Assignment on Nokia - Essay Example

Assignment on Nokia Introduction Every organisation or company like individuals must have a distinct identity that makes them different from others. This is known as the corporate identity (Orriss-design, n.d.) It personifies an organisation which helps it achieve its goals. Although corporate identity is complex it helps the consumers to clearly recognise and distinguish between its competitors. The identity of a company is manifested by its branding. However having said so, corporate identity is not limited to branding. It has far wider implications in term of understanding how an image of a corporate is developed. It includes the values and objectives that are shared by the employees, the public relation that is maintained by the organisation and their way of interacting with the consumers. According to Gotsi and Wilson, 2001 there are two schools of thought. One that considers corporate identity and corporate reputation is the same thing, where as on the other hand the other school of thought believes corporate image and reputation have a common link. Herbig & Milewicz, 1995 on the other hand considered that in order to build a corporate reputation, identity as well as image is equally important. However Balmer and Seonen, 1997 developed a model for studying the corporate image of an organisation. The model is named as ACID Test Model. The model is a widely accepted one that helps a company understand the dynamics that are involved in creating corporate identity. Later on the model was modified and an advanced form of the model known as AC2ID Test. The improved version includes an extra ‘C’ as Conceived Identity along with the existent ‘C’ which represented Communicated Identity. Thus the improved version of the model (AC2ID Test) has been incorporated in the project. The Company that has been selected for the study is Nokia. The company is a worldwide leader in the communication industry that has made its presence felt globally. It has stamped its authority through the globe and created an everlasting image in the minds of its consumers. It is interesting to understand that how Nokia has understood and incorporated the various components of creating a unique identity that has made them surge ahead of the competitors. Since Nokia has lead from the front by creating its dominant corporate image, it makes the company an ideal choice for a case study. Company Overview The Finnish multinational, Nokia Corporation that is headquartered in Espoo, Finland came into existence in the year 1865, when its founder Fredrik Idestam founded the company. The company mainly focused in manufacturing of mobile devices. It catered to the large market segments including GSM, CDMA and W-CDMA. It also diversified itself into developing internet services and included features like music, maps, media and games in its mobile phones. (Moeder, n.d.). The company presently operates in more than 120 countries and its annual global revenue generated is close to € 50 billion in the year 2008. The company is undoubtedly the world’s largest mobile phones manufacturer with an overall market share of 38% in the Q2 of 2009.The Company has undergone a few conglomerate acquisitions in order to strengthen its foothold in the communication industry. The company acquired Sega in the year 2003, and merged with Siemens in 2005 and the latest being Navteq an US based supplier of digital mapping data in the year 2008 (Nokia, 2009). The motto of the company is “Connecting People” and it has been doing so since its inception. Being a market leader it has focused on developing its brand equity in order to maintain a distinct differentiation from its competitors. The corporate structure consists of three different groups Devices, Services and Markets. Three units are supported by Corporate Development Office that is responsible in evaluating strategic decisions regarding future growth prospect. Balmer’s AC2ID Test Model Dr. Balmer modified the initial ACID Test model by introducing an extra ‘C’ that is the conceived identity to give rise to the AC2ID model. The pentagon frame work of the model is based on ‘5 +10’ principle. The five identities namely, actual, communicated, conceived, ideal and desired have ten types of relationship between them. REDS approach is adopted in this model. The initial approach to ACID model and this differs in the only way that apart from revealing, examining, diagnosis an additional step of selecting a suitable strategy is added. The selection of the strategy is done after analysing the different identities and finding out the mismatch that exists between them and need to be rectified. The pentagonal structure has been broken down into two identity triangles. The first identity triangle identifies the relationship between actual, communicated and conceived, where as the second triangle studies the relationship between the actual, ideal and desired identity (Balmer, 2001). Figure 1: Balmer’s AC2ID Test Model (Source: Balmer & Stuart, 2004, pp 12) Actual Identity Actual identity of a firm is its organisational identity. It is determined by the overall business performance of the company. Attributes like the style of leadership, reputation of the organisation and ranges of products and services that are being offered by the firm play a role in developing the actual identity of the organisation. Apart from all these factors the actual identity of the firm is also shaped by the kind of corporate ownership, its activities that are being carried out, the history and its reputation and the type of organisational culture that is existent within the firm. The time frame of this kind of identity is present as because the identity that has been shaped by the company is existent in real time (Balmer, 2001). The most important factor that helps in creating the actual identity of an organisation is the values that are held by the management and employees of the company, the culture that is prevailing in the company. The culture of an organisation may consist of a number of subcultures which collectively determine the culture of an organisation. The employees make up the internal part of the organisation, also the stake holders, partners and alliances those were considered outsiders have a role to play in building the actual identity of an organisation . (Balmer & Stuart, 2004). In case of Nokia the actual identity of the company is determined by the overall business performance of the company. The fact that the company has its presence in 120 countries and in terms of market share it has a major pie