2. BACKGROUND:
Nokia Corporation was the world’s leading mobile phone company and the market frontrunner for
several decades. The origins of the company date back 150 years ago to rubber and wood industry,
however the history of the modern Nokia company, as we know today, began in 1967 when Nokia
Corporation was formed by merging three Finnish companies: Nokia AB (a wood-pulp mill
founded in 1865), Finnish Rubber Works Ltd (a company producing rubber boots, tires and other
rubber products founded in 1898) and Finnish Cable Works Ltd (a producer of telephone and
power cables founded in 1912).
After the fusion, Nokia set its focus to telecommunication industry and manufacturing of electronic
devices. In 1982 Nokia introduced the world’s first car phone for the Nordic Mobile Telephone
analog standard which marked the beginning of mobile communication era. That same year the
first fully-digital local telephone exchange in Europe was created by Nokia’s engineers.
Another major breakthrough in mobile communications industry was when the GSM standard for
second generation (2G) digital cellular networks was adopted as the European digital standard.
Consequently, the first GSM call was made with a Nokia phone in 1991 in Finland, and in the
same year Nokia was selected to provide GSM networks for other European countries.
With this major breakthrough in mobile communications industry Nokia saw the market potential,
therefore the decision was made to focus entirely on telecommunications business and become a
market leader in every major segment. Mobile communications evolved rapidly throughout 1990s
and 2000s and Nokia was able to capture that growth and maintain global market leader position
up to the year 2008
PERIOD OF 2003-2007:
The period of 2003-2007 marks the great success and rapid growth of Nokia Corporation. Due to
the major breakthrough in telecommunications industry Nokia saw an opportunity to become a
market leader in major global markets. The company was now reorganized into four business units
which were supported by three cross-divisional horizontal groups that support the business groups:
Customer and Market Operations; Technology Platforms; and Research, Venturing and Business
Infrastructure.
3. Fig 1: Organizational structure of Nokia, effective 2004
Company continued to swell and year 2006 marks the shift in the company’s strategy. The
management, saw that the success of the company might be threatened by maturing mobile device
market and therefore identified the need to diversify company’s activities. New strategy included
expansion to consumer Internet services and network solutions, as well as increase in professional
and enterprise services besides the existing mobile device market strategies.
In 2007 Nokia’s Networks business unit was separated from the rest of the business groups and
combined with Siemens carrier-related operations to form a new business segment – Nokia
Siemens Networks. The rest of the business units together with horizontal functional groups were
combined into an integrated business segment – Devices & Services. Later on in 2008 acquisition
of NAVTEQ Corporation created a wholly-owned subsidiary of Nokia – separate business
segment which provided mapping and other location-based content and services.
Fig 2: Organizational structure of Nokia, effective 2008
Technology and architecture was also the crucial factor for Nokia’s success – most of the
technology was invented and developed in-house, intellectual property accounted for 11000
4. protected patents and only 20% of the production was outsourced. In 2006 Nokia also made efforts
to engage its consumers by offering downloadable online content through Nokia Content
Discoverer service, and Nokia Music Recommenders.
During the period on 2003-2008 Nokia has made more than 15 acquisitions of various software
companies in order to expand its in-house knowledge and ensure solid development of its Mobile
devices and software platforms. For example, in 2003 Nokia acquired Sega.com Inc in order to
enhance online games and multiplayer technologies; 2008 marked the successful acquisition of
NAVTEQ company – a leading provider of comprehensive digital map information, which led to
successful development of Nokia maps, navigation and location based services, etc.
PERIOD OF 2008-2011:
Towards 2008 many changes happened in mobile communications industry as well as Nokia
Corporation. After the introduction of Apple’s iPhone in 2007 and Google’s announcement to form
Open Handset Alliance for developing standards of mobile devices and, most importantly, Android
OS, the situation in the market started to stir up.
Since 2008 company had 3 reportable business segments: Services & Devices, NAVTEQ and
Nokia Siemens Networks. Services & Devices business unit combined three former mobile device
business groups – Mobile Phones, Multimedia and Enterprise Solutions – and the supporting
horizontal groups. The Devices & Services group had three units – Devices, Services and Markets.
Company’s top management believed that the new structure will increase efficiency and fasten the
development processes.
NAVTEQ Corporation was acquired on July 10, 2008 and became reportable business unit of
Nokia Corporation. The acquisition was successful and gave Nokia the comprehensive knowledge
of digital map information and related location based content and services. Due to this technology
Nokia was able to develop and introduce automotive navigation systems, mobile navigation
devices, Internet based mapping applications, etc.
Main competitors that developed the operating system software at that time included Apple,
Google, Microsoft, Palm and Research in Motion. In 2008 Apple’s flagship device iPhone 3G was
released as well as the first Android powered smartphone – HTC Dream.
