Three years later, the company introduced its first compact phone called Mobira Cityman 900, which was also the world's first hand-held mobile telephone. Although Nokia was the world leader in the mobile phones market, the new decade brought along a new set of challenges for the company. Although the company managed to beat market expectations by selling over a million units of these devices in just a few months, job cuts continued. The HR practices at Nokia are perfectly found to be aligned with the technological environment as well as the Nokia … 3. He was also the first non-Finnish leader of the company. The next year saw the company launching the Nokia 3210. Nokia was operating on the mechanistic organizational structure when it suddenly though of shifting to the matrix structure. The spectacular success of Nokia’s 6100 series - the company sold nearly 41 million cellular phones in 1998 - helped the company surpass Motorola and become the world’s top cellular phone maker in that year. It was decently successful as the company managed to sell around 8 million units of the device, but it didn't manage to create die-hard following as it touch-experience was sub-par. Strengths in the SWOT analysis of Nokia. In 1996, Nokia 9000 Communicator was launched. The deals proved nearly fatal for the company. This sudden change was to be done to improve agility. Later that year, the company launched Windows Phone 8-powered Lumia 920 flagship, which received mixed reviews - mainly criticized for its large size and bulkiness. The wireless and Internet technologies were converging, and the 3rd generation of wireless technology - that promised enhanced multimedia capability - was evolving. A few years later, Nokia launched the world's first international cellular system dubbed Nordic Mobile Telephone network, which linked Sweden, Denmark, Norway, and Finland. Facebook 'Tiger King' star says he was 'too gay' for Trump pardon After recognizing the threats in competitive erosion, firms typically engage in transformation processes that aim to revitalize or turn around the firm's business model. Coverage Finally, the year 2013 brought some good news as Nokia returned to profit six quarters of bleeding money. This page is older archived content from an older version of the Emerald Publishing website. First Round: AMCAT Online Test Round. Android app In 1984, Nokia acquired Salora and changed the name of its telecommunications unit to Nokia-Mobira Oy. Quite evidently, the company’s situation was going from bad to worse. Dubbed the 5800 Xpress Music, the device was also the first to run the touch-driven Symbian v9.4 (S60 5th Edition). Key amongst these decisions was the reallocation of important leadership roles and the poorly implemented 2004 reorganisation into a matrix structure… In effect, Nokia ended up in a survival crisis. An effective organizational structure looks into qualitative and quantitative issues of the structure were it ensures that both human resources matters and physical combination of resources have been addressed accordi… Moreover, NokiaMobile87 had a coherent structure and rather few subunits: the two product-based units, i.e. Responding to the changes, the Finnish company started churning out both sophisticated multimedia handsets as well as low-end devices. The phone became iconic and was nicknamed “The Gorba” after the then Soviet Union president Mikhail Gorbachev used it to to make a call from Helsinki to Moscow during a press conference in October 1987. Evaluate Nokia's changing organizational structure against the changing characteristics of the external environment over this time. Some of these purchases proved to be essential, as Nokia's later focus on telecommunication networks was contingent on its early acquisition of a Finnish company, Televa, with expertise in switching and base stations. refers to how individual and team work within an organization are coordinated. By contrast, Nokia created “… Nokia became too controlling and bureaucratic, as a result of its organisational structure and leadership. The year also marked the launch of Mobira Talkman, which was advertised as one of the first transportable phones. News ; User friendliness – Till date Nokia is remembered with fondness because it was the first mobile phone for many people and it was very user friendly. This, in turn, created the legitimacy for radical and rapid changes in the respective business models. The following year brought a tough phase for the company as it witnessed sharp drop in profits owing to severe price competition in the consumer electronics markets, and its chairman Kari Kairamo committed suicide reportedly due to stress. Glossary Nokia Networks R&D Engineer Off Campus Drive for 2020 passed out students. Microsoft Corporation Report contains a full analysis of Microsoft organizational structure. The year 1998 also saw the company launching the Nokia 8810, its first phone without an external antenna. Part of