Nokia

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-competing in the third vawe:
business insights
Outi Sutinen,
Senior lecturer University of Applied
Sciences, Department of Business and
Information management
Visiting lecturer
Name: Outi Sutinen
Education:
MBA, Vaasa University, Finland International
Business
Professional Career:
Senior lecturer at Oulu University of Applied Sciences,
department of International Business
Marketing director, Baltic States, L’Orèal
Marketing director and Exports Area Manager, sales
person in various food stuff organizations in Finland and
France
Head of Oulu Export association
Presentation structure
Introduction
Case Nokia: company presentation
Market dynamics and Research &
development
The Nokia approach
Future challenges
Introduction
Where do I come from?
Oulu – a Nokia town
How Nokia and Oulu are connected?
Why Nokia came just from Finland?
 teleoperator market was not concentrated to
only 1 national company like in many other
European countries > more competition> more
innovation
Oulu University department of engineering
played a central role in the developement
of Nokia technology
 The founding of Oulu University in 1958
is regarded as the preparation for the Oulu high
tech industrial cluster’s formation, and the
establishment of university’s Department of
Electronical Engineers in 1965 as the starting
point (1975 orientated in electronics, mobile
telecommunications and IT – personal interests
of former professors Juhani Oksman and Matti
Otala)
 1973 Nokia radio producing company started in
Oulu
 1974 VTT – National Technical Research Centre
of Finland comes to Oulu
Foundation of an electric laboratory
 innovation environment further improved
Today Oulu is important production and R&D
center for Nokia and Nokia as a anchor
company has attracted a variety of other
companies which together make an important IT
cluster in a global level (Oulu Technology
Village)
Oulu -the Finnish ”Phenomena”
 A finnish center of high tech
NOKIA
TECHNOPOLIS SCIENCE PARK
MULTIPOLIS-METROPOLIS NETWORK
PROJECT
STRONG NETWORKING BETWEEN COMPANIES,
UNIVERSITY, POLYTECHNIC & VTT
What do you know Nokia?
Origins of Nokia?
Procduct range
Where the products of Nokia are made?
Nokia in Brief
How old is Nokia?
Nokia's roots go back to 1865, when the Nokia woodpulp mill was founded. In 1967, upon the merger of
three separate companies.
Some important dates:
1981 Nordic Nordic Telephone (NMT), the first
international mobile phone network, is built
1991 GSM- a new mobile standard opens up
Nokia equipment is used to make the world’s
first GSM call
Nokia in Brief
Mobile revolution 1992-1999
1992 Jorma Ollila becomes CEO of Nokia
(access to international finance markets)
1994: World’s first satellite call made using a
Nokia GSM handset
1998 Nokia becomes the leader in mobile
phones
Nokia in brief
 Nokia 2000-today
2002: First 3G phone, 6650
2003: Nokia launches N-Gage – mobile multiplayer
game
2005: The billionth Nokia phone-a Nokia 1100-is sold in
Nigeria
Today: market leader (40% market share 4/4 quarter
2007 –Nokia’s market share exceeded the combined
shares of its next three biggest competitors: Samsung,
Motorola and Sony Ericsson.
(http://www.nytimes.com/2008/01/25/technology/25nokia
.html)
Is today worlds 5th most valued brand
Nokia Mobile phones production
FINLAND
GB
GERMANY
HUNGARY
ROMANIA CHINA
MEXIQUE
BREZIL
INDIA SOUTH-COREA
Nokia in Brief
World largest manufacturer of mobile
devices
Head office in Finland
Appr. 60 000 employees in 128
nationalities
R & D centers in 11 countries (31% of staff
work in R&D)
Production facilities in 9 countries
Nokia Today
Market dynamics
Which are the market trends in mobile
markets?
What are the critical succes factors in
winning the business?
Market trends
1. consumer taste divergence/fashion
business
From high tech to fashion business –
customer is the key
Consumers look for experience - not just
technology
Fragmenting market segments> more and
more models
Fashion and phones
Market trends
2. Shortening life cycles
Customers tastes wary quicky > shorter product
life cycles
Shortening life cycles of mobile phones
Product Life Cycles: mobilephones
Development
1-2 years
Typical life cycle 1-2 years
Product & Process R&D in the Innovation
Life cycle (based on M.L. Patterson, 93)
Cash flow
Product is
Released to production
(Mostly
Product R&D)
Opportunity
occurs
Negative
Cash flow
Positive
Cash
flow
Net
Profit
period
Break
Even
time
Product
Definition and
Project
Activity begins Plans freeze
Opportunity
Is
perceived
Project
Time
Becomes
extinct
(mostly process
R&D)
First customers are
satisfied
3. Globalisation
 Geographical and consumer diversity –
differences in consumer behaviour and taste
 Role of Asia growing, namely China and India,
 BRIC countries (Brasil, Russia, China and India
getting stronger)
Globalisation affects business
 ”China Phenomena” > companies go to cheap labour
countries
 ”India Phenomena” > companies are no more just
addressing costs but try to get best partners globally and
see opportunities in networking
 ! 20% of worlds software outsoursed to India
 Companies go where the market is
 New division: China contributed more than
25% to global growth in 2007 (India 9%)*
 For example: Exports and production
Nokia sold in 2007 77.8 million cellphones in Asia, the
Middle East and Africa in the quarter, nearly double the
42.3 million sold in Europe and North America. In China,
Nokia’s fastest-growing high-volume market, it sold 20.2
million phones, an increase of 38.4 percent over a year
earlier.
4. Technolgy war- new technologies and
constant improvements




