Nokia's Performance in the Context of International Management Principles and Theories - Example

Nokia Management Analysis Report Prepared By: Table of Contents Executive Summary...........................................................................................i Business Summary 3 1.1 Business Overview 3 1.2 Product/Service Features 5 1.3 Management Analysis 6 1.4 Management Issues 8 1.5 Business Structure & Culture 15 1.6 Management & Ownership 16 1.7 Key Objectives 18 Suggested Actions 18 1.8 Key Recommendation 1 18 1.9 Key Recommendation 2 19 References 22 Appendix B 23 Executive Summary This report assesses Nokia’s recent performance and the degree to which it is addressing various management issues that it faces. The report identifies the current challenges faced by Nokia. The report notes that Nokia’s performance trends show inconsistency in sales and seasonal fluctuations in profitability. The report also analyses the business operations, products and a service offered, and identifies management and the management issues that are faced by the Company and which can be effectively addressed by application of various International Management Principles and theories. The report notes that reliance on a few lines of products for its profitability, declining profitability, and undertaking successful expansion constitutes the three main challenges that are faced by the company. The report further analyses the business culture and structure, management and ownership and uses these aspects of the management to provide recommendations to the management on the best approach to address the challenges. Among the recommendations include expansion of the lines of products to reduce reliance on a few income streams thereby reducing risks, selling or divesting from loss making and less profitable products and services, pursuing suitable expansion strategies through various options such as mergers and acquisitions that would provide the company with new product lines or lead to improvements in the firms profitability in the long run and improvements in leadership involving adapting suitable management models for the type of organization. Business Summary 1.1 Business Overview After divesting from the handset device manufacturing to Microsoft, which was completed on 25 of April 2014 under an arrangement that required Nokia not to participate in handset manufacturing until 2016, the company reorganized coming up with three businesses which include: Nokia networks - Provides mobile connectivity infrastructure and services. The products are sold to telecommunication companies such as mobile providers. Consists of two segments – global services and mobile broadband (Nokia, 2014b). The company provides networking infrastructure to mobile operators. HERE - a mapping and location intelligence. The mapping and intelligence system is sold to diverse individuals including car manufacturers, tracking companies, among other buyers (Nokia, 2014c). Nokia technologies - the engine for Nokias future innovation and licensing. Consists of IP Portfolio of over 10,000 patent families and 30000 individual patent and applications for patents (Nokia, 2014d). Nokia has grown from one of the largest mobile phone makers before exiting from the manufacturing of handsets to concentrate on the three business areas. The company’s has concentrated its resources in the telecommunication infrastructure through its Nokia Networks, which provides mobile connectivity infrastructure and services and HERE, which is mapping location intelligence. The company’s Nokia Technologies, which is the engine for Nokias future innovation and licensing, has experienced mixed success in the industry as evidenced by unsatisfactory profitability and low sales in some of its services. The company is also faced with the major expansion decision including the proposed Alcatel-Lucent integration deal. Faced with these issues, the company‘s management needs to identify the best approaches. Nokia’s main competencies include its organizational culture (Nokia, 2014a) and investment in research and development (Nokia, 2014a). Nokia’s organizational culture has included being open to employee suggestion for new products and services leading to industry innovations. By this they create room for continuous learning and also an easy way to get feedback from the employees. Nokia employs 51,750 people and over one third of these people is made up of research and development (Nokia, 2014a). It employs approximately 1000 new people in research and development each year. By doing this they are able to acquire people with new skills and also enable them to create a trusted consumer relationship. The business has also differentiated itself by its ability to innovate, which is reflected in various products such as Nokia HERE (Nokia, 2015). The company is set above competitors by among other factors the brand name recognition, history in the telecommunication industry as an equipment manufacturer and handset reseller, better products and services compared to competitors. The business is likely to increase its