Executive Summary

For this project, we have chosen the company NOKIA. Nokia is a mobile

telecommunications company, and offers far more than just mobile phones for everyday

use. They offer networking solutions for businesses that help businesses stay connected

and communicate with each other at all times and places. For them, Nokia also offers

special mobile phones with exquisite and unique functions and options. In this project,

we will first talk about what Nokia is and what they do. We will talk about their history,

and how they came to where they are today. Vision, goals, and their strategy are

discussed, as well as their wide variety of products and services offered for the regular

consumer, businesses, and service providers. Nokia’s success benefits were some

advantages they had in the market. These also include the advance technology and

features, as well as services they offer to their consumers. However, like most other

companies, Nokia has some weaknesses, but we consider these to be very minimal, and

almost only come down to their competition. Lastly, we will talk about their

informational business model. This model includes Nokia’s work organization, control

system, industrial relations, human resources, business strategy, and finally, enterprise

organization. We will look closely at and discuss all of these elements, and why we think
that they are relevant to Nokia.

Nokia has recently undergone a major organizational restructure. As a result of

this restructuring, Nokia has revised it goal, mission and strategy into clear and specific
objectives. On Nokia’s website they state, “Our goal is to be a good corporate citizen

wherever we operate, as a responsible and contributing member of society. We take part

in long-term projects aimed at helping young people create their own place in the

world, for example through our global youth programs.” They hope to fulfill their goal

by following their mission statement that is, “By connecting people, we help fulfill a

fundamental human need for social connections and contact. Nokia builds bridges

between people – both when they are far apart and face-to-face – and also bridges the gap

between people and the information they need.” Nokia plans to achieve its goal and

pursue its mission by implementing its strategy of, “Expand mobile voice, drive

consumer multimedia and bring extended mobility to enterprises.”

There are many different products Nokia offers within a common product

line. This common product line is cellular phones and accessories. Nokia offers many

different cell phones with many different features. Nokia, however, is more than just a

manufacturer. In addition to its manufacturing base, Nokia offers cellular phone and

digital television service though in limited areas. It may seem that Nokia has a limited

product line but when include with the research and development of these areas, their

service and manufacturing portfolios become more impressive.

As it can be assumed the cellular phone market is very lucrative. In 2003,

according to The Journal.com, Nokia had sales of $37.1 billion and profit of $4.53

billion. This encompasses all revenue and profit areas, with a market share in the phone

industry of nearly 35%. This market share has declined, at least in the first quarter of this

year, to 29%. Rival phone manufacturers are stealing market share away from Nokia,

while Nokia failed to meet the demand for its phones in the first quarter. More recent

estimations of market share where not available as of November 2004.

Technology is absolutely crucial to the prosperity of Nokia. Technology is what

sets Nokia apart from its competitors. As a pioneer in the development of cell phone
capabilities, Nokia uses cutting edge technology in mobile instant messaging, browsing,

video, imaging, music, and emailing. Security while using the features is also one of