What caused Nokia to collapse1.
IntroductionTheonce a tech giant “Nokia” took its beginning as a single operating paper millin 1865. It is a Finnish communication and IT corporation. By the end of the 19thcentury, Nokia added electricity generation to their business and with the helpof their mills generated electricity for the nearby towns. Nokia hasexperienced three major transformations in their business: from rubber, paperto cable, from cable to mobile phones, from mobile phones to mobile internetover decades of business process since 1865. In the very start of 20thcentury, they decided to set up a new mill for which they decided to move tothe town named Nokia nearby the Nokianvirta River, and that is how Nokia gotits name. In the meanwhile, Nokia started producing telegraph and electriccables. By the end of World War I, the Nokia Company was about to becometotally bankrupt.
A company namely Rubber Works acquired the business to makesure the business of Nokia continues. Due to merging of many companies, in1967, the Nokia Corp. was founded.
This new company had a lot of business tohandle, like televisions, car and bicycle tires and other paper products includingother consumer products.Nokiawas bought by Microsoft in September 2013 and since then Nokia’s mobile phonebusiness has been continued by Microsoft. It took Nokia about ten decades toassemble its brand but took only a few years for this brand to decline. Othercompanies learn a lesson from the downfall of Nokia.
Both business and academicworld had been inspecting this fall of Nokia from various aspects and angles inorder to gain valuable experience and lessons. 2. Thedevelopment of nokia2.1.FromDiversification to Specialization (1865-1998)Notlong before 1992, Nokia acquired a highly cross-industry and multipliedbusiness tactic with a total of 34 subsidiaries in 10 various industries and108 regions. The company’s board of directors made Ollila its president whenNokia faced full loss situation in 1992. Ollila sold 71 enterprises, abandonednon-core business, narrowed the scope of operation, adjusted the business structuredrastically and immediately gave up the diversification.
At the end, Nokia hadonly two business groups remaining, mobile phones and network, and from hereNokia began its professional tour.2.2.
BeingNumber 1 (1998-2007)Before1998, the largest mobile phone manufacturer was Motorola, and since then Nokiahas been wanted to become one. Within 6 years, Nokia became the world’s largestmobile phones manufacturers. This milestone was achieved by Nokia when Nokiaproduced its 100 millionth mobile phone in 1998 crossing Motorolla.Nokia’smarket share flew up in a few years due to the achieved milestone. Anothermilestone was achieved by Nokia in China when their annual sales and exportsexceeded €10billion with net sales exceeding €5.3 billion and exports crossing €4.
8billion. By then China had become the biggest market for Nokia in the world.2007was the vintage year for Nokia because its global market share touched 40% inChina.
The glory of Nokia seemed to be drawing to a close during that year.2.3.Yearsof Decline (2007-2013)In2008, a new market reform came when Google released its smartphone operatingsystem Android. The market mainstreamwas flooded by the craze of smartphones. In the following year, Nokia was notsuccessful in occupying the first position in the mobile phone market sharerather got ranked at third.
Worsening the situation, in 2011 Nokia’s smartphonemarket share dropped from 33% in 2010 to 14% far lesser than that of Apple andSamsung.Accordingto a survey carried in 2012 namely “Mobile Internet Users Behavior ResearchSurvey” released by CNNIC, 53% of Nokia’s customers’ planned and decided to buysmartphones in the near future, out of which 43.3% preferred Android operatingsystem and 28.
6% chose IOS operating system. This threatened further decline inthe market share of Nokia. Nokia had to develop some new strategy to competenew users as well as to retain the old users. The choice percentage of Nokiausers 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, threwlight on the domestic market of mobile phone sales, Samsung was the marketleader with 32.3%, Apple with 14.3%, HUAWEI with 12.
5%, Lenovo with 7.3% andHTC with 5.9% being followed by Nokia whose ranking had dropped from the topthree since September of that year acquired 5.9% market share. The sales sharefor December 2012 in Chinese market is shown in below figure.Figure 2. Sales shareof each mobile phone brand in December 2012.Nokiahas faced series of serious problems since 2012.
It has been under a lot ofpressure due to several events including the one where Nokia announced 10,000layoffs worldwide on June 15, 2012. Later, on December 2012, Nokia sold itsheadquarters building for €17 million and at last the company sold out its mobilephone producing business to Microsoft on September 3, 2013.3. Whythis decline?Nokiahad a long history of assembling cell phone, and its assembling standard aswell as its administration initiative achieved a genuinely abnormal state.
Furthermore, amid its key change Nokia created relating helper items to helpthe offers of cell phones, for example, Nokia set forward the idea of versatileInternet and built up the Internet mark Ovi in mid-2007; Nokia achieved a vitalparticipation association with Microsoft in February 2011, to getaccomplishment with the assistance of the helpful advancement. Be that as itmay, Nokia’s gear and administrations office was obtained by Microsoft onSeptember 3, 2013, and the hardware and administrations segment was for themost part in charge of the cell phone business. From that point forward, Nokiaas a cell phone mark left the phase of history, and went over course of itscell phone improvement. All through the historical backdrop of its advancement,I examined Nokia’s decrease chiefly from the accompanying three viewpoints.