profitability within the next five years (Nokia, 2014a). Various products and services that are set to be introduced are likely to lead to improvements in profits, reduce reliance on profitability to a few products and services and thereby cushioning the company from declining sales in some of the product categories. The expected merger between Alcatel Lucent and Nokia is likely to lead to creation of the second largest infrastructure manufacturer in the telecommunications industry (Fitchard, 2015). The synergies from the merger and the size of the company will enable Nokia to compete more effectively in the telecommunication market. The merger will also help Nokia to effectively enter into the U.S. market, which is one of the largest market for infrastructure development and where it has not been as successful in the past. The merger is further anticipated to aid Nokia in its quest to re-enter the handset manufacturing by introducing new phones, which is in line with its capabilities. Adopting a suitable model will see the firm acquire some of the market share from the dominant companies. 1.2 Product/Service Features Nokia Networks - Provides mobile connectivity infrastructure and services. Includes LTE technologies, networking technologies and radio technologies. Also includes global services that include systems integration, which is experienced growth (Nokia Corporation, 2015). The products are sold to telecommunication companies such as mobile providers. The company has experienced decline in the sales of mature radio technologies coupled with increase in sales of core networking and LTE (Nokia, 2015). HERE - a mapping and location intelligence (Nokia Corporation, 2015). The mapping and intelligence system is sold to diverse individuals including car manufacturers, tracking companies, among other buyers. The maps are licensed for use and this are then embedded in navigation systems. In Q4 of 2014, the system was embedded on 3.9 million new vehicles, which marked an increase in licensing of the technology from 3.2 million over a similar period in 2013 (Nokia Corporation, 2015). Nokia technologies - the engine for Nokias future innovation and licensing. Under the Nokia technologies, Microsoft was a major licences and sale of Nokia Devices and Service. The company also has other licensees that have experienced positive sales growth in the past year. This is evident in 23 percent year-on-year growth in sales in 2014 (Nokia, 2015). Company has patent licensing cases and has seen its operating expenses under the Nokia technologies increase eating into the company’s profits (Nokia Corporation, 2015). 1.3 Management Analysis In order to identify the issues that are faced by the organization and to determine the appropriate strategies, various methods have been used. First, information was obtained from various company reports, industry reports, major newspaper articles and relevant articles filed with varied authorities such as Securities and Exchange Commission. Various databases on business related subjects on the company have also been used. In order to identify management issues, which are focus of the report, the same sources have helped to identify challenges that the organizations has experienced in regard to aspects such as organization, HRM, leadership, product and services, management structure among other relevant areas for analysis. The sources are suitable since they are from recognized and respectable organizations thus making the information reliable for use. SCOPE The limitations of the study include the fact that it was not possible to articulate all the forces that may have shaped the decision by the organizations. The information obtained from diverse sources may therefore not provide the full picture of the exact situation that was faced by the management in making decisions. It is also not possible to cover all the areas that may have influenced the decision of management or that may likely influence the performance of the organizations. Lack of access to all the necessary information may also influence the analysis. These limitations may limit the proposed solutions. 1.4 Management Issues Initially Nokia was the world’s dominant and pace setting mobile phone maker. It was an adoptive company which moved in and out of different ventures such as paper, electricity and rubber galoshes. In the early nineties, Nokia came up with its first smart phone thus proving that it was not a technological laggard. It used much time and resources on research and development but it could not translate the research and development in the products that people actually wanted to buy in the period before it sold off its handset and devices division. Nokia Phone Company collapsed due to a number of factors which included the pervasive bureaucracy by the management which led to its inability to act. There was also internal competition among the firms’ different units. Nokia failed to recognize the importance of lifestyle products such as the Iphone. It was unable to innovate due to the incompetence of the middle management who hampered these