In 2008 Nokia’s top management made a decision to acquire the full ownership of Symbian Ltd.
which still was the world’s leading smartphone software at the time. Symbian OS became fully
open source and available royalty-free since February 2010. Nokia has dedicated its full power to
developing feature-rich mobile devices and started selling off its side business lines, such as
enterprise software development business, security appliance business, Symbian Professional
5. Services, etc. Despite the lost market share in the high-end sectors Symbian OS still retained the
market leader position in low-end mobile device market.
In February 2011 Nokia’s management announced many major changes for the company. First of
all, it was officially announced that Nokia is “entering a broad strategic partnership with Microsoft
to build a new global mobile ecosystem and Windows Phone would serve as Nokia's primary
smartphone platform “. The development of Symbian was outsourced to Accenture.
Fig 3: New operational structure of Devices & Services business unit
PERIOD OF 2013:
After 2 years of close cooperation between Nokia and Microsoft, in September 2013 companies
announced that Microsoft will purchase all of Nokia’s Devices & Services business, license
Nokia’s patents, and license and use Nokia’s mapping services.
6. VISION & MISSION:
VISION:
“Nokia’s Vision is to expand the human possibilities of the connected world.”
Nokia wants to create a new world; To transform a big planet into a small village. Their vision is
to create, build, and encourage people from all countries to communicate with each other in order
to create a world where everybody is created.
Nokia continues to imagine how technology blends into our life, working for us, discreetly yet
magically in the background.
MISSION:
“Nokia’s Mission is to shape and revolutionize how people, businesses, and services connect
with each other creating new opportunities for everyone.”
To weave together the networks, data and device technologies to create the universal fabrics of our
connected lives.
7. SITUATIONAL ANALYSIS:
Currently, Nokia is at a junction where its main business of mobile and devices has been sold to
Microsoft. Nokia wants to connect the world as stated in its vision using its strength of research &
development and networking which it is good at. During its previous years Nokia had acquired
many small companies as a part of its growing plan which requires to be divested from the parent
company.
On the basis of the vision Nokia proposes a new business model consisting of five business units
that are mobile networks, fixed networks, IP/Optical networks, application and analytics, Nokia
technologies. From this it can be concluded Nokia is on the path of entering into the new market
of networks combined with cloud computing, Internet of Things, Data analytics, 5G as well as
sensors and imaging.
SWOT ANALYSIS:
STRENGTHS WEAKNESSES
Well established market position
Widespread geographic presence
spreads business risk
Robust patent portfolio
Concentrated customer base
Declining revenues from Nokia
Networks Business
OPPORTUNITIES THREATS
Strategic acquisition of new companies
related to networking and research
Strong focus on expanding its presence
in 4G LTE market
To divest old businesses
Intense competition
Foreign exchange currency fluctuations
Weak macro-economic conditions
8. STRENGTHS
WELL ESTABLISHED MARKET POSITION:
Nokia has established a strong market position across all its businesses over the years. According
to the company, Nokia Networks is the third largest company in mobile infrastructure and related
services industry. It has a strong position in all generations of radio network technologies,
including second generation (2G), third generation (3G) and fourth generation (4G). In addition,
Nokia Networks has partnerships with most of the world’s largest mobile operators, including
Bharti Airtel, China Mobile, Deutsche Telekom, NTT DoCoMo, SoftBank, Sprint, Telefonica,
Verizon and Vodafone.
Further, Nokia Technologies is considered the leading innovator in key cellular standards, as well
as wireless large area network (LAN), near field communication (NFC) and various audio, speech
and video codecs. Nokia’s strong market position across all its business divisions provides
significant competitive advantage to the company. It provides Nokia with favorable competitive
environment; and enables it to leverage opportunities from the growing end markets, to drive
strong growth in its revenues.
WIDESPREAD GEOGRAPHIC PRESENCE SPREADS BUSINESS RISK:
Nokia has a diversified geographic presence. The company has operations and research and
development (R&D) facilities in Europe, North America and Asia. It also has sales offices in
approximately 130 countries. The company's widespread footprint reduces its exposure to risks
associated with operating in a particular market. It also provides Nokia with benefits such as cost
reductions through economies of scale. In addition, this geographic diversity provides proximity
to customers, enabling the development of close relationships.
ROBUST PATENT PORTFOLIO:
Nokia has established a robust patent portfolio in a range of technology areas, including radio
connectivity and networking, multimedia, user interface (UI) and software, hardware, product, and
mapping and location services. Nokia Networks business owns a portfolio of nearly 4,000 patent
families comprising of approximately 11,000 individual patents and patent applications across an
array of technologies. The company’s intellectual property rights (IPR) portfolio includes
standard-essential patents (SEPs) and patent applications related to LTE, wideband code division
multiple access (WCDMA), Global system for Mobile Communications (GSM) and other
standards.
