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Addressing the Challenge of the Nokia Corporation: Strategic Collaboration

Introduction

In the contemporary age, many organizations encounter serious challenges that affect their position in the global market. As such, the Nokia Corporation is suggested to have experienced a severe issue when promoting its 5G services in North America, failing to provide the residents of this region with the necessary coverage (AP News, 2021). In the long term, this event might account for a significant drop in the enterprise’s productivity, limiting its growth and creating additional obstacles. However, to determine the most efficient strategy for addressing the challenge, it is critical to evaluate the company’s internal and external environment, identifying the most prominent pathways for advancement.

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The Strengths, Weaknesses, Opportunities, and Threats analysis conducted in this paper suggests that strategic collaboration could be a beneficial method for addressing the 5G coverage issue. US Cellular and Rogers Wireless appear to be the most prominent corporations for creating a strategic alliance. After the initiation of the strategy, profit margin, production expenses, and changes in 5G network usage across North America could be assessed to determine its success. Nevertheless, Nokia will still be required to account for the financial costs associated with the collaboration, as well as the negative consequences that could follow if the executives were to ignore the 5G coverage problem.

The technological and electronic device industry continues to grow in the current age, with numerous enterprises introducing novel technological advancements. The upcoming worldwide transfer from 4G to 5G networks is a beneficial event for the technological corporations aiming to strengthen their presence on the international market (Townsend, 2019). Such companies as Samsung, Verizon, and Ericsson have recently introduced 5G coverage in the majority of the world’s regions, including North America (Townsend, 2019). However, North America has become a challenge for Nokia, which was unable to establish its 5G services in this area. Failing to introduce 5G network coverage in the North American market can tremendously decrease Nokia’s competitiveness, leading to severe productivity reductions. The current paper discusses the 5G coverage issue encountered by Nokia in the North American region, discussing the organization’s internal and external environment and suggesting that strategic cooperation could be used to address the challenge.

The Nokia Corporation: History, Leadership, Governance

The Nokia Corporation is currently one of the leaders in the technological industry that offers both network and electronic device distribution services. Established in 1865, Nokia has undergone numerous changes throughout the years, evolving into a multinational company that manufactures various electronic and technological devices (Our History, n.d.). The firm’s mission is to create technology that helps the world act together while following the four strategic values (Nokia’s Strategy 2021, n.d.).

These values are grounded in Nokia’s commitment to be a trusted partner in network communication, focus on establishing technology leadership in business, utilizing cloud and other novel business models, and engaging in long-term research (Nokia’s Strategy 2021, n.d.). Finally, the purpose of the corporation is to deliver critical networks through technology leadership and trusted partnerships (Nokia’s Strategy 2021, n.d.). These statements clarify the enterprise’s intention to become a leader in the technological industry, offering advanced and high-quality technologic devices to customers.

Currently, Nokia’s operations are managed by the Board of Directors, which is focused on determining the most beneficial development pathways. However, the Board is also influenced by the President and CEO Pekka Lundmark, external and external audits, and the general meeting of shareholders (Leadership and Governance, n.d.). In its corporate governance structure, Nokia divides the responsibilities for the organizational and operative activities between the Board of Directors and Group Leadership team, respectively.

Defining the Challenge: Issues of 5G Coverage

Although 5G networks are not yet distributed worldwide, they are already considered to be the systems that will be utilized for accessing the Internet in the future years. Currently, the majority of network providers and phone distributors slowly transform their devices to be compatible with the 5G network (Rost et al., 2016). Considering that 5G possesses exceptional speed and bandwidth compared to its previous analog 4G, it is proposed that most developed countries will switch to the usage of 5G networks in the upcoming years (Fletcher, 2021). From this perspective, Nokia can lose a tremendous amount of its customer market in North America by being unable to offer these services.

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Occupied by the USA, Canada, and other countries, North America is an essential part of Nokia’s customer targets (Lamberg et al., 2021). With customers switching to network providers that offer 5G, this challenge has the potential to affect the company’s growth strategies and limit future development. Therefore, to promote the corporation’s development, Nokia’s executives must address the described challenge and create a strategy that could help resolve it.