attempts despite its significant investment in research and development. When the competitors came up with the smart phones; Nokia did not have a firm ground to stand in the competitive market. The attempt of Nokia to move out hardware and to venture into services also led to its failure in the devices sector (Nokia, 2013). The divestment from the handset device industry, which was previously its largest source of revenue has lead to the need of the organization to identify alternative income streams with the three main product categories contributing in one way or another to the company performance. The company is faced by certain issues A. The first issue that the company faces is negative net profitability. Whereas some of the company’s products are profitable, others such as the mature radio technologies are experiencing a decline (Nokia, 2015). The company relies on a few lines of products that are profitable with other products resulting to losses (Nokia, 2015). B. The second issue is the role of the organization structure and culture in the effective management of the company and how this may be changed to make the company more effective. First of all there was a bureaucratic system in the organization. This led to the company underestimating new capabilities required, when the Samsung and apple companies came up with the Iphone. Nokia did not see that as a threat but that is one of the many factors that led to its fall. Due to the change in culture, people were able to move to the use of Iphones and thus giving the apple and Samsung companies a better bargaining ground. The Nokia organization was focused on more of its functional structure; this was to enable the organization to have a better coordination between the different departments and also to focus its major functions. The limitation of adopting this structure is that the employees focused on their functional area and are less engaged with the firm as a whole (Bruton, G., Ahlstrom, D. 2010). This is seen where the company has the best hardware but pays less attention to the software of their product. C. Although the company is a global company, it has not successfully penetrated other markets such as the United States especially in provision of infrastructure (Nokia, 2015). Successful expansion into other markets is therefore another challenge that is faced by the company. Nokia is a weak player in the Network market in the North America market and thus the company should devise a suitable strategy to expand into the market. Currently, the proposal for a merger between Nokia and Alcatel Lucent is a major expansion strategy and ensuring that the merger succeeds is of significance importance to Nokia in expanding its footprint in other markets (Fitchard, 2015). There is complimentary fit in geographical markets and the products served by the company. The fact that the two companies hold smaller shares of the Network markets is an indication that combining is expected to lead to a bigger market share that would enable the company to effectively invest in research and development and to compete against Ericsson, which is its major competitor. However, already certain issues have emerged over the merger that raises threats over whether it will succeed. The announcement by the company that the merger was to proceed lead to a drop in the share prices of the respective companies (Kelleher, 2015). Among the major issues is the integration of the sales, managerial ranks and engineering, which often takes years to complete and often contributes to layoff. The company thus is faced with the issue of determining how best to manage the organization after the merger, Other issues Various tools are crucial in identifying issues at Nokia. Using the P.E.S.T.L.E analysis framework, ways that Nokia adopts to environmental factors that may interfere with its competitiveness can be identified. PESTLE identifies ways in which the different environments that an organization might expose it to risk. P.E.S.T.L.E represents political, economic, social, technical and legal environments that an organization faces (Bruton, G., Ahlstrom, D. 2010). Nokia faces three types of environments and they include the social, technical and economic risks. In the social environment, due to the changing needs of the people, they were able to buy the smart phones and the I phone that were produced by the Samsung and the apple companies. Nokia failed to produce phones that met the changing needs of people and this led to a fall in the sales. At that time the needs of the people changed from the traditional feature phones to smart phones. The failure of Nokia to act fast and produce smart phones made it face major competition from the Samsung and the Apple companies. In the technical environment, the Samsung and apple were able to come up with better products which had the latest technology unlike Nokia. Nokia lagged behind and was not able to compete with these two companies with their unique products. This also led to a drop in sales. The economic environment is based on prices established between the buyers and the