Nokias business strategy - Coursework Example

?Report on Nokia’s business strategy Introduction In the highly competitive environment of global business, fast changing technology and globalization have become two most critical components that have significantly impacted business dynamics. As a result, the need to become flexible and evolve with time not only becomes essential for organizations for their growth but also for maintaining their competitive edge. The strategic planning therefore becomes the major plank that helps them to anticipate and evolve proactive measures to meet the challenges. Mintzberg (1994), has defined planning as methodology of cohesive decision making process that facilitates the desired outcome and achieve defined goals. Thus strategies and plans become vital ingredients of safeguarding future of the companies. The report aims to study Nokia’s strategies for maintaining competitive advantage while expanding globally. Nokia is a leadership company working in the field of wireless communication and communication devices. It has become one of the largest producers of mobile phones despite being headquartered in Finland which is one of the smallest countries of the globe. The company has been able to gain significant foothold within the highly dynamic technology driven industry of mobile communication. Its people centric approach backed by state of the art research and development center, constantly helps it to innovate and meet the changing requirements of its more than 800 million customers (nokia, 2010). The company was started in 1865 by Fredrik Idestam primarily as a wood pulp company in Finland. By 1980s, it had diversified into huge conglomerate involved in tire manufacturing, paper, footwear, television, consumer electronics and telecommunication equipments etc. In 1981, it had created world’s first wireless network and revolutionized communication. Wireless service was cheaper to landline because of higher infrastructure cost and therefore preferred in countries where people have to survive arctic winter and tough terrain. In 1987 first mobile phone was launched and in 1992, first mobile phone with GSM technology was introduced. Thereafter started the success story of Nokia and its strategy of innovation and patenting knowledge which became the mainstay of its leadership phenomena. In 2005, its N series mobile handsets, equipped with huge features became a craze amongst the users. It was also the year that saw the sale of billionth sale. 2. Organization structure Nokia is a public limited company that is listed in major stock exchanges across the globe vis-a-vis New York exchange, Helsinki exchange, London exchange etc. Its corporate governance principles are subject to Finnish Laws. It has 139,000 people working across 115 countries. In its devices and service segment alone, 41% of the staff are women! (ibid). Diversity is intrinsically incorporated within its business goals and culture. The company enjoys organic type organizational structure that highlights the horizontal communication and thrives on flexible approach and shared learning. A well defined hierarchy within human resource is designed towards higher productivity across its five major segments: mobile phones which meets the need of common man through mobile sets which are affordable and feature laden; smart devices use symbian technology to deliver multiple service; location and commerce introduce integrated services for consumers and facilitate platform for ecommerce for corporate customers ; markets broadly ensures market and sale of its products and services; and Nokia Siemens network ensures telecommunication network and broadband services. 3. Business process and system Organic organization is broadly defined as structures that are highly adaptive and flexible to change and promote continuous learning environment (Robbins and Coulter, 2002). Organizational culture becomes a critical factor that promotes specific code of behaviour amongst the workforce that helps to inculcate sense of stability and desired motivation for improved outcome. Mullins (2007), asserts that organizational culture emphasizes behavioural regularities which is distinct in its language, custom and traditions and the way workforce reacts to the situations. Indeed, in Nokia’s case, it hugely facilitates knowledge sharing and understanding amongst the workforce that cuts across race, colour, culture and nationality. It broadly follows codetermination model of management that integrates diverse interests to evolve common goals and achieve target through mutual cooperation. It encourages collective decision making and empowers its workforce to make decisions based on informed choices. Thus, the model hugely promotes creative input and innovation within the strategic plans and processes. The leadership initiatives of Nokia management believe in building relationships based on mutual trust and confidence. This not only helps in creation of strong teamwork but also ensure that changes are accepted with equanimity and conflicts are resolved early. Indeed, understanding of organizational culture and behaviour is vital part of organizational communication which motivates people for better performance, leading to higher productivity (Smith, 2007). R&D, acquisition and mergers, effective supply chain and benchmarking are key components of its strategic plans which help it to gain competitive advantage within the industry. These factors become important in the current environment of cut throat global competition, especially against rivals like Sony Erickson, Apple Inc., Samsung etc. which have increasingly become major players in the telecommunication and wireless mobile field. These are key areas in business processes and system which enabled Nokia to compete innovatively and create niche global presence. 