ContentsIdentify and discuss the multidimensional external forces that brought changes to Nokia.........................................2Question: Critically discuss the nature of changes and their impact on company’s operations...................................5Evaluate the proposed changes by the company and recommend appropriate methods for implementing it..........................7In an attempt to facilitate the change process, advise Nokia’s leaders on issues of organisational culture, politics and leadership......................................................11

References........................................................13

Identify and discuss the multidimensional external forcesthat brought changes to Nokia.

The multi-dimensional changes which have occurred in and around

Nokia can be explained through the environment, Industry and other

strategic analysis which have had direct effect on the working of

company. The first segment in this answer focuses on how external

forces determine the changes which are strategic in nature to the

firm. The second segment diagnoses as to how and what kind of

external forces have been in action which have changed the face of

Nokia.

These analysis have been observed by various strategic authors like

Porter. Some of them include:

PEST: for Wider scanning of global market conditions

Porter’s five forces: This is for Industrial scanning of conditions

SWOT analysis: This is to consider the Strengths, weaknesses,

threats and opportunities of Firm.

Environment analysis is necessary as choo (2008) in one of his

papers whereby he states that with environment scanning one gets to

know about the rate of change and complexity in outside environment.

The external forces which have acted to bring changes to the firm

begin from identifying the environment of the firm. Few authors also

express that company’s marketing system must operate within

framework of forces which comprise of firm’s environment and this

includes major external variables which are not easily controllable.

Companies can use the environmental scanning to pursue many

strategic decisions such as foraying into new market, investing in

new product line or to innovate the current product (Babatunde and

Adebisi, 2012). Porter argues that sustainable competitive advantage

cannot be achieved through operational effectiveness alone. It has

to incorporate innovative nature to explore different horizons. He

further argues that some companies in last decade have tried to be

innovative by re-engineering their operations to stay ahead of the

competition like just in time method, business process re-

engineering (Babatunde and Adebisi, 2012).

Moving on to the external forces scanning one can say that PEST

analysis is best tool for analysing the span of 10 years (2000 to

2010) in the time which has effected Nokia’s profits.

Political: On the political front the collapse of many corporations

and housing problems had effect on the economies as whole. Further

the gulf wars on political front also had effect on the world

economies making it difficult for companies to expand in those

particular countries. These political issues combined with others

had effect on the Turnover and changes which were felt around many

companies.

Economic: There are a number of changes that may have contributed to

the rebound in economic growth over the past decade. Probably the

most important is the rise of China, and its imports from developing

countries. China’s economy has multiplied more than 17 times over

the past three decades, to become the world’s second largest economy

(Weisbrot, 2012). The other factors which contributed to the

recovery and slowdown of the world economy was the Wall Street

breakdown from 2007-2010. However it was china’s economic growth

which balanced and also the developing countries which helped the

economies to recover the slowdown (Weisbrot, 2012).

Social: Amongst the other social impacts the cultures came closer

than before with the social networking websites. These social

websites had impact on behaviour, beliefs and everything in daily

lives of people. These affected the needs and wants of people on

larger extent.

Technology: The technology factor in these years changed a lot

because of the search engines, smart phones and the graphitic

technology which brought various other markets closer and changed

the industry dynamics. Amongst the other industries Mobile

communications was the worse which got hit with the advent of these

factors. Nokia’s turnover was effected by these factors most than

others but however the other factors contributed to the erosion of

the position in world brands.

Furthermore the Industry Dynamics can be understood through the

porters Industry model of rivalry and then factors effecting those

powers.

Source: Google/images, 2014

The above model with relation to telecommunication Industry can be

followed up and how it has evolved and changed to bring changes to

Nokia through external forces.

Threat of new entrants: The new entrants can be low if capital

requirements are more like in the case of telecommunications

Industry. To start a new venture in this Industry a lot of barriers

and switching costs are required like purchase of licence for new

software to be embedded in the mobile phones and also various

government policies are to be scanned. To quote an example the

telecommunication regulations and policies which are chalked out in

different countries can affect the particular new firm foraying in

this market. Hence threat of new entrant on whole with global front

is high because of incumbent regulations and rules which only make

way for huge capital owners to expand in this Industry.