sellers. The slow reactions suggests that the company need to come up with approaches to adequately address competitive forces. Based on the different type of structures that are described (Bruton, G., Ahlstrom, D. 2010.), Nokia used a simple type of organization structure. This is where the CEO runs everything in the business and everything that was done in the business was coordinated by him/her. Being that Nokia is an international company, having a simple structure hinders its growth. This is because the CEO would not be able to coordinate all the major elements within the firm that made it grow. Based on SWOT analysis an organization should analyse its strengths, weaknesses, opportunities and threats (Bruton, G., Ahlstrom, D. 2010). Nokia had its strengths in that it had a good brand name, the Nokia brand with a motto ’connecting people’ is known for its durability, reliability and the creativity that it provides. It was also the best hardware manufacturing firm and Nokia products are easy to use. The weaknesses that Nokia had are that their products were highly priced and thus making them unaffordable to the lower and middle class earners. Nokia also was not able to adapt to the changing market where Samsung and Apple came up with the I phone and the Android devices. (Nokia 2014). Due to the delay by Nokia to come up with such products they lost their huge market share. These led to a drop in the overall sales and thus making huge losses. Nokia also faced a slump in its development due to the stiff competition. According to the risk management concept, a firm should use the following risk management process so as to handle the risks facing them. First, the firm should identify the risks they are facing and come up with list of the possible risk. They can do these through brainstorming. In the case of Nokia , the firm has not been able to adequately identify and address the different risks that they are facing. These risks include: foreign exchange risk- this is where Nokia operates on a global market and therefore it is exposed to foreign currency dominated cash flows. Interest rate risk is another type of risk that faces Nokia; this is due to the market fluctuations which will affect interest- bearing assets and liabilities. Nokia also faces financial credit risks and liquidity risk. Secondly, they should carry out a risk an assessment so as to know the probability of a risk occurring and the effects of its occurrence to the firm. Thirdly, they should have a risk mitigation plan where they will be able to come up with a way of reducing the risk. This can be done through risk avoidance, risk sharing, risk reduction or risk transfer. The firm should come up with a contingency plan; this is an alternative method that would be used if an anticipated risk occurs. Fourthly the firm should come up with a way in which they will respond to risk, they should observe and change plans for new risks. Nokia should focus on the risks that would make it not achieve its objectives. It covers all the areas that would face risk and these include, strategic- this include staff retention, new projects, staffing skills and reputation (Bruton, G., Ahlstrom, D. 2010). Financial risks include funding models, cash flow, fraud and procurement, and operational risks include security, employee turnover and insurance (Nokia 2008). According to board of directors, risk management should be incorporated into the business processes. It is the responsibility of all Nokia employees to ensure that they identify the risks that would make them not achieve their objective. Various risks associated with the intended merger should be identified and steps taken to mitigate the risks through the identified strategies. Other initiatives such as the proposed re-entry into the phone market should also take consideration of the risks in setting up factories considering the huge costs that the firm incurred leading to its closure of the device business (Gibbs, 2015). Risk transfer may be possible, for instance, where the company may opt to produce the new phones under licensing with Nokia designing the phones. This will reduce the cost of the new investment and thereby enhancing its potential to contribute to the firm’s profitability. Nokia being a worldwide company would face risk in the international environment. These risks include the political and the financial risk. Political risks include war, political instability and potential nationalization of firms’ resources. The economic risks include fluctuation in the currency, change in wage rates, unemployment and the complexity in implementing property rights. In 2014, Nokia Networks assembled the operations of its customers according to three geographical locations: Asia, Middle East and Africa; Europe and Latin America; and North America. These were further divided into regions containing sales, business and delivery teams (Nokia, 2015). It aims at implementing a new structure in sales team, by bringing the three markets together form one global sales organization .through this Nokia will gain some more speed and it will