Case study02: NOKIA

Nokia’s loss of dominance in the mobile market after 2007 is one of the most significant
failures in modern business history. For Finland, this was an economic catastrophe, when
the largest company in the country lost grip on its core business. In 2007, Nokia’s mobile
division was the leading mobile device manufacturer in the world, with a market share of
about 40% (Cord, 2014). In 2011, its market share was only 25%, and the company started
software collaboration with Microsoft. In 2013, it was announced that Nokia would be
selling its entire mobile business to Microsoft. By this stage, the company’s market share
was only 14%. By 2015, the market share was a measly 1%. Microsoft, in turn, announced in
spring 2016 that it will stop manufacturing mobiles it inherited from Nokia. Practically
speaking, the company’s mobile phone business crashed from the top position in the world
to complete extinction within about eight years. A lot has been written about Nokia’s
hardship and ruin. People are pas-senate about this topic, particularly in Finland: after all,
this company was the country’s first real world-class business, which at one point had the
highest market value among European corporation. The descriptions of Nokia’s failures are
often ideologically charged and tainted. As Professors Eero Vaara and Juha-Antti Lamberg
(Laamanen, Lamberg, & Vaara, 2016) have persuasively demonstrated in their recent study,
interpretations regarding Nokia have been turned upside down as triumph has turned to
disaster. The same company which was idealized as having exemplary management started
to look like a textbook case of failed strategies, as soon as the difficulties started. It is
tempting to interpret every- thing related to a company through a positive frame of
reference when it is experiencing financial success, while a fault-finding perspective
promptly takes centre stage as soon as problems start to pile up (cf. March & Sutton, 1997).
Such polarisation of the representations of organizational and managerial competence can
obscure a more impartial under- standing of the actual structures and processes within
corporate entities. Bearing that caveat in mind, this section aims to use the source mate- rial
available about Nokia advisedly. There are so many different types of people and
stakeholders around the company that it is somewhat impossible to try and uncover the
overall picture of the decisions and solutions that led to the downward spiral using
traditional interview methods. Each actor has its own story. And each of these in turn often
coalesces into attempts to rationalize, legitimize and sugar-coat the story-teller’s own
solutions. In this book, the case of Nokia is analyzed mainly on the basis of the executive
biographies (Alahuhta, 2015; Ollila & Saukkomaa, 2013; Palmu-Joroinen, 2009) and
interviews (Heikkinen, 2010) as well as historical overviews, newspaper articles and
reference books about the company (Cord, 2014; Häikiö, 2009; Linden, 2015; Nykänen &
Salminen, 2014). However, the interpretation or “reading” provided in this book in respect
to the processes related to the collapse of Nokia’s mobile business does not attempt to
become the exclusive truth about controversial processes and events; instead, it is offered
as one narrative among others. The focus is, again, on the dynamics between different levels
of wisdom in organisational action and decision-making. Nokia’s situation around the year
2008 could simply be described by stating that there was a paradigmatic change under way
in the mobile business. The company had been successful by making reliable, techno-
logically advanced phones cost-efficiently. Nokia was strong particularly in Europe and in
developing countries. However, a significant thing happened in 2007; Apple launched the
iPhone. This model was completely different from any other product on the market at the
time. It had a touch-screen and only one function key. The phone was simple to use, and
aesthetically unique. Apple was able to offer a large number of apps. Another front also
opened up in 2007: the search engine Google presented their own operating system,
Android, designed for smartphones. The Android system was open; that is, all mobile
manufacturers were able to use it, regardless of their particular software resources. The
appearance of Apple and Android on the mobile market meant that companies that were
previously developing computers and internet services broke into an arena dominated by
mobile device manufacturers. With Steve Jobs at the helm, Apple had brought home
computers within everyone’s reach, and had recently also expanded into music distribution
through the iPod device and the iTunes online service. Google, in turn, had become the king
of internet search engines. Nokia’s mobiles were reliable, and always advanced
technologically, but now they looked pitifully old-fashioned, with their clumsy user inter-
faces and limited range of services. A Nokia mobile was durable, but cumbersome. On the
other hand, Apple’s iPhone was a beautiful trendy product, which was easy to and whose
touch-screen offered many innovative ways to use the phone; for example, for gaming. The
Android OS provided a strong basis for new smartphones, while the capacity of Nokia’s own
Symbian was starting to reach its limits in its current format (Cord, 2014). Nokia was unable
to respond to iPhone’s challenge. It started losing market share. The selected operating
system, Windows, was not as intuitive as iOS, which Apple had been developing for
computers for a long time. In principle, however, Nokia had every opportunity to accept the
challenge of its new competitors. The company had an extensive product development
organisation and a stable financial situation. It had already started developing a touch
screen in 2004. The technical features of the iPhone were not considerably more advanced
than those of their competitors. Nokia had also been aware for a long time that the Symbian
operating system was coming to an end, and the company had been designing a new,
substitute software platform for some time. From the perspective of traditional situational
management theory, Nokia’s technological operating environment was going through a
sudden change, which should have denoted an attempt to achieve greater flexibility in the
operating method and form of organisation.