of around 38%, gives the company its actual identity (Nokia, 2009). It is a flat and well network organization which makes decision making faster and flexible. The company has named its management and leadership approached as the Nokia Way, which is unique in its own way. It has a straight forward way of dealing with its customers and suppliers and has adopted innovative ways to create products and solutions for the market (Nokia, n.d.). Communicated Identity The communicated identity is the image that the company creates through communicating the message of the company. Communication can be controllable as well as non controllable. Communication can be controlled through advertisements and promotional campaigns. Maintaining a healthy public relation and sponsoring are also a part of the controllable communication. The part of the communication that is not under the control is determined on how a product performs in the market, behaviour of the organisation, the views and the opinion that others have about the company. This may be the opinion of the media or its competitors. In the words of Balmer it is known as ‘Total Corporate Communication’. The total corporate communication consists of three main parts, primary, secondary and tertiary. Primary communication is determined by the organisation’s behaviour and the products and services that are available. Secondary communication is communicated through advertisements, PR and the different channels that are selected for communication. Tertiary communication is controlled through word of mouth. The time frame involved in primary communication is present that of secondary is past, present as well as future whereas for tertiary it is past and present (Balmer, 2001). Communication or so called promotion is an important ingredient of marketing. Nokia for example has been able to communicate the message that the company stands for. With its motto of ‘Connecting people’ it has succeeded in successfully communicating the message across to its consumers. Conceived Identity Conceived idea refers to the perception that exists in the mind of the customers. There are three broad perspectives to a conceived idea. They are corporate reputation, corporate image and corporate branding. These factors play a role on what the conceived identity of an organisation will be. A corporate identity is referred to the perception that individuals can instantly recall about the organisation. It is the image that is conceived in the mind of the customers and they immediately recall it on coming across the name of the company. Corporate reputation is developed over a period of time. The conceived identity is related to the communicated identity as because the former is created as a result of what is communicated to the customers. It is a result of Total Corporate Communication. Corporate brand refers to the expectations that are prevailing in the minds of the stakeholders as well as the consumers. It refers to the promises or a type of informal agreement that have been made by the company in order to fulfill the expectations of consumers and the stake holders (Handelman, 2006). Ideal Identity Ideal identity of a corporate is totally a conceptual identity. It refers to the identity that the company would ideally want to have in the industry. It depends upon the how managers are able to position their company in the market, what are the strategic plans that has been formulated in order to gain an upper hand in the market in a given period of time. The ideal identity of the company has a future time frame, meaning where by the company aims for achieving that identity in the near future. This can be done by analysing the environment and the corporate structure. Ideally the company would wants to build a reputation in the world of being a responsible corporate group that will not only connect the people across the globe but also try and provide solutions to the daily problems of the people. Desired Identity Often the managers and the strategic leaders have a preconceived identity in their mind that they want the company to have. This type of identity is known as the desired identity of the organisation. It is the vision that owners foresee in the future. It may be seen that often the vision that the managers hold may not be in alignment with the strategies of the company. Thus the decisions that are taken regarding implementation of the strategies mismatch with the objective of the company. It differs from the ideal identity in the way that ideal identity is arrived to after conducting some kind of research and analysis, where as desired identity is totally based upon individuals perception and personality with respect to the organisational goals in the present time frame. Figure 2: The ten interfaced of Dr Balmer’s AC2ID Test (Source: Balmer & Stuart, 2004, pp 13) Justification of the Model The model is well adopted in the industry. According to Balmer the model comes in handy to develop and implement a programmed in order to bring about changes in the identity. For companies like Nokia the model can be used as a tool in order to monitor the corporate identity and also evaluate the factors that govern the identity of an organisation. The mangers can use them to highlight the strengths and weaknesses of the different identities. The model is also useful in developing the relationship between the consultant and the organisation that is undergoing an identity check, as the companies can judge the ability of the consultant through this model. Analysis the Ten Environmental Factors (Red Process) The ten environmental factors that effects corporate identity of Nokia are as follows- 1. Acceleration of product life cycle 2. Deregulation 3. Privatisation process 4. Increased competition in the public and non-profit sector 5. Increased competition in the service sector 6. Globalisation and the establishment of free trade areas 7. Mergers, acquisitions, and divestment 8. Storage of high-caliber personnel 9. Public expectations for corporate social responsibility 10. Break down of boundaries between the internal and external aspects of organisations (pp 127) Acceleration of product life cycle - The electronic market is highly fluid as because the prevailing product gets replaced by other and it gets out-dated very soon. Nokia has identified this fact and tried to be ahead of market. Its brand name helps consumers to accept the product without uncertainty. Deregulation - Such an environmental factor help a firm to expand themselves and to enter into other markets, but many a time they left their public