Ensuring Business Growth

When managing a challenge, it is necessary to identify a strategic approach that could successfully mitigate both the complication and the possible negative consequences. In organizational development, an inappropriately applied technique might harm the organization’s standing (Abraham, 2012). In this regard, examining the internal and external elements of the corporation’s environment could be highly beneficial for selecting a relevant strategy. Furthermore, identifying the most suitable path for implementing the chosen approach would help the executives to ensure the preservation of time and resources.

SWOT Analysis: Internal and External Environment of Nokia

The Strengths, Weaknesses, Opportunities, and Threats (SWOT) framework is a well-recognized tool for assessing a company’s internal and external environment. While Strengths and Weaknesses refer to the internal environment, Opportunities and Threats are understood as aspects of the external environment. As such, the Strengths component is defined as the capabilities of the firm that provide it with significant advantages against its competition (Abraham, 2012). For Nokia, the most prominent Strength is its consistently outstanding technological performance, as this brand remains one of the corporation leading technological advancements (Lamberg et al., 2021). When attempting to address the 5G coverage issue, this aspect could be of tremendous help for Nokia, strengthening its position in the North American market.

After that, the Weaknesses element highlights the company’s limitations impeding the resolution of emerging issues. For instance, unimproved operational areas or performance gaps are frequently recognized as Weaknesses (Abraham, 2012). For Nokia, its low agility may be a tremendous limitation, especially in the modern age. Over the last decade, the firm has been reported to lack the ability to adapt to emerging technological trends, for instance, in the smartphone industry (Lamberg et al., 2021). As Nokia failed to change its strategic approach, the enterprise’s revenues and performance dropped considerably, meaning that this aspect is a significant disadvantage for the firm.

In contrast, the Opportunities factor refers to the external characteristics of the corporation. These elements are typically products, services, or trends that might be beneficial for enhancing organizational performance (Abraham, 2012). In the case of Nokia, increasing demand for 5G technology and equipment from network carriers is a valuable opportunity for addressing the North American coverage issue (Rost et al., 2016). With the 5G network’s popularity growing, more mobile network operators are establishing contracts with 5G device distributors due to the need for technological equipment. Being a world-renowned leader in technological advancement, Nokia could utilize this tendency to its advantage by agreeing with a mobile network operator offering services in North America.

Finally, Threats are the elements of the external environment that could be hazardous to the enterprise’s development. Threats are defined as external forces that can cause significant harm but cannot be addressed internally as they are not controlled by the organization (Abraham, 2012). For Nokia, the cost of production materials for 5G devices is a critical Threat impeding its manufacturing performance. As resources utilized for electronic schemes and components are becoming scarce, technological companies struggle to secure these materials (Rost et al., 2016). Given that a high amount of materials will be needed to establish strong 5G coverage in North America, Nokia might experience the negative consequences of tremendous expenses.

Overcoming the Challenge Through Creating a Strategical Alliance

The proposed strategy for addressing the complication is based on ensuring the advancement of 5G coverage through collaboration with another entity, namely a network distributor located in North America. While Nokia could achieve complete coverage of this region using its resources, this approach would require a significant amount of time and expenses, meaning that the resources of the organization would be diminished. In addition, as some of Nokia’s competitors have already finished this task, with more technological companies competing for the provision of 5G coverage in this area, Nokia must secure a stronger position as soon as possible (Townsend, 2019). In this regard, gaining aid from a mobile network distributor could tremendously simplify the coverage process, providing Nokia with an opportunity to attain a strategic advantage over other device manufacturers.

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Another essential detail to consider is that Nokia has recently lost a sponsorship with one of the leaders in American telecommunication services. In 2020, Verizon launched a program to seek a supplier of electronic devices for establishing the 5G network in the US, aiming to award $6.6 billion to a prospective distributor (Morris, 2020). Although Nokia was competing for this possibility, the contract was delegated to Samsung, which tremendously decreased Nokia’s position in the United States market and the North American sector (Morris, 2020). From this perspective, establishing another agreement could incredibly improve the corporation’s reputation among customers and businesses, demonstrating the firm’s potential to continue its growth.

