the multidimensional external forces that brought changes to Nokia Essay

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the multidimensional external forces that brought changes to Nokia

Nokia’s website explains the goal and mission of Nokia as

‘To be technology leader in a world where everybody and everything is connected’ The website also states Nokia reinvented which explains for the fact that the company is gearing up to face the changes in the market. Change as defined in online dictionary as transfer from one to another (, 2014). This transfer from one to another is not restricted to only one environment, it’s related to all spheres of mankind. Surprisingly this change is always seen in the business field. Porter defines that the business always needs to align its company goals to the market and achieve the competitive advantage. Further there are many theories which exemplify that external forces are necessarily determine whether the business has competitive advantage for thriving long term or not. Cajanto and Karral (2008) explain that the industries always go through the changes in the market and some changes are disruptive, irreversible.

These changes often include innovation, demand in customer expectation. The multi-dimensional changes in environment does not only include the macro but also many other factors which contribute to the changes faced by companies. Some of the studies investigates whether the frequency of incremental and radical innovations may be explained by different mixes of environmental, organizational, processes, and managerial forces, and therefore may need to be managed differently (Rogers, 1995; Van de Ven et al., 1999 in Koberg et al, 2003). The porter’s five forces and other environmental scans may analyse these changes and also categorize them in bigger parameters. PEST Analysis for telecommunication Industry for wider view. Political: Nokia operates in World and not one country. Hence the changes faced in world politics affects the whole company and also the industry. The world politics suffered a lot changes from the span of 2000 to 2010.

The war against some of the Middle East countries, Oil expense and Endemics like swine flu emerged (, 2014). These political changes may have had a little bit of change which affected the probable distribution of handsets to overall human population directly. However Oil expense and war may have had direct change on the considerable shift of profits in all these years. Economic: Amongst many economic shifts one of the biggest crisis which emerged was the collapse of US mortgage system which had effect on world economy and all industries (, 2014). The industries felt downturn in the purchasing power in the hands and hence the industries had a lot of redundancy, closures in firms. Somewhere this shift was not one of the main reasons of downturn of Nokia but Industry had to face a lot of changes technologically.

The possible combination of cameras, mp3 players and other technology which was to be carried by people was getting changed with the purchasing power. This shift of less purchasing power probably led to concentration on innovation of technology. Social: The societal news had in this century introduction to Iphone which revolutionized the world. This brought people in different countries closer. Technological: Amongst many technological facts which changed and effected company’s like Nokia was the advent of smartphones. Amongst many other changes which turned around the world was google. The company became a success so as to a point that ‘google’ is a verse used for getting any information.

They have multitude of services from photo sharing, to email support system, software development, computing and mobile operating system development, navigational mapping and so much more. These changes had a drastic effect on working of Nokia. The above changes in wider environment were faced by Nokia which had direct or indirect impact on the working and strategic problems of company. The industrial scanning which effected company have been scrutinized in this section. The porter’s five forces analysis shows how the company is effected with industrial forces acting in the industry. This analysis narrows down the environment and scans it further.

Source:, 2014

Bargaining power of suppliers: Nokia is surrounded by the different kind of suppliers which are spread across globe and mainly in china. The pressure to save more from cost allows china as only country providing technology products at such cheap rates. Further the bargaining power of supplier’s increases when the place supplying goods is one to most of the telecommunication companies (Nokia, 2014). Bargaining power of customers: Bargaining power of customers is low in this Industry because the other forces like innovation and cost determine the price of a product. However the company’s like Nokia and Ericsson which are not pioneers in innovation and are late movers might feel the bargaining power of customers. Threat of new Entrants: It is difficult for new entrants to establish a brand in Telecommunication Industry globally but not very difficult.

Apple was not in the Industry a decade before but it is one of the company’s which have reshaped the Industry. Likewise a company can enter the market but on the basis of brand which has been already present globally. Threat of substitutes: This Industry is governed by substitutes. If people do not buy an apple Iphone then they resort to Samsung, Sony and HTC. There is a lot of threat which can be seen in the Industry within the smartphone market. It can be said that the Industry is governed by different brands and people have wide choice which one to choose ranging from high to low price. Further amongst the micro environment the SWOT analysis of company tells whether company is able to survive in the environment or not.

