Organizational Changes at Nokia Company - Case Study Example

Organizational change Name Institutional affiliation Date Introduction Changes in organizations are part and parcel of the day to day running of the organization. It may involve the change in the strategies the organization employs or change in employers and the management team. Causes of changes within an organization vary from technology, competitors, need to improve processes to government regulations and desire for growth (Joseph, 2014). Organizational change has an impact on the whole organization and it is thus important for organizations to ensure that they employ the right strategies during such changes in order to minimize resistance. This paper discusses the organizational changes that have occurred at Nokia, one of the largest mobile phone makers in the world and analyses the various factors that the outcome of the changes were successful. Background information The Nokia Company was founded in 1865 and is based in Finland (Myers, Hulks and Wiggins, 2011). The company initially dealt in manufacture of paper and paper products which utilized the vast forests available in Finland. The company dealt in paper products up to the 1960s when the company directors realized that the company was stagnating and that if it were to start growing, it hard to expand beyond the Finish boarders. The Finish government saw it fit for Nokia to merge with two other companies that were underperforming and this merger saw Nokia start dealing in other products such as tires, electronics and Wellington boots (Myers, Hulks and Wiggins, 2011). Despite diversifying into other industries, the domestic market formed the largest consumer base of the products Nokia Produce. The Soviet Union formed the main foreign market for Nokia products and the company traded its paper products for Soviet oil. The relationship between these countries was a good one given the neutral standard of Finland in World War II. The oil crisis that hit the world in 1973 saw the prices of oil rise dramatically and Nokia and other Finish companies that heavily relied on the Soviet Union had to re-strategies since there purchasing power had been reduced drastically (Myers, Hulks and Wiggins, 2011). The company directors decided to focus in electronic production and in 1975, the newly appointed CEO, Kari Kairamo, initiated one of the major organizational changes. The company went out to acquire a number of companies and assets in their quest to expand beyond Finland and even become one of the world largest electronics producers. It acquired a number of Electronics Company in the Scandinavian region in the 1980s and this saw the company’s revenue increase significantly. The company’s management wasrestructured in 1986 with its 11 units being cut down to 4 industry segments. One of the industry segments was the telecommunication industry and within the same year, Nokia decided to venture into mobile telephone making. The telephones became the company’s first product to be marketed under the brand name Nokia (Myers, Hulks and Wiggins, 2011). In 1992, the company underwent a crucial strategic change. Diversification had resulted to the company’s stagnation and the newly appointed CEO, Ollila, saw it fit for the company to only concentrate on one industry segment. This saw the company sell all its other businesses and concentrate on the telecommunication industry. This change also saw the company acquire a major telecommunication company named Technophone and this made Nokia one of the first producers of digital phones (Myers, Hulks and Wiggins, 2011). In the mid 1990’s, the company underwent another organizational change with the logistics operations being over-hauled. This was due to the logistics crisis that hit the company due to increased demand of mobile telephones. The overhauling of the logistics operations proved successful because the company was able to make a lot of profit and even overtake Motorola as the world leading mobile phone producer by 2000 (Myers, Hulks and Wiggins, 2011). 2004 saw another major organizational change, the company’s business units were re-structured and reduced from 9 to 4. The company also re-organized its customer and marketing operations, logistics operations, product development operations and manufacturing into 3 horizontal business units. This restructuring was aimed at ensuring high speeds of production and innovation (Gratton, 2010). This change proved very successful despite taking only a week to implement. The change saw the company employing about 100 new employees with the rest of the employees being retained at their past stations and task but with reconfiguration being done (Gratton, 2010). Stiff competition from other mobile manufactures such as apple and Samsung saw the company’s sales fall drastically. Another major organizational happened and the company decided to enter into partnership with Microsoft. The partnership proved a little bit successful since the company was able to lunch windows phone. The Lumia Smartphones that proved a success led to the company selling its handset division to Microsoft in 2013 (Ando and Rigby, 2013). This is the most recent organizational change involving the company and it was inspired by the falling share markets the company was experiencing and the stiff competition from other major telecommunication companies. The company currently concentrates on the production of networking equipment and navigation equipment (Ando and Rigby, 2013). The successful change variables that were in place Lewis (2011) points out that change in inevitable for any organization and that it occurs for a number of reasons that include rule of law, governance, policies and challenges of efficiency. The Nokia Company has undergone a significant number of organizational changes with most of them proving successful. For any organizational change to be successful, the process of managing change should be carried out appropriately. The five main things involved in managing change include motivating change, creating vision, developing political support, transition management and sustaining the organization’s momentum. The successful change variables in Nokia’s case included technology, the company’s desire to grow and the need to improve processes. The company desire during the 1970s and 80s was to expand into an international company and after identifying areas where it can gain much success, a conclusion was reached to pursue business in those areas. Organizational re-structuring saw the company become a global leader in mobile phone production. Technology also drove the company to success. The organizational change during the 1990s was based on new technologies that had enabled the production of digital phones. The company took advantage of these and went ahead to become the leading mobile technology company. It was necessary for appropriate