images blurred. Same case happened with Nokia in 1900s when they diversified themselves in an unorganised manner. Privatisation programmers - It has been noticed that in many countries like Poland and Europe privatisation in public utilities like gas, electricity, power, telecommunication and rail helped countries to enhance their economical growth rate. This leads to emergence of new firms which can make their own distinct corporate image. Nokia being a giant player in communication sector may face sharp competition from these firms. Increased competition in public and non-profit sectors - Competition is constantly increasing in public sector which has resulted into up-gradation. This is a growing challenge for privet sector organisations as because these public sectors receive certain special privilege from government. To handle such competition Nokia has introduced some rearrangements in their working patters so that they can overcome the growing pressure from public sector companies Increased competition in service sector - With the advancement in technological sector, communication sector has seen many new entrants. These entrants adopt different strategy to enter into market and to penetrate. But Nokia due to its strong brand image and high quality services can manage such competitions quite well. At present company is concentrating more on their core competency that is mobile manufacturing, but it also have existence in service sector like internet service which offers certain services to satisfying certain requirements of clients. So if Nokia has to go ahead, they have to set proper strategy beforehand penetrating deeper in these fields. Globalisation and free trade area - Globalisation and free trade has opened new doors to Nokia for entering unexplored markets. As per WTO, all third world countries have to remove trade barriers to allow foreign companies to enter. Hence Nokia has better chances to expand its market . Shortage of high caliber personnel - It is quite crucial for a company to attract and retain skilled and motivated people. Nokia is regarded as best employer, thus due to its strong brand image and well planned human resource management strategies, it is able attracts and retain quality people. Blurring of boundaries between organisation and between stakeholders - Today companies consider their suppliers, consultants, franchisee partners and even joint venture partners an important driver of their growth. Nokia has understood the importance of stockholders and have taken different measures so that they can participate in major decision making process of organisation. After analysing these ten environmental farces, RED test on Nokia was carried out. Strategy selection (find out the misalignment) Initially there were a few models existing for identifying the corporate identity. These models adopted a vision driven approach, however there was not sufficient literature to explain these theories. It was however followed by all consultants when companies approached them to evaluate their corporate image and help them to develop it further. In recent studies a holistic approach to corporate identity was adopted. It involved the complexities and the multi dimensional factors that influenced a corporate image. The traditional belief was of the view that the corporate image depended upon the reality and perception, whereas according to the modern theory the corporate image was a result of interaction between the vision and the communication of the company (Abratt, 1989). The most effective means of communication is through visual means. Balmer identified three characteristic related to corporate identity. Due to the incorporation of various factors in determining the corporate identity it is complicated. Since there are four different types of identities each have their own time frame, this makes it variable. Lastly the presence of a corporate identity mix makes it heterogeneous. The ACID Test of corporate identity management was developed by Balmer and Soenen in 1999. The Actual Identity, Communicated Identity, Ideal Identity and Desired Identity are the four major types of identities that are abbreviated as the ACID test Model. The model was originally known as RED ACID test, which is based on ‘4 + 6’ principle. Consultants those who adopt this model should evaluate the four types of identities and the six types of relations that exist between the identities in order to conclude on the corporate identity. The ‘RED’ is the three steps through which the ACID test can be approached. The first step ‘R’ is to reveal the four types of identity that has been discussed previously. ‘E’ is the step where the six types of interfaces are examined last step is to carry out a diagnosis of the situation in order to evaluate the corporate identity. For carrying out RED Process Test of Nokia, the four characteristics had been segregated and analysed as follows: Actual Identity- In the context of Nokia the actual identity of Nokia is said to be a massive one. Since its inception in the late nineteenth century the company has strongly but steadily build its enormous reputation. In building its actual identity the company has differentiated itself from its competitors by way of its values. Nokia has identified its values as in four ways by engaging its employees, stakeholders and customers by achieving customer satisfaction that it has been known for. The company believes in achieving it goals through a combined effort, thus encouraging the participation of its partners. In the process trust is developed within the organisation and its employees. The company has a formal as well as informal environment. It believes that the passion for innovation can create the desire of thinking beyond imaginations and achieving it. By doing so the company thinks that it can take the technological leap forward. The company believes to be human in their approach, meaning that it takes adequate steps to make sure that the customers are satisfied. The idea is to keep things simple at the same time the adequate measures are taken to care and respects its employees and build a company that is human in its approach. As it had been discussed that the most important thing of actual identity is the dependent on the values held by the employees, Nokia has been very successful in creating its actual image (Nokia, n.d.). Communicated Identity- Nokia in the year 2004 launched the ITV’s biggest star search X-Factor. This was launched keeping in mind to increase the brand communication of the company. The show was one of the biggest in the