Examples:
internet convergence
Non - cellular wireless
Usability-customer friendliness aspect in technology
growing
 Compatibility of technologies
 New added performaces – just the imagination as a limit
(Nokia & Free music, free navigation…Nokia acquired a
USA based Navteq, an American maker of digital maps,
and has joint-venture with Siemens in wireless networks
 competition today = setting standards first
(like, Microsoft , Intel….)
Challenges that Nokia has to meet – and
the Nokia Response
Understand consumer needs and variety
Response: decentralized R&D in 11 countries
Be first in the market and set standards
Response: Nokia has a strong history in being
innovator-firsting the markets
For example: 13.11.2006 world’s first
commercial WCDMA*900 data call on 900 MHz
band- advantages: 2-4 times larger coverage
area
*Wideband Code Division Multiple Access
Product innovation N95
Response: new launches,
New technologies
Customer friendly
N95
Now attacking Us markets
Nokia – fostering Innovation- how?
The vision of Nokia of ”Inclusive environment”
 emphasis on cultural/individual differences
 diversity was seen as a key to success > increased
creativity, mirrored market place, improved attraction
and retention of human resources
 1997 : Nokia Code of conduct was introduced to
support inclusive environment
• commitment to equal opportunity & openess
 The Nokia Way
• efforts to promote teamwork & individual
responsability
Secrets of Nokia’s success
BOLD STRATEGIC INTENT
- seizing the opportunities
INNOVATION THROUGH
VALUE CHAIN
FLAT ORGANIZATION
ENTREPRENEURIAL SPIRIT
collective leadership
global R & D networks
competition & cooperation
CUSTOMER SATISFACTION
Nokia New Values 2007 – Worked Down
to Top worldwide in Nokia Way Cafés
 Achieving together
Trust, cooperation, sharing, openness, networking
 Engaging you
Listening, client, employee, partner, consumer,
development
 Passion for Innovation
Dream, passion, courage, future
 Very Human
Close to humanity, respect, customer friendliness
Nokia secret: flat team organisations
- working with cross-functional teams
 Cross-functional Team Defined
 Cross-functional team is a group of employees
from various functional areas of the organization
– research, engineering, marketing, finance.
human resources, and operations, for example –
who are all focused on a specific objective and
are responsible to work as a team to improve
coordination and innovation across divisions and
resolve mutual problems.
Example from Nokia India – Great place
to work
 Nokia HR department closely tracks every
employee's progress. Every September, Nokia
employees across mobile phones, networks and
two R&D divisions set up teams comprising 6-8
employees. Each of these cross-functional
teams has employees from marketing, sales and
logistics, who would already have submitted a
performance rating of themselves, the company,
the division and so on, on various parameters.
The teams are told to formulate an action plan
and improve on the parameters with the lowest
scores. The HR department coordinates this
exercise and reviews progress every quarter.**
Nokia working with cross-functional teams
 new product development projects are run by a
cross-functional teams to ensure that all
viewpoints are heard and given proper weight
throughout the life of the project.
 The team is composed of people that represent
the various functional areas important to the
success of the product
 Nokia has strong networks with suppliers and
research institutes, very often teams are
multinational and operate mainly virtually
 Nokia Spirit supporting cross-functional teams
”The Nokia culture is the same world over. Sanjay Bhasin,
director (India strategy) who has spent two years in
Finland and a year in London observes: "Nokia is a
melting pot of people, based on the egalitarian society
that exists in Finland." Nokia also offers a lot of
opportunity for its employees to work globally. **
Comment: Finnish culture is about taking responsability,
low control, having low power distance, high trust and
”growing in work” – large responsabilities- and equalityteam leaders normally rotate in Nokia
New Focus deeper in Internet where
New business models
Roles of actors are mixed
Work societies and ways to work change
(Nokia follows very closely people at work>
innovations)
Need for agility, knowhow and speed grow
Globalisation: China phenomena > you
have to focus on costs – sometimes
difficult decisions
Nokia response: production in 9 countries
–latest factory was opened in Chennai,
India, move from Bochum (Germany) to
Romania Jucu
Nokia manufacturing strategy – cost
leader
 Plants in Brazil, China, Finland, India, Germany,
Hungary, Mexico, the Republic of Korea and UK,
new plant to be opened in Romania
 Flexible global manufacturing network
Quick response logistics
 No inventories (moved to suppliers)
 Highly automatized production
 Focus on ITC systems and production platform flexibility
 Stong supplier relationships (eg. Perlos (phone cover
manufacturer deliveres just on 4 hour notice) – high trust
Future Challenges
 Which kind of future challenches can you
imagine Nokia will face?
 Which do you think are the worst competitors for
Nokia along different criteria?
Design
Price
Service offering
Other, which
 What do you think will be happening in this
market in the close future- which kind of new
launches do you predict? And in Spain?
Summary
 Nokia is working in a very dynamic market
 Attention to speed to the market >R&D
 Attention to customer needs and design

Nokia excells both in low cost models as well as high end
 Attention to new technologies > to set the standards> deeper to
Internet and wireless innovations
 New partners (Siemens, …)
 Attention to logistics optimation > production costs and flexible
manufacturing
 Attention to Asia and BRIC countries
 CLIENT is the key (Nokia has learned it’s lessons)
 In Nokia the inspiration and spirit of organization makes the
difference – achieving together!
 Muchas gracias!
Sources and Recommended addresses
 http://www.nytimes.com/2008/01/25/technology/25nokia.
html) (market share)
 http://www.businessweek.com/magazine/content/07_32/
b4045401.htm (brand value)
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www.virtualfinland.fi
www.tekes.fi
www.vtt.fi
www.oulu.fi
*www.arvopaperi.fi/extra/esitykset/rahapaiva07/konnos_r
aoul.pdf
 **http://www.growtalent.com/gptw/no8.htm
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