What in 1865. It is a Finnish communication

What caused Nokia to collapse

1.  Introduction

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The
once a tech giant “Nokia” took its beginning as a single operating paper mill
in 1865. It is a Finnish communication and IT corporation. By the end of the 19th
century, Nokia added electricity generation to their business and with the help
of their mills generated electricity for the nearby towns. Nokia has
experienced three major transformations in their business: from rubber, paper
to cable, from cable to mobile phones, from mobile phones to mobile internet
over decades of business process since 1865. In the very start of 20th
century, they decided to set up a new mill for which they decided to move to
the town named Nokia nearby the Nokianvirta River, and that is how Nokia got
its name. In the meanwhile, Nokia started producing telegraph and electric
cables. By the end of World War I, the Nokia Company was about to become
totally bankrupt. A company namely Rubber Works acquired the business to make
sure the business of Nokia continues. Due to merging of many companies, in
1967, the Nokia Corp. was founded. This new company had a lot of business to
handle, like televisions, car and bicycle tires and other paper products including
other consumer products.

Nokia
was bought by Microsoft in September 2013 and since then Nokia’s mobile phone
business has been continued by Microsoft. It took Nokia about ten decades to
assemble its brand but took only a few years for this brand to decline. Other
companies learn a lesson from the downfall of Nokia. Both business and academic
world had been inspecting this fall of Nokia from various aspects and angles in
order to gain valuable experience and lessons.

 

2.  The
development of nokia

2.1.
From
Diversification to Specialization (1865-1998)

Not
long before 1992, Nokia acquired a highly cross-industry and multiplied
business tactic with a total of 34 subsidiaries in 10 various industries and
108 regions. The company’s board of directors made Ollila its president when
Nokia faced full loss situation in 1992. Ollila sold 71 enterprises, abandoned
non-core business, narrowed the scope of operation, adjusted the business structure
drastically and immediately gave up the diversification. At the end, Nokia had
only two business groups remaining, mobile phones and network, and from here
Nokia began its professional tour.

2.2.
Being
Number 1 (1998-2007)

Before
1998, the largest mobile phone manufacturer was Motorola, and since then Nokia
has been wanted to become one. Within 6 years, Nokia became the world’s largest
mobile phones manufacturers. This milestone was achieved by Nokia when Nokia
produced its 100 millionth mobile phone in 1998 crossing Motorolla.

Nokia’s
market share flew up in a few years due to the achieved milestone. Another
milestone was achieved by Nokia in China when their annual sales and exports
exceeded €10
billion with net sales exceeding €5.3 billion and exports crossing €4.8
billion. By then China had become the biggest market for Nokia in the world.

2007
was the vintage year for Nokia because its global market share touched 40% in
China. The glory of Nokia seemed to be drawing to a close during that year.

2.3.
Years
of Decline (2007-2013)

In
2008, a new market reform came when Google released its smartphone operating
system Android. The market mainstream
was flooded by the craze of smartphones. In the following year, Nokia was not
successful in occupying the first position in the mobile phone market share
rather got ranked at third. Worsening the situation, in 2011 Nokia’s smartphone
market share dropped from 33% in 2010 to 14% far lesser than that of Apple and
Samsung.

According
to a survey carried in 2012 namely “Mobile Internet Users Behavior Research
Survey” released by CNNIC, 53% of Nokia’s customers’ planned and decided to buy
smartphones in the near future, out of which 43.3% preferred Android operating
system and 28.6% chose IOS operating system. This threatened further decline in
the market share of Nokia. Nokia had to develop some new strategy to compete
new users as well as to retain the old users. The choice percentage of Nokia
users is shown in a pie chart in the following figure.

Figure 1. Nokia users’
future choice of mobile phone operating system.

A report released in December 2012 by IResearch Consulting, threw
light on the domestic market of mobile phone sales, Samsung was the market
leader with 32.3%, Apple with 14.3%, HUAWEI with 12.5%, Lenovo with 7.3% and
HTC with 5.9% being followed by Nokia whose ranking had dropped from the top
three since September of that year acquired 5.9% market share. The sales share
for December 2012 in Chinese market is shown in below figure.

