This paper is aimed at examining strategic management in Nokia Corporation. In particular, it is necessary to determine whether this management function corresponds to the current needs of this company, and external or internal environment. One of the major tasks is to show Nokia’s strategies are formulated and implemented. One should bear in mind that at the given moment, there are many definitions of such a notion as strategic management.
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Overall, this concept can be defined as the formulation of the organizational vision; moreover, this notion includes planning, controlling, and directing the whole range of a company’s activities to attain future objectives (Tyndall, Cameron, & Taggart, 1990, p 9). Among other aspects of strategic management, one can distinguish sustaining competitive advantage, managing opportunities and threats, or enhancing capabilities and competencies (Sadler & Craig, 2003, p 9). This paper will cover such issues as the macro-environment of Nokia Corporation, and its major competitors, and current policies, HRM practices, and leadership. This discussion can show if Nokia needs to modify its policies.
Overview of the company
It should be pointed out that Nokia was founded by Frederik Idestam in 1965 (Steil et al 2002, p 225). From the outset this company specialized in the forest industry, however, in 1912 it merged with the Finnish Cable Works (Stadler, 2011, p 122). Before the 1990s, this enterprise marketed a variety of products, for example, consumer electronics, rubber products, paper, or computers (Lewis et al, 2006, p 344).
Yet, that time the company’s focus shifted on telecommunications, mobile phones, and network equipment. Currently, Nokia can be viewed as one of the most valuable and recognized brands in the world. Its offices are located in different European countries and the United States; while the number of its employees constitutes more than 130.000 people (2011b, p 27). One can point out that current strategies and strategic management practices in Nokia evolved during the last two decades.
It is quite possible to argue that strategic management in Nokia is based on the active participation of employees. This task is not left only to senior executive officers. The thing is every six months senior management selects approximately 400 employees who can work in various divisions of this company (Lewis et al, 2006, p 344). These people are divided into teams and they explore various issues related to product development, customer relations, technology innovations, pricing policies, and so forth.
Based on the reports submitted by such research teams, the company shapes its future strategies (Lewis et al, 2006, p 344). Thus, employee participation lies at the core of their strategic management practices. Such an approach facilitates the flow of information within the company and promotes a better exchange of ideas. It should be noted that in this way the employees can affect various aspects of strategic management, namely analysis of the situation, evaluation of the alternatives, choice, and event planning. This policy is the major strength of strategic management in Nokia. To a great extent, this is the cornerstone of their success.
On the whole, their current strategy is composed of several important elements. First, one should mention their intention to form a long-term partnership with Microsoft to provide more software solutions to their customers (Nokia, 2011, unpaged). Additionally, this company is planning to invest more in Research and Development. Their goal is to provide customers with more break-through technologies. One of their postulated intentions is to regain their leadership “in the smartphone space” (Nokia, 2011, unpaged).
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It is possible to single out the following component of the Nokia strategy, namely, bringing innovative products to the customers, brand differentiation, and excellent after-sale services. Also, such researchers as John Thompson and Frank Martin identify the following aspects of Nokia’s strategy: 1) specialization or focus on telecommunication technologies, 2) willingness to adjust the company to a highly globalized market, and 3) creation of value-added products (2010, p 468). These objectives or priorities are reflected in many activities of this corporation, namely leadership, marketing, product development, and so forth.
External and Internal Environment of the company
At this stage, we need to determine to what extent their strategic management is suitable for this company. First, it has to reflect the internal and external environment of the organization. When speaking about the internal environment of Nokia Corporation, one should identify its major strengths and weaknesses. Among the major advantages of this company, we should first single out brand loyalty. At this point, Nokia is the fifth most popular brand in the world; it is ranked only behind Coca-Cola, IBM, Microsoft, and Toyota (Lamb, Hair & McDaniel, 2011, p 341).
One should take into consideration that Nokia’s brand is a very important value-adding element; it enables the company to enter emerging markets such as India, Russia, or Chine (David 2009, p 252). None of their competitors can boast of such a brand image. In this respect, it is quite understandable that Nokia’s strategic goal is to further enhance its brand image by providing innovative products to the customers.
Another strength of this corporation is its research capabilities. Its overall research and development expenses are 5,863 billion Euros (Nokia Corporation, 2011 b, p 34). This company cooperates with many leading universities in Europe, Asia, and the United States. Such investment in R&D ensures that they can create new technological solutions. Overall, vast research capabilities are crucial for the achievement of a Nokia strategy since they operate in a market in which companies have to frequently offer new products to the customers.