the company’s "Fashion Phone" line, the device was listed as one of the best products of the year by Fortune Magazine. At Nokia, the decisive factor behind telecom focus was the fact that the TMT at CHQ in the beginning of the 1990s consisted almost solely of executives with a telecom background. Experience – 142 year of history for Nokia – Nokia has a fantasic history behind it and it was one of the top brands selling in the market before the launch of Android Or IOS Smartphones. Although Nokia and companies in general never consist of one organizational structure as described by Mintzberg, there is generally one main organizational structure. It was announced on September 9, 1996 as the first of Nokia's high-end 8000 series of phones. Along with improving product quality and operations performance, this manifested in shortening product development project lead times and increased corporate R&D spending and university cooperation, in Finland as well as abroad. Conversely, Nokia also made clear miscalculations by getting involved in the consumer electronics business by purchasing large European television and computer manufacturers in the 1980s. The people who helped Nokia to become the best company were no longer there. In this article, we take a trip down memory lane to revisit Nokia’s history, which - hold your breath - spans a whopping 150 years. FAQ The most notable changes occurred in the period of 1985-1995, when the corporation's market focus expanded from the original focus on paper, rubber, and cable industries to the field of consumer electronics – which was eventually replaced by a focus on mobile telecommunications: mobile telephones and mobile telecommunication networks. 2. Privacy Phone friend is the best option for you. As such, it may not display exactly as originally intended. Twitter Phase III: Diversified organization The following year, Stephen Elop - who was previously head of Microsoft's business software division - was appointed as Nokia’s new CEO. Another hiccup came in 2007, when the company had to recall a whopping 46 million faulty cell-phone batteries. Incidentally, it was also the company’s billionth phone sold later in 2005. It was also Nokia’s first phone to feature a video recorder. Meanwhile, in an effort to save more expenses, the company also announced that it will close its oldest factory in Finland and shift its manufacturing to Asia, which had become its largest market by then - all of this happened in early 2012. Running Symbian OS 6.1 (Series 60), the phone/hand-held gaming system wasn’t much successful commercially as only 3 million units were sold. It had also got rid of much of its diversified structure. An organization is defined as an integration of processes with a single purpose; to attain the expected goal of an organization, management needs to develop and effective working organizational structure. The all-in-one phone, which carried a price tag of $800, allowed users to send emails, fax, and browse web, besides offering word processing and spreadsheet capabilities. In contrast, NokiaCorp87 had a highly diversified and complex structure with various product-specific business units operating in matrix with various international regional units. On the contrary, NokiaCorp87 was engaged in highly active M&A as a part of its aggressive internationalization strategy. Get ready to publish a teaching case study, Strategic management of business model transformation: lessons from Nokia. Nokia was catering to so many market segments with different phone models that it lacked focus. Nokia announces planned leadership and organizational structure for combined Nokia and Alcatel-Lucent Espoo, Finland - Nokia today announced the planned leadership and organizational structure that it intends to implement after and subject to the successful closing of the public exchange offer for Alcatel-Lucent securities announced on April 15, 2015. Case Study Questions Response Nokia Corporation has been applying product based organization structure in the past three decades. Following the announcement, there were rumors that Microsoft is in talks to acquire the struggling Finnish giant. The establishment of the pan-European GSM standard proved to be a lifting force for the company, as it was able to find new customers in nascent mobile telecommunications markets. Structure Nokia functions under a matrix structure . In 1918, Finnish Rubber Works acquired Nokia to secure access to the latter’s hydro-power resources, and in 1922, Finnish Cable Works was also acquired by the newly formed conglomerate. The newly formed company mainly focused on four markets: paper, electronics, rubber, and cable. 