Bargaining power of buyers: It is very logical to say that on large

scale the bargaining power of buyers is high to low and depends on

region to region. Telecommunication Industry has variable regions

like in China the bargaining power of buyer will be high because the

country might have local firms competing with Nokia on regular basis

to provide handsets on cheaper rate which might lead to more

switching cost if it does not suit them. Further the buyers in UK or

USA have contracts binding them in legal enforcements which allows

them to have less switching between different brands. However the

brands which innovate and put a lot of emphasis on innovation like

Apple launching constant radical changes compel the buyers to switch

cost and buy new products regardless of the costs and other

regulations.

Threat of substitutes (High): Rivalry increases when there is slow

growth in the Industry and also diverse competition. The competition

in smartphones and mobile market is high due to the constant

innovation in the Industry by giants like Apple and Samsung. Growth

in this Industry was primarily lead by Nokia until 2001 (Assignment

brief, 2014). However in later stages the growth declined with

advent of new innovative handsets.

Bargaining power of suppliers (low): The suppliers of Handset

Industry include Sim providers, lithium battery providers etc. As

there are vast number of suppliers for mobile market and from

different countries whereby low cost is one of the key to profits it

is really likely that the power of suppliers is low as compared to

other industry specifics.

The above analysis of External forces provide some conclusion on

facts which are evident that combined effect of technological

changes and other effects of maturity of the Industry lead to the

changes in Nokia which probably could not cope up with some vast and

quick changes in the Industry.

Question: Critically discuss the nature of changes and their impact on company’s operations. Discussing the nature of changes which affected the company on

larger and smaller scale and had effect on operations of the company

are provided in this chapter. Companies in telecom Industry are

clever when they squeeze out profit from per unit production with

mass production techniques bargaining power of suppliers Nokia could

not change its downturn on sales for company. The same is with Nokia

however with low bar In the case of Nokia if we start from

environmental analysis and see how the firm’s operations were

affected through these forces, one can say that most important of

all forces was technological change.

As per the Jodt (2014) firm has failed to respond to technological

situational happenstances which were faced by most of the firms in

earlier 2000’s. The other firms like Samsung, HTC were able to

organise themselves according to the global terrain. Following are

example of some of those changes provided by the Jodt (2014).

(Journal of disruptive technologies, Jodt, 2014)

Joseph Scumpeter in 1942 was the first person who advocated creative

destruction as one of features in technological changes (Jodt,

2014). He explains that creative destruction means that the old and

worn out technology was efficiently removed from market and replaced

with new and creative one which could lead to innovation. Nokia as

described by the author has been built on the effort that company

has had built in modular method for supply of new and old handsets

by determining the demand in global market however they could not

survive and sustain the creative technological changes which

effected the company. Further the other dimension which is internal

in nature consists of cultural factor whereby some of the reports by

Zahra et al (2008) suggest that company had all its recruitment with

young, creative and fresh minds which was the culture but over the

course of time after the company diversified into telecommunications

more the fresh talent was not recruited. Hence brought technological

changes they brought disruptive technologies themselves and changed

the course of market. However with the changes which were faced

outside with world the company failed to keep up with the innovation

on board with long term effect.

The other external force which was discussed in the above answer was

social trends. The advent of social media and again search engines

effected the way people think and brought World more closely as a

global village. This teamed up with certain technological factors

has brought a lot of shift on operations of Nokia from 2005 onwards.

The nature of changes were not only external but also internal which

have been driving positively the firm. The firm started with pulp

and wood manufacturing company and how it has forayed in other

industry segments represents the brave choices company leaders made.

Further Kajanto and Carral (2008) refer that the firm saw that

telecom Industry on global scale was growing in 1990’s with demands

coming up no one but the Industry analysis modelling system they

figured how to meet and tap this demand which affected their

operations to greater extent. The operations further increased to

more countries in those years like the company started its

operations in Hungry and India. These positive effects on company

made it grow in all these years and expand further to new horizons.

However the negative effects which the company has survived through

have also had same kind of impact which effected profits so much so

that the company had to shell one of the home software company

Symbian to outsiders. The divestment and negative change to the

company have pushed the company to share R&D and other facilities

with Microsoft. Amongst the radical changes like technological shift

which happened at the centre of the telecom Industry which can be

classified as radical shift there were some other imminent dangers

which should have been perceived by company. The change in the

mobile communication Industry like digital phones, internet speed

and more storage spaces were part of radical shift and changes.