3.1.ExecutivesDidn’t Accurately Grasp the Market or Didn’t Know How ToTheprimary cell phone entered individuals’ life as an apparatus of calling, andwas for the most part committed to cell phone calls to compensate for theabsence of settled phone. Individuals at that day could by no means envisionthat they could utilize cell phones to tune in to music, watch recordings, surfthe Internet, play amusements and even go shopping.
By and by, with the advanceand 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.Atthe point when the cell phone was well known in the market many years prior,the larger part of buyers paid more consideration regarding the genuineadvantages of cell phones, for example, battery life and cellphones’ dropnumber due to the monetary level point of confinement, their buy practices wereby and large more sound, target and genuine; be that as it may, individuals’pay expanded essentially in twenty-first century, purchasing cell phone was nolonger as precisely as previously, cell phone was more considered as amusementdevices, the buy conduct is more passionate also, activity.Evenwith the progressions of the market and shopper request, Nokia still embracedthe innovation arranged what’s more, item situated procedures to control thedevelopment of items, kept on fortifying the intrinsic properties of Nokia cellphone aimlessly: for instance, Nokia was endeavoring to make its cellphone difficultto broken, at that point misused better approaches to broaden its battery’slife expectancy, and expanded the pixel of cell phones to achieve the cameras’ standard4. The administrators concentrateon items and innovation a considerable measure, in order to overlook that thenecessities of customers have changed with the market demonstrating diversequalities. Basic leadership that did not depend on purchaser’s request lead Nokianot exclusively to isolate itself from the market, disregard the genuine needsof customers, yet in addition to do much sit without moving work.
3.2. Divergence in the Business Tactic of the CompanyTheconventional 4P hypothesis (counting item, value, put, advancement) changedinto 4C hypothesis (counting Customer, Cost, Communication, and Convenience)steadily. It implied that organizations should give careful consideration tothe items and also the buyer needs, with the goal that the item advancementmust take the genuine needs of purchasers into account. Like the cell phone,what do purchasers truly think about, the equipment or programming?Nokiahas esteemed the equipment business a great deal and ignored the productbusiness over a drawn out stretch of time.
Theorganization kept on doing mechanical development in order to make Nokia cellphones be an enchantment that couldn’t be broken, however overlooked theprincipal issues, the incongruence and conclusion property of the workingframework. The working arrangement of Nokia cell phone was Symbian, which wasextremely prominent in the machine age and earned a great deal of piece of thepie 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 greatestruin 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 7application couldn’t keep running on Symbian 8, and expanded innovative workcosts for all intents and purposes.
Also, Saipan’s deficiency, for example,process set and cumbersome issue caused it not to help touch screen, mixedmedia and new operation interface, which implied Nokia cell phones were offguard in the PDA advertise. At last, Saipan’s demanding 2G advancement didn’tadjust to current 3G improvement force.Bethat as it may, regardless of whether Symbian’s flaws were very much aware,Nokia did not surrender it, simply because Symbian was somewhat develop andbrought Nokia colossal benefits. On the off chance that Nokia could embrace anopen disposition to treat the development of the working framework andcollaborated with Google Android, it more likely than not created one workingframework that was more reasonable for advanced mobile phone framework than theAndroid and Symbian framework, in this way Nokia may haven’t come to such acircumstance.3.3.Lackof TeamworkAnyshowcasing technique should ensure that the organization and differentendeavors could accomplish a win-win circumstance.
These days, attempting tocontrol the piece of the overall industry of a specific industry through theinnovation imposing business model to acquire high benefits was unrealisticwith regards to item and administration homogenization. The greatest mix-upthat Nokia made was declining to coordinate with other cell phone makers in itsbusiness procedure. Symbian framework itself is a shut framework, which on onehand can shape obstructions to anticipate other Handset producers from enteringthe market Nokia has possessed; then again lead Nokia to dismiss the changes ofoutside and along these lines missed the most obvious opportunity with regardsto change. With a specific end goal to get the high restraining infrastructurebenefits, Nokia declined to work with other cell phone makers and gave thisconclusion property to the outrageous.
Declining to participate kept its own particularnatural market and accomplish the imposing business model to a specific degree,while the Symbian framework was exceptionally hard to create and theapplication were few, which made it barely conceivable to take care of thecustomers’ demand; in the meantime Nokia’s solid style likewise constrainedother cell phone producers try to coordinate with each other. Inferable fromAndroid framework was a completely open framework, which can be connected toany telephone, so far numerous cell phone producers have joined the Androidcamp, for example, Samsung, HUAWEI, HTC, SONY Ericsson, Coolpad and ZTE, and soforth. Numerous Android camp organizations’ collaboration was definitely not sufficientlyjust to rival Nokia, yet in addition could enhance and enhance the Android frameworkgrow more applications addressing the necessities of shoppers.4.