Creating an Alliance

Considering these aspects, there are two primary North American areas to be addressed by Nokia’s campaign: the United States and Canada. In the US, a beneficial strategic alliance could be created with US Cellular, a large-scale company providing network services in the region. With approximately 4.9 million customers and $4 million in revenue in 2020, US Cellular occupies a strong position in the American market (US Cellular, n.d.). Although smaller than Verizon, US Cellular can account for Nokia’s needs in the distribution of network services and the establishment of necessary connections, which is a crucial step in securing 5G coverage. Furthermore, this enterprise has previously exhibited its interest in a partnership with Nokia (Nokia Extends UScellular Relationship with 5G Standalone Core Agreement, n.d.). Thus, the discussed details suggest that an agreement with US Cellular could become a successful event for Nokia, ensuring that the 5G coverage issue is resolved.

As for Canada, a prominent organization for a partnership could be Rogers Wireless. The Canadian mobile network distributor is currently supporting approximately 10.9 million subscribers and has generated up to $11 billion in revenue (Macrotrends, n.d.). As such, Rogers Wireless remains one of the leading telecommunications companies in Canada and is currently promoting the establishment of 5G coverage throughout the country. A vital consideration to note is that Rogers Wireless has already obtained 5G equipment from Nokia to ensure 5G network access in some of the most populated Canadian regions; however, this contract was not renewed (Rogers Wireless, 2020). Therefore, Nokia’s 5G coverage of Canada is not yet complete, but it could be finalized with the help of Rogers Wireless. Such actions as the provision of network distribution in areas without 5G, access to 5G for customers, and promotion of Nokia’s 5G services could tremendously advance the settlement of the challenge.

Examining the Impact Through Organizational Metrics

To ensure the success of the implemented strategy, it is essential to rely on organizational metrics that help determine the outputs obtained after the initiation of the endeavor. For Nokia, it will be necessary to identify whether the strategic collaboration has yielded the required results and whether the network coverage issue was mitigated. in this assessment, the Nokia executives could rely on gross profit margin, production expenses, and changes in 5G network usage across North America.

The gross profit margin is a significant aspect of a business’s performance that can assist in clarifying the amount of money left after selling the 5G network equipment. This metric demonstrates how much profit was made after deducting additional costs for general administrative and selling expenses, illustrating whether the products or services sold had a beneficial effect on the financial standing (Baghersad & Zobel, 2021). In the scenario described, as Nokia should attempt to decrease its expenses on establishing 5G coverage, the gross profit margin could be used to ascertain if the company has made any profit through strategic alliances. From this perspective, if the gross profit margin of Nokia will increase after collaborating with US Cellular and Rogers Wireless, then the proposed strategy can be deemed effective.

Another crucial factor to examine is the production expenses, namely the cost of manufacturing and delivering 5G equipment to be utilized in North America. This metric allows for estimating the resources spent and comparing the expenses with the obtained advantages (Baghersad & Zobel, 2021). For Nokia, the factors assessed would be 5G coverage, customer satisfaction, and the corporation’s financial standing. Considering that providing the North American sector with the necessary amount of equipment requires a large variety of materials, Nokia should evaluate whether the attributed costs yielded positive results and whether any losses occurred in the process.

Finally, the changes in the 5G network usage across North America are vital coefficients for determining the success of the strategy and the resolution of the discussed issue. As such, elevated numbers of 5G mobile data usage and an increased amount of customers utilizing this network might be considered positive trends, which illustrate that the 5G network integration process was successful (Lamberg et al., 2021). In addition, it will be necessary to ascertain the 5G data usage across different geographical regions of North America, identifying the sectors where network consumption has achieved the highest degree. Nevertheless, it will also be imperative to contrast the production costs with the new level of 5G network usage, ensuring that the contributed resources have resulted in an expected increase and no significant losses were made.

Financial Considerations for Implementing the Plan

in addition to the organizational metrics, the financial components of the suggested plan should also be analyzed. The North American region occupies a tremendous amount of territory and is highly densely populated, especially with the United States region being one of the areas where Nokia generates the most of its revenue (Lamberg et al., 2021). In this regard, to provide sufficient 5G coverage for the residents of North America, Nokia will be forced to account for the increased population numbers and the high demand for 5G services, which in turn necessitates the establishment of efficient equipment.

