Jeetendra

 Executive Summary The objective of this research report is to analyze the issues concerning Nokia’s collapse and their loss of market share in mobile phones and telecommunications networks and give recommendations for its revival and potential return to the competitive landscape. The emphasis of the analysis is on the technological, organizational and industry related factors and intends to explain how these relevant factors influenced the landslide of the business opportunities. Nokia’s management failed to capitalize on the revolutionary technological advancements and prevented itself from achieving consistent global leadership in the mobile industry. As the power-relations phenomena explains specified set of attitudes or behavior of the individuals expected in the organization, it can be observed that this phenomenon resulted in the conservative approach towards its innovative policies and finally tumbled the profits generated in the corporation. This report classifies Nokia’s life cycle in different time periods between 2003 to present to identify the issues and there on proceeding to make further revival proposals. Finally, we conclude by giving an emphasis on how significant the top-level management is for the vision and mission of the organization. For the organizational analysis, we use the theories concerning industry dynamics and mega trends in the current business environment, strategies and transitions in the technological arena to come up with the effective, potential prosperity to the once global leader in mobile market. Table of Contents Introduction2 ISSUES2 Solution5 Conclusion6 Reference7 Introduction In a world where technological advances can make or break a company it is no secret that Nokia fell behind and failed to keep their leading position in the market which in the beginning was surprising as the Finish company had been able to adapt and reinvent itself in the past. Nokia was funded in the mid 1800’s in Finland as a paper mill factory that was near the Nokianvirta River which inspired the name of the company that would make Finland proud. Later on, the company drifted away from paper to get into rubber product manufacturing, and then diversified once again by getting into the cable fabrication business. It was not until 1992 that their recently appointed CEO decided to change their business scope once again and focus on mobile communications leaving their other business ventures in the past, this decision is what allowed the company to be a pioneer in the mobile device development and a leader in the market. Nokia was able to maintain their leading position in the early 2000’s but they were soon to receive their first hit, Motorola launched a new and improved product that caught the attention of the worldwide mobile device using population and attracted more competitors from countries such as China and the United States to enter the market. From this moment on it was of great importance that Nokia aligned their strategy to the constant and future changes in the industry so they decided to not only change and ameliorate the design of their products by adding good quality features such as cameras, but to target them to specific users and offer them designs focused on their profiles and needs, launching this large variety of new mobile phones allowed the company to recover some of their market share loss. It was not until 2007 with the launch of the first iPhone and the Blackberry that Nokia’s struggles became more evident and difficult to ignore. ISSUES The loss of agility and entrepreneurialism of Nokia started in the first half of the 2000’s when numbers of decisions were made to launch the early drive and energy of Nokia. Far from the Nokia reinvigoration, the company has actually set up the beginning of decline that caused by the poor leadership roles and implementation of matrix structure in 2004 (Lubinaite 2015). The tension of matrix organization is common as different priorities, qualities and performance criteria are required in an organization to work collaboratively. As Nokia has a decentralized initiative and lack of resource allocation process, management of product and policy, sales priorities and the unprepared managers to support the process, this led the company to a deterioration of strategic thinking of the business. The strategic decision-making capability in the management depend on several factors including both implicit characteristics, which can be described as those underlying norms that drive people in the organization to act in an appropriate way, and explicit characteristics that include observable behaviors, rituals and symbols in an organization. These factors can be further classified into i) Resources and capabilities in the Finish corporation which decides the production capacity of corporation’s artworks, innovation in the technological aspects and thereby learning curve of the organization to upscale the future prospects. ii) The strategy of a tech-company is heavily influenced by the market volatility and intense competition present in the mobile communications industry. It is in fact quite evident that the pace at which the technology is progressing is apparent that heavy investments in innovative areas has to be enforced for getting a resealable market share, both