Management Principles- An Anchor in Times of Turbulence: The Case of Nokia

Abstract

Nokia, one of the Fortune 500 companies has been losing its fortune. The Finnish company’s ranking plummeted from 147 to 174 in the Fortune 500 list. Its contribution to Finland’s GDP has fallen from 4-6% in 2000 to 1.6% in 2009. Correspondingly, its share of Finland’s export has fallen from 32% to 16%. In 2011- 12, it has cut around 20000 jobs and has announced plans to shut its Salo (Finland) manufacturing plant, resulting in loss of 90% of Salo’s revenue. In June 2012, Nokia also sold its SBU (Vertu) to a private equity group EQT VI, retaining only 10% share. Surprisingly, the downslide of Nokia, which started in 2007, has not been as a result of the economic slowdown, but due to complacency and management ineptitude. Nokia at one point of time had the highest brand loyalty and largest market share in each of its segments. Flattered by customer loyalty, Nokia turned a blind eye to the changes sweeping the markets. Samsung capitalized on Nokia’s inertia and captured a lion’s share of the market. The progress was phenomenal and unparalleled. Of late, Nokia has been trying to turn things around. The measures included appointing a new CEO, phasing out the Symbian platform in favor of Windows OS, introducing mobile phones in each segment including the dual SIM phones, de-layering the organization, etc. Despite these efforts the picture didn’t improve. This paper views the Nokia case through the prism of Management concepts which, if adopted, could have helped Nokia in its turbulent situation.