The strengths, weaknesses, opportunities and threats when matched with the Strengths: The Company has global presence and brand name which has been since the mobile phones came in the market. To make such name in market new entrants might have to struggle a lot. Another strength is the position company holds in world and also resources like supply chain management built on years of hard work, marketing channels etc. Weaknesses: Amongst the many weaknesses the company did not realise the potential of change, innovation and did not manoeuvre itself according to the changes in the telecommunication, IT and other Industry. The changes brought by smartphones were not applied even as late movers and hence the lack of research was one of the basic weaknesses.

Opportunities: The recent amalgamation with Microsoft will expand new opportunities like the software support, marketing skills and branding. They will also have new insight and access to resources with brand like Microsoft which has its root to old new and present generation. Threats: The basic threat to the firm is extinction whereby it can be compared to a dinosaur. The lack of adaptation and change can lead to extinction. Further no innovation can place it on the back end of the industry as a late mover, however it would also have to be continuous. The above overall effects have placed Nokia where it was before and together with the SWOT analysis it can reach where the Industry is shaping. This can be tedious task but it can also help earn the lost reputation of connecting people continuously by bringing new technology to them.

Question 2:

Critically discuss the nature of changes and their impact on company’s operations. The changes discussed above have been explained in this section and further critically analysed. The first change which is evident from the origin of Nokia is the foraying from paper manufacturing, then rubber and cable production. The operations of the company would have changed from paper manufacturing factory to rubber and then cable production. However the best the company did was to introduce themselves in to mobile phone market. It expanded quickly and certainly the operations were affected with this big change. By 2010 Nokia employed over 123,500 people across 120 countries in fifteen manufacturing sites around the world (Case study, 2014). This states that company might have had to expand its operations offshore and liaise with manufacturing units for operations like supply chain management which affected in positive growth.

The changes like having outdated Software Company (Symbian) after 2005 and not recognising to change accordingly to the market was one of the facts which impacted most on company operation which slid the profit and company position to lows. Furthermore amongst the above answer given whereby PEST analysis is done with the environment. The technological factor states that google was becoming more and more powerful as a search engine. The impact of this was seen everywhere in all the Industries. Advent of technological changes with Smartphone introduced combined the Software, Computer sector together. Koberg et al (2003) states that Innovation is a necessity for a firm which compete in environment where change is pervasive, unpredictable and continuous.

There is volume of research on various strategies that point out what structures make firm innovative. However the above authors also suggest that there aren’t any specific rules for being innovative but then there is always radical innovation or sudden innovation changes which are seen in the environment. The advent of Iphone is one of sudden changes and merging of search engine, Tablets and laptops to form one Industry is also part of that change. Furthermore the new versions of smartphones is part of incremental change. This change can be replicated in Nokia research centre and further followed so as to survive as one of the giants. The company which went in negative growth can be saved through this route. The environment changes had a lot of impact on working operations of company since it dealt with mainly the phones which were restricted to camera, GPS and bit of surfing on the internet. The company operations had to change drastically from making gps and dual sim phones to smartphones.

The top market which used to spend same money for buying new models of Nokia diverted to Buying Iphones. Furthermore the other big changes which have been discussed in previous answer were the software problems which were complained by the customers to the company. It lead to travel a revolutionized path by tying up with Microsoft for software research and basis. The other changes which were faced by the company which made them one of the top most grossing firm in mobile Industry was building in the strategic way to predict growth and supply model of mobile handsets from mid-1990’s to 2000.

Carral and Kajanto (2008) state that company had best strategic models for predicting the growth and expansion of mobile handsets from mid-1990 to 2000. The Industry analysis model and process was one of the best which made them rise and subsequently meet the demand. The model states that they organised operations in such a way that they predicted how many customers replaced handsets, how many markets were explored, what is the network evolution. The picture says below the industry analysis model of Nokia and how it affected the brought together the whole company to make it topmost grossing firm.

Source: Carral and Kajanto (2008)

The above strategic focusing might have included Supply chain management, sales force, research and development team and marketing departments together. The replacement team analysed why the handsets are replaced or what could be wrong with new handsets and further gave review to research team. The above authors also conclude that not only the mobile Industry in terms of smartphones changed but also the mobile communications changed from analogue signals to digital ones. This meant that company had to change the third generation of mobile handsets giving more space to store downloaded information, multimedia services etc. Carral and kajanto (2008) state that it is important to mention that communicating industry changes is not an easy task. It is very difficult task to predict the industry life cycle with all early signs and different types of uncertain data. One of the main changes in operations which Nokia had to face through changes in Industry life cycle was human resources in company had to shift from what they were good at to something else.

