Visiting lecturerName: Outi SutinenEducation:

MBA, Vaasa University, Finland International BusinessProfessional Career:Senior lecturer at Oulu University of Applied Sciences,

department of International BusinessMarketing director, Baltic States, L’OrèalMarketing director and Exports Area Manager, sales

person in various food stuff organizations in Finland and France

Head of Oulu Export association

Presentation structure

IntroductionCase Nokia: company presentationMarket dynamics and Research &

developmentThe Nokia approach Future challenges

Introduction

Where do I come from?

Oulu – a Nokia town

How Nokia and Oulu are connected?

Why Nokia came just from Finland? teleoperator market was not concentrated to

only 1 national company like in many other European countries > more competition> more innovation

Oulu University department of engineering played a central role in the developement of Nokia technology

The founding of Oulu University in 1958

is regarded as the preparation for the Oulu high tech industrial cluster’s formation, and the establishment of university’s Department of Electronical Engineers in 1965 as the starting point (1975 orientated in electronics, mobile telecommunications and IT – personal interests of former professors Juhani Oksman and Matti Otala)

1973 Nokia radio producing company started in Oulu

1974 VTT – National Technical Research Centre of Finland comes to OuluFoundation of an electric laboratory innovation environment further improved

Today Oulu is important production and R&D center for Nokia and Nokia as a anchor company has attracted a variety of other companies which together make an important IT cluster in a global level (Oulu Technology Village)

Oulu -the Finnish ”Phenomena”

A finnish center of high tech

NOKIA TECHNOPOLIS SCIENCE PARKMULTIPOLIS-METROPOLIS NETWORK

PROJECT STRONG NETWORKING BETWEEN COMPANIES,

UNIVERSITY, POLYTECHNIC & VTT

What do you know Nokia?

Origins of Nokia?Procduct rangeWhere the products of Nokia are made?

Nokia in Brief

How old is Nokia?Nokia's roots go back to 1865, when the Nokia wood-pulp mill was founded. In 1967, upon the merger of three separate companies.

Some important dates:1981 Nordic Nordic Telephone (NMT), the first

international mobile phone network, is built1991 GSM- a new mobile standard opens up Nokia equipment is used to make the world’s first

GSM call

Nokia in Brief

Mobile revolution 1992-19991992 Jorma Ollila becomes CEO of Nokia

(access to international finance markets)

1994: World’s first satellite call made using a Nokia GSM handset

1998 Nokia becomes the leader in mobile phones

Nokia in brief

Nokia 2000-today2002: First 3G phone, 66502003: Nokia launches N-Gage – mobile multiplayer

game2005: The billionth Nokia phone-a Nokia 1100-is sold in

NigeriaToday: market leader (40% market share 4/4 quarter

2007 –Nokia’s market share exceeded the combined shares of its next three biggest competitors: Samsung, Motorola and Sony Ericsson.

(http://www.nytimes.com/2008/01/25/technology/25nokia.html)

Is today worlds 5th most valued brand

Nokia Mobile phones production

CHINA

BREZIL

FINLAND

GERMANYHUNGARY

INDIA

GB

SOUTH-COREAMEXIQUE

ROMANIA

Nokia in Brief

World largest manufacturer of mobile devices

Head office in FinlandAppr. 60 000 employees in 128

nationalitiesR & D centers in 11 countries (31% of

staff work in R&D)Production facilities in 9 countries

Nokia Today

Market dynamics

Which are the market trends in mobile markets?

What are the critical succes factors in winning the business?

Market trends

1. consumer taste divergence/fashion business

From high tech to fashion business – customer is the key

Consumers look for experience - not just technology

Fragmenting market segments> more and more models

Fashion and phones

Market trends

2. Shortening life cyclesCustomers tastes wary quicky > shorter product

life cycles

Shortening life cycles of mobile phones

Product Life Cycles: mobilephones

Development1-2 years

Typical life cycle 1-2 years

Product & Process R&D in the Innovation Life cycle (based on M.L. Patterson, 93)

Cash flow

Time

Opportunityoccurs

(MostlyProduct R&D)

First customers aresatisfied

PositiveCashflow

BreakEventime

NetProfitperiod

ProjectBecomesextinct

(mostly processR&D)

OpportunityIsperceived

ProjectActivity begins

ProductDefinition andPlans freeze

NegativeCash flow

Product isReleased to production

3. Globalisation

Geographical and consumer diversity –differences in consumer behaviour and taste

Role of Asia growing, namely China and India,BRIC countries (Brasil, Russia, China and India

getting stronger)Globalisation affects business

”China Phenomena” > companies go to cheap labour countries

”India Phenomena” > companies are no more just addressing costs but try to get best partners globally and see opportunities in networking

! 20% of worlds software outsoursed to India

Companies go where the market isNew division: China contributed more than

25% to global growth in 2007 (India 9%)*For example: Exports and production

Nokia sold in 2007 77.8 million cellphones in Asia, the Middle East and Africa in the quarter, nearly double the 42.3 million sold in Europe and North America. In China, Nokia’s fastest-growing high-volume market, it sold 20.2 million phones, an increase of 38.4 percent over a year earlier.

4. Technolgy war- new technologies and constant improvementsExamples: internet convergenceNon - cellular wirelessUsability-customer friendliness aspect in technology

growingCompatibility of technologiesNew added performaces – just the imagination as a limit

(Nokia & Free music, free navigation…Nokia acquired a USA based Navteq, an American maker of digital maps, and has joint-venture with Siemens in wireless networks

competition today = setting standards first(like, Microsoft , Intel….)