1.What can we learn from Nokia’s failure?

2.What is still wrong with Nokia?
3.What is the reason for failure for Nokia in India? How can Nokia come back again?
4.What should Nokia do to Increase product Innovation?
5. Why is Nokia such a failure as compared with Samsung, Apple and other companies?
II. ANALYSIS OF THE CASE STUDY
A. Situational analysis
Title of This Case Is Reasons Behind the Failure of Nokia: A Case Study on Nokia. In past
time, Nokia is the one of the successful leaders in mobile phone market and their products
are top on selling and Nokia cover larger market share of mobile phones. When time passes
new players enter into the market with new innovations and ideas. That time Nokia become
a heavy loaded truck who runs in saturated road where new players enter with new things.
New players over take Nokia with its new mobile phones with new features, Nokia has
already very big, so they cannot over take others. Nokia think that no one can beat them.
They think wrong and many other reasons which effect on Nokia growth and be them a
failure.
This case is selected as per following basis:
• Case is related with Product innovation and brand equity
• There are many opportunities for company to re-enter into cellular market
• To understand reasons for failure of a business
• To justify that product and brand dies on the same day, but it is not true.

B. Statement of the Problem

The main problem of this case study is Nokia’s lack of innovation in products. It failed in its
marketing strategies by following an unsuccessful strategy of umbrella branding and
couldn’t go with the trend in mobile industry. Another reason for Nokia’s failure was the ill-
timed deal with Microsoft and it overestimated its brand value.

C. List of Critical Factors/Facts

 The Resistance to Smartphone Evolution

When mobile phone manufacturers were busy improving and working on their
smartphones, Nokia remained stubborn. Nokia never considered Android as an
advancement and neither wanted to adopt the Android operating system. After realizing the
market trends, Nokia introduced its Symbian operating system. However, it was too late by
then with Apple and Samsung having cemented their positions. This is the biggest reason
behind Nokia's downfall.

 Nokia's Failed Marketing Strategies

The company followed an unsuccessful strategy of umbrella branding. Samsung followed
the same route as apple to apply the umbrella branding model by launching the Samsung
Galaxy series but Nokia failed to take cues. Seeing the mess, Nokia decided to come up with
some fascinating hardware and software innovations. However, these were already released
by Nokia's rivals and lacked the uniqueness. Failure in Nokia’s marketing and distribution
strategies played a significant role in its elimination from the mobile industry.

 Moving Too Slow with The Industry

Nokia never kept pace with changing technology and trends. Initially, the company
overlooked technical advancements to avoid the risks associated with bringing innovation in
phones. The business needed diversion but it was too late by the time Nokia realized this.
Instead of being amongst the early initiators, Nokia transitioned when almost every major
brand had already started producing awesome phones.

D. Assumptions
Following are the assumptions of the case study:
• Nokia will reenter into the cellular market
• Sources of Data have right information
• There is long gap between real case and this study.

E. SWOT Analysis

 Strengths
I. The biggest strength of the company is their brand name.
II. Many consumers often opt for Nokia more than any other brand because of the
reliability, durability, and creativity their phones provide.
III. Most of Nokia’s highly qualified personnel have teamed up with Microsoft’s experts
as a part of the acquisition deal.
 IV. The phones provided by Nokia have a much higher re-sale value compared to other
mobile phone brands.
V. Many of Nokia’s products are easy to use and are usually coupled with a variety of
handy accessories.
VI. Products offered by the company are available in all price ranges.

