NAME: ___________________________________________

SUBJECT AND SECTION: ___________________________

A Nokia case study

Building a global telecommunications business

Introduction
The twentieth century will be looked back on as the period when telecommunications
revolutionized people’s daily lives - from the first telephone call and short wave radio
transmission, to the modern era of mass instant global telecommunications patterns.

Telecommunication is the science of communication by telephony, radio, television

and computer networks. One of the most significant changes in recent times is the
agreement, signed in February 1997, which liberalized the world telecommunications
market. It is estimated this will lead to international phone charges falling by 80%. This
will, of course, have a dramatic impact on the world economy. Customers will be able
to contact suppliers all over the world for almost the same price as ringing their local
supplier.

The telecommunications revolution is leading the trend towards increasingly global

lifestyles. Any organization involved in telecommunications must therefore think
beyond its domestic market. Global businesses are seeking global
telecommunications suppliers.

The need for telecommunications has no limits. More and more users will want a
thousand times more data (bits) than is being transmitted on today’s networks. The
increased number of bits, however, does not only mean that a single person will
require and receive larger amounts of information. It means that quality will be vastly
enhanced, resulting in clearer images and sounds at the chosen destination.
Telecommunications will eliminate distance related problems. Global
telecommunications organizations are therefore required to meet growing consumer
demand for rapid, competitively priced methods of communication.
This case study focuses on one such organization, Nokia, a Finnish company which
has become a key global player in the telecommunications industry. Nokia's main
markets were in both Eastern and Western Europe until the transformation of the
Soviet bloc of countries in the late 1980s and early 1990s. The liberalization of trade
with the former Soviet bloc led to increased competition for Finnish companies who
had previously considered the Eastern European market their own. Nokia therefore
looked to expand globally - concentrating on its strengths and cutting out its least
effective lines.

The business writer Tom Peters has described this process as one of 'sticking to the
knitting'. It is something that some of the most successful companies like Coca-Cola
did in the 1990s. They concentrated on their best lines and cut out what they were not
so good at. They also decided to look to future markets rather than past successes.
Telecommunications will, of course, be the major growth industry of the post
millennium era.
Nokia is a leading international telecommunications company. The roots of Nokia go
back to 1865 and the establishment of a forest industry enterprise in south-western
Finland by mining engineer Fredrik Idestam. The year 1898 witnessed the foundation
of Finnish Rubber Works Ltd and in 1912, Finnish Cable Works began operations.
In 1966, the three companies were merged to form Nokia Corporation. At the
beginning of the 1980s, Nokia started to strengthen its position in the
telecommunications and consumer electronics market. Today, Nokia is a leading
international telecommunications group with net sales of FIM 52.6 billion in 1997.
Headquartered in Helsinki, the Nokia Group employed in 1997 over 36,000 people in
45 countries where it is strongly positioned as a global telecommunications business.

Business focus
Nokia concentrates on the key growth areas of wireline/wireless telecommunications.
The Group runs global R&D programs on audiovisual signal/data processing and
communications, third-generation wireless systems as well as integrated, multi-
service network solutions. A pioneer in mobile telephony, Nokia is the world’s second
largest manufacturer of mobile phones and a leading supplier of digital cellular
networks. The Group is also a significant supplier of advanced transmission systems
and access networks, multimedia equipment, satellite and cable receivers and other
telecommunications related products. Nokia’s

shares were first listed in Helsinki in 1915. Today, they are also traded in Stockholm,
London, Paris, Frankfurt and New York.

Today, Nokia is a focused telecommunications company, but this has not always been
the case. A successful company is one which can adapt to changes in its
environment. The secret is to anticipate future changes and adapt appropriately in
order to make the transition successfully. This process can be illustrated by
highlighting some examples of company’s evolution.

1865 Nokia was established as a forest-industry enterprise.

1898 Foundation of the Finnish Rubber Works.
1912 Establishment of Finnish Cable Works.
1967 Nokia, Finnish Rubber Works and Finnish Cable Works merge to form Nokia
Corporation.
1979 Nokia Mobile Phones, owned jointly by Nokia and Televa, was founded.
1982 Nokia introduced the first fully digitalized local exchange in Europe.
1991 The world’s first genuine Global System for Mobile Communications (GSM) call
was made in Finland with equipment supplied by Nokia. Core skills in rubber and
cable became the foundation of a cable lead telecommunications business. Once in
this market, it was a natural process to become involved in building telephone
exchanges and, with the global development of mobile phones, to be at the leading
edge of hand-held communications

In the early 1990s, Nokia made a major shift in its activities by becoming a focused
telecommunications company, as illustrated in the following chart. Nokia had
effectively decided that the future lay in:

Telecommunications products ('sticking to the knitting').

The global rather than simply the national market (manufacturing in 11 countries to
sell in 130).
In 1997, Nokia Mobile Phones accounted for 51% of Nokia’s sales and Nokia
Telecommunications for 35%. Other operations, (14% of sales) included Nokia
Multimedia Network Terminals and Nokia Industrial Electronics. Nokia Mobile Phones,
a pioneer in the development of cellular phone products, manufactures a complete
range of cellular phones for all digital and major analogue cellular phone systems.
Nokia Mobile Phones are used in all 130 countries that the Group’s products are sold.

Developing a global business

As the mobile telephone networks opened, Nokia faced competition from well-known
international rivals jumping into the Nordic market in Nokia’s own backyard. With this
directly challenging situation, the company soon learned what it would need to
succeed in a global telecommunications industry.