9. WEAKNESS
CONCENTRATED CUSTOMER BASE:
Nokia’s businesses depend on few customers for significant portion of their revenues. Nokia
Networks derives large proportion of net sales from limited customers and large multi-year
agreements. The consolidation among these customers leads to a greater portion of revenues being
attributable to smaller number of large service providers operating in multiple markets. In addition,
mobile operators are increasingly entering into network sharing arrangements, as well as joint
procurement agreements, which may reduce their investments and the number of networks
available for Nokia Networks to service.
DECLINING REVENUES FROM NOKIA NETWORKS BUSINESS:
The company witnessed a significant decline in its revenues from the Nokia Networks business.
The decline in the revenues from this business was attributed to reduced wireless infrastructure
deployment activity, which affected both global services and mobile broadband businesses.
Further, the decline in the sales from this business was attributed to decrease in global services net
sales and decline in sales in mature radio technologies.
OPPORTUNITIES
STRATEGIC ACQUISITION OF NETWORK AND RESEARCH BUSINESSES:
Nokia requires to merge with companies like Alcatel-Lucent to lead to the creation of an
innovation leader in next generation technologies and services for an internet protocol in the
connected world. Such strategy acquisitions will enable Nokia to strengthen its product portfolio
in the domains of optical transmission and IP. It would help Nokia to focus on future technologies,
including 5th
generation, IP and software define networking, cloud, analytics as well as sensors
and imaging and strengthen its product portfolio.
STRONG FOCUS ON EXPANDING ITS PRESENCE IN 4G LTE MARKET:
The company is focused on enhancing its presence in the 4G LTE market. The company’s Nokia
Networks is focused on the development of LTE-Advanced and 5G technologies as well as small
10. cells and radio cloud. The company is one of the leading suppliers to 15 of the world’s top 20 LTE
operators.
TO DIVEST OLD BUSINESSES:
To acquire new businesses in networking the company require to divest its old business which
were acquired during its growth period. Businesses like HERE that is the virtual mapping business
and various other business requires to be sell off to help Nokia out of its financial crisis at the same
time it will also help Nokia to invest in new Businesses.
THREATS
INTENSE COMPETITION:
The company faces intense competition in the networks business. Nokia's networks business
primarily focuses on mobile broadband infrastructure and related services market, which is
characterized by rapidly changing technologies, frequent new solutions requirements and product
feature introductions and evolving industry standards. The segment's performance depends on the
timely introduction of new products, services and upgrades of current products to meet the
evolving requirements of its customers, to comply with emerging industry standards and to address
competing technological and product developments carried out by its competitors.
FOREIGN EXCHANGE CURRENCY FLUCTUATIONS:
Nokia operates globally and is thus exposed to foreign exchange risk arising from various
currencies. The magnitude of foreign exchange exposures changes over time as a function of the
company's presence in different markets and the prevalent currencies used for transactions in those
markets.
WEAK MACRO-ECONOMIC CONDITIONS:
Nokia’s sales and profitability depends on general economic conditions both globally and
regionally, as well as industry and market developments in numerous diverse markets. Difficulties,
uncertainty or any deterioration in global economic conditions or the occurrence or escalation of
political unrest may result in mobile network operators postponing or reducing their investments
in their network infrastructure and related services.
11. REGULATORY ENVIRONMENT:
The markets in which the company operates are highly regulated. Nokia's business is subject to
direct and indirect regulation in each of the countries where it or its clients operate. The company
develops many of its products based on existing regulations and technical standards. As a result,
changes in various types of regulations, their application and trade policies applicable to current
or new technologies or products may adversely affect its business and results of operations.
Fig 4: Business Evolution Model of Nokia from 2004-2011
12. RECOMMENDATION
IT VISION & MISSION
To enable and develop IT infrastructure for Nokia in such a way that it aligns with company’s
Vision and Mission and becomes more of an enabler than a hindrance in the progress of Nokia.
IT STRATEGY
We require to formulate an IT Strategy for Nokia when it’s in the process to sell off its Mobile
Device and Services business to Microsoft which was the major part of the company and generated
the most revenue for them. The strategy should be designed in such a way that it helps the company
achieve its Vision and Mission for the year 2020. Networking has always been a part of the
company which the company plans to advance and further develop on. To be able to do this Nokia
requires getting rid of Businesses which are not making any profit to the company or are no longer
aligned with companies need. At the same time purchase businesses which will help Nokia to
further develop in the field of Network and Research.
The IT strategy being designed requires to be revisited every year and should be analysed. It should
be agile in nature and keep transforming according to the need of the company. Since Nokia is in
the transformation phase so the IT Strategy should not create any hindrance for the company or
slow down the process instead it should be dynamic in nature and keep up with the changing trends.
