The Rise and Fall of Nokia

I. Synopsis

Nokia AB was founded in 1865 as a timber company near the town of Nokia,
Finland. By the late 1960s, it had merged with several Finnish concerns to form Nokia
Corporation. In 1970s the company developed its own computers such as Mikro Mikko
Office Computers, in which they have gained 80% of the market share of computer
sales in Finland. From 1977 to 1988, Nokia was led by CEO Kari Kairamo, it was an era
of growth for the firm. They have secured their position as the largest consumer
electronics company in Scandinavia. Nokia’s impressive performance continued with a
series of mergers and acquisition that boosted their revenue.

Nokia continued with their new CEO, Simo Vuorilehto from 1988 to 1992. Nokia’s
total sales dropped 31% from the previous year in 1991. In 1992, Vuorilehto stepped
down and Jorma Ollila was maned Nokia president and CEO. Ollila implemented “The
Nokia Way” highlighting Nokia’s core values of customer satisfaction, respect for the
individual, achievement, and continuous learning. Nokia also launched the first mass-
produced digital phone, Nokia 1011, for GSM. By late 1992, Nokia had become the
biggest producer of mobile phones in Europe, and the second largest producer in the
world behind Motorola.

By 1994, Nokia accounted for 25% of the market capitalization of Finland’s

Helsinki Stock Exchange and the mobile penetration was the highest in Sweden with
13% of the population owned a mobile phone, followed by Finland with 10%, and the
U.S. by 6%. In 1995, Ericsson, Motorola, and Nokia collectively controlled 75% of the
global handset market by the end of 1995. By 1998, Nokia sold products in 140
countries and Nokia became the world’s leading mobile phone manufacturer, with 23%
market share and 163 million units sold, surpassing Motorola’s 20% market share.

Nokia turned its attention to emerging markets in the early 2000s. Nokia
controlled over 40% market share of GSM handsets and 5-7% of the CDMA handset
market of the U.S. and South Korea. Nokia annual revenues exceeded 29 Billion by
2005

Nokia AB was founded in 1865 as a timber company near the town of Nokia,
Finland. The late 1960s, it had merged with several Finnish concerns to form Nokia
Corporation. In 1970s the company developed its own computers such as Mikro Mikko
Office computers, in which they have gained 80% of the market share of computer sales
in Finland. From 1977 to 1988, Nokia was led by CEO Kari Kairamo, it was an era of
growth for the firm. They have secured their position as the largest consumer
electronics company in Scandinavia. Nokia continued with their new CEO, Simo
Vuorilehto from 1988 to 1992. Nokia’s total sales dropped 31% from the previous year
in 1991.
 In 1992, Vuorilehto stepped down and Jorma Ollila was named Nokia president
and CEO. Ollila implemented “The Nokia Way” highlighting Nokia’s core values of
customer satisfaction, respect for the individual, achievement, and continuous learning.
By 1994, Nokia accounted for 25% of the market capitalization of Finland’s Helsinki
Stock Exchange and the mobile penetration was the highest in Sweden with 13% of the
population owned a mobile phone, followed by Finland with 10%, and the U.S. by 6%.

In 1995, Ericsson, Motorola, and Nokia collectively controlled 75% of the global
handset market by the end of 1995. By 1998, Nokia sold products in 140 countries and
Nokia became the world’s leading mobile phone manufacturer, with 23% market share
and 163 million units sold, surpassing Motorola’s 20% market share.

Nokia turned its attention to emerging markets in the early 2000s. Nokia
controlled over 40% market share of GSM handsets and 5-7% of the CDMA handset
market of the U.S. and South Korea. Nokia annual revenues exceeded 29 Billion by
2005. In September 2013, Nokia sold its Devices and Services business to Microsoft
and provided access to Nokia’s patents 172 forten years, for €5.44 billion

II. Statement of the Problem

How can Nokia regain its competitiveness in mobile phone business?