Whereas in some industries organizations focus upon domestic markets within limited
geographical boundaries, Nokia made a key decision in 1991 to increase its research
and development and global marketing. This was a critical decision which set a
pathway for the whole organization, so that Nokia was prepared when the cellular
boom hit world markets. The development of global strategies offered Nokia the ability
to respond and meet customer needs quickly as they developed, with the added
benefits of cost reduction, improved quality and competitive leverage.

Digitalization has ushered in a completely new telecommunications age. People’s

ideas of the nature of telecommunications will change fundamentally in the next
decade. Networks will become more customer focused and offer a wider range of
services. In simple terms, 'going digital' means that radio or television signals are
turned into strings of numbers (bits). These numbers occupy a much narrower part of
the network than conventional signals and do not corrupt so easily in the transmission.
Therefore, it is possible to:

 create more radio or television channels

 transmit clear, sharp 'phone pictures' on digital phone lines

 transmit much greater quantities of information at a faster rate.

Increasingly, data and graphics are transmitted over the phone in addition to speech.
Therefore, new technologies are being developed to enhance the capacities of access
networks. By the year 2000, it will be possible to transmit approximately one hundred
times more information, cost-effectively, over access networks than was possible in
1986. These and the home multimedia terminals of the future will allow integrated use
of telecommunications, computer applications and media technologies.
Nokia identified the opportunity for digital developments before anyone else,
introducing its first digital transmissions systems in 1969. Following ongoing research
and development in this field, Nokia was able to deliver the first GSM network in 1991.
The third-generation telecommunications systems, UMTS (Universal Mobile
Telephone System) and FPLMTS (Future Public Land Mobile Telecommunications
System), will be standardised during the next few years prior to launch at the
beginning of the next millennium. Future solutions will include new platforms on which
operators will build their service ranges.
Third-generation wireless telecommunications will support versatile
broadband services largely based on various combinations of image, voice and data.
The investments required for the new systems are so great that the networks must be
developed in stages.

Competitive advantage
As broadband systems become more popular, the share of data in all network traffic
will increase. New product possibilities include the Internet whose rapid expansion is
stunning the world. The Internet will generate a new demand for broadband services,
thereby offering new challenges, as well as business potential, to Nokia.
The highly entangled Internet web-sites provide neither sure access to the data
required nor guarantees as to their accuracy. In the future, there will be many
opportunities for companies who can offer a professionally managed Internet network
to operators. Nokia is currently developing circuit switched and packet switched data
traffic which will vastly speed up the transfer of large volumes of data in a quickly and
easily accessed way through the Internet.

The telecommunications market is highly competitive. In the future,

telecommunications and information technology, as well as different media technology
applications, will often merge. In order to keep ahead of the field, Nokia is seeking
differentiation strategies which build on its current strengths and include its high
frequency technology expertise. Nokia’s extensive R & D investment has been
channeled into a number of key areas where it knows it can create a competitive edge
over its rivals. Staff training and development is targeted at these areas known as
core competencies.

By focusing on consumer requirements, Nokia has become a symbol of user-

friendliness, simplicity and style, combined with high technology and broad choice of
features. The emphasis placed on meeting consumer requirements is likely to
maintain Nokia’s competitive edge in the future.
Nokia’s ability to keep ahead of the competition is illustrated by one of its most recent
state-of-the-art products, the Nokia 9000 Communicator, launched in 1996. It is a
GSM phone with fax, e-mail, short message service, address-book, calendar and
Internet connections and created an entirely new category of digital all-in-one
communications device. The Nokia 9000i Communicator was introduced in 1997 with
enhanced software features.
 Using values to drive business
At the heart of any successful organization is a value system that drives the
organization forward. As an international company, Nokia needs to recognize and
value the diversity of its individual employees and its operating units. However, it also
needs to generate a shared vision within the Group.

The Nokia values, common to all its divisions whatever the country, are those of:

Customer satisfaction - Nokia is a market driven company which sets out to identify,
anticipate and satisfy customer requirements.

Respect for the individual - This is based on open and honest communications
between members of the organization, fair treatment at all times, mutual trust, the
ability to depend on each other and accept diversity. Nokia employees are expected
to be able to make decisions for themselves and work together as a team. In 1997,
Nokia employed more than 36,000 people from all nationalities, ethnic groups, ages,
sexes and backgrounds. Nokia continues to cherish this diversity and views it as a
core strength in helping to generate a variety of local and global solutions.

Achievement - Nokia places a strong emphasis on the achievements of the

organization and the individuals within it. This emphasis is based on creating a shared
vision of how the organization can become the global leader in telecommunications.
By empowering its employees - encouraging them to take responsibility for their own
actions - Nokia has created a workforce that fights to win rather than sitting back and
letting others do the work.

Continuous learning - Rapid decision-making and flexible use of resources are

critical in the dynamic field of telecommunications. Nokia sees itself as a learning
organization - it does not rest on its existing strengths but seeks to add to them,
encouraging employees to take on more responsibilities and acquire new knowledge
and skills. This world-wide network of knowledge and expertise is at the disposal of all
the members of the Nokia team and is ultimately available to provide complete
customer satisfaction.

On the space provided on the next pages, write down your ABSTRACT,
CONCLUSION AND RECOMMENDATIONS regarding this Case Study.
ABSTRACT
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
___________________________________________________
CONCLUSION
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
___________________________________________________
RECOMMENDATION
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
___________________________________________________
REFERENCES (APA Format):

Books
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________

Internet Source
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________