GOALS AND OBJECTIVES
TO IMPLEMENT AN IT STRATEGY FOR NOKIA FOLLOWING GOALS ARE BEING
DEFINED WHICH REQUIRES TO BE ACHIEVED:
DIVEST MOBILE DEVICE AND SERVICE BUSINESS FROM PARENT COMPANY.
As of 2013 Nokia is in the process of selling its Mobile Device and Services Business to Microsoft
since it’s been generating losses for the company. Nokia has not been able to sustain its Mobile
business and develop it further so the company decided to unload the entire business unit
altogether. To enable this and help in a smooth transition for Microsoft and Nokia the IT requires
fulfilling the following objectives in the first initial year that is by 2014.
13. • Segregate the Business IT systems like Database, SAP, IP protocol and networking from the
parent company and at the same time integrate it with Microsoft in collaboration.
• If any Nokia business is affected by the process provide that business the necessary IT support
to start again.
• Develop a Data warehouse to store all the historical files related to Mobile System Business
which can be accessed in future if the need be.
• Define Security protocols and denial of service for employees who have been laid off or
transferred to Microsoft during the transfer and acquisition period.
IMPLEMENT CUSTOMER RELATIONSHIP MANAGEMENT SYSTEM.
During the entire process of the downfall of Nokia, the major issue which was prevalent in the
entire scenario was the lack of customer feedback. No steps were taken into consideration to see
what the customer needs or to see how satisfied or dissatisfied the customers were with the Nokia
products. To avoid this in future, since Nokia is trying to expand into Networking Business which
already has few customer and strong competition it is very much required that Nokia gives due
importance to its customer. For this, we require implementing proper Customer Relationship
Management system.
Objectives for the same are as follows:
• Plan to outsource Customer Relationship Management System to IBM discuss the outsourcing
agreement with the company.
• Ask for requirement analysis for the system to be install on all site locations.
• On the basis of requirement prepare a checklist for all sites if some IT requirements not fulfilled
make plans to fulfil the IT requirements and invest for the same.
INTEGRATE PRODUCT KNOWLEDGE OF VARIOUS BUSINESS.
Nokia plans to venture into Networking Market with five business unit which are the Mobile
network, Fixed network, IP/ Optical Network, Application and Analytics and Nokia Technologies.
For the benefit of the company and to save cost a system should in place were all documents related
to product development are made available to everyone. Since three business units are related to
various forms of the network it will help in reusing product design for the various project of the
company and help save time and money.
14. Objectives:
• Digitalized all the product development related documents.
• Design a database where all documents related to all the prior and current product are stored
and access is granted to all members of the development team of various business. This will lead
to easy sharing and flow of information in the company.
INTEGRATE ALCATEL-LUCENT INTO THE PARENT COMPANY.
Nokia requires to purchase a new company like Alcatel-Lucent and integrate it with the Parent
company. Alcatel-Lucent will be able to provide expertise to Nokia in the field of Research and
Development as well as in the field of Networking.
Objective:
• Deploy IT systems being used by Nokia into Alcatel-Lucent Office sites.
• Integrate all the IT system with Nokia and make them compatible with Nokia standards.
• Assign access to all Alcatel-Lucent employees into Nokia system.
• Provide training to Alcatel-Lucent Employees with the new IT systems.
DEVELOP NEW BUSINESS DEPARTMENT FOR NEW IDEAS.
Nokia plans to venture into the new and unknown field of cloud computing, Analytics and Nokia
technologies. For this, the company requires to motivate new business and product ideas in its
company and also give them the much-needed boost by providing all the support needed. IT plays
an important role in this since it will be able to keep tabs on all the development related to all this
new field.
Objective:
• Assign IT head to this business department to keep a tab on all the new business development
and to check whether it's aligned with Nokia’s future strategies. So that all the projects
development is evaluated on regular basis.
• Provide the department with all the IT support needed to set up their business.
16. CONCLUSION
Nokia has always been a company which kept changing its business domain from rubber to
telecommunication to mobile devices. Right now it is on the verge of again changing its business
domain to that of networking and in future again Nokia plans to shift to various new technologies
like 5G, Cloud computing and much more. To design an IT Strategy for a company like Nokia is
not a child’s play the company profile is so dynamic and the company itself keep changing a lot.
We required an IT strategy which could match with Nokia’s vision and mission of 2020 and at the
same time, it should be agile in nature so that it’s adaptable to the changing needs. We designed
an IT Strategy keeping Nokia current and future needs in mind and devised a path for the same. It
is recommended to revisit the above mentioned Strategy on an annual basis. This will help the IT
department to evaluate its strategy and how have they succeeded in the previous year and to check
if any change in strategy is required on the basis of company needs.