These changes and external forces were recognized by the firm and

were hence manoeuvred.

The Industry forces which have been analysed in the previous answer

can be justified that overall the telecom Industry is regulated by

patents, high threat of substitutes and low bargaining power of

suppliers. Hence it is tough to get in into the competition whereby

the capital requirements are high and returns are squeezed through

constant innovation. It would be also viable to specify that Nokia

was ahead of most of the firms however through lack of constant

Innovation and above given TSH the firm lacked clear strategy to

sail through the radical changes.

Amongst many other problems and internal changes were the company

had problems with the Symbian software which was developed at heart

of Nokia. The changes and shift in demand lead to giant exploratory

venture for software to Microsoft. Again stating the fact that few

authors pointed that company always recruited young, talented and

staff which developed software at heart of the company was shifted

to joint venture. This might have affected the operations of the

company drastically.

Furthermore the changes which effected the operations include many

other things like the culture shift in stages from owned and

governed and now having joint venture with Microsoft. The ‘White

box’ transition whereby companies produced cell phones on cheaper

rates than Nokia which had its operations with old methods and also

some spread in countries like hungry (Kajanto and Carral, 2008).

These kind of changes would have had impact on the profits and

operations of company directly because the company would have had

not survived the threat of cheap substitutes. As the Jdot, 2014

suggest that the problem with some of these changes was that

somewhere maybe the leadership skills were also not apt according to

the situations outside and sometimes as few authors (Koberg et al

(2004)) describe that innovation theory may have radical or

incremental innovation. However the firms which innovate have few

common grounds like environmental dynamism, age and size of firm,

intra firm structural linkages, and improvisation, Experimentation,

transitioning across projects, age and tenure of policy makers. The

leadership style of policy makers is also one of them. Further

quoting an example a firm like Apple when was led by Steve jobs had

different mind-set as compared to others. The same is with Nokia

with its new CEO which has been appointed by the shareholders to

have smooth transition in the venture. This may have caused a lot of

shift in operation because the company has been used to the changes

and the employees have had organisational culture which fostered

them to learn and innovate with in house software development. They

might have to work with new R&D firm which may have different work

ethics and culture of working in the firm.

In the end the company has gone through a lot of changes which have

affected operational facilities. The company did not have always

forayed in telecom Industry however with current erosion of its

position and sales on global front the company might have to focus

on innovating with all its current capacity and workforce for smooth

sailing.

Evaluate the proposed changes by the company and

recommend appropriate methods for implementing it.

Evaluating the proposed changes for company are given below:

Forming a broad strategic partnership with Microsoft to build

jointly a new mobile ‘ecosystem’;

Aiming to gain volume and value growth by connecting ‘the

next billion’ to the internet in developing markets;

Making focused investments in next-generation technologies;

and

Putting in place a new leadership team and organizational

structure with a clear focus on speed, results and

accountability.

(MBA, Case study, 2014)

The above changes proposed by the company were to allow the smooth

sailing of the organisation through the eroded brand effectiveness.

Taking the first change which company has suggested the broad

strategic partnership with Microsoft to build new mobile ecosystem.

The eco systems built by different mobiles over the course of time

are different. Following is the ecosystem of iPhone.

Source: Images/google.com, 2014

The eco system of iPhone above shows how it chooses its carriers,

exclusive plans, technology support, cost, standards and upgrade

factors. Hence Microsoft has chosen Microsoft to partner for

efficient ecosystem. Chukhray (2012) suggest that business now does

not only depends on scanning and strategically placing your

competitive advantage. Now business does not only depend on the

supply chain system which involves giving away different phones to

the market, or way the Nokia had its decision model represented by

Carral and Kajanto (2008). This model recognized the demand in the

market and delivered the handsets in exact replication of that

demand. This was calculated through careful screening of cumulative

mobile subscribers, added mobile subscribers and network build out

patterns. However authors like Chukhray (2012) express that

innovation in the ecosystem is the solution to the problem. This

could be combined to the change which has been presented by Nokia’s

Management with Microsoft. The author uses the term "innovation

ecosystem" having in mind such forms of cooperation when

organizations combine their individual proposals into integrated

solutions, ready for use on the consumer market. An innovation

ecosystem is usually formed for the development and implementation

of innovations (Chukhray, 2012). The company could develop such

innovative solutions like apple which provide more sales to expand

the operations in world. The software Research and development with

Microsoft as a brand and the platform will help to create brand re-

structure which has been depleted over the course of time. However

the company has to be careful with the creation of innovative

ecosystem.