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Thus, Nokia executives should consider the financial costs required for manufacturing the needed amount of 5G devices, delivering them to the North American region if necessary, and installing them. Furthermore, the company might be presented with the demand to spend additional funds on securing the materials used in the production of microchips and other electronic parts, as such resources are becoming increasingly scarce. Finally, marketing and advertising campaigns should also be integrated to promote collaboration and ensure that the North American population is aware of the 5G network availability.

Possible Costs of Ignoring the Challenge

Although the proposed strategy will require substantial financial investment, the possible costs of refusing to mitigate the presented issue might be considerably higher. As mentioned before, the North American sector comprises a significant portion of Nokia’s revenues, and the failure to provide the region with 5G coverage has already led to detrimental expenses (Lamberg et al., 2021). It has been reported that Nokia’s profits in 2020 and 2021 had dipped, with the reasons for these events attributed to the lack of 5G coverage in the USA and Canada (AP News, 2021). Furthermore, while Nokia stalled the launch of its 5G services, other companies have been able to surpass the corporation by obtaining a higher market position and securing lucrative deals (Morris, 2020). Samsung and Ericsson are perfect examples of Nokia’s competitors who have been thriving on the 5G network popularity, and further delays may be even more costly for Nokia’s executives.

Conclusion

To conclude, the 5G network coverage issue encountered by Nokia in the past year was described in detail in this paper, highlighting the details of this challenge and suggesting a strategic collaboration pathway that could resolve the discussed challenge. It has been demonstrated that this obstacle can extremely decrease the corporation’s profitability, leading to substantial financial costs in the future. Although the failure in North America has weakened the enterprise’s standing in the customers’ interest in its services, this disadvantage can be mitigated by creating an alliance with an American and a Canadian network distributor to ensure the completion of 5G coverage.

While decreased costs and assisting with the promotion of 5G services could be beneficial for Nokia, the collaboration could also improve the enterprise’s standing in the market. Nevertheless, the corporation’s executives should also consider the additional expenses connected to the initiation of this strategy, as well as the financial metrics that will help ascertain the success of the endeavor.

References

AP News. (2021). Nokia profit dips as it sees challenges in US market for 5G. Web.

Abraham, S. C. (2012). Strategic management for organizations. Bridgepoint Education.

Baghersad, M., & Zobel, C. W. (2021). Organizational resilience to disruption risks: Developing metrics and testing effectiveness of operational strategies. Risk Analysis [online ahead of print]. Web.

Fletcher, B. (2021). Nokia cites mobile progress but braces for challenges in 2021. Fierce Wireless. Web.

Lamberg, J.-A., Lubinaitė, S., Ojala, J., & Tikkanen, H. (2021). The curse of agility: The Nokia Corporation and the loss of market dominance in mobile phones, 2003–2013. Business History, 63(4), 574–605. Web.

Leadership and governance. (n.d.). Nokia. Web.

Macrotrends. (n.d.). Rogers Communication Revenue 2010-2021. Web.

Morris, N. A. (2020). Samsung’s $6.6B 5G deal with Verizon bodes ill for Nokia. Light Reading. Web.

Nokia extends UScellular relationship with 5G standalone core agreement. (n.d.). Nokia. Web.

Nokia’s strategy 2021. (n.d.). Nokia. Web.

Our history. (n.d.). Nokia. Web.

Rogers Wireless. (2020). Canada’s Rogers Communications expands 5G to Manitoba. Web.

Rost, P., Banchs, A., Berberana, I., Breitbach, M., Doll, M., Droste, H., Mannweiler, C., Puente, M. A., Samdanis, K., & Sayadi, B. (2016). Mobile network architecture evolution toward 5G. IEEE Communications Magazine, 54(5), 84–91. Web.

Townsend, W. (2019). Who is “really” leading in mobile 5G, part 5: Global carriers. Forbes. Web.

US Cellular. (n.d.). Financials—Quarterly Results. Web.

Whitelock, K. (2021). Overcoming the operational challenges of 4G and 5G slicing at scale. Nokia. Web.

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