provide an easier way of dealing with the requirements of their customers and thus maintaining good relationships. The report focuses on the three main issues including how the firm can successful expand its range of products to reduce overreliance on limited income streams, how the firm can expand Detailed Evidence 1.5 Business Structure & Culture An organization structure is how the different sections of a business are organized from the top to the bottom and the level in which decisions are made within the organization. A good organizational structure helps the firm to grow. In the case of Nokia phone company which is an international firm, there should be an administrative component to enable it to have a good plan, better coordination of activities within the firm and also better training of employees due to the current changing trends in the economy. Nokia has a simple type of structure where it is headed by the CEO though whom all the activities are coordinated. The CEO monitors all the actions within the organization and ensures that the organization achieves its goals. This type of organization is somehow challenging as the CEO cannot fully focus on all the key activities of the company. Nokia is a worldwide company and therefore is should adapt a strategic business unit. This will help the firm to develop the necessary skills for its business and in case of change in product taste and preference by the customers then they will be able to come up with better products to suit the customers need. Nokias’ organization structure is made up of the CEO, at the overall management. This is followed by sales and marketing, operations, design and office of the chief technology officer as the second to the top management. There is a separation of units at the top management level that is the’ smart phones’ and the ‘smart devices’. Nokia has a culture in which it provides a great working place for its employees based on trust, respect, honesty and openness. It focuses on the well being of there employees so as to ensure that there is team work (Nokia, 2014). The managers ensure that this is done through ensuring that there are regular changes in job, fitness and well being days and also they provide conference where much training is done to the employees. It emphasizes that its employees should understand and work towards this. The culture of nokia is based on core company values which include; respect, renewal, achievement and challenge. nokia is a registered trademark of nokia corporation, it is a public company under the industry of Telecommunications equipment computer software, it is traded as OMX:NOK1V and NYSE:NOK and its website is Nokia. Invent With Nokia is an intellectual property and it receives inventions from non-Nokia employees 1.6 Management & Ownership Nokia has a tough and knowledgeable leadership panel that brings experience from all departments in the organization. The CEO of nokia is Rajeev Suri, he was the CEO of Nokia solutions and networks since 2009. He held up various positions in Nokia since 1995. He is a leader who is passionate in value creation, growth generation and brings technology that has a positive impact on the lives of people. He was appointed as the CEO when Microsoft Mobile bought Nokia’s phone division in . He is followed by an assistant who is the executive vice president and the group chief officer. He is known as Timo Ihamuotila and he has a range of responsibilities in the organization which include sales, risk management and corporate finance. Nokia’s operations are managed under the direction of board of directors, within the framework set by the Finnish Limited Liability Companies Act and Nokia’s Articles of Association as well as any complementary rules of procedure. The board of directors have various responsibilities which include the power to appoint independent legal, financial or any other advisor, they oversee the composition of the top administration, and they are also the ones in charge of assigning and ejecting the president and members of group leadership team. During an annual general meeting, the following nine members were elected as board of directors: Samih Elhage-executive vice president and chief financial and operating officer of nokia networks, Seam Fernback-president HERE, Ramzi Haiamus- president nokia technologies, Ashish Chowdhary-executive vice president and chief business officer nokia networks, Igor Leprince- executive vice president global services nokia networks, Mark Rouanne- executive vice president mobile broadband nokia networks, Hans –jurgen Bill- executive vice president human resources, Barry French- executive vice president marketing and corporate affairs, Maria Varsellona- executive vice president and chief legal officer. 