Nokia Cooperation is the world leading supplier of mobile phones and a titan of European and world technology. Nokia is now suffering from the economic crisis and from the fast growing smartphone market, where its rival Apple became the leader. Nokia’s history goes back for more than 140 years and it had to undergo different changes and legal environments. The successful development of Nokia has set a great example in the business world in order to learn from its effectiveness in implementing various different strategies which had helped Nokia to secure the position around the world until recently. After a definition of a diversification strategy this paper will than describe a brief history of Nokia. The aim of this investigation is to demonstrate the different diversification strategies Nokia has applied during the past until today.
Table of Contents
1. Introduction
2. Diversification
3. A brief history of Nokia
4. Nokia’s unrelated Diversification strategy
5. Nokia’s related Diversification strategy
5.1. Nokia’s Devices & Services
5.2. Nokia Siemens Networks (NSN)
6. Facts and Figures of Nokia in 2010 and 2011
7. Conclusion
Objectives and Topics
This paper examines the evolution of Nokia's corporate strategy, specifically focusing on how the company transitioned between unrelated and related diversification to maintain its market position amidst changing technological landscapes and global economic pressures.
- The theoretical definition and categorization of diversification strategies.
- A historical overview of Nokia's transformation from a Finnish industrial conglomerate to a global telecommunications giant.
- An analysis of Nokia's unrelated diversification period in the 1980s.
- The strategic shift toward related diversification and integrated business models.
- Assessment of Nokia's performance and strategic challenges in 2010 and 2011.
Excerpt from the Book
4. Nokia’s unrelated Diversification strategy
During the eighties Nokia, which was already formed in a diversified company, further diversified into several other sectors, including businesses in machine engineering, chemicals, light bulbs, capacitors, aluminium, plastics and power plants. The intention of this unrelated diversification strategy was to grow fast, because at this time, it was believed that diversification can offer protection against economic fluctuations. Through more acquisitions in the years 1980 and later, Nokia strengthened its position in the telecommunications and consumer electronics markets through acquiring of i.e. Mobira, Salora, Televa and Luxor of Sweden. Over time the diversification into high technology markets pushed the company further away from its original industries. Again and again Nokia has seized opportunities to enter new and exciting businesses characterized by high risks but great promise to growth. The company’s move into electronical power did not result from a commitment to a particular technology or capability but to innovation. As Nokia grew and became therefore more international as well, the company also started to be more interesting for international financial markets. Since 1915 Nokia was listed on the Helsinki Stock Exchange. Since 1983 and the following years, Nokia was listed on the London Stock Exchange, the Frankfurter Wertpapierbörse, the Bourse de Paris and finally in 1994 on the New York Stock Exchange. Already in the beginning of the original company, as a forest industry, the international worldwide efforts were taken. Nokia continued its aggressive acquisition activities, also with foreign companies, in order to learn and get success to foreign markets. While the market shares of telecommunications in Finland grew there were also important market entries of the telecommunication sector into neighboring countries as well as to the US market recorded. Already in 1988 70% of net sales were generated outside of Finland. Through acquiring the data system division of Ericsson in 1988 made Nokia to the largest information technology company in Scandinavia.
Summary of Chapters
1. Introduction: Outlines the purpose of the paper, which is to investigate the various diversification strategies applied by Nokia throughout its history.
2. Diversification: Provides the theoretical definition of diversification, including the distinction between related and unrelated strategies and the motivations behind them.
3. A brief history of Nokia: Traces the origins of the company from its 1865 founding as a forest industry enterprise to its evolution into a telecommunications firm.
4. Nokia’s unrelated Diversification strategy: Analyzes the company's aggressive expansion into unrelated sectors in the 1980s to hedge against economic fluctuations.
5. Nokia’s related Diversification strategy: Explores the shift toward focusing on core business areas and the subsequent integrated models, including specific business units.
5.1. Nokia’s Devices & Services: Details the strategic focus on smartphones, services, and software to compete with new market entrants.
5.2. Nokia Siemens Networks (NSN): Discusses the joint venture formed to leverage scale in network infrastructure and R&D.
6. Facts and Figures of Nokia in 2010 and 2011: Presents the state of the company during the 2010-2011 period, highlighting its struggles against competitors like Apple.
7. Conclusion: Summarizes the effectiveness of Nokia's strategies and evaluates future prospects, emphasizing the need for innovation.
Keywords
Nokia, Diversification, Strategy, Telecommunications, Unrelated Diversification, Related Diversification, Corporate Management, Market Growth, Acquisition, Innovation, Business Strategy, Mobile Phones, Technology, Market Competition, Strategic Management.
Frequently Asked Questions
What is the core subject of this document?
The paper fundamentally analyzes the corporate diversification strategies employed by Nokia throughout its long history to adapt to changing markets.
What are the central themes discussed in the paper?
Central themes include the distinction between related and unrelated diversification, the historical evolution of Nokia, and the strategic shifts necessitated by global competition in the mobile technology sector.
What is the primary objective of this investigation?
The aim is to demonstrate the various diversification strategies Nokia has applied, from its early industrial roots to its modern focus on telecommunications and services.
Which scientific framework or method is used to analyze Nokia?
The paper utilizes business management concepts such as the Ansoff Matrix and Porter’s five forces to evaluate the effectiveness of Nokia’s strategic decisions.
What topics are covered in the main body of the work?
The main body covers the theoretical framework of diversification, a historical company profile, the 1980s unrelated diversification era, the transition to related diversification, and specific business segments like NSN.
What are the key terms that characterize this work?
Key terms include diversification, strategic corporate management, market growth, and technological innovation within the telecommunications industry.
Why did Nokia pursue unrelated diversification in the 1980s?
The company sought to grow rapidly and believed that operating in multiple, disparate markets would provide a buffer against economic fluctuations.
What specific strategic change did CEO Ollila implement in the 1990s?
He streamlined the company by focusing on mobile phones and telecommunications as the core business, disposing of non-core products under the strategy "Focus globally, Telecom-orientated, high value-added."
How did the smartphone market affect Nokia's position in 2010-2011?
The company struggled as competitors like Apple and Android-based devices gained market share, leading to declining performance and the need for further restructuring.
- Quote paper
- Anonym (Author), 2011, Diversification Strategies of Nokia, Munich, GRIN Verlag, https://www.grin.com/document/190107
