Nokia is the world’s leading telecommunication company and manufacturer of mobile phones. The company was established in 1865 and has its headquarters in Keilaniemi, Espoo, in Finland (Nokia Corporation, 2007). Nokia has since grown to become the most popular brand in the telecommunication industry with numerous businesses in most parts of the world. In 2010, the company had more than 132,000 workers in 120 countries (Steinbock, 2010). In the third quarter of 2010, the company had a global market share of 38%. However, its market share decreased in 2011 with an estimated global market share of 23% and 31% being recorded in the second and fourth quarter respectively (Press Release, 2011). Nokia manufactures mobile phones for each major protocol and market segment such as GSM and CDMA among others. Via its Ovi platform, the company provides internet services like messaging, maps, games, media etc (Nokia Corporation, 2007). Nokia also offers navigation services and digital map information through its subsidiary, Navteq at absolutely no cost. The company had worldwide annual revenue of more than ˆ42 billion in addition to an operating income of ˆ2 billion in 2010 (Press Release, 2011).
Nokia has a leading global presence in numerous markets and its business has grown significantly in every area to support the development of the telecommunication industry and customer needs. In addition, the corporation manufactures mobile phone infrastructures, as well as other telecommunication application devices like ISDN and broadband access among others (Nokia Corporation, 2007). Compared to other mobile companies, Nokia has the leading distribution network that has contributed significantly to the company’s overwhelming sales. With a strong financial back up and a team of high quality professionals, the company is committed to customized and user friendly products in an effort to maintain its market position of being the number one seller of mobile phones globally (Nokia Corporation, 2007).
By December 2010, the company had research and development, as well as sales and production centers in more than sixteen countries including U.S., UK, China, and Finland among others, employing about 35,870 people (Steinbock, 2010). Nokia’s research team which consists of engineers, researchers and scientists, represent 27% of the company’s entire workforce. The corporation is a public company whose stocks are listed in both the New York and Helsinki Stock Exchanges (Steinbock, 2010). In 2009, the company was the leading Finnish Company in Finland contributing about 1.6% of its GDP (Steinbock, 2010). In 2011, the Nokia brand which is valued at $25 million was ranked the fourteenth best global brand in the BusinessWeek, as well as the 143rd largest global company by revenue in the Fortune Global 500 list. The company became number three in the global smartphone industry in the 2nd quarter of 2011, after Samsung and Apple (Press Release, 2011).
The company goal is to produce high quality mobile products that make it possible for millions of all over the world to get value for their money. Nokia has a mission of connecting people from all parts of the world (Steinbock, 2010). To attain its mission, the company has formed a partnership with Microsoft to help them salvage their lost ground within the smartphone market (Nokia Corporation, 2007). The duo is committed to delivering innovative and differentiated products with unmatched scales in relation to brand identity and product breadth. In an effort to connect billions of people online, the company provides customized mobile experiences with affordable mobile prices and fast internet speeds, in addition to applications such as QWERTY keyboard, Web apps, maps, and dual SIM among others (Karttunen, 2008).
In a report released in the third quarter of 2011, the company had revenue of $12.11 billion and an operating loss of $95.54 million. The company’s liquidity at the end of the quarter was $14.5 billion and a cash balance (net) of $6.86 billion (Press Release, 2011). During the same period, a general decrease in shipment was recorded in all countries where Nokia operate except in Africa and Middle East, where there was a 3% increase. The percentages of reduction in shipment of selected countries were as follows: 68% in North America, 41% in Europe, and 25% in China respectively (Press Release, 2011). The volume of sales of mobile devices reduced by 3% percent y-o-y and increased by 20 percent q-o-q to about 106.6million (Press Release, 2011). High demand for Dual SIM and QWERTY-keyboard products was recorded during the quarter with the sales of mobile phone being led by Nokia models like Nokia C3, C2 etc. Nokia 5230 led the sales of smart devices. There was a decrease in mobile phone ASP by $5.30 to $43 from the second quarter of 2011 (Press Release, 2011). According to sources from the company, smart devices were continually being affected by the strong momentum of the rivaling smartphone platforms. At the same time, the company also launched a reasonably priced smartphone which has a 1GHz processor, as well as Nokia 700 and 701 (Press Release, 2011). Nokia expected its net cash at the end of the last quarter of 2011 to supersede $15 billion. It also aims at reducing its operating expenses on devices and services by over $1.34 billion by 2013. According to Nokia’s president, Stephen Elop, the company intends to cut down on the number of workers, facility costs, as well as to adopt the utilization of outsourced professionals (Press Release, 2011).
Operations management refers to the activities undertaken by managers of firms to produce goods and services. A lot of emphasis is put on the effectiveness of processes. Being the leading global mobile company, Nokia is committed to maintaining high quality standards in all aspects of its operations (Karttunen, 2008). Key areas where the company aims at achieving excellence include customer satisfaction and loyalty (by producing reliable high quality products and services), product leadership (via innovation), and operational methods (through effective and ethical management). Because every operation impacts on the final quality of Nokia’s products and services, the company manages the quality of its operations from the top, beginning with the management, via the processes, to the end product (Karttunen, 2008). Since management of quality requires consistency in all activities, every person in the Nokia chain has a role to play in attaining quality, and every employee in all the operational units take their work very seriously and personally. It is also important to note that customers are the key priority of Nokia, and the company is striving to accustom itself with the customer’s needs in order to provide them with tailor-made quality products and services. Using the feedback received from customers, Nokia continually improves its operations processes via research and development, and innovation. The company also continuously trains its employees to keep them abreast with the latest technologies (Karttunen, 2008).
Nokia’s Use of Teams in Operations Management
According to the company’s president, the use of teams or teamwork is at the core of the company’s principles. In fact, the company attributes the success it enjoys currently on the ability of its employees to work together as a team. The use of teams extends beyond the employees in the operation units of the company; the company also has a leadership team which oversees all its operations (Steinbock, 2010).
Nokia’s Ability to Adjust to a Major Economic, Environmental, Or Natural Crisis
Nokia has the ability to adjust to major crisis. The 2008 financial crisis affected a majority of industries and companies and Nokia was not spared either. For instance, Europe which is a major market for Nokia products constituting 37% of its sales was significantly affected by the 2002 economic crisis, and consequently, the company’s sales reduced significantly. However, the company adjusted to the crisis by investing in innovation in order to produce high quality customized products that have not only ensured sustainable growth but also profitability (Steinbock, 2010).