This might have arose discomfort, discontent in the work pattern. Further the above authors also stress that a good understanding of industry saves the companies from a lot of cost restricting later with its operations and also abrupt decisions. Koberg et al (2004) explains Innovation theory by basing it hypothetically on two of types of innovation, Incremental and Complexity theory. Both of theories have similar hypothesis like environmental dynamism, age and size of firm, intra firm structural linkages, and improvisation, Experimentation, transitioning across projects, age and tenure of policy makers. He further explains that environment can act as a cushion where by company can change direction but not a real cause of innovation. As explained in case of Nokia the company was innovating the way the market responded towards technical and mobile communications however it was not focused much on research and development.

Admittedly the Industry analysis with porter’s five forces explained that Industry is highly regulated globally with patents, brand names and customer choices. The upgrading and merging of wider environment also effects the inner industry cycle. The mobile industry is closed yet open industry whereby many Industries are merging and going together to form one big pool of Industry. Earlier the mobile industry was the only industry operating providing communications but nowadays the VOIP communication (Skype, Facetime, Messenger’s) and we have IT merging in both to change and give different experiences. Hence the idea of having only Mobiles or only big giants in industry rules out.

This will further provide difference in the way operations will work out for Nokia in near future. In the end the company has gone through a lot of changes which will affect the company some which will shape and then reshape the structure of communication Industry. Some of these operations will affect the company with positive impact whereby human resources will have to be shed in order to fit in with the other giants. In order to become giant or leading company in this industry Nokia will have to focus more on the demands of market environment and align company goals and vision to achieve greater share of profits.

Question 3:

Evaluate the proposed changes by the company and recommend appropriate methods for implementing it. The proposed changes which have been marked by the company for its growth and progress are analysed. First change which the company resorted was to build a brand together encompassing Microsoft and Nokia as a brand together. The company as brand will be able to do much more because collaborating on brands will provide much more coverage whereby the gadgets of Nokia cannot reach name of Microsoft reaches before anything. Talbot (2013) says that with Microsoft vouching for increasing sales through mobile devices, tablets it is a very good deal for both ends. Since the skype as Voice over Internet Service is one of the powerful tools of company and realizing its potential in every sphere will help build new ways to reach customers which is one of mission statements for Nokia. The working of two important brands together will create a lot of potential for more R&D for company.

The company might have to invest more in R&D to create more channels for new mobile devices with updated software to be given to human race. Further to implement this company will have to invest a lot in patent rights and acquiring those rights. The earlier money invested in R&D failed to produce technologies that could dent the dominance of Apple and Samsung in the smartphone business. It is possible that with this collaboration the company may have new niche and acquire lost reputation. The only hurdle to achieve this will be manpower. The company might have to shell or reduce the previous research employees or maybe teach and train them to Microsoft standards. Furthermore the patent costs may have to be arranged for both firms and how it will work out by the end of collaboration period.

The method for implementing these changes includes changing names of the new venture products which hit market and how the old products which have been with old software system will be serviced or replaced. The Symbian software which was heart of Nokia was one of the software providers giving software support however with problems in providers made them outdated. Further the company will have to develop new products and build software’s to support applications for those products. This will entail a lot of new ties with product manufacturing, a lot new support of supply chain management and also marketing strategies. Some of the marketing strategy which the company can do should be bringing new technology whereby mobile phones can encompass VOIP, new technology and the idea of new age mobiles which can store more data, bring more information and bring businesses and technology on your fingers.

The other changes which have been proposed by Microsoft and Nokia together are the business opportunities for developers. The developers which can tie up with firm to bring new application for users can also prosper in the way of this new market. The firm can always connect and develop with new team of researchers in many ways. They can use connect and develop strategy for Finland or from Silicon Valley which can have young university graduates to tie up with the firm to develop new mobile software’s or devices. The idea of this collaboration and working together is to also embed the culture and work ethics of both organisations. The firm Nokia is originally from Finland and Microsoft has been spawned in Silicon Valley California. The work culture of Nokia encompasses change because since its advent the company has changed so many times with time. It started from wood pulp to wire telecommunication to mobile devices giant. Further Microsoft has been very steady with the changes. It has occupied monopoly in software market in IT industry.