1.7 Key Objectives The key objectives for Nokia are to develop their three businesses which include, HERE, Nokia networks and Nokia technologies. This is to ensure that they achieve their vision of being a leader in the programmable world, be the best in technology and also build a lasting investor worth (Nokia, 2015). They aim at increasing profitability and the growth rate of their product. It also aims at becoming the no 1 electronic company worldwide and to create good relationship with the public. Nokia has core values which govern them and they include Respect, Achievement, challenge and Renewal. Suggested Actions 1.8 Key Recommendation 1 Key recommendation 1 Nokia should diversify in its products range to avoid overreliance on few product lines thereby reducing the risk from underperformance of a given product line. This will also help the organization to increase its market size and hence an increase in sales and profitability. Through diversification the company will be able to achieve synergies; this will help by exploiting the resources available and also to aid exploit core competencies in new markets. It will also help the company to smoothen out cash flow variations and also reduce vulnerability (Bruton, G., Ahlstrom, D. 2010). One of the suitable approaches is to continue with the planned merger between Nokia and Alcatel Lucent (Gibbs, 2015). The proposed merger will help Nokia acquire additional market share in the North America market, where the company’s performance has not been very good. The company stands to gain synergies from the deal (Fitchard, 2015). Through the deal, the company will achieve geographical expansion. The expansion will help Nokia in introduction of new products and penetration of existing products within the market. 1.9 Key Recommendation 2 Nokia should have a leadership system in where the top positions are more diversified. The top positions should be with a firm decision making body unlike a single CEO who is the overall decision maker. Leaders should set high standards for performance; this is to ensure that they are able to get quick results from a highly motivated and competent team. Leaders should also coach their employees so as improve performance and also to increase long term strengths (Bruton, G., Ahlstrom, D. 2010). This will ensure that the organization has a competitive advantage and that it will remain strong and dominant in the market. In case of the change in products for instance the way in which Samsung and Apple were able to come up with the Iphone and the Android phones, Nokia should be able to adopt to change in production so that it fits in the competitive market. For Nokia to implement it has to be guided by the following rules. The employees should be made aware of why the change is necessary, the employees should the support the change, the units affected and those on top management should embrace the change and finally the plans to adopt the change should be followed. The managers should be able to identify any issues that could confront the firm. 1.15. Key Recommendation 3 Nokia should adapt an organizational structure that is multidivisional. This type of organizational structure will help the organization to operate more efficiently and thus more productivity. There will also be a decentralized type of decision making which allows the views of even lower subordinate staff to be considered. This will in turn create more openness within the organization and also increase creativity and thus coming up with better products (Bruton, G., Ahlstrom, D. 2010). Nokia should have a related diversification as it is involved in different countries within very different cultures. They should have a divisional structure so as to address each one. Nokia should adopt an organic structure; this structure is more flexible, innovative and is able to change with change in environment. In the case of Nokia where the main competitors are able to come up with better products and even new products such as the Iphone, it should embrace the organic structure as it is suitable for changing environment. This type of structure requires employees who are highly motivated and those that have more skills. For Nokia to effectively adopt the organic structure it should be a learning organization. Nokia spends much time and money on research and development, through which it is able to come up with better software of its products. For Nokia to be a learning organization, it should encourage team learning, create an understanding among the people, have a shared vision where every employee is motivated to work towards achieving it, have a common systems thinking and also allow personal mastery for individuals to become more motivated and better (Bruton, G., Ahlstrom, D. 2010). 