3.1 Research and development Nokia’s core strength lies in its research and development capabilities which constantly strive for superior breakthrough in technology. Innovation in network infrastructure, wireless technology and software development create value for customers and customer satisfaction. Nokia’s business strategy therefore is used not only to anticipate changing preferences of customers but also to develop and evolve new mechanisms of creating value. They considerably widen the scope of Nokia’s competencies to touch new heights in technology innovation. At the same time, it motivates its workforce for greater performance outcome. It therefore thrives on discovery and new product development that can give firm greater business and financial advantage through patents and ownership rights, which are crucial measure of success. Innovative approach and focus on state of the art research and development facility was a critical element of Nokia’s strategic planning mainly due to intense domestic competition. It needed to be creative in its overall products and services and provide the customers with quality products at competitive cost. Hence it became the driving force for the company to test new approaches with high creative input. It provided the company with distinct differentiation within the industry and gave them an edge over their rivals. It was also a major factor that motivated it to expand globally and become a flagship company in wireless technology with global presence. 3.2 Fostering strategic alliances and partnership Fostering strategic alliances with other firms hugely helps to expand business across globe and penetrate new areas of interest. In the current times, network relationship not only helps the firms to gain distinct competency adding value to its core business proficiency but also facilitates survival in cut throat difference. Indeed, ‘all types of contract business relationship are the linkages that facilitate higher level of efficiency and organizational growth which would offset a competitive advantage over their rivals… not by legal process, but by the need the parties have to go on doing business with each other’ (Kay, 1995:50). They are important linkages that help the organizations to gain leverage against their rivals. The disinvestment of many of its business activities was a major decision that helped it to focus on telecommunication. Nokia’s leadership initiative was demonstrated when it correctly decided to disinvest its low performing business activities and saw latent opportunities in the telecommunication, especially in wireless technology could significantly alter business dynamics and offer huge potential for business expansion. It relied on its long term goals and objectives for its success and growth. It quickly aligned its strategic plans and actions to its business goals to gain leverage in the industry which was still in its infancy. It therefore became pioneering company to introduce wireless technology in order to overcome geographical constraints of extreme weather conditions. The cable based telecommunication was not only difficult but also very expensive proposition which provided Nokia with huge potential tat could be successfully exploited. The later acquisitions and partnerships were primarily focused on exploiting knowledge and enhance its capabilities in the field. Its business partnerships with Siemens and recently with Microsoft have been major landmark that has significantly added to its core competencies and widened the scope of its business goals and delivery in myriad sectors. 3.3 Supply chain Supply chain is intrinsic part of business that brings together the organization’s various linkages with the external agencies and help in efficient receipt and delivery of goods and services. Porter (1985) believes that effective supply chain is crucial ingredient of value chain that constructively influences business activities and significantly improve productive outcome both in terms of performance and global credibility. Nokia uses various suppliers for its electronics parts for its various manufacturing units that are sold from the various outlets either directly or through franchisees and retailers across the globe. Its various suppliers strictly follow quality parameters and conform to its principles of ethical business practices. Sustainable business practices are inherently linked to all its operations and human resource. It makes conscious efforts to meet the demands of all its stakeholders and establish high standards of ethics in the cutting edge business paradigms. Nokia’s supply chain management highlights smooth flow of information, goods and services at different levels of business processes and operations. It helps company to work with people who favour ethical consideration and sound labour practices. The various productions units across the globe are guided by the company’s principles. ‘At Nokia, responsible environmental and social practices are integrated into everything we do… from the devices we build and the suppliers we choose, to our mobile solutions that enhance people’s education, livelihoods and health’ (nokia.com). Its membership to Global e-Sustainability Initiative or GeSI and Electronic Industry Citizenship Coalition or EICC is important indicator of its social consciousness and its effort to consistently monitor compliance of sustainable business practices across its supply chain (ibid). 