and 1990s mobile phone handsets and infrastructure in 1980s Low end product were manufactured by Taiwanese firms  Controlled almost 25% of world market in 1990s In 2000, lead of over 40% in infrastructure market  2nd in mobile networks (13%) and phones (15%) in 2001 In 2001, served more than 130 markets  Slow to shift from analog to digital phones
  10. 10. The Nokia Story Core Competencies of Nokia  Nokia’s Core CompetenciesInternational operations in  Personality countsvarious fields  Brand name/ Brand developmentWorldwide joint ventures  Research & developmentHighly skilled work-force  Mass productionNordic identity through the“Nokia way”  Nokias focus on two key industries  handsetsLow production cost and shortproduct development cycle  network equipmentBroad market: serves distinct  More than one-third of the total Nokia workforce is incustomer segments withdifferent needs R&D, and two-thirds of these are based in FinlandFocus on R&D (15 countries, 9%of its revenue)  Three Nokia’s main market areas  EuropeNokia is always ahead of its  Asia Pacificcompetitors  America
  11. 11. Critical ChallengesCritical Challenges for FinlandThe 90’s The 21st Century Rising Interest Rates in Europe  Declining growth rates and Falling prices of its Main Export exports Industry  Downturn of Tele-Communication Higher Unemployment Industry  Entry of Chinese Low Price Higher Inflation Players  Scarcity of Skilled HumanWhat did the Government Do Resources Tighten Macro Economic Policies Taxation moderation Monetary policy aimed at increasing Interest rates initially via government bonds Centre of Expertise Program & Cluster Program
  12. 12. Critical ChallengesCritical Challenges for Nokia2001 2012 Evolution of standards  Emergence of Smartphones  Fast losing ground in feature New low cost entrants phone segment as well  Shut down its last manufacturing facility in PDAs were emerging Finland on Friday 27th July 2012 Competitors like Sony were  Shares are at an all time low horizontally integrating  Shut down its software devices division,  Aligned itself with Microsoft to Reduction of product life keep Windows on all their cycle smartphones
  13. 13. Evaluation of AlternativesEvaluation of alternativesFinland Nokia Tie-ups with education  Promote Finland as an institutes educational hub Hike in R&D expenses  Trade agreements Investment in consumer-  Reviving old industries targeted models  Growth in low-skilled service sector  Modification in central wage policy  Promotion of tertiary education
  14. 14. Recommendatio nsRecommendationsFor government in 2001 Use Porter’s Diamond approach to evaluate each determinant and its dependent relationship Encourage immigration of high-skilled professionals to join the work force Encourage more global firms to open R&D centers in Finland by providing tax incentives Incentives for Skilled People Entry into Finland Making Demand Conditions in favor of local players (Nokia) Global Outsourcing of Components to achieve cost benefits
  15. 15. Recommendatio nsRecommendationsFor Nokia in 2001 Continue creation of stylish but short life cycle mobile handset The market for South East Asia had a low penetration of mobile phones, and can concentrate their sales in this region With increased importance of email communication on the go, improve WAP technology to enable data services Finland should market Global IT & Telecommunication specialized universities to attract more foreign students NOKIA should get skilled labor from its global existing markets to cope up with skilled labor shortage

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