Howto comeback?4.1. Accurately Grasp the Market TrendInthe period of quick improvement of science and innovation, the substitution speedof items and also benefit was quickly expanding.
All client needs, even thecenter needs that organizations were most comfortable with, would unavoidably change.Thusly, ventures should keep near clients, and attempted their best to thinkabout them, take the change pattern of their requests and fulfill them. Keep inmind not to utilize the old advertising data, even despite the fact that theyhave been demonstrated compelling in the most recent years, since they won’tnot have the capacity to reverberate with the current clients. Much the same asthe cell phone industry, buyer interest for cell phones has moved from usefulnessand solidness to knowledge and engaging, accordingly reinforcing thetelephone’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 tolikewise be moved from the call quality to the quantity of the applications andstraightforwardness of operation.
Buyers’request and want is the subjective inclination to utilization, and could beaffected by a ton of factors, for example, the attributes of the items itself,benefit quality, mark impact, the moderateness, the advertise patterns, and soon., 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 thecircumstances, take after the market patterns, have a knowledge into theprogressions occurred in the whole customer advertise. From one perspective,undertakings can obtain the general circumstance of the past purchaser requestthrough access to second-hand data about the improvement of the business; thenagain, undertakings could show signs of improvement comprehension of marketchanges through statistical surveying to get the most recent direct informationof patterns in purchaser request changes.
4.2. Acquire the Right Business TacticsBusinessstrategy implies that the response that one undertaking takes to frame theirown favorable circumstances and make space for survival and advancement bythinking about its preferences and detriments in the focused condition. Businessstrategy can’t stay unaltered, despite what might be expected, it must beacclimated to the progressions of the inner conditions also, the outercondition. In addition, Business strategy is identified with future advancementof the endeavor. So it is noteworthy for any organization to explore and breakdown the outer condition and inner conditions of endeavors, characterize theposition of the venture in the market rivalry, and in the end have a reasonablebearing about how to improve its own quality.Endeavorsshould desert those projects that are not extremely appropriate for the undertakingventure rapidly, as Symbian has been not able meet the PDA prerequisites andunfit to take care of customer demand, when they have perceived the marketslant. Any organizations aiming to involve an offer in the field of advancedmobile phones ought to gain from Samsung, who pulled back from Saipan toAndroid camp in the early improvement of the keen telephone.
As the outcometurns out, Samsung’s opportune forsaking Symbian made it now the biggestadvanced cell creator in Android camp, and Nokia’s seeing the circumstanceparticularly 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 runwound up being procured by Microsoft.Thisis a disclosure for present day endeavors, from one viewpoint to grab the chanceto surrender the business strategy not versatile to the market and its ownparticular improvement way ahead of schedule, then again, to locate another wayappropriate for the market and its own particular advancement prospects 7. Organizations must comprehend thatthe business strategy of a business is its business system and significantlyaffect the undertaking, regardless of whether in the short term or in the longhaul.4.
3. Become More Cooperative than CompetitiveThepresent world is an open world, the assets, innovation, administrationexperience et cetera must be shared under the fast advancement and promotion ofthe Internet. There is no confined undertaking, any venture is having anassortment of contact with different ventures, and it is demonstrated thatexclusive participation is the source furthermore, energy of long hauladvancement of undertakings. Any undertaking declining to coordinate must belooked with the certainty that it will be crushed by other joined organizationsin a similar industry. Much the same as in the advanced mobile phone industry, variouscell phone producers in the Android camp snatched Nokia’s piece of the pie toan exhaust.SoNokia ought to have participated with other cell phone makers to expand thewhole cell phone advertise, along these lines each organization’s offer ofbenefits will increment as needs be, and the benefit is much more than its pastrestraining infrastructure benefits.
In any case, Nokia was unwilling tosurrender the high imposing business model benefits Symbian brought, more awfulstill it was not willing to impart the benefits to different ventures and rejectedto team up with Android. It might likewise be said that Nokia’s emergency wasrebuked for its preservation, since its dismissing to collaborate constrained otherhandset sellers to connect with each other, and the advanced mobile phone pieceof the pie was seized well ordered.Sothe present undertakings must have a win-win thought and place itenergetically. 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 thisis a more canny and forward-looking benefit considering, it not just encouragesorganizations to protect their own particular in the aggressive condition, yetadditionally build up business associations to look for help for the futureadvancement.5. ConclusionThispaper initially presented the foundation of Nokias’ obtaining by Microsoft, atthat point proposed the exploration heading of this paper in view of themeetings by concentrate the issues, and took after by giving a short record of thethree phases of Nokia’s improvement.
From that point onward, this paperdissected the Nokia’s decrease from three perspectives: Nokia’s administratorsdidn’t get a handle available precisely; there was a deviation in the businessstrategy of the organization; Nokia was absence of cooperation. At long last,this paper set forward the focused on promoting systems on the over threeissues of Nokia.