Nokia Case Study Analysis Recommended Solutions
As Sam and Todd have discussed the underlying cause for the need to relocate the manufacturingoperations of Bochum to Romania was due to cost pressures; as a result of rising cost levels, decliningprices and high competition; low-cost manufacturing had become a necessity. These pressures arisedue to;
The predicted slowdown in growth from 2008 onwards (did the telecommunications industrypredict the GFC?),
The change in market expectations being increased demand for cheaper phone models(growing market for $10-25 phones),
merging markets dominated sales revenue (China and India).We know now that as a result of what I have discussed, Nokias decision was to relocate itsmanufacturing plant in Bochum to Romania. This relocation was not uncommon within themanufacturing industry (Siemens, Volkswagen and Opel) nor to Nokia, who already had othermanufacturing plants within Brazil, Mexico, India, South Korea and 2 in China. The movement was madefeasible as apart from low wages, investors were lured there (CC
countries) by high productivity andsimple taxes.Our team believes (along with most of Bochum) that Nokia failed in its decision to move to Romania,particularly due to;
Its lack of transparency with regard to the companies decision making process,
The companys inability to reach out to social partners within Germany, such as the employeeunions, government and local politicians. This was common place when a business wasstruggling within Germany (cultural differences?),
ack of knowledge regarding the cultural differences which existed between Nokias homecountry (Finland) and the German community of Bochum,
Nokias uncompromising stance on its decision to shut down the Bochum plant; (Nokia) wouldadopt the same strategy if such a situation arose again as the company stated that Germanbusiness practices did not fit with Nokias way of doing business,
Its a cultural issue; we dont normally do it like that in Finland.
When analyzing the possible solutions to the problems faced by Nokia and its stakeholders,management should adopt a
whereby they acknowledge that there is no singlebest way to solve a problem, and as such are open to more holistic approaches to solving theseproblems. Nokia presumably took a
to their decision will it work and save usmoney? Rather than taking more of a
moral idealism approach
looking into the ethics and social sideof such a decision.
Case | HBS Case Collection | January 2014 (Revised April 2017)
The Rise and Fall of Nokia
by Juan Alcacer, Tarun Khanna and Christine Snively
In 2013, Nokia sold its Device and Services business to Microsoft for €5.4 billion. For decades Nokia had led the telecommunications (telecom) industry in handsets and networking. By the late 2000s, however, Nokia's position as market leader in mobile devices was threatened by competition from new lower-cost Asian manufacturers. Apple's 2007 release of its iPhone established an entire new category—the smartphone—immediately popular with users. What were Nokia's missteps over the years? What should Nokia have done differently?
Keywords: Mobile phones; smartphone; telecommunications; wireless technology; emerging market; Technological Innovation; Competition; Emerging Markets; Mobile Technology; Wireless Technology; Telecommunications Industry; Asia;