The good side to this can be that company will be not well versed with the change whereas Nokia has steered clear with changes and further is prone to changes which come in near future. Both have different organisational culture. Parker (2000) agrees that organisational culture is different to the place where companies have originated. Corporate culture is also one of the term used by the above author to define working in an organisation. The company more than anything in order to work together has to form and foresee working culture of each other. As was said above Nokia has been very evident and prone to changing its operations and this has made it one of the versatile companies. Furthermore Microsoft has been in a monopolistic conditions operating as only one big giant in software industry. Hence it might create problems in working together and mind-set of employees working in R&D for new developments in mobile technology.

The R&D and other departments will have to see the mind-set and working preferences of both companies. Further the other change which has to be seen by the company is through cost cutting. The company is cutting on cost on useless products and features which it gave before in old mobiles. Some of them included keypad system, storage cards etc. The company may cut costs through the employee packages and other benefits. Further Symbian technology which was heart of Nokia is shifted to Accenture. Accenture is mainly outsourcing, consulting and technology services firm. Symbian software helped to form base for Nokia. The company in process of going through transition did not sell the Symbian Software but only outsourced it to Accenture. The idea can be regarded as good and bad. It is beneficial because Microsoft has just had 10 years collaboration with Nokia, may be after 10 years if Symbian technology is grown powerful and profitable can still be reverted to heart of Nokia.

Further it is non beneficial because the company could have made a lot of profit which have been lost in previous years by selling the technology. The company can sell off the outdated or worn out wings of business to some other firm and could have pooled money to develop in R&D (, 2014). The changes which the company is incurring now are in the segment of value and growth in developing markets. The company is all geared to make changes in the growing markets where giants like Apple, Samsung and HTC have not made any foothold. With the statements in the case study which were mentioned by current CEO Elop, it is very clear that the company is focusing more on the developing markets. The company might have to expand its operation to Africa, Russia and other markets which have lot of potential to be tapped.

The company will have to focus on the marketing, Nokia venture segment, Nokia mobile phone market and also communication departments. They will have rebuild the old system of tapping potential with new tweaks (, 2014). In the end, Nokia has been versatile to face changes but to be pioneer it needs to be step ahead of the competition. The company needs to look out for new developments in the technology segment which can give it competitive advantage. The R&D facility from Microsoft may be able to provide innovative base to increase customer reach. The further added advantage to both companies to reach new markets is the brand names they hold together. The changes which have been advised by Elop (CEO Nokia) are very apt and short term but for longer profitable venture they have to invest a lot of time in building core capabilities in Mobile market which both can have provided they tap full potential of current capabilities.

Question 4:

In an attempt to facilitate the change process, advise Nokia’s leaders on issues of organisational culture, politics and leadership.

The issue of culture, whereby two companies come together and tie knot for mutual benefit has been always curious case in theories. It has sometimes been overlooked and sometimes over emphasized. “A cultural shift is rapidly changing how we work, learn and interact (Hirzel, 2013)” Schein (2009) states that culture and leadership are both entwined with each other. It resides within a person and drives most of the behaviour inside and outside. Further the author also tries to justify the relation to an extent that managers or the leaders should understand that subcultures in organisation are formed due to employees. In the earlier segments it was defined that corporate culture is different to the organisational culture. They can be aligned together but it takes a great leader to align the goals of company to the goals of employees so much that employees embed that in the work ethics (Schein, 2009).

Managing subcultures is very important nowadays because of many reasons which have been pointed out by Schein (2009): Mergers, acquisitions and joint ventures were subcultures need to be aligned/blended or at least adjusted for smooth working. Globalisation which produces diversity in working environments based on ethnicity, language and nationality. Technological complexity which produces more ‘mature’ occupational subcultures that have to be taken into account in designing work flow. IT which has created subcultures like structural options like people have virtual offices when they have not met each other personally but are working with each other guiding instructions. The cultural and subcultural issues influence all aspects of business, hence the task of leader is to understand the dynamic forces which arise and to manage these forces to ensure the corporate goals and missions are realised.

The case of Nokia can be compared to all the issues stated above which exemplify that there are subcultures of working ethics which might be prevalent in both companies. Bringing CEO and leader from Microsoft who has had experience in Software focused firm might be detrimental or can provide new beginning. Nokia has not been in the software domination but has been active in mobile segment. The changes it has faced on whole provides us that firm is very much ready to withstand further changes and so are the employees on whole (, 2014). One of the cases which is similar to the case of Nokia and Microsoft has been given by parker (2000) whereby he justifies that in mid-1990’s a firm named Atari hired a CEO with background in marketing. The firm was mostly managing software engineers and he found that there is no incentive and work structures are very loose.