Furthermore the second change which company wants to gain volume and

growth by connecting to next billion in developing market. This

change can be executed through the operational directions which can

be given through previous experience by Nokia. The operational

decision making model can be innovated through the new ecosystem

which both companies can develop and then create new volume of

customers. Company has further agreed to collaborate and work

together which means that Microsoft will be heading for software

development whereas Nokia will be developing the hardware. To smooth

sail the developments for next level the company has to know the

work culture and the company culture of both firms. Nokia has been

always good at evolving through times and succeeding in those

evolving times however Microsoft has not had any joint ventures on

that bigger scale and in new Industry.

The problem again in collaboration is not bound to the work

environment or difference in culture but it also goes to the level

of working. The supplier and the company relation is not only

collaboration in work as is defined by Phillips et al (2002). The

authors further explain that in order to work as a team on

international front in joint ventures focus is on inter-

organizational relationships that are essentially collaborative

precisely because we believe that their dynamics differ

substantially from those of competitive relationships. Although both

collaboration and market relations clearly involve negotiation, the

negotiation of collaborative relationships involves a wider and more

fundamental range of issues, including the roles to be played by

different participants, and the nature of the problem to be

addressed. Hence in this Industry where the lines of demarcation

between IT and telecom are merging and entwined one has to clearly

see both companies and their goals and values of working.

The company explains the third change which is related to make focus

investments in next generation technologies. Scarnhost (2008) refers

to the Industry life cycle of telecom Industry and explains that

this Industry is heterogeneous in nature. Emails, Wire call transfer

and Nowadays the Voice over Internet (VOIP) has also merged with the

Industry. This makes it more susceptible to change than other

Industries. The investment in other generations in this Industry

will have to be scrutinized very carefully. In order to implement

this change both companies will have to sail through period of

collaborative work and then chalk out the Industry dynamics and

changes which are occurring on the global scale with regards to

regulations, trends and further Innovation. According to Koberg et

al (2002) the radical Innovations and incremental innovations are

both different in nature. He specifies that the change from fibre

optical communication to Wireless is an example of incremental

Innovation. Hence these kind of changes might affect the decision

making of the Joint venture. The complexity theory provided by

Koberg et al (2002) can be very well adjusted to the structure of

this Industry and this situation. He explains that with this

framework whereby the stability and instability is part of Industry

life cycle, Complexity structure in the hierarchy of work is very

well suited in order to bring out the Innovation in products. These

innovative products will not be incremental in nature but radical

outcome. This outcome can be researched through the previous

experiences of both firms combined and also the current Industry

situations. The research and development as given by Zahra et al

(2008) in Nokia used to be built in system with Symbian and fresh

talent which was always leading force to steer it ahead of

competition. Making the change necessary the company has to combine

the R&D teams of both companies and make a platform to work together

to make these focus investments.

Putting in place a new leadership team and organizational structure

with a clear focus on speed, results and accountability is the next

change which company suggests to be made with this collaboration.

This change encompasses the leadership which has been constant talk

for the company. The replacement of old CEO Olli-Pekka Kallasvuo,

with Stephen Elop was one of those changes. Going by the exact

meaning of this term one can say that the company’s survival in this

Industry depends highly on this change. As referred in case study

Nokia has been very capable in handling those changes and the phases

continuously however changing from a Finland origin company to

Multinational was also a roller coaster ride with dismantling and

acquisition of many Firms and Industries. The company as some

sources say is gearing for a takeover or acquisition which has

happened in 2014 (Kovach, 2014). Some of these changes mentioned

leadership which would target to examine global presence for both

brand names in digital market. To establish these changes Microsoft

had to purchase Nokia as a firm on whole however which happened to

few divisions like its mobile segment only (Kovach, 2014).

