Finland and Nokia: Creating the World’s Most Competitive Economy Case Study Solution

Introduction

Nokia Corporationalso known as Nokia,is one of the leading organizations in the Finnish multinational telecommunication industry, which was found in 1865 as a pulp mill in Finland. In 1967, Nokia merged with the telecommunications cable corporations, electronics business and Finnish rubber works. The Nordic Mobile telecommunication (NMT) was created in the year 1981.It highlightedthe customers’ perspective towards the innovative technology. Nokia’s one of the essential innovations is the roaming technology that allows the customers to use the communication channel across the borders. The company accounts for 70% to 80% of the cluster of exports, and can be considered as one of the world’s most efficient leaders in mobile phones. NMT increased the standard of mobile technology and started its operations in other foreign countries.

Due to the emergence and growth; Nokia began to form joint ventures and occupied different global market through expansion. Therefore, the company consolidated with the Finnish telecommunication system in 1987, through mergers and acquisition. The emergence and growth of Nokia helped the Finnish economy to flourish, and helped Nokia to become the largest company in the country. In 2000, Nokia recorded the sales of 30.4 billion Euros, and an operating profit of 5.8 billion Euros. The company has generated above average margins in comparison to the industry rivals. Average employees working in the company during 2000 were 60,289,out of which almost 40% employees are located in Finland. The company sales its products globally, in over 130 countries. In 2001, the company was segmented into three business groups i.e. Nokia network (GSM and third generation mobile system), Nokia mobile phone and Nokia ventures. However, the question arises that how will the country and the company manage to overcome these challenges to sustain the company’s success. (SÖLVELL & PORTER, 2011)

Problem Statement

In the 1990s, Finland reached an economic crisisdue to the collapse of the Soviet Union. Finland had been quite slow in its approaches to become one of the fastest-growing and competitive economies. Due to economic conditions, the country and the company faced many challenges and issues, such as the slowdown of the global telecommunication, severe downturn, shortage of skilled laborers and unemployment. The country’s core emphasis shifted from an investment-driven economy into an innovation-driven economy.

The dynamic telecommunications cluster plays an important role in flourishing the country’s economy and especially Nokia,which outraged the other telecommunication companies. The biggest competitors of the Nokia are Blackberry and Motorola, which havecaused challenges not only for Nokia but also for Finland. Therefore, in-depth analysis is required for the country as well as the company in order to overcome the issues and challenges, so that Finland could sustain its economy and Nokia could sustain its profitability, resulting in both of their success and growth.

Internal Analysis

The internal analysis provides a deep understanding of the company’s core competencies, competitive viability, and the financial performance of the company. The internal analysis of Nokia is conducted by the SWOT analysis

SWOT Analysis

SWOT analysis is very helpful to assess the competitive position of the company, plus understanding of the environment of the company because SWOT analysis provides complete knowledge of the company’s strengths, weaknesses, opportunities and threats.This helps the investors to understand the future prospects of the company (Sammut-Bonnici & Galea, 2015). SWOT-analysis helps to identify the-alternative, drive best possible solution and recommendations.

Strengths:

  • Nokia is one of the leading telecommunication companies with the majority of market share.
  • The strength of the company is its innovative design and product with the consistent and effective use of innovation and creativity.
  • The company has diversified its product portfolio in order to eliminate the dependency on a single product. The three main products of the company are the Nokia network (GSM and third-generation mobile system), Nokia mobilephones, and Nokia ventures.
  • The company targets different segments with its diversified product portfolio and catersto the growing needs of different markets,to improve its customer base, market share and profitability.
  • The company has emerged as one of the pioneers in the region, and has created new opportunities. Moreover, Nokia’s main focus is on the emerging market with a big investment in infrastructure, and it possesses a broad product line to gain long-term growth.
  • The company has high-profit margins in comparison to its competitors, and average above margins in comparison to the industry.
  • The company has a first-mover advantage as the company had introduced various innovative technologies such as Bluetooth, Wi-Fisystem in its phones and definedmobile phones as fashion items rather than technologicalproducts.
  • Nokia has strong brand equity and awareness because it is one of the most recognized brands in the domestic market.
  • The company has a strong relationship with its suppliers and other membersof the supply chain.
  • The company offers an extensive variety of products and services, with amarket share of around 31% in 2000.

Weaknesses:

  • Nokia faced severe loss in the 1980s, due to having an investment in numerous segments of consumer electronics.
  • Due to the outsourcing of most of its functions, the company lost its control overits departments.
  • One of the major weaknesses includes the usage of an improper tool to analyze the industry trends and forecasting.
  • The products and the technology of the company are easily imitable
  • The company is suffering from the lack of critical talent and the diverse workforce, which mitigates the company from the speedy technological and digital transformation.

One of the weaknesses ofthe company is that it is not open to licensing, and only 3% of revenue are from Nokia Ventures…………………………………

 

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