Challenges that Nokia has to meet – and the Nokia Response

Understand consumer needs and varietyResponse: decentralized R&D in 11 countries

Be first in the market and set standardsResponse: Nokia has a strong history in being

innovator-firsting the marketsFor example: 13.11.2006 world’s first

commercial WCDMA*900 data call on 900 MHz band- advantages: 2-4 times larger coverage area

*Wideband Code Division Multiple Access

Product innovation N95

Response: new launches,

New technologies

Customer friendlyN95Now attacking Us markets

Nokia – fostering Innovation- how?The vision of Nokia of ”Inclusive environment”

emphasis on cultural/individual differencesdiversity was seen as a key to success > increased

creativity, mirrored market place, improved attraction and retention of human resources

1997 : Nokia Code of conduct was introduced to support inclusive environment

• commitment to equal opportunity & openessThe Nokia Way

• efforts to promote teamwork & individual responsability

Secrets of Nokia’s success

BOLD STRATEGIC INTENT- seizing the opportunities

INNOVATION THROUGHVALUE CHAIN

FLAT ORGANIZATION

ENTREPRENEURIAL SPIRIT

collective leadership

global R & D networks

competition & cooperation

CUSTOMER SATISFACTION

Nokia New Values 2007 – Worked Down to Top worldwide in Nokia Way Cafés

Achieving togetherTrust, cooperation, sharing, openness, networking

Engaging youListening, client, employee, partner, consumer,

development

Passion for InnovationDream, passion, courage, future

Very HumanClose to humanity, respect, customer friendliness

Nokia secret: flat team organisations- working with cross-functional teams

Cross-functional Team DefinedCross-functional team is a group of employees

from various functional areas of the organization – research, engineering, marketing, finance. human resources, and operations, for example – who are all focused on a specific objective and are responsible to work as a team to improve coordination and innovation across divisions and resolve mutual problems.

Example from Nokia India – Great place to work Nokia HR department closely tracks every

employee's progress. Every September, Nokia employees across mobile phones, networks and two R&D divisions set up teams comprising 6-8 employees. Each of these cross-functional teams has employees from marketing, sales and logistics, who would already have submitted a performance rating of themselves, the company, the division and so on, on various parameters. The teams are told to formulate an action plan and improve on the parameters with the lowest scores. The HR department coordinates this exercise and reviews progress every quarter.**

Nokia working with cross-functional teams

new product development projects are run by a cross-functional teams to ensure that all viewpoints are heard and given proper weight throughout the life of the project.

The team is composed of people that represent the various functional areas important to the success of the product

Nokia has strong networks with suppliers and research institutes, very often teams are multinational and operate mainly virtually

Nokia Spirit supporting cross-functional teams”The Nokia culture is the same world over. Sanjay Bhasin,

director (India strategy) who has spent two years in Finland and a year in London observes: "Nokia is a melting pot of people, based on the egalitarian society that exists in Finland." Nokia also offers a lot of opportunity for its employees to work globally. **

Comment: Finnish culture is about taking responsability, low control, having low power distance, high trust and ”growing in work” – large responsabilities- and equality-team leaders normally rotate in Nokia

New Focus deeper in Internet where

New business modelsRoles of actors are mixedWork societies and ways to work change

(Nokia follows very closely people at work> innovations)

Need for agility, knowhow and speed grow

Globalisation: China phenomena > you have to focus on costs – sometimes difficult decisions

Nokia response: production in 9 countries –latest factory was opened in Chennai, India, move from Bochum (Germany) to Romania Jucu

Nokia manufacturing strategy – cost leader

Plants in Brazil, China, Finland, India, Germany, Hungary, Mexico, the Republic of Korea and UK, new plant to be opened in Romania

Flexible global manufacturing networkQuick response logistics

No inventories (moved to suppliers)Highly automatized productionFocus on ITC systems and production platform flexibilityStong supplier relationships (eg. Perlos (phone cover

manufacturer deliveres just on 4 hour notice) – high trust

Future Challenges

Which kind of future challenches can you imagine Nokia will face?

Which do you think are the worst competitors for Nokia along different criteria?DesignPriceService offeringOther, which

What do you think will be happening in this market in the close future- which kind of new launches do you predict? And in Spain?

Summary

Nokia is working in a very dynamic market Attention to speed to the market >R&D

Attention to customer needs and design Nokia excells both in low cost models as well as high

end Attention to new technologies > to set the standards> deeper to

Internet and wireless innovationsNew partners (Siemens, …)

Attention to logistics optimation > production costs and flexible manufacturing

Attention to Asia and BRIC countries CLIENT is the key (Nokia has learned it’s lessons) In Nokia the inspiration and spirit of organization makes the

difference – achieving together!

Muchas gracias!

Sources and Recommended addresses

http://www.nytimes.com/2008/01/25/technology/25nokia.html) (market share)

http://www.businessweek.com/magazine/content/07_32/b4045401.htm (brand value)

www.virtualfinland.fi www.tekes.fi www.vtt.fi www.oulu.fi

*www.arvopaperi.fi/extra/esitykset/rahapaiva07/konnos_raoul.pdf

**http://www.growtalent.com/gptw/no8.htm