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This Nokia case study presents the management crisis the company encountered in mid 2007 with the malfunctioning of its handsets due to faulty batteries which could get overheated and emphasizes the critical challenges a multinational company faces in an emerging market. Nokia is a Finland based communications technology provider. It started as a paper pulp business which expanded into various business verticals majorly mobile phones, multimedia, enrprisse solutions and networks. It is the worlds largest mobile manufacturer since 1998. It expanded into several countries all around the world and has now become a global brand.
Context
India had one of the fastes-growing mobile phone markets in the world with 170 million mobile subscribers as of October 2007; an average of 8 million subscribers was being added every month. Nokia entered the Indian market in 1995 and within a decade established as a leader, developing a huge customer base within the country with revenues of over $3.5 billion in the year 2006. Nokia has been able to build such a reputation due to the quality of its products, the localized offerings it makes to the Indian customers, its relations with the media and shareholders and the trust created due to its investment in the Indian market. Nokia had developed a strong network of sales and marketing centres within India and boasted one of the largest distribution networks, with a presence in more than 130,000 outlets.
Critical situation
Nokia has built a solid reputation as a brand for ten years and has been the market leader in the Indian mobile industry. India, incidentally, was also the second largest market of Nokia, after China. In August 2007, a routine product feedback and defect analysis process identified a defective batch of batteries supplied by a Japanese vendor, Matsushita. India happened to be the recipient of the largest proportion of the defective batch. Nokia's corporate communications team, based in Finland, in cooperation with the Indian team, responded with a customary global product advisory, that, unfortunately resulted in a customer panic. For almost four months, Nokia India had to recall millions of batteries and replace them with new ones.
Communication with Suppliers Within a week of the media panic, battery replacements ran in the millions. Other than the batteries from the Chennai plant, more batteries were brought in from Singapore and Dusseldorf. Given the huge volume of shipments, Nokia had to seek the intervention of DHLs regional headquarters though its Singapore office for managing the surge. Reverse Shipment In late September 2007, Nokia global headquarters issued a mandate that the old batteries be collected and disposed of in an environment-friendly manner. An empty insulated envelope, which Matsushita shipped to Nokia from its factory in China, was sent in a DHL courier bag to each customer address that a replacement battery had been delivered. Customers were asked to send their old batteries back in that envelope. Nokia collected almost 100,000 old batteries in this manner, and also collected almost 300,000 old batteries from the CCCs. To ensure that customers ere given sufficient time to replace batteries, Nokia continued the replacement process for four months.