Same was the case with Nokia, it had to determine a particular line of business to choose and divest the rest. He declared the strategic intent of Nokia as "focused, grouped, telecom-oriented and value-added." One of the key reasons for the success was the remarkable team work of five main figures of the organization, under the dynamic leadership of Ollila. As the time passed and the group progressed, a number of other strategic changes also took place; such as, the injection of US capital in the organization, the global expansion, the product-specific strategies. Setting own standards (WAP), Nokia Venture Organization, fact-based management etc.
Happiness comes never alone; it does bring some undesirable consequences as well, either in the long run or in the short run. Same is the case with Nokia; there are a number of facts which are influencing the current problems. Some of the problems faced by the Nokia group, along with their background facts are as follows.
Currently, the growth rate for Nokia is 25-35 percent. Nokia was looking as a prospect of one hundred thousand employees round the world. This desire was deeply rooted in the history of the performance of Nokia. Nokia wanted to be the market leader at worldwide level. It was not possible by limiting its operations only in the Finland only. As a result, implementing the word global of the strategic intent, it started to expand beyond the borders of Finland. At that time, this strategy had a positive impact. It was so, on the basis of the fact that this expansion brought the presence of Nokia in new markets, thus it resulted in increase in sales and consequently, increase in the market share. This increase in market share was well reflected in the performance of Nokia in the initial years of 1990's. However, now further expansion would have proved to be costly in many regards. It would have been costly not only in monetary terms, but in terms of other aspects as well. The main cost in that regard would be the diseconomies of scale in terms of management resources. The more the company was expanding; it was loosing the central values, which were the reason of success in the past. Moreover, the unity of organizational culture was being lost.
Another challenge faced by the Nokia group now was the pressure of market forces to lower the prices. Initially, when the technology was new, the competitors were few, the prices for the mobile phones were high. Thus, it was possible to have high margins. But now all the mobile phone companies were being squeezed from the two sides. On one hand, the global price war is being in the process forcing the mobile phone companies to lower the prices. On the other hand, the more fierce competition is to attract the fresh talent. All the companies, especially the mobile phone companies require the talented young blood to work for their company and make strategies to respond to the dynamic environment. Thus, all the companies are offering the higher salaries and other financial incentives to attract those dynamic managers. As a result of this tug of war, the companies are on one hand pressurized to lower the prices, while on the other hand, they are bound to offer high salaries to retain their knowledge asset (human resource), this has become a real challenge for Nokia as well in current