Nokia Business Culture Case Study
Nokia’s Corporate Culture Challenge What are the corporate culture challenges along with other challenges that Nokia face in keeping up with other competitor in the market? Introduction to the Nokia Corporation: The Nokia Corporation is a multinational telecommunication Phone Company that locates its headquarters in Finland. The company is involved in the manufacturing of mobile phones in conjunction with Internet and communications service providers, having more than 130, 000 employees in 120 countries, with sales in over 160 countries and an annual global income of €42. billion as of 2010. Nokia is the world’s leading manufacturer of mobile phones having a global market share of 38% in the third quarter of 2010, however, shares dropping to 31% in the fourth quarter of 2010 and further down to 22. 8% in the second quarter of 2011. Nokia is the largest Finnish company, stands exigent in Finland’s economy, and also serves as a crucial employer in Finland, having solely increased the GDP of Finland by 1. 5% in 1999, responsible for nearly a quarter of Finland’s exports in 2003 and accounting a share of 3. 5% of Finland’s GDP in 2004.
Nokia (Corporate Culture): Rules and Regulations, working styles, values, beliefs, behavior and shared knowledge that are incorporated in a working environment is known as corporate culture. Inspirational and strong corporate cultures work on innovative ideas along with catering to changing consumer tastes and expectations. Forming a corporate culture is a slow procedure and begins from the leader of the organization. The Nokia Corporation has been operating for more than a hundred years, achieving the tag of being one of the most thriving manufacturers of mobile phones.
However, recently, Nokia has experienced downfall in market share, the root cause of this being that Nokia’s old culture has not changed with time. With Nokia’s wide range of products, it is difficult to believe that the company is drifting away from being world leaders n the phone industry, and the greatest limitation is the unwillingness of the company to amend their corporate culture. Need For Nokia to Change: Recently, Nokia has fallen behind competitors such as Apple and Google Android in terms of innovation and has been attentive to mobile phone devices instead of applications.
The age of the smart phone has begun and Nokia has been shadowed by companies such as Apple, Samsung, HTC and Google Android because of missing this big transition in the market. Along with this, Nokia has also confronted powerful competition from mobile phone manufacturers that produce products that are cheap and similar in terms of features and looks. The company has started turning out to be a product-led than a customer-led company. Apart from this, Nokia’s culture consists of a number of problems, limiting the company to achieve their targets.
There include several drawbacks in Nokia’s corporate culture that impose serious challenges that the company faces. These have been underlined in Elop’s recent “Burning Platform” memo and include a pure Finnish culture that is quite cut off from others, weak administration and complacency, highly-bureaucratic structure with unsatisfactory liability resulting in the failure of decisions, permanent Managers at the business, an absence in focus attributable to the production of various products in the market, a deficiency in innovation and slow product development.
Apart from these, implementing change is one of the biggest challenges that Stephen Elop confronts, along with cultural differences between the Canadian boss and his Finnish employees. Elop believes that there are a number of companies that believe in short-term domination and immediate results in contrast to Nokia as the culture at Nokia is very different. Change in Nokia’s Strategy: With the intention of setting Nokia back on track, Stephen Elop was appointed Nokia’s new chief executive on September 2010, being the first non-Finn leader of Nokia.
Elop replaced Olli-Pekka Kallasvuo who had been CEO in-charge since 2006. Kallasvuo had been under pressure to quit the company after share price dropped more than 40% during March and June of 2010. Elop had therefore been appointed CEO in charge in order to alter the company’s strategy and in turn restore previous figures in sales. This sweeping change indicates that Nokia seems to be facing a severe crisis.
The problem however, is more inclined towards failures in ideas, innovation, leadership and corporate culture as Nokia remains to be the world’s biggest phone manufacturing company. Nokia used to be looked upon as a leader in innovation, but now, other companies such as Apple, Samsung and HTC are regarded as more innovative brands. The assigning of Stephen Elop, a Microsoft executive may appear to be a gamble by Nokia as Windows phones have not developed in the Smart phones sector.
Despite this, Elop has had a good and strong wide ranging career in the communications and software industries. His skills and experience should aid him to be good leader at Nokia. Changes Made After Appointment of Elop: With the appointment of Elop as the new CEO on September 2010 so as to bring about a change in the strategy of the company, Elop outlines all the challenges that Nokia faces as a company. In March 2011, Nokia joined partnership with Microsoft, to manufacture smart phones using Windows as its primary mobile software.
Also, Elop cut out many aspects of Nokia’s former corporate structure and diverted the focus of the company on leadership, good administration, this, further leading to Innovation and proper decision-making. Incentives and goals are also clearly defined and learned by the management. These changes have provided Nokia with objectives and clarity. ——————————————– [ 1 ]. http://www. nokia. com/NOKIA_COM_1/About_Nokia/Sidebars_new_concept/Nokia_in_brief/In_briefApr11. pdf [ 2 ]. “Annual Results 2010” (PDF).
Nokia Corporation. 27 January 2011. Retrieved 27 January 2011. [ 3 ]. ^ a b “Gartner Says Sales of Mobile Devices in Second Quarter of 2011 Grew 16. 5 Percent Year-on-Year; Smartphone Sales Grew 74 Percent” (Press release). Gartner. 2011-08-11. Retrieved 29 September 2011. [ 4 ]. http://www. zdnet. com/blog/btl/nokias-problem-is-there-time-to-change-culture-amid-a-burning-platform/44618 [ 5 ]. http://www. bbc. co. uk/news/business-11257069 [ 6 ]. http://tutor2u. net/blog/index. php/business-studies/comments/nokia-a-business-culture-problem/