1. The internal ranking of business units, according to growth prospects and financial performance, allowed the change of the corporate business model. Nicknamed "banana phone", the device featured in the popular 1999 science fiction action film The Matrix. What is more, the internal ranking of business units was necessitated by a sophisticated management accounting system, allowing swift reactions to declining business performance after 1988. Contact us A couple of years ago, Microsoft reached a deal to acquire Nokia's struggling devices and services business, ... the device featured in the popular 1999 science fiction action film The Matrix. The flagship was also one of the Nokia’s first phones with chrome slider shell. External triggers for change acted as strong signals for change both at the level of the corporation and at the level of the business units. of organization structure, which is being, used by Nokia Corporation is known as the matrix organizational structure. This was followed by another round of job cuts, affecting around 10,000 employees this time. For instance, periods of organic growth alternated with spells of frantic M&A activity. Desperate to come out of the ongoing crisis and better compete with competitors, Nokia announced a strategic partnership with software giant Microsoft to make the latter’s Windows Phone its primary mobile OS. The Finnish company’s unwillingness to embrace drastic change when it was required the most was probably the biggest reason that brought the mobile giant down. Nokia’s net sales increased over 50% year-on-year, operating profits shot up nearly 75%, and stock price sky-rocketed a whopping 220%, resulting in an increase of market capitalization from nearly $21 billion to around $70 billion. It was a solid handset that came in six color variants and had a talk time of the impressive for the time 4- 5 hours. Instagram, © 2000-2021 GSMArena.com While the vertical dimension identifies functions and reporting relationships, the horizontal dimension maps how inputs flow across those functions to create products and services for customers. The deal, which saw CEO Stephen Elop return to Microsoft, also included the Finnish company's patents and mapping services, although it excluded the Nokia’s Chennai factory in India as well as the Masan factory in South Korea. Two mistakes of that magnitude, combined with the great delay in jumping to touchscreen were enough to cost the company's dominant position in the quickly moving market. It was the year 2001, when Nokia’s profits first crumbled after becoming the top phone maker in the world. The solutions department ensures that it continuously develops solutions whereby ensuring that a particula… "Business unit level managers perceived important changes in markets and the business environment in general, offering concrete strategic alternatives for corporate headquarters.". Their product ontologies strongly favoured rapidly growing handset and network businesses, in which Nokia also had significant early-mover advantages in technological development. Nokia’s Corporate Structure Nokia is a large company with many departments and layers of management. Nokia Corporation is an example of a corporation whose business model has dramatically transformed in the face of changing environmental dynamics. Later in the year, the struggling Finnish company finally acknowledged that it was slow to react to the change in the market, which was now slowly being taken over by the likes of Apple and BlackBerry, and influenced by newcomers like Samsung, HTC, and LG. A) functional, B) divisional C) matrix structure. The traditional business units and the newer consumer electronics unit, as well as the complex international structure, were expressly replaced with a focused structure of two business units in the telecommunications product area (Nokia Mobile Phones and Nokia Networks) and regional sales offices abroad. Moreover, the corporate situation was further aggravated by the collapse of the Soviet Union, which suddenly took away a large part of corporate sales to Soviet markets, as well as a severe macro-economic recession in Finland at the beginning of the 1990s. Anyway, as they say, nothing is permanent and whatever goes up must come down. In September that year, Nokia announced it’s selling its Devices & Services division to Microsoft. However, that doesn’t take away the fact that Nokia remains a huge part of mobile phone history that will never be forgotten. Let’s start with the first part of SWOT analysis of Nokia which is strengths: 1. The authors are Jaakko Aspara, Juha-Antti Lamberg, Arjo Laukia and Henrikki Tikkanen. Unsurprisingly, it was made using Nokia equipment. It was the location of his second mill - on the banks of the Nokianvirta river - that inspired Idestam to name his company Nokia Ab, something which happened in 1871. The article characterized the Nokia restructuring as a shift to a “matrix organization,” but the company was already a matrix: it operated in two dimensions, even though the current management system only addressed the vertical dimension, represented by a classic organizational chart. At the level of the top management team (TMT) and at the level of individual managers, the HR system, corporate