In an attempt to facilitate the change process, advise Nokia’s leaders on issues of organisational culture, politics and leadership.The change process in Nokia focusses on many divisions like

leadership, cultural fit and politics. Bollinger and Smith (2001)

propose that human behaviour is the key to success or failure of KM

strategies, as KM involves an emphasis on organizational culture,

teamwork, the promotion of learning and the sharing of skills,

experience and knowledge (Yang, 2006). Many companies have faced

issues whereby people act what their superiors do and this leads to

sometimes arguments whereby the decisions are not executed by the

subordinates. As explained by Barkema and vermeulen (1997) reasons

to consider culture in joint venture or partially owned subsidiary

on international projects is that not only the leadership nature

changes but also the transition of goals from one firm and working

jointly to finish the projects with other firm also is affected.

The culture issues were pointed first by Hofstede in his theory of

organisation of how people react in different aspects on different

issues. Previous studies on the influence of cultural distance often

used an aggregate measure based on the four dimensions in Hofstede

[1980]: power distance, uncertainty avoidance, individualism, and

masculinity (see Kogut and Singh [1988]). Hofstede's more recently

developed fifth dimension, long-term orientation (or Confucian

dynamism) [Hofstede and Bond 1988], has received less attention,

perhaps because scores were available for only twenty-three

countries [Hofstede 1991]. The present study builds on Hofstede's

five dimensions, including long-term orientation (Barkema and

vermeulen, 1997). However with new technologies and mingling of

cultures with work environment the old dimensions of work ethics

seem to diminish.

Organisational culture does not only bound to the origin of the firm

but it also extends to the way the companies work towards the

achievement of goals and long term missions. Schein (2009) states

that culture can be divided into many forms and now specifically it

is very difficult to get into nitty gritty details. Technological

factors and expatriation in many firms has allowed different

subcultures to be existing within those dimensions referred by

Hofstede above. The author above also states that leaders and

managers not only have responsibility to achieve goals but also to

manage people in that company. He exerts that leaders are supposed

to create new form of work environment or culture and also manage

the previous cultures existing in the old organisation. With Nokia

and Microsoft having a lot of history of work it would be difficult

for CEO Stephen Elop to smooth the process of working together in

Collaboration. Quoting an example here if the leader is creating a

new company he will have much more opportunity to embed values,

morals and work ethics in a company than bringing new leader to old

company. Hence if the company succeeds and brings profits then what

is reflected as leadership is the values and work environment the

leader has brought during start of the organisation (Schein, 2009).

However if the company is old and new CEO comes then he is expected

to learn the existing culture and also bring in his own leadership

skills. This is where politics come into existence. Some

subordinates may like decision making style which is fresh and some

will not. It again depends if the CEO destroys the original existing

culture while bringing his own or makes it easier by taking old good

points. In the case of Nokia Microsoft is going to bring new

culture, through the case study the political factors were already

seen whereby the terminology of Trojan horse was referred to the

CEO. Further Nokia has been good at accepting changes, however the

firm has relied on young and fresh talent to build its software

platform, hence they will be used to the fresh ideas and will be

more risk taking as compared to Microsoft.

Furthermore the changes with cost cutting, redundancies and

transfers may not be welcomed in Nokia. The origin of Nokia as a

company has been in Finland which through Hofstede’s study suggests

that role of trade union is very high in Europe as compared to USA

(Barkema and Vermeulen, 1997).

Admittedly coming to the terminology of subcultures, it is very

important to peep into this segment because the company not only no

works in different geographical boundaries but also has many product

lines, hierarchies and department goals in addition to the corporate

goals. These subcultures originate from these lines of demarcation

and sometimes without any reason. It is kind of important to

understand these subcultures because this whereby the motivated,

hardworking and innovative minds lay. To provide a solution to the

role of union mentioned above one can say that evolving union as a

subculture is also one of roles of leaders so as to not have further

troubles with decision making. This can be done through creation of

subculture with trade union which has its corporate purpose aligned

to the mission and vision of Company.

In the end, to facilitate the change on broader level which have

been mentioned and carved out by CEO and board members it is

important that company brand names should be evolved through all the

disturbing times. However this should not be done by depleting the

brand existence, culture and subcultures of the firm. Nokia

leadership has been very steady with not many changes however

Microsoft has had a lot of leaders. This can lead to resistance in

accepting the long term changes within corporate board. The work

culture of development could be new and positive because Microsoft

has good history of making software basics whereas Nokia had very

durable and reliable handsets which used to be sold like hot cakes.

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