in terms of revenue and brand value and iii) the organizational hierarchy or structure plays a significant role in analyzing the potential of its technology and how the management interacts with the market environment it operates in. It is important to note that the timing of technological decisions and its entry in the market are heavily challenging to be decided upon by the organizational decision-making authority (Christensen et al,1998). Therefore, according to Eggers (2014), strategic decision making is crucial for the overall organizational success of Nokia. Theoretical Framework The current study is conducted by constructing the key concepts that Nokia perceives to be relevant along with its core competencies (path dependence and dynamic capabilities), industry related factors (Industry advancements, Radical Transformation and disruptive technologies) and its organizational variables including Matrix form of organization, managerial cognitions and organizational learning. The crux of the research can be identified by the process through which Nokia can use its inner capabilities to align its objective with the industry related trends and then finally deriving at how the organizational variables can be influenced in increasing management competencies for technological transformations. The inner capabilities of Nokia can be understood by VRIO analysis given by Berney and Hesterley in 2006. This framework is a tool to identify and analyze the company’s resources and capabilities where it emphasizes on how valuable a product is, its rarity, imitability and the organizational ability to capitalize the specified resource or a capability in the given context. (Barney and Hesterly, 2006). The historical performance of the brand depicts that its high quality in the product manufacturing has made it a global success and resulted in high customer loyalty and satisfaction. As the statistics prove that the third world countries are growing at an enormous pace, this opportunity can be targeted to bring the core competencies into action and deliver the desired results for the brand image. Nokia has relied on path dependency theory which states the approach used by the organization to innovate its products in order to satisfy the growing needs in the market. The theory gives an idea where an innovative development in the product can be solidified by using its previous practices and commitments worked on it. Path dependency, in the current market scenario is not desired as it leads to obsoleteness and conservatism in the strategic technology management and thereby has led to the downfall of the former industry leader in mobile technology division. The path dependency cultures in Nokia include Masculine culture, Finnish culture and approach towards short term strategy. These can be described as follows: i) Masculine Culture There are two main reasons why Nokia has a masculine culture in the company (Merriden 2001), first the R&D teams that are trying to compete with one another for recognition instead of working together as a team for the betterment of Nokia. Secondly, the top executive of Nokia that focusing in maintaining power and status rather than working on the development of the products. These two reasons may not only result in a drop market share that Nokia was and is facing, but also may leads to a high-power distance that gives more power to the top managers and less power to the employees. However, when it comes to company, power distance can lead to an inequality since the structure of a company differs a lot depending on the power distance. ii) Finnish Culture Finnish culture on the other hand can be defined as a high level of conservatism. The word Finnish itself was first created by Elias Lonnrot when he travelled the borderland of Finnish-Russian to record the ballads and charms that sung by the rural people (Vento 2012). He then amasses a fantastic tale of war, spells, revenge and love as a mythic history of the ancient Finns that fire his imaginations and Finnish people’s national consciousness, which become an identity of Finnish culture. According to Vento (2012), Finnish working culture happens when employees have no choices but to agree on the decisions that have been made by the top people in company. This happens to Nokia working culture where the senior executive is making all major decisions collectively and the top management in Nokia resists the ideas of developing smartphone as the manager thinks it is too novel, which takes nine months for the company to decide the new ideas in creating a new innovation. However, the opportunity has slipped away when the decision was being made as other companies have already introduced new inventions, designs and latest versions of smartphone. Short-Term Strategy The lack of innovations and strategies evolution delayed the company from growing and allowing competitors to get more of market share. The approach to remain current in the market by having a wide variety of products was put into question when people believed one could fit all and that the difference is in how much one phone can do for the user. Yet, the short-term incremental innovations have led Nokia to ignore the idea of adding a touch screen to new smartphones as they believed this wouldn’t fit with their micro