1.16. Key Recommendation 4 Nokia should diversify its products range by investing in evaluation process to ensure success of its products. One of the biggest challenges faced by the company was failure by the middle level management to support new innovations leading to a lag in the company’s ability to adequately address new market challenges. In order to address the challenge and hence increase the product diversification, an evaluation process will help determine how the organization will achieve its goals and objectives. There should be control of activities within the organization to ensure that the goals are achieved. Nokia should adapt the following evaluation and control process to ensure that it achieves its set target: it should first establish the objectives that they want to achieve after a particular period of time, for instance if it decides to produce android phones after a certain period of time. It should then measure the performance to gauge whether it’s working towards achieving its objectives, for instance if it has fully utilized the resources that are needed to produce the android phones. It should then carry out a comparison between the performance and the set standards that is if they have achieved their objective which was to produce android phones and if they have not been able to produce them, they should take a corrective measure and see what went wrong. Through this process the company will be able to adopt change with the changing environment (Bruton, G., Ahlstrom, D. 2010). For an effective evaluation process, the firm should analyse its external environment, strategic environment and internal systems. The external environment is the firms’ competitiveness, and denotes, for instance, how competitive Nokia is compared to Samsung and Apple. Evaluation and control processes changes as the environment changes (Bruton, G., Ahlstrom, D. 2010). References Bruton, G., Ahlstrom, D. 2010. International management: Strategy and culture in the merging world. Fitchard, Kevin, 2015. What’s at stake in the $16.6 billion Nokia-Alcatel Lucent deal? Fortune. Gibbs, S. (14 April, 2015). Nokia setting sights on Alcatel-Lucent. The Guardian. Kelleher, Kevin (20 Aoril, 2015). Why Nokia’s blockbuster merger turned into such a mess. Times Nokia (2015). Interim report for Q1 2015. Nokia Corporation. Nokia Corporation.. 2015. Nokia corporation report for Q4 2014 and full year 2014. Nokia (2014a). Nokia annual report 2014. Nokia Corporation. Nokia (2014b). Nokia Networks. Nokia Corporation. Retrieved from http://company.nokia.com/sites/default/files/download/nokia_uk_ar14_nokia_networks.pdf Nokia (2014c). Nokia HERE. Nokia Corporation. Retrieved from http://company.nokia.com/sites/default/files/download/nokia_uk_ar14_here.pdf Nokia (2014d). Nokia Technologies. Nokia Corporation. Retrieved from http://company.nokia.com/sites/default/files/download/nokia_uk_ar14_nokia_technologies.pdf Appendix B Documents used in Analysis Table 1: Nokia Financial Performance 2015 (Nokia, 2015). Reported first quarter 2015 results1 EUR million Q1'15 Q1'14 YoY change Q4'14 QoQ change Net sales - constant currency     11%   (21)% Net sales 3 196 2 664 20% 3 802 (16)%   Nokia Networks 2 673 2 328 15% 3 365 (21)%   HERE 261 209 25% 292 (11)%   Nokia Technologies 266 131 103% 149 79% Gross margin % (non-IFRS) 42.5% 45.6% (310)bps 43.5% (100)bps Operating profit (non-IFRS) 265 305 (13)% 524 (49)%   Nokia Networks 85 216 (61)% 470 (82)%   HERE 19 10 90% 20 (5)%   Nokia Technologies 193 86 124% 77 151%   Group Common Functions (32) (8)   (43)   Operating margin % (non-IFRS) 8.3% 11.4% (310)bps 13.8% (550)bps Profit (non-IFRS) 200 172 16% 356 (44)% Profit 181 110 65% 327 (45)% EPS, EUR diluted (non-IFRS) 0.05 0.04 25% 0.09 (44)% EPS, EUR diluted 0.05 0.03 67% 0.08 (38)% Appendix B Notes to Instructor Nokia started business in 1865 as a milling company in south-west Finland under a mining engineer Fredrick Idestam. In 1898 Nokia became a rubber producing company and it produced rubber products such as boots and tires. It has developed continuously with a diversification of products up to 1991 where it became the world’s first ‘global systems for mobile communications. In 1992, Nokia launched its first handheld GSM phone with CEO, Jorma Ollila. It decided to sell off its rubber cable and consumer electronic divisions. In 1994, it launched the 2100 series and made a sell of 20m phones worldwide. That was the first phone with the Nokia ringtone; in 1998 it became the world leader in the mobile phone market. The turnover increased gradually from E6.5bn to E31bn between 1996-2001. After launching the first phone with an in built camera in 2001, the profits started going down and this was blamed on a slowdown in the mobile networks. Investors were stunned and in 2004 Nokia started losing share to its rivals, with a 35% share comparing to a target of 40%. In 2007, it recalled its product after it admits that the batteries were faulty. The same year Apple launches the I phone which led to a 30% fall in third-quarter profits while the Apple phones grew by 327.5%. It announced to its plans to cut 1,700 jobs worldwide. Android-based devices and I phones posed a serious challenge to Nokia’s future, this were the main competitors. In 2012 Nokia cut over 14,000 jobs and moved its manufacturing to Asia and it announces its last factory in Finland would close. Microsoft bought Nokia’s handset business for E5.44bn in 2013. On September 3rd 2013, Nokia announced that it had signed an accord to enter into a deal where it would sell to Microsoft all its devices business units including the mobile phones and smart devices as well as an industry leading design team, operations including Nokia devices and service production facilities. Read More