Figure 2. Sales share
of each mobile phone brand in December 2012.

Nokia
has faced series of serious problems since 2012. It has been under a lot of
pressure due to several events including the one where Nokia announced 10,000
layoffs worldwide on June 15, 2012. Later, on December 2012, Nokia sold its
headquarters building for €17 million and at last the company sold out its mobile
phone producing business to Microsoft on September 3, 2013.

3.  Why
this decline?

Nokia
had a long history of assembling cell phone, and its assembling standard as
well as its administration initiative achieved a genuinely abnormal state.
Furthermore, amid its key change Nokia created relating helper items to help
the offers of cell phones, for example, Nokia set forward the idea of versatile
Internet and built up the Internet mark Ovi in mid-2007; Nokia achieved a vital
participation association with Microsoft in February 2011, to get
accomplishment with the assistance of the helpful advancement. Be that as it
may, Nokia’s gear and administrations office was obtained by Microsoft on
September 3, 2013, and the hardware and administrations segment was for the
most part in charge of the cell phone business. From that point forward, Nokia
as a cell phone mark left the phase of history, and went over course of its
cell phone improvement. All through the historical backdrop of its advancement,
I examined Nokia’s decrease chiefly from the accompanying three viewpoints.

3.1.
Executives
Didn’t Accurately Grasp the Market or Didn’t Know How To

The
primary cell phone entered individuals’ life as an apparatus of calling, and
was for the most part committed to cell phone calls to compensate for the
absence of settled phone. Individuals at that day could by no means envision
that they could utilize cell phones to tune in to music, watch recordings, surf
the Internet, play amusements and even go shopping. By and by, with the advance
and improvement of science and innovation, PDAs showed up in individuals’ life,
intense utilitarian machine was not able meet the new needs of individuals,
cellphone makers started to figure it out that cell phone must be refreshed.

At
the point when the cell phone was well known in the market many years prior,
the larger part of buyers paid more consideration regarding the genuine
advantages of cell phones, for example, battery life and cellphones’ drop
number due to the monetary level point of confinement, their buy practices were
by and large more sound, target and genuine; be that as it may, individuals’
pay expanded essentially in twenty-first century, purchasing cell phone was no
longer as precisely as previously, cell phone was more considered as amusement
devices, the buy conduct is more passionate also, activity.

Even
with the progressions of the market and shopper request, Nokia still embraced
the innovation arranged what’s more, item situated procedures to control the
development of items, kept on fortifying the intrinsic properties of Nokia cell
phone aimlessly: for instance, Nokia was endeavoring to make its cellphone difficult
to broken, at that point misused better approaches to broaden its battery’s
life expectancy, and expanded the pixel of cell phones to achieve the cameras’ standard
4. The administrators concentrate
on items and innovation a considerable measure, in order to overlook that the
necessities of customers have changed with the market demonstrating diverse
qualities. Basic leadership that did not depend on purchaser’s request lead Nokia
not exclusively to isolate itself from the market, disregard the genuine needs
of customers, yet in addition to do much sit without moving work.

3.2.
 Divergence in the Business Tactic of the Company

The
conventional 4P hypothesis (counting item, value, put, advancement) changed
into 4C hypothesis (counting Customer, Cost, Communication, and Convenience)
steadily. It implied that organizations should give careful consideration to
the items and also the buyer needs, with the goal that the item advancement
must take the genuine needs of purchasers into account. Like the cell phone,
what do purchasers truly think about, the equipment or programming?

Nokia
has esteemed the equipment business a great deal and ignored the product
business over a drawn out stretch of time.

