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  • Subject area(s): Marketing
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  • Published on: 14th September 2019
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ntroduction:

Nokia Corporation is a Finnish multinational, information technology and consumer electronic organization established in 1865. The company has been involved in various industries its 152-year history however since the 1990's Nokia has had a strategic focus on largescale telecommunications infrastructure, technological advancements and licensing.

Information and communication technology plays an integral role in the modern-day communication systems. The level of technological revolution companies gets confronted with in recent times has been revolutionary to the extent that the revolution of previous years has faded away in the present technological dispensation. The revolutionary changes that mobile phone technology has brought about is phenomenal resulting in a change in the dynamics of communication and within a very short time occupied a significant business value.

Market Dominance and Strategies:

Nokia has been one of the prominent figure in the mobile phone manufacturing industry with great profitability strides and dominance for years. Globally there are lots of companies who have come into the industry with manufacturing facilities and global outreach, but has not been able to compete with Nokia. The market leadership of Nokia for a very long time was unchallenged. The strategic approach adopted by the company during the 90's regraded as its peak was commendable. The company had a strategic focus on its product line, marketing strategies, expanded distribution network, effective supply chain system and customer service efficiency.

The years of dominance was brought about by the introduction of mobile communication technologies, launching of new mobile telecommunications products such as the 2100 series, Nokia 9000 communicator and the Nokia 6100 among others. The astonishing success of the 6100 series the first phone that came with the classic snake game pre-installed attributed to the sales of about 41 million cellular phones in 1998 and helped the company become the top cellular company that year surpassing Motorola. The following year saw the company launch the Nokia 3210 which was at that time a very solid mobile phone that was sold in six different colors with an impressive talk time of 4-5hours. In addition to introducing extra ringtones and games, the phone also allowed users send installed picture messages through SMS. About 160million units of the products were sold, making it one of the most successful phones in history.

The year 2000 popular regraded to as Y2K was seen as the new era for modern technology. Although Nokia was the market leader in the mobile phones industry, the new decade came along new set of challenges for the mobile phone industry as a whole. The internet technologies and the need for multimedia capabilities were evolving at a geometric rate. (Surowiecki, 2013)

Revolving market in the new era and Corporate Leadership Response:

The beginning of the new era started okay for Nokia with its leadership aware of the expected technological uproar but underestimated its potential. The following actions were taking by the company as a response to the modern era:

Successive Introduction of New Products: As part of the company's response to the evolving changes in the mobile phone market, the company started introducing both sophisticated multimedia phones as well as low-end mobile devices. This however followed with the launching of the Nokia7650, the company's first phone to have a built-in camera and color display. This was also followed by the launch of the first 3G phone Nokia 6650, the Nokia 3650 the first Nokia phone to feature a video recorder. The introduction of all these new products in successively did not give the Leadership an opportunity to access the market, create strategic research and development initiatives before launching products. This however put the company in a bad strategic position.

Management focus on marketing with less focus on Software: As the market leader Nokia was more regarded as an engineering company that needed to be more marketing savvy. This strategy by its corporate leadership was based on the fact that the company had best discovered how to model mobile phones into fashion accessories hence its focus on hardware which is at the heart of the company. This however led to the neglect and underestimation of the importance of software which includes the applications that run on smartphones which has changed the experience of using a phone. In all the development process of the company was for a long time dominated by hardware engineers, marginalizing software experts.

Slow transition into smartphones: Aside from its failure to recognize the increasing importance of software the management of Nokia also underestimated the importance of transitioning into smartphones as it focused on the physical hardware features of the mobile devices and in a way, was enthralled by its past success as it was at that time in 2007 earning more than fifty per cent of the mobile phones industry most of which was not coming from smartphones. Nokia believed that diverting lots of resources into high-end, low-volume business would be too risky which lead to an institutional reluctance to transitioning into a new era. (Lee, 2013)

Management's overestimation of the strength in its brand: Despite the company's late transition into the new era of the smartphone Nokia's corporate leadership completely overestimated the strength of its brand and market dominance with the believe that it would be able to catch up quickly the new entrants such as IPhone and Samsung. In fact, long after the release of IPhone, Nokia continued to insist that the superiority of its hardware design would be fine by its users.

Management focus on Internal competition: The overriding emotions felt by top executives as they see the gradual decline of a once top leader in the mobile phone industry was not necessarily the fear of being fired, but more of the fear of losing their social status in the organization. These fears resulted in a collective emotional atmosphere which influenced what information was discussed in meetings. Middle managers made senior managers believe deadlines which were unrealistic would be met not wanting to show their limitations. In addition to the internal status struggle amongst managers, although there were also pressure from their shareholders to improve earnings and sales revenues the managers focused on internal competition for resources and higher social status with no fear or concern on what the competitors were doing. additionally, the pressures from shareholders has also led to increasing pressure from Managers to subordinates to work faster and harder which created an unhealthy environment and optimistic reporting which led to the fast decline on Nokia high end smartphones. (Huy, 2014)

Appointment of Microsoft Head of Business Software: In 2009 Nokia laid off 1,700 employees worked wide and later that year the company's corporate leadership acknowledged its slow reaction to the market after been slowly taken over in the market by Apple, Blackberry and the newcomers at that time Samsung, HTC and LG. In 2010 Stephen Elop previously the head of business software division was appointed as Nokia's CEO as a reaction to developing its software business to catch up with the evolution in the smartphone industry. (Himanshu, 2015)

Strategic partnership with Microsoft: following the appointment of Stephen Elop as its CEO, Nokia was desperate to be out of the ongoing crises and be able to compete with its competitors. The company announced a strategic partnership with Microsoft to make Nokia's windows phone its primary mobile operating system. This however led to the introduction of the Lumia series which although was already announced way too long before its actual market availability as a strategic initiative to boost had an early encouraging start and company profitability glimpse but this was not enough to meet up with the innovative brilliance of technology giants such as IPhone and Samsung as its revenue dropped considerably due to the company inability to make a mark in the smartphones industry.

Conclusions and Recommendations:

Nokia's unwillingness to embrace innovative change when it was expected was the biggest reason for the fall of the company. Its corporate leadership was late in adopting the smartphone revolution and when it finally did make way, the companies made too many strategic mistakes. The announcement of the switch to windows phone way ahead of the actual release of the hardware was a strategic mistake by the corporate leadership. However, in looking at what they would have done differently, a careful assessment and management of the emotional process would have enabled top managers at Nokia get more accurate information on the software innovation and development level this would however include creating an environment where managers share honestly their fears to reduce maladaptive internal fears which makes telling one superior the right thing difficult. Another way of reducing internal fears within management is to use new competitor's products. This strategy was adopted by Samsung to ensure that there is an adequate understanding of their weaknesses and competitors strength over Nokia products in line with specific dimensions on usability.

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