 Weaknesses
I. The company, though, is often criticized for poor after sales services.
II. Took a long time to enter the highly productive and booming smartphone market. As
a result, the company lost a lot of its once huge market share.
III. Some of Nokia’s products are not affordable for middle- and lower-class consumers,
which often affects their searches negatively.
IV. The Finnish mobile company has made comparatively lower profits due to drop in
sales that result from tough competition. According to statistics, the company’s
profits have fallen by 7% in the second quarter of 2014.
V. There are slumps in the company’s development with its Windows Lumia range of
smartphones because of constant competition from rivals Android and iOS.

 Opportunities
I. The Microsoft-Nokia deal is a win-win situation for both companies. The deal
possesses great opportunity if both utilize resources in a proper way.
II. Opportunities to expand the range of products and their prices. Also bring in new
features and applications on to Windows OS.

 Threats
I. Strong competition from other smartphone companies will make it hard for Nokia to
maintain and expand their market share.
II. Low-cost threats by China mobile companies and others can cause big problems.

F. Solutions for the questions in the Case study.

1.What can we learn from Nokia’s failure?

There are several factors that might have caused Nokia's failure, but the one that seems
most likely is the inability to execute a coherent business strategy during a time of high
technological change. It is clear that Nokia did not react fast enough, and it was unable to
adapt its strategy in time. They continued to rely on their strength in making traditional
phones based on outdated technology when competitors were already developing smarter
devices based on new technologies and quickly taking over the market. As a result, this lack
of vision for the future and failure to adjust their strategy led them to lose their position as
the leader in mobile technology.

2.What is still wrong with Nokia?

The company failed when the smartphones took over the market. The main reason behind
its failure is lack of innovation (in alignment with the market demand). For a decade, Nokia
produced many phones with very less innovation in its models. They made lots of phones,
sold it at low price and ignored the innovation.

3.What is the reason for failure for Nokia in India? How can Nokia come back
again?
There were many reasons for it to fail, but the main failure of the company was when
Android was launched. The main reason for its failure was that it kept on developing new
operating systems for every series of the phones, which led to less apps in its stores. And
they could still be the best company if they started using android as their operating system
which was offered by Google to them firstly but they denied and when Android launched
publicly there was only one operating system in many-many phones leading to more and
more apps on store which was very charming to users. Users saw useful apps and tried to
find those on their phones but they were not available for Nokia or Symbian. There are less
chances that it can stand firm again like earlier days. But it can come back after a few years,
if they keep on developing phones whether bad or good.

4. What should Nokia do to Increase product Innovation?

Innovation is a key to survive in the market for a Nokia. If Nokia wants to recover it market
and position in India, they require increasing innovation activities. Through new innovation
Nokia able to creates its old brand image in customer’s mind. There are different sources of
innovation like customers, suppliers, competitors etc.

5. Why is Nokia such a failure as compared with Samsung, Apple and other
companies?
Nokia was late to the game. When Apple rolled out with the iPhone, Nokia was still pretty
competitive and actually has a larger share in the market. When the consumer moved on
from BlackBerry and Nokia to Capacitive Touchscreen Phones, Samsung decided to quickly
adopt Android. Nokia was still trying to do their best with their proprietary OS which was
more suited to keyboards. This costs them. After Samsung proved that Android was the way
to go, Nokia instead chose Microsoft’s Mobile Windows Platform. In then end Nokia Mobile
was suffering such a loss that it was sold off. This is actually a pretty similar case with
Blockbuster and Netflix.
G. Conclusion
That Nokia have an opportunity to re- enter into the market with strong manner. Also, they
have different ways to solve their problems and issues and come back again with its
solutions. Nokia have threat to changes and it is the biggest reason for its failure in market.
Also, there are others reasons which effect on Nokia failure. There are many solutions and
ways given in this case study by researcher which helps Nokia to overcome its problems and
issues.
These are top 3 solutions other than company solutions like Increase product Innovation,
recall old brand images on customers mind and implement right umbrella brand strategy.

H. References
Htts://www.slideshare.net
Htts://pdfnokiacompany.com
Htts://startuptalky.com
Htts://www.totalassignmentmenthelp