The
organization kept on doing mechanical development in order to make Nokia cell
phones be an enchantment that couldn’t be broken, however overlooked the
principal issues, the incongruence and conclusion property of the working
framework. The working arrangement of Nokia cell phone was Symbian, which was
extremely prominent in the machine age and earned a great deal of piece of the
pie for Nokia. Be that as it may, in the time of advanced mobile phones,
Symbian’s downsides bit by bit rose and in the end turned into the greatest
ruin for the advancement of Nokia versatile telephone. Right off the bat,
Symbian framework isn’t perfect, having the numerous incongruent adaptations,
as well as having no capacity of in reverse similarity, which prompt Saipan 7
application couldn’t keep running on Symbian 8, and expanded innovative work
costs for all intents and purposes. Also, Saipan’s deficiency, for example,
process set and cumbersome issue caused it not to help touch screen, mixed
media and new operation interface, which implied Nokia cell phones were off
guard in the PDA advertise. At last, Saipan’s demanding 2G advancement didn’t
adjust to current 3G improvement force.

Be
that as it may, regardless of whether Symbian’s flaws were very much aware,
Nokia did not surrender it, simply because Symbian was somewhat develop and
brought Nokia colossal benefits. On the off chance that Nokia could embrace an
open disposition to treat the development of the working framework and
collaborated with Google Android, it more likely than not created one working
framework that was more reasonable for advanced mobile phone framework than the
Android and Symbian framework, in this way Nokia may haven’t come to such a
circumstance.

3.3.
Lack
of Teamwork

Any
showcasing technique should ensure that the organization and different
endeavors could accomplish a win-win circumstance. These days, attempting to
control the piece of the overall industry of a specific industry through the
innovation imposing business model to acquire high benefits was unrealistic
with regards to item and administration homogenization. The greatest mix-up
that Nokia made was declining to coordinate with other cell phone makers in its
business procedure. Symbian framework itself is a shut framework, which on one
hand can shape obstructions to anticipate other Handset producers from entering
the market Nokia has possessed; then again lead Nokia to dismiss the changes of
outside and along these lines missed the most obvious opportunity with regards
to change. With a specific end goal to get the high restraining infrastructure
benefits, Nokia declined to work with other cell phone makers and gave this
conclusion property to the outrageous. Declining to participate kept its own particular
natural market and accomplish the imposing business model to a specific degree,
while the Symbian framework was exceptionally hard to create and the
application were few, which made it barely conceivable to take care of the
customers’ demand; in the meantime Nokia’s solid style likewise constrained
other cell phone producers try to coordinate with each other. Inferable from
Android framework was a completely open framework, which can be connected to
any telephone, so far numerous cell phone producers have joined the Android
camp, for example, Samsung, HUAWEI, HTC, SONY Ericsson, Coolpad and ZTE, and so
forth. Numerous Android camp organizations’ collaboration was definitely not sufficiently
just to rival Nokia, yet in addition could enhance and enhance the Android framework
grow more applications addressing the necessities of shoppers.

4.  How
to comeback?

4.1.
 Accurately Grasp the Market Trend

In
the period of quick improvement of science and innovation, the substitution speed
of items and also benefit was quickly expanding. All client needs, even the
center needs that organizations were most comfortable with, would unavoidably change.
Thusly, ventures should keep near clients, and attempted their best to think
about them, take the change pattern of their requests and fulfill them. Keep in
mind not to utilize the old advertising data, even despite the fact that they
have been demonstrated compelling in the most recent years, since they won’t
not have the capacity to reverberate with the current clients. Much the same as
the cell phone industry, buyer interest for cell phones has moved from usefulness
and solidness to knowledge and engaging, accordingly reinforcing the
telephone’s equipment offices like Nokia wasn’t right, despite what might be expected,
it should look to create and enhance the product, the concentration ought to
likewise be moved from the call quality to the quantity of the applications and
straightforwardness of operation.

Buyers’
request and want is the subjective inclination to utilization, and could be
affected by a ton of factors, for example, the attributes of the items itself,
benefit quality, mark impact, the moderateness, the advertise patterns, and so
on., so it would be greatly hard to figure out which one was more essential.
This required all organizations to dependably remain in a main position of the
circumstances, take after the market patterns, have a knowledge into the
progressions occurred in the whole customer advertise. From one perspective,
undertakings can obtain the general circumstance of the past purchaser request
through access to second-hand data about the improvement of the business; then
again, undertakings could show signs of improvement comprehension of market
changes through statistical surveying to get the most recent direct information
of patterns in purchaser request changes.