However, one should not suppose that Nokia’s strategy management is entirely devoid of limitations. As it has been mentioned before, their major objective is to regain leading positions in the “smartphone space” (Nokia, 2011, unpaged). However, very little is being said about their other products like mini laptops, internet tablets, or global positioning systems. It seems that this enterprise has become too focused on one particular product, and this decision can prove very imprudent in the long term. Besides, one should not forget that brands are usually created holistically which means that the company must always create products of the highest quality to win customer’s trust (Banwise & Meehan, 2011, p 13). In turn, this means that by focusing only on smartphones, Nokia can harm its brand image. This is the peril of focusing on one particular product and overlooking the others.
Another weakness of Nokia is that it is very dependent on the supplies of software for their cell and smartphones. In the past five years, the company used the Symbion operating system (Banwise and Meethan, 2011, p 11). Yet, nowadays it is regarded by many as obsolete. This is why the company chose to rely on Microsoft and its software solutions. Unlike Apple, Nokia failed to develop an OS that would best fit the needs of the client. Failure to develop their operating system can increase the vulnerability of this corporation. At the given moment, one can hardly predict the results achieved by their partnership with Microsoft.
The main issue related to their external environment is the extreme saturation of the mobile and smartphone market. Currently, Nokia has to compete with such companies as Apple Inc, Samsung, Sony Ericson (Curwen & Whalley, 2011, p 116). This corporation operates in a market in which new products and solutions are offered to customers regularly.
Under such circumstances, technologies and solutions are quickly emulated (Curwen & Whalley, 2011, p 116). Judging from this external environment, one can argue that their strategy management practices are quite prudent. In this case, one should emphasize the willingness of the senior management to engage employees in planning and decision-making. To be agile, the company must ensure that its employees share ideas and react to the changes in the environment.
Yet, there are significant limitations in Nokia’s strategic management. For a certain period, the viewed itself as the unquestionable leader of the mobile phone market; they overlooked the possibility of new entrants such as Apple. The increasing popularity of the iPhone significantly reduced Nokia’s market share (Banwise & Meehan, 2011, p 11). Such scholars as Patrick Barwise and Sean Meehan argue that the company’s situation is now very similar to that one of Motorola in 1994 when Motorola lost its leading positions even though it was a major mobile phone brand (2011, p 11). This is the danger that Nokia should be aware of, if they do not want to give way to Apple, Samsung, or Sony Eriksson. Hence, one must always remember that an excellent brand name does not guarantee continuous success.
Strategy and HRM
Human resource management is closely linked with Nokia’s implementation of its strategies. First, this corporation attempts to make its workforce globalized; in part, it is done by making English the official language of the company (Steinbock, 2010, p 66). This requirement is essential for the effective exchange of information within the company.
The company has a proactive human resource program and policies through which the company makes sure that only qualified workers are hired and that the employees do not lose their motivation and hence their morale. In this respect, we need to mention that HR managers of Nokia recruit people from a great variety of universities which may be located all over the world (Steinbock, 2010, p 85). Again, we can say that such a policy is indispensable if the company wants to compete in a globalized market.
The company HRM plays a major role in ensuring that the company can meet its objectives by ensuring that the employees attain job satisfaction and high morale. Thus there are ways through which the HRM achieves this, for example by using its remuneration bonus schemes to encourage employees to meet their targets (Steinbock, 2010, p 259). Also, regularly the company holds conferences or training programs for its employees whereby they are kept at par with the latest technology and trend in the telecommunication industry. These examples show that Nokia tries to align its HRM policies to the strategies and goals that they set. This emphasis on HRM contributes to their overall success.
Again, leadership is closely tied with such tasks as sustaining competitive advantage and achieving strategic goals. Nokia develops various training programs for their employees so that they could develop their leadership qualities and take independent decisions (Avery, 2006, p 156). This initiative is quite understandable because the workforce of this corporation must quickly adjust to changing organizational needs and external environment ((Avery, 2006, p 156). Those people, who cannot act as leaders can hardly cope with this task. Overall, a person, who is employed by Nokia, is encouraged to act as a decision-maker, researcher, and a leader. This is one of the reasons why this company is always able to bring technological innovations to the market.
This analysis indicates that despite some limitations Nokia’s strategic management meets the needs of this organization and reflects the situation in the market. Strategic decision-making in this company is based on close cooperation between senior officers and other employees. Such an approach makes this corporation more agile. The main issue which does require attention is that Nokia can become too focused on one particular product while overlooking the others. Nokia can connect its strategic management to other aspects such as leadership or HRM practices. Another weakness that one can identify is extreme dependence on software developers, especially those that provide operating systems to Nokia.
Avery G. (2006) Leadership for Sustainable Futures: Achieving Success in a Competitive World. London: Edward Elgar Publishing.
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