Nokia Analysis
Essay Preview: Nokia Analysis
Report this essay
Introduction:
“Nokia – Connecting People”: this slogan is known all over the world. In 2006 Nokia employs 68,041 people in 120 countries. Currently every third mobile phone sold in the world is from Nokia. The Nokia Company is today one of the worlds leading high tech companies. Its rapidly growth in the 1990s coincided with a basal structural change of the Finnish economy and industry. In this restructuring process Nokia played an important role. Despite the fact that Nokia is a leading multinational company, a major part of its business is located in Finland. Nokia plays a significant role in the economic growth of Finland, which has been one of the fastest growing in whole Europe.
I. History of Nokia
The Nokia story begins in 1865, when Fredrik Idestam, a mining engineer, establishes a paper mill at the Tammerkoski Rapids in south-western Finland, a few years later, he built a second mill by the Nokianvirta river Ð- the place that gave Nokia its name. In those days there was a strong demand for paper in the whole industry, the companys sales achieved its high-stakes and Nokia grew faster and faster. Nokia exported paper to Russia first and then to almost whole Europe.
A few years later, Finnish Rubber Works, a manufacturer of Rubber goods like tyres, industrial parts and footwear, impressed with the hydro-electricity produced by the Nokia wood-pulp (from river EmĤkoski), merged up and started selling goods under the brand name of Nokia. Unfortunately there was a recession during World War II, but after World War II, Nokia acquired the majority part of the Finnish Cable Works shares. The Finnish Cable Works had grown quickly due to the increasing demand for power transmission and telegraph and telephone networks in the World War II. Gradually the ownership of the Rubber Works and the Cable Works companies consolidated.
(Haikioe, M. 2002) and (“The History of Nokia 1865-2002,” 2003)
In 1967, all the 3 companies merged-up to form the Nokia Group. The Electronics Department generated only 3% of the Groups net sales and provided work for 460 people in 1967, when the Nokia Group was formed. NokiaÐÒs Cable Works Electronics department started to perform research into technology in the 1960ÐÒs. This was the beginning of Nokias journey into telecommunications.
In the early 1970s, the majority of telephone exchanges were electro-mechanical analog switches. Nokia began to develop the digital switch Nokia DX 200. which was equipped with high-level computer language and Intel microprocessors. At the same time, a new law in Finland allowed the Finnish telecommunications authorities to set up a mobile network for car phones that was connected to the public network. (“The History of Nokia 1865-2002,” 2003). The result was Nordic Mobile Telephony (NMT), which was inrroduced in 1981 and was the first multinational cellular network. Since this day, NMT was introduced in many other countries and launched the rapid expansion of the mobile phone industry. At the end of the 1980s the standard for digital mobile telephony, known as GSM (Global System for Mobile Communications), was developed.
In 1991 Nokia made agreements to supply GSM networks to nine European countries and by August 1997 Nokia had supplied GSM systems to 59 operators in 31 countries.
(Haikioe, M. 2002)
During the 1980s, Nokias operations rapidly expanded to new business sectors and products. The strategy was to expand rapidly on all fronts. In 1988, Nokia was a large television manufacturer and the largest information technology company in the Nordic Countries.
“During the deep recession in Finland at the beginning of the 1990s, the telecommunications and mobile phones divisions were the supporting pillars of the Nokia. Despite the depth of the recession, Nokia went back-to-back business quickly as the company started to reform its businesses. In May 1992 Nokia made the strategic decision to divest its non-core operations and focus on telecommunications.”
The companys 2100 series phone was an incredible success. In 1994, the goal was to sell 500,000 units but Nokia did the impossible and sold 20 millionen.
By 1998, Nokias focus on telecommunications and its early investment in GSM technologies had made the company the world leader in mobile phones. Nokia success year was 2002 when they launch Nokias first phone with a built-in camera and its first video capture phone (“The History of Nokia 1865-2002,” 2003)
In 2005, the billionth Nokia phone is sold Ð- a Nokia 1100 Ð- in Nigeria. (Messageboard, 2005) In 2006, there will be 2 billion mobile users. (Wearden, G. 2005)
Today, Nokia is still the worlds number one manufacturer of mobile phones, and one of the leading makers of mobile networks. Nokias market share in Q4 of 2006 was 36% (Analysis of Q4 2006. 2007). Also, in 2006, “Olli-Pekka Kallasvuo, formerly Nokias Chief Financial Officer, took over as CEO from Jorma Ollila, who became chairman of Nokias Board of Directors.” (Nokia Corp. 2007)
II. Corporate Structure and Top Management
Nokia started out as a small company in Finland, but over the years grew to be a much recognized symbol of telecommunications. Its roots started out small in the 1980s and gradually grew further and further until the company itself began to export more than the countrys entire paper industry. Basically its a large company in a small country. With that said, the company holds current about thirty percent of the telecommunications market share worldwide, this being much larger than that of Motorola or Ericsson. (Nokia – a big company in a small country (2001)).
Based upon 2005 figures from the 2005 calendar year, the combined company had EUR $15.8 billion in pro forma annual revenues and had started their operations with about 60,000 employees worldwide. Although as of January 2007 Nokia was been able to open up an additional 40,000 jobs to new employees. This making a grand total of 100,000 employees worldwide. Also recently Nokias CEO Jorma Ollila had announced that he would step down from his post in June of 2006. This had then by default made the new CEO of Nokia Olli-Pekka Kallasvuo. Who had previously headed the