 

4.2.
 Acquire the Right Business Tactics

Business
strategy implies that the response that one undertaking takes to frame their
own favorable circumstances and make space for survival and advancement by
thinking about its preferences and detriments in the focused condition. Business
strategy can’t stay unaltered, despite what might be expected, it must be
acclimated to the progressions of the inner conditions also, the outer
condition. In addition, Business strategy is identified with future advancement
of the endeavor. So it is noteworthy for any organization to explore and break
down the outer condition and inner conditions of endeavors, characterize the
position of the venture in the market rivalry, and in the end have a reasonable
bearing about how to improve its own quality.

Endeavors
should desert those projects that are not extremely appropriate for the undertaking
venture rapidly, as Symbian has been not able meet the PDA prerequisites and
unfit to take care of customer demand, when they have perceived the market
slant. Any organizations aiming to involve an offer in the field of advanced
mobile phones ought to gain from Samsung, who pulled back from Saipan to
Android camp in the early improvement of the keen telephone. As the outcome
turns out, Samsung’s opportune forsaking Symbian made it now the biggest
advanced cell creator in Android camp, and Nokia’s seeing the circumstance
particularly made it step by step lose the ruler of slope position, indeed,
even had no privilege to talk in advanced cell advertise, and in the long run
wound up being procured by Microsoft.

This
is a disclosure for present day endeavors, from one viewpoint to grab the chance
to surrender the business strategy not versatile to the market and its own
particular improvement way ahead of schedule, then again, to locate another way
appropriate for the market and its own particular advancement prospects 7. Organizations must comprehend that
the business strategy of a business is its business system and significantly
affect the undertaking, regardless of whether in the short term or in the long
haul.

4.3.
 Become More Cooperative than Competitive

The
present world is an open world, the assets, innovation, administration
experience et cetera must be shared under the fast advancement and promotion of
the Internet. There is no confined undertaking, any venture is having an
assortment of contact with different ventures, and it is demonstrated that
exclusive participation is the source furthermore, energy of long haul
advancement of undertakings. Any undertaking declining to coordinate must be
looked with the certainty that it will be crushed by other joined organizations
in a similar industry. Much the same as in the advanced mobile phone industry, various
cell phone producers in the Android camp snatched Nokia’s piece of the pie to
an exhaust.

So
Nokia ought to have participated with other cell phone makers to expand the
whole cell phone advertise, along these lines each organization’s offer of
benefits will increment as needs be, and the benefit is much more than its past
restraining infrastructure benefits. In any case, Nokia was unwilling to
surrender the high imposing business model benefits Symbian brought, more awful
still it was not willing to impart the benefits to different ventures and rejected
to team up with Android. It might likewise be said that Nokia’s emergency was
rebuked for its preservation, since its dismissing to collaborate constrained other
handset sellers to connect with each other, and the advanced mobile phone piece
of the pie was seized well ordered.

So
the present undertakings must have a win-win thought and place it
energetically. Make a little stride back is to take a enormous advance forward,
and win-win does not intend to surrender their own advantages, but rather this
is a more canny and forward-looking benefit considering, it not just encourages
organizations to protect their own particular in the aggressive condition, yet
additionally build up business associations to look for help for the future
advancement.

5.  Conclusion

This
paper initially presented the foundation of Nokias’ obtaining by Microsoft, at
that point proposed the exploration heading of this paper in view of the
meetings by concentrate the issues, and took after by giving a short record of the
three phases of Nokia’s improvement. From that point onward, this paper
dissected the Nokia’s decrease from three perspectives: Nokia’s administrators
didn’t get a handle available precisely; there was a deviation in the business
strategy of the organization; Nokia was absence of cooperation. At long last,
this paper set forward the focused on promoting systems on the over three
issues of Nokia.

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