III. Objective of the Study

o To be able to compete with other competitors such as Apple and

Samsung
o To retain its position as the number one in mobile phone sales worldwide
o To identify an alternative that will boost the competitiveness of Nokia on
mobile phones

IV. Areas of Consideration

Strength
 Nokia is one of the world’s largest mobile phone manufactures.
 Wide array of devices in ranges from low to mid-priced
 Patent portfolio
 Reputation and experience
 Distribution network

Weakness
 Struggle in competing with CDMA based models
 Declining presence in US
 Inability to compete with high-end smartphones
 Slow reaction to competition
 Poorly designed smartphones
 Opportunities
 Expansion of mobile market
 Increase in demand of smartphones

Threat
 Fast development of low and mid-end smartphones
 Growing number of competitors worldwide
 Strong competition with emerging companies in the industry

V. Alternative Courses of Action

1. Product development to be able to compete with low and mid-end

smartphones in the industry.
Advantage: easier access to markets in developing countries
Disadvantage: Reputation will take time to grow and potential consumers are
not use to have another type of smartphone

2. Specializing in customization
Advantage: something new to market.
Disadvantage: People might dislike the product and the process of change.

3. Product development to be able to compete with high-end smartphones in the

industry.
Advantage: fewer competitors than low and mid-end smartphones in the
industry
Disadvantage: high cost in production and development

VI. Recommendation

The recommendation will be number one (1) from the Alternative Courses of
Action, which is the product development to be able to compete with low and mid-end
smartphones in the industry. According to the strong competition in the mobile phone
market, Nokia should improve their mobile phone operations as well as improving the
phone’s ability such as the functionality of internet mobility as well as accessibility; and
provide applications that will satisfy the consumer mobile needs.

Nokia should not be completely dependent on Microsoft focus, which may be

risky in terms of lack of validation from the consumer and the disengagement on Nokia
“same” operations, instead of having a innovative and sustainable operational mobility.
Nokia should keep developing the mobile phone technology at the same time Microsoft
should focus on software and another application that relates to mobile phone using,
which has a similarity to famous cellular phone application in order for it to be more user
friendly
The advantage is that Nokia has an easier access to markets in developing
countries, which will help and improve to focus the company as to have a product
development in order to compete with the low and mid-end. Considering that the recent
competitors have tough skin such as Apple, Samsung etc. Nokia should focus in
regaining its popularity slowly as it will climb up from the abyss where it was. Nokia
should focus on its reputation and challenge it competitors on the low and mid-end
smartphones in the industry as a starter from where they end up.

The disadvantage is that Nokia will take its time in regaining its reputation like in
the beginning of their journey as well as Ollila’s Work as a CEO. Considering that Nokia
is well known through its durability instead of having a good operating model. Potential
consumers are not use to having other type of smartphones out of the android and iOS;
and this will be a new change as well as customer satisfaction forecasts.

Nokia might have a hard time to recover from the problems endured over the
years in the competing world of mobile phones; competition of the high-end
smartphones surpassed the popularity scale due to strong trend of smartphone. But
Nokia has a chance to rebuild itself slowly, considering that Nokia produced numerous
portfolios and has a very large distribution channel around the world and Microsoft that
is the worldwide leader in software, which would create a new efficiently technology to
offer customers and be successful again

VII. Conclusion

For Nokia to be able to regain its competitiveness in mobile industry, the best
possible alternative is to specialize on product development of low to mid-end phones.
Nokia should keep studying and developing for the improvement of technology on
mobile phone, not just by depending on Microsoft. While Microsoft would focus more on
improvement of software and application, Nokia should take in charge of innovation for
competitive mobile to recover the loss and reputation. Knowing that the market
penetration for high-end market such as Apple and Android phones, is difficult and
costing high, it would be better to focus on lower end phones which they can exert more
efficiency with their own advanced technology.
 VIII. Gantt Chart

Activities 1 year
Jan Feb Mar April May June July Aug Sept Oct Nov Dec

Research and
study the trend
of low and mid-
end
smartphones in
the current
industry
Assessment of
the conducted
research and
study on low
and mid-end
smartphones
Forecasting of
the trend
Meeting for
strategizing on
product
development
Proposal of
product
development
Upon its
approval,
production of
the proposed
product
Developing and
implementation
of marketing
strategy
Sale of the
developed
smartphone

IX. Potential Problem Analysis

o Opportunity Loss= focusing their product developments on low to mid end
phones could a problem because of the emerging market for high end phones.

o Developing Competitors= even with Nokia’s focus on product development on

low to mid end phones, there are still other minor competitors that are doing the
same.