3.4 Environmental responsiveness in its business process World Commission on environment asserts that sustainable development is the ability of current generations to meet their needs of their natural resources without endangering the requirements of future generations (WCED, 1987). In the current times, various imperatives vis-a-vis product life cycle, green design with biodegradable aspects, recycling, waste management, carbon footprints etc. are essential to the sustainability of development processes of new product development (Pujari, 2006; Pujari and Wright, 1999; Prothero and McDonagh, 1992). Nokia, being highly aware of environment, adopts innovation driven strategy for product development that effectively addresses the environment issues within the broader business strategy of the corporate world. Fuller (2004) strongly claims that ergonomically designed products contribute towards sustainable development and therefore technology needs to be efficiently used to manufacturing such products. Nokia’s products are not only green but also highlight its sustainable business practices at all levels of business processes and system. 4. Quality Benchmarking and TQM are two of the most successful tools of best practices that improve performance, reduce cost and industrial waste. While Nokia looks for continuous improvements through innovative measures, its supply chain stringently require international standards ISO 14001, SA 8000, OHSAS18001, PCMM and ILO, and UN conventions (nokia, 2010). All its suppliers, new and old who supply various products, components and parts are committed to meeting the company’s requirements and are included within the contractual agreement. The requirements are dynamic and are constantly upgraded to meet the changing needs of the customers and environment. Within the broader framework of its manufacturing processes, quality assurance has become intrinsic part of its activities that deliver high standard of products and services to customers at large, meeting and satisfying their changing preferences. Juran (2000) believes that all quality improvement takes place on a project-by-project basis. It therefore requires development of system that is well documented and information disseminated to all stakeholders for transparency. The quality assurance standards are followed globally and help to identify the issues and elements that impact efficiency and quality of product. Nokia uses integrated approach with focus on speed and flexibility in its development process of new products so that they are able to constantly keep up with changes. Improvement initiatives of businesses are key factors that are responsible for businesses to not only evolve new tools of quality control but also to expand across globe. They develop new mechanisms of improvement and use tools that enhance efficiency and quality. Mannan and Ferdousi (2007:2) proclaim that key to competing in the international market place is to simultaneously improve both quality and productivity on continual basis. The integration of various elements and business processes like TQM, benchmarking, six sigma, quality assurances standards etc. contribute towards optimal performance. Nokia’s quality assurance standards at various levels of business processes are designed to provide it with sustainable success over a long period of time. 5. Conclusion Kotler & Keller (2007) affirm that in competitive business environment firms must be innovative and service oriented. Nokia was able to align its strategic action plans with its business goals to succeed in the highly competitive market. It divested its many business interests to focus on the digital wireless telecommunication which was its core competency. The market has increasingly become need driven and business strategies are evolved to meet their challenges. Indeed, understanding consumer psychology and correlating it with the products has become critical part the emerging new market environment. With its unique approach to creative input within its business goals and vision, Nokia was able to exploit its early knowledge to penetrate new markets geographical boundaries. It promotes dynamic business strategies that continuously strive to identify critical factors and innovate to meet their challenges. It has truly proved its global leadership in mobile communication by creating a niche position in the global market in the relatively short time. (words: 2262) Reference Fuller, D.A., Ottman, J.A. (2004) ‘Moderating unintended pollution: the role of sustainable product design’. Journal of Business Research. Juran, Joseph M. (2000) Juran’s Quality Handbook, McGraw-Hill. Kay John. (1995) Foundation of corporate Success, Oxford University Press. Kotler, Phillips and Keller, Kevin Lane. (2007) Marketing Management, Pearson Education Inc. Mannan, M.A., & Ferdousi, F. (2007) Essentials of Total Quality Management, The University Grants Commission of Bangladesh, Dhaka. Mintzberg, H. (1994) ‘The fall and rise of strategic planning’, Harvard Business Review, vol. 72, no. 1, pp. 107-114. Mullins, L. (2007) Management and Organizational Behaviour, 8th ed., FT/Prentice Hall. Nokia. Retrieved from: http://www.nokia.com/global/about-nokia/company/about-us/about-us/ Porter, M. 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