segmentation strategy. Nokia struggled to get into the software creating business and took a long time to realize that they were too far behind and as companies such as Google, Apple were growing significantly at a rapid pace and they stood for innovation and revolutionary creativity it was harder for Nokia to retain their top engineers and hire new talent when they wanted to strengthen that part of the business as talented minds wanted to be a part of the companies that were taking the world by storm. Furthermore, Nokia was slow to act and by the time they decided to spend billions to regain their former glory they couldn’t deliver, they mismanaged resources and delivered poor quality smartphones, their strategic partnership with Windows did not result as fruitful as expected and they could not get people to buy their products (Anwar, 2014).  The crisis management in the organization was inefficient and failed to respond to the initial crises stage thereby giving up the market share to Apple . (John P McCray, Juan J Gonzalez, John R Darling, 2011) Nokia also failed to pay attention to their employees, the amount of uncertainty that their actions brought to them and the consequences they would create in their performance. Cost-cutting, integrate with Siemens and then buying them out, selling divisions to Microsoft and acquiring Alcatel, and disrupting their masculine corporate structure by bringing in the first non-Finish CEO to run the company are actions that sum to the pile of bad decisions that led Nokia to lose what took so long to build. Solution In order for the corporation to overcome these problems, suggestions that can be drawn from the empirical evidence concerning Nokia’s revival proposals. Technological evolution in the telecommunications industry has been significant since the early 2000’s and in order to maintain their stance in the market, tech companies have to invest heavily in the research infrastructure to design high quality products at an affordable cost. According to McGaham (2004), industry evolution can be explained as either gradual, incremental change or fast paced, discontinuous evolution. Depending on the company’s phase in the evolutionary life cycle, it has to align its strategies for diversification of business units, investing in disruptive technology or even to cease the existing business to avoid future losses. Radical change can be described as a new proposal to the existing technology which has transformational significance. This can also be related to disruptive innovation where totally new technological ideas are designed to focus towards the same consumer segments. It can be further added that in the early phases, disruptive technology is considered as of lesser significance than the established technologies (Christensen,1997;Adner,2002). Therefore, Nokia has to emphasize on this approach to make internal changes in its technological division. The empirical evidence shows that Nokia had technological advancements way ahead of its competitors when it was at peak but failed to capitalize following a path dependency approach.      The following organizational variables can also be further enforced by the organizational management in order to make a strong come back in the mobile communication segments. Identifying the market trends is quite challenging and it requires high cognitive capabilities in the management team along with sharp decision-making power. Inculcating these abilities in the management through organizational learning helps the brand to achieve future oriented approach in business environment. (Tripsas & Gavetti, 2000). According to Jaakko Aspara, in order for a corporation to achieve corporate level transformation process, it has to undergo strategic changes in the business units and align the cognitive minds to that of the central corporate headquarters for dynamic functioning of the management. Managerial involvement is considered to be of higher regard and therefore the organizational structure can be changed to matrix form to encourage efficient networking between the functions and divisions. The important attributes of matrix organizational structure are that it removes the filter of traditional hierarchy and inculcates diversified authority between divisions. (Ford & Randolph,1992). As the matrix consists of characteristics of both functional and projectized structures, it can be inferred that power authority in functional structure flows vertically whereas in project structure, it flows horizontally across divisions to share skills, knowledge and talents of employees between the management team. This form brings together the aspects of both the structures in creating an efficient balanced matrix organization. In balanced structure, the budget of a project is shared by both functional and divisional managers, thereby having the authority and power to influence decisions. The significance of it can be seen in employees being able to communicate freely across boundaries of the organization to integrate its operations and decision-making agility. Finally, as the employees report to managers in two different functions and divisions, it cultivates positive reinforcement amongst the team to come up with innovative practices to further enhance the organizational change. Therefore, we