organizational changes to take place for the company to become a major player in mobile technology. Another important success variable that was in place was the availability of the necessary resources. The company had enough human and financial resources to facilitate the various changes it has gone through. Apart from that, the company always aimed at improving process and this also forms a major successful change variable. The successful change variables that were place are listed below: Good working climate Desire for growth and development Strong organizational philosophies and leadership Strong financial resources and planning Competent and skilled employees Availability of new technologies The critical factors for the success of the changes A number of factors that ensured the organizational changes in the company were successful came in play. The factors include availability of the right resources, preparation of employees for the changes that were about to happen, support from stakeholders and the right skills and knowledge among the key players in the process that lead to changes in the organization. In addition to that, committed and active leadership played a key role in ensuring the success of the organizational changes. Employee participation also contributed to the success of the changes. The company had the right resources that ensured changes were successful. The human resource in terms of worker and financial resources ensured that the Company’s process did not come to a standstill during the changes. In addition to that, the company had enough financial resources to enable it acquire a number of companies. The acquisition of these companies led to the successful expansion of the company beyond Finland and the growth of the company to being one of the leading mobile phone manufactures. In addition to that, employees were involved in all the organizational changes. The transformation of the company in 2004 saw it employ a number of new employees but the other employees had their roles slightly re-configured. The participation of employees in any organizational change means that the changes will face minimal resistance. Committed and active leadership is among the most factors that contribute to success in organizational change. Kari Kairamo’s commitment and active leadership saw the company transform in 1975 with the acquisition of a number of companies. Ollila on the other hand was able to transform the company into a telecommunication company. His dedication and commitment saw the company’s focus turned onto the telecommunication industry where the company became very successful. Employees look up to their leaders during organizational changes and committed leaders will always inspire the employees to take the changes positively. It is important for organizational leaders to be available, accessible and articulate during the changes (Townsend, 2014). Apart from that, the stakeholders such as investors and business partners play an important role in the success of any organizational changes. If stakeholders support the organization change, then the changes will most likely be successful. In Nokia case, various stakeholders such as the government played a key role in ensuring its success. Apart from offering financial aids, the government ensured that the policies and legislation in place favored the growth of the company. Importance of the factors during organizational change The factors that contributed to the successful organizational changes include availability of the right resources, employee preparation, committed and active leadership and support from stakeholders. All these factors are important in ensuring that organizational changes are successful. As earlier discussed, Committed and active leadership ensures that the employees are not negatively impacted by the organizational changes. Employees are often sensitive to what their leaders say and their actions. If a leader shows disinterest in the organizational changes going on within a company, the people who work under him are likely to show disinterest and even resistance to the changes (Townsend, 2014). It is therefore important for management to ensure that all the leaders within the organization are in favor of the changes that are about to take place. Employee preparation is always important before any major organizational change such as re-structuring of the management or changing of the organization’s ownership. It is always important to keep the employees in the know about the major happenings within and without the organization since these happenings affects them greatly (Townsend, 2014). Employee preparation ensures that they are involved in the process and that they give their views about the changes. In addition to that, it enables them to prepare physically and mentally thus ensuring that the changes do not affect their day to day work. Apart from that, employee preparation minimizes resistance to organizational change. It is always important for organizations to prepare their employees before any major organizational changes as it gives the employees a feeling of participation in the organization’s core activities. Preparation of employees also involves provision of psychological support since most employees would be worried about the personal losses that might come with the changes and some may fear that they would not be able to effectively work under the organizational changes that have taken place (Pierce & Gardener et al, 2002). Availability of the right resources, in terms of finances and skilled workforce is also an important factor in the success of organizational changes. If an organization re-structures itself to pursue production in a certain industry, the availability of the right resources required in that industry will determine whether this change would be successful or not. It is always important for an organization to consider the available human and financial resources before undertaking a major organizational change (Pierce & Gardener et al, 2002). Stakeholders on the other hand may support or may fail to support the organizational changes taking place in an organization. It is important for organizations to involve the major stakeholders in organizational changes since their support is crucial in the success of the changes. Conclusion The paper analyzed organizational changes and used the Nokia Company as a case study. The Nokia Company has gone through a number of organizational changes since its formation in 1865 with most of the changes proving successful. The paper discussed the various successful change variables in Nokia’s case and analyzed the critical factors that led to success in the changes. Factors that led to successful organizational changes include employee participation, availability of the right resources and committed leadership. 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