television with around 10 million viewers watching the show every week. This huge campaign gave a large market exposure. The campaign bought out the fact that a 360 degree programme vehicle gave Nokia a huge breadth of the market to which it can communicate. In the beginning of 2004 the company lacked awareness in the UK market. The managers were on the lookout for an opportunity to place Nokia back in to the market, and X Factor was the right moment. Through the campaign the company was able to achieve an awareness of 59% from 49%. It helped the company to enhance its image and communicate the message that they were innovators (Think box, 2008). Thus through the communicated identity Nokia was able to remap itself in the market. Taking the case study of Nokia’s X Factor sponsorship it is evident that the company wanted to enhance its reputation in the UK market. The link between the communicated identity and the conceived identity helps us to understand that what were the pre and the post sponsorship effect. After the programme ended Nokia was among the top 5 sponsors in the TV. In terms of spontaneous awareness the respondents almost triple from 5% to 18%, Where as the prompt awareness which was about 49% before the show increased to 59% after the final broadcast. 61% of the viewers believed that Nokia was the appropriate sponsor of the programme. By the end of October 2004 Nokia’s campaign had boosted its sales. Sales of specific models like 5140 had almost doubled and that of 7610 went up by 30%. The company achieved 30% more sale than what it had predicted. These are the evidences of the company being successful in communicating an image that was conceived pretty well by the UK market. Ideal Identity- Nokia’s Corporate Business Development is responsible for analysing the strategic growth areas. Its main aim is to come up with innovative ideas that would help them to expand its core business. The unit is responsible for identifying potentials that will provide a long term growth for the company. After they have identified and evaluated the long term growth potential the company moves forward in order to collaborate or set up new joint ventures or acquire or merge with others. The company ideally should keep on upgrading its ideal identity in order to move ahead. For example the company underwent various acquisitions through out its lifecycle in order to keep itself ahead of the market. In 2003 the company acquired Sega.com which used to develop software for particular model. The company merged with Seimens AG to create the largest network company. Its latest acquisition came in 2008 when it acquired Navteq which provided data for their digital mapping. Desired Identity- In the case of Nokia it has a vision of creating a world where everyone is connected. This is the desired identity that it wishes to achieve in the near future. They are very close in achieving their vision as the mobile subscriptions are about to reach 4 billion. This was thought to be unachievable few years back. As the company expands it wishes to be more and more responsible. In order to be a responsible corporate body the company has its focus on corporate social responsibility. They wish to make corporate responsibility an integral part of their identity. The numerous global challenges that are faced by people, Nokia constantly strive to affects these billions of lives across the world. Through their mobile technology they wish to provide a solution to these challenges that would reflect their values and responsibilities. Thus according to Balmer the desired identity of a company will pave its way in attaining the future goals and objectives. The company can shorten the gap between the desired and the actual identity only after determining and evaluating the relationship between the identities (Nokia, n.d.). The six relations who exist between these four characters, on through analysis indicated that Nokia has managed to retain a healthy balance between all its characters. But there exist misalignment in between ideal identity and desired identity. Nokia’s slogan is “connecting people”, thus it indicates that ideally company want to make themselves identified as the best and number one company in mobile manufacturing and in telecommunication sector. But on the contrary company is trying to expand its presence in service sector also. Such activities of management are against company’s ideal image. In present world where all big economies are suffering from global slowdown, Nokia should not follow such diversionary strategy because risk related to it will be high. Undertaking its present brand image and condition of the world economy, Nokia should stick to its core competency and should focus on those areas which are already profit making and have further growth capabilities. To overcome misalignment, Nokia should establish correlation between its ideal identity and desired identity. Hence it can be concluded that this is not the time to adopt diversification strategy rather at present Nokia should enhance itself its core competency and should focus on its profit making segment, that it mobile manufacturing and telecommunication sector. Conclusion Although the company is today the largest telecommunication company, the journey of Nokia has not been a smooth one. During the 1980s the company had ventured out in quite a few businesses by acquiring. These turned out to be unsuccessful and the company reported huge losses. The company ventured out into television manufacturing and far too diversified businesses. Ideally what the company identified its ideal image to be did not align with the desired identity that its managers saw. Eventually the company during 1990s under the leadership of Jorma Ollila recovered. He took a drastic step in divesting the company from unproductive business by aligning the ideal and the desired goals. The company focussed on telecommunication business which was its synergy. Since then the company had tasted success in every field that it had ventured. .Perhaps it can be said that the company’s ideal and the desired goals was misaligned as a result it could not be successful. Thus Nokia from its personal experience learned that how important is it to align the relationships between the five different identities in order to build a successful corporate image. It is also an appropriate case study for any struggling business to identify the misalignments in their identities. References Abratt, R., 1989. A new approach to the corporate image management process. 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