He set new parameters to judge the work done by giving specific targets, incentives and work regimes which were not accepted by way the R&D engineers worked. Some of the esteemed employees left the company because of tight rules and regulations. Hence one could say that leader also has his own work culture which he is used to and the firm had different work culture. This could be one of the case where Nokia employees can react because they have been used to responding Symbian developers and their way of working. The CEO of that firm had not realized that in gaming since the evolution of company people working in it had realized that essence of designing good games was unstructured collaborative effort to trigger each other’s creativity. Politics in a whole is very frightening yet intriguing term. Politics can effect business with its outside environment and also from inside. Hollingsworth and Boyer (1997) state that business is and will be always effected with the politics, by quoting an example that the capitalistic and industrial revolution had effect on the making of cultures within many companies.

Markets and other coordinating mechanisms are shaped by and shapers of societal systems of production. By the term social systems of production the author means that structured firms in same industry have been entwined by the relations with other firms like supplier chain companies, marketing firms etc. Further the outer social cover like unions, concept of social fairness held by capital and labour markets, society’s idiosyncratic customs and traditions as well as norms, moral principles rules and laws all are applicable to the term politics. These effect the firm the way it has been structured and how sub cultures work within the organisation. It is evident from above statements that the term politics effect the social circle a lot more than way we think. Nokia has originated in Finland hence it will have work structure in its roots of Finish culture. Microsoft has been dominant in Silicon Valley hence the work ethics structure and its culture will have US work ethics.

The politics can be cumbersome with both firms however Nokia has also headquartered in Silicon Valley California. Further the interference of European Union is a lot evident than US having any political block with any countries. The unions in Europe have very strong foothold than US which states that if the R&D and joint venture has to happen it needs to consider the interference of company unions in the work. However from work venture point of view in the era of globalisation the companies know how to handle the political scenario and union interference (Hofsetede and Bond, 1982). Politics could also occur within the management in the joint venture.

It is seen in the case study that the appointment of Microsoft CEO created disturbance in mind of Nokia stakeholders. The idea of being governed by silicon valley CEO who was initiating transition of joint venture was taken in grey shades considering the fact that the collaboration is good for both companies together. This may arise further discontentment in the Nokia employees because they might be fearing complete acquisition by giant like Microsoft. In the end the above areas are likely to affect the further running of this joint venture but if the companies are open to learning, development and bringing new technology then these obstacles could not hamper the growth.

References (2014) ten years that changed the world. Available at: [accessed: 7 July, 2014] (2014) Porter’s five forces. Available at: [Accessed: 11, July, 2014] (2014) Nokia and Accenture Close Symbian Software Development and Support Services Outsourcing Agreement. Available at: [Accessed: &th Aug, 2014] Parker., M (2000) Organizational Culture and Identity: Unity and Division at Work. Available at: {accessed: 15th July, 2014] Talbot., D (2013) How Microsoft Might Benefit from the Nokia Deal. Available at: [Accessed: 15th July, 2014] Hofsetede.,G and Bond ., M, H (1982) Hofstede’s Culture Dimensions: An Independent Validation Using Rokeach’s Value Survey. Journal of cross cultural phycology. Available at : [accessed: 20th July, 2014] Holllingsworth., R.J and Boyer. R (1997) Contemporary Capitalism: The Embeddedness of Institutions. Available at: [Accessed: 24th July, 2014] Schein., E (2009) The Corporate Culture Survival Guide. Available at: [Accessed: 20 th july, 2014] Gawer., A (2009) platforms, markets and innovation. Available at: [accessed: August 2nd, 2014] (2014) Search: Nokia and Microsoft collaboration. [Accessed: 1st Aug, 2014] Koberg., S.C, Detienne., D.R and Heppard., K.A (2003) An empirical test of environmental, organizational, and process factors affecting incremental and radical innovation. Journal of high technology and management research. 14 (3) pp 21-45. [Accessed: 15th july, 2014] Scharnhorst W (2008): Life Cycle Assessment in the Telecommunication Industry: A Review. IntJ LCA 13 (1) 75–86. Accessed: 20th july, 2014 Kajanto ., M and Carral., R (2008) Nokia: a case study in managing industry Downturn. Journal of business strategy. VOL. 29 NO. 1 2008, pp. 25-33. Accessed: Aug 3, 2014

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