culture, and the personal values, beliefs and backgrounds (cognitions) of the TMT strongly influenced the choice of strategic alternatives and, eventually, business model transformation. The Markets unit runs sales, marketing, and global supply chain functions. It developed things like toilet paper, bicycle and car tires, rubber footwear, TVs, communication cables, robotics, PCs, and military equipment, among others. The year 2009 saw Nokia laying off 1,700 employees worldwide. rekindle Nokia’s earlier drive and energy but, far from reinvigorating Nokia, they actually set up the beginning of the decline. Also, the processes of managing intellectual property rights were under development, especially after the business unit ended up in court with Motorola, concerning patent issues in the US at the end of the 1980s. More broadly, it may also describe the management of cross-functional, cross-business groups and other work models that do not maintain strict vertical business units or silos grouped by function and geography. However, at that point in time, Elop rubbished them as “baseless.” Meanwhile, Apple overtook Nokia in smartphone sales in Q2, 2011. The focus on mobile phones, in turn, was contingent in Nokia's early involvement in radiotelephones through the founding of a joint venture company – Mobira – with another Finnish company, Salora in 1979 and the subsequent acquisition of the whole of Salora by Nokia in 1984. In Nokia's case, the corporate recipe quickly transformed from a diversified conglomerate to a strong telecom-focused firm, through the inheritance of many elements of the earlier business model of the mobile telecom subunit to the new corporate business model. To achieve organizational goals and objectives, individual work needs to be coordinated and managed. In the 1980s, Nokia internationalized its operations while acquiring competences in the fields of electronics through the acquisition of various companies. Reviews Nokia's telecom units (especially Mobira/NokiaMobile) demonstrated very strong technological competence in the early 1980s, which raised the probability of business model innovations. Processes of ensuring product quality and supply chain efficiency were concerns to managers in NokiaMobile87, due to problems manifesting as component failures, product deficiencies, and inefficient production, and the resulting customer complaints and cost overflows. At the end of the day, established companies that want to be more digital have to do more than talk about the end goal. However, it seems evident that the promotion of the former telecom managers to CHQ was as much a consequence as a cause of the rapid selection of the telecom business as the only realistic alternative in the worsening economic situation. Thus, NokiaCorp95 inherited also the emphasis put on these processes from NokiaMobile87, and further reinforced this emphasis. Description: The matrix organisation structure is complex but helps in achieving the ultimate goal i.e. This was followed by the launch of the company’s as well as world’s first car-phone dubbed Mobira Senator, which weighed in at around 10 kg. Nokia Corporation Stock Exchange Release March 17, 2017 at 8.30 EET (CET +1) Nokia announces changes in its organization and Group Leadership Team to accelerate the execution of company strategy. Compare This is a shortened version of “Strategic management of business model transformation: lessons from Nokia”, which originally appeared in Management Decision, Volume 49 Number 4, 2011. It’s true that Nokia had terrible last five years, but this doesn’t take away the fact that it was this very company that effectively defined the mobile industry for over a decade prior, and gave us some of the most memorable phones. The device reportedly had a talk time of 90 minutes and could store 99 contact numbers. As of October 1, 2009 the organizational structure at Nokia was extremely mobile and flexible. 2. In 2003, the company launched the Nokia 1100, a budget-friendly phone that sold around a whopping 250 million units, making it the best selling phone as well as the best selling consumer electronics product in the world. While the three companies were jointly owned, they continued to work independently until 1967, when they were finally merged and Nokia Corporation was born. The following year, the Nokia 7280 "lipstick" phone was launched. Nokia struggled to remain agile, as it had a market-leading position to protect. Midway through the decade, the company launched its N-series of phones, with the N70, N90, and N91 being the first members of the series. It was also known as Mobira Cityman 2000. In 1987, NokiaMobile87 was a highly focused business unit that relied on organic growth, engineering know-how, and pan-European collaboration in technology standard development. In 1991, world’s first GSM call was made by the then Finnish prime minister, Harri Holkeri. 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