recommend Nokia to change its structure to Matrix organizational structure. With globalization in technology occurring at a distinct pace, it’s important to exploit opportunities in the tech-arena to capitalize on the collaborations in global generation of technology. From the recent developments in the company, Nokia was acquired by Microsoft in 2014 after the brand experienced overhaul in the profits and a poor vision. HMD global, a company formed from passionate Nokia employees acquired the brand again and are in a process of refurbishing the once known popular brand. The company is going through a wide array of developments in various functions it operates and it can be foresighted that it’s revival boost may not be a surprise for the hardcore fans of Nokia. Conclusion The issues that have been analyzed in this report could be summarized as, the reasons for Nokia to fall behind in the smartphone competition was the conservatism which resulted in uncertainty as the sources of the smartphones were very uncertain. By putting the situation that Nokia is facing into Kurt Lewin’s Change Model, the unfreezing stage is not even the first step for Nokia’s change in organization (Levasseur 2001). The unfreezing stage occurs when Nokia recognize and realize the need to change. Even though Nokia was losing its touch in the smartphone business they were ignorant of the change which was taking place in the industry. To survive in the market, market change must be anticipated before and taken advantage of to be the market leader according to McGaham (2004). Another reason for Nokia, not adapting to the change was its insufficient decision-making process and the non-participative work culture, this cause a huge roadblock for Nokia to make improvements. However due to the typical Finnish culture reaching to an agreement with everyone explained the toughness of the decision-making process. This lead to loss of many opportunities as miscommunication rose between the employees and the top managers (Lewin 2015). In the competitive smartphone industry time and ability to make profitable decisions may define a make or breaks company. Thus, by having just the competitive edges in the smartphone industry will not help Nokia to be a market leader in the smartphone industry. To stay in relevant in the technological telecommunication industry Nokia is suggested to make internal changes in its research and development sector and increase its spending. As McGaham mentioned earlier that the business to extend its evolutionary life cycle must invest in disruptive technologies and use it as its extension strategy. Redeveloping the existing technology which  Focuses on the same consumer segments could be beneficial for Nokia to cease its existence and be in competition with its competitors in terms of technological advancements. Organizational management is also found to be a challenge for Nokia to be strong competitor in the market thus suggestion of incorporating matrix structure which will not only make the internal networking  More effective between the functions and division but it will also remove the filter of traditional hierarchy which will diversify the responsibilities and will lead to motivating the division in charge to work harder by empowering them with some of the responsibilities. It is important for the employee’s goals to match with the organizational goal this according to Jakko Aspara was an issue for which managerial involvement was considered as a solution which would be  automatically enforced if the matrix structure was incorporated. Reference Koeszegi, A T, Zedlacher, E & Hudribusch R 2013, ‘The war against the female soldier? The effect of masculine effect on workplace aggression’, SAGE Journal, vol. 40, no. 2, p. 246, viewed 9 May 2018. Levasseur, R E 2001, ‘People skills: Change management tools-Lewin’s change model, SAGE Journal, vol. 31, no. 4, p. 73, viewed 9 May 2018. Doz, Y & Kosonen, M, 2011, ‘Nokia and strategic agility: a postscript, California Management Review, vol. 53, no. 4, pp.154–156, viewed 1 June 2018, SAGEpub Database. Ciesielska, M 2017, ‘Nokia on the slope: The failure of a hybrid open/closed source model’, International Journal of Entrepreneurship and Innovation, vol. 1, no. 8, pp. 1-7, viewed 1 June 2018, SAGEpub Database. Aspara, J, Lamberg, J A, Laukia, A & Tikkanen, H 2011, ‘Strategic management of business model transformation: lessons from Nokia’, Management Decision, vol. 49, no. 4, pp. 622-647, viewed 1 June 2018, EmeraldInsight Database. Hossain, M 2012, ‘Open innovation mill: Utilization of Nokia's non-core ideas, Social and Behavioral Sciences, vol. 58, no. 1, pp.765–773, viewed 1 June 2018, ScienceDirect Database Pakarinen, M & Virtanen, P 2016, ‘Solving organisational conflict in public matrix organisation’, An International Journal, vol. 11, no. 4, pp. 232-252, viewed 1 June 2018, EmeraldInsight Database. Chiesa, V & Frattini, F 2011, ‘Commercialising technology innovation: learning from failures in high tech markets’, Journal of Product Innovation Management, vol. 28, no. 4, pp. 437-454, viewed 1 June 2018, Wiley Database. Lee, Choonwoo et al., 2001. Internal capabilities, external networks, and performance: a study on technology‐based ventures. Strategic Management Journal, 22(6‐7), pp.615–640