Analysis of Nokia

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Analysis of Nokia

Author:

Di WU ((104354490)

Yuan Ding (104490761)

Qianli Cen (104310740)

Wenjing Hao (104374896)

Xiaonan Zhao (104425804)

Li Gao (104443398)

【Abstract】

Founded on May 12 1865, Nokia Corporation once had been the largest mobile phone company and had kept the record of best sale mobile phone for 14 years in the world. Since 2010，Nokia had steadily been losing its market share to Apple and Samsung. This report will focus on the main problems of Nokia from four elementary factors: organizational structure, cultural difference, leadership and motivation. Combining with OB concepts, the report will give logical advice at last.

【Key words】

Nokia；organizational structure；cultural difference；leadership；motivation

Analysis of Nokia

1. Introduction

  Nokia is a Finnish multinational corporation created in 1865. It used to be the number one mobile maker in the world, but when Apple and Android were introduced, Nokia faced fierce competition and inevitable failure.  

Nokia agreed to sell its handset business to Microsoft for $7.2 billion, which put an end to its prosperous past and change the handset history. Not that long ago, Nokia was one of the world’s most dominant and leading mobile-phone makers. Many managers and researchers went to Finland to learn Nokia’s enterprise methods. But today, it holds merely three per cent of the global smartphone market. After three years of massive restructuring that was supposed to revive Nokia, the former global mobile communications giant was gone.

2. Organizational structure

2.1 Large group size & organizational structure instability

  It is difficult to manage a great number of large sized groups because they are more likely to prompt conflicts and dissensions. Also, members of larger groups consistently report less satisfaction with group membership than those in smaller groups. On the other hand, the instability of structure poses a threat to the company’s development. For example, in order to get more market shares in China, the Chinese branch experienced several rounds of personnel transfers. These changes had a negative influence on the organizational development.  

2.2        Poor communication & delayed feedback

  Nokia faces a lot of problems in both downward and upward communications. According to Adam Greenfield, the director of design department, after they came up with a new project, it would take a long time to make a decision because there are too many members in top management. These communication problems between managers and employees result from conflicting role demands and the Mum Effect. For example, the middle management may only pass positive statistics upward and make downward filtering, as they tend to avoid communicating unfavourable news to others. Consequently, the top management cannot get the true information. In the long term, the company will lower productivity and employees will have less job satisfaction.

2.3 Solution

In order to solve these problems, the organization could reform the organizational structure by reducing management levels, adopting flat management and establishing an open door policy, in which any organizational member below them can communicate directly without going through the chain.

3. Culture

  The company has ran almost exclusively by local executives since 1865. Although there are a large number of employees from overseas, the closed Finnish culture impeded the advance of Nokia. Specifically speaking，the underlying problems of Nokia's organizational culture has became more serious after the emergence of touch-screen mobile phones and the integration of Microsoft.

3.1 Problems

3.1.1 Finnish culture --Isolated from outsiders.

  Among Western nations, it would be difficult to find two cultures as different as the US and Finland. Americans are stereotypically confident and outgoing; Finns are considerably more reserved. (Microsoft-Nokia culture clash will be tough to overcome September 3, 2013) Nokia’s new CEO, a Canadian, who was employed to run a business where he did not even understand Finnish, formed major management breakdowns internally in the company. He wanted to break through the Finnish management model and make a change to the company, but it is really a big challenge. Many of senior managers in headquarters spent a whole career working in Nokia. They rejected to change and worked for enjoyment. Also, they believed that the threat from emerging brand in the smart phone market is short-lived, like Apple and Android etc., and have confidence that Nokia will have a bright future.

3.1.2. Gender Egalitarianism-- A masculine culture, with deals brokered in the sauna.

  A masculine culture is commonly seen in Nokia. There is an imbalance between the male and the female in top management. Meanwhile, due to the profound influence of Finnish culture, sauna plays an important part in Nokia’s business activities .The BBC news shows that the details of Nokia business are always done in the sauna. But women are not able to join the business talking with men in a sauna, which is unfair to some female senior managers. Thus, this enclosed the spread of information to some extent.

3.1.3. Strong uncertainty avoidance— Missing the leading role in mobile devices market

  Nokia is a company based on a set of rules and regulations, and has a bunch of technical experts. Thus, the business strategy pertaining to whether to market a product is impacted by complex factors. Hofstede’s study suggested that this is a strong uncertainty avoidance, which caused the fall of Nokia from the leading role in the mobile phone product industry.

3.2 Solution

  In order to solve these problems, Nokia could open its mind to accept the diversity from different cultures. Diversity and its proper management can yield strategic and competitive advantages, including the potential for improved problem solving and creativity when diverse perspectives are brought to bear on an organizational problem such as product or service quality (Organizational behaviour, Gary Johns ,Alan M.Saks). Secondly, Nokia should to find a balance between the male and female employees, particularly in the area of top management. Thirdly, the company could recruit more fresh and young employees to diverse the labour pool and train them efficiently, the younger may also have a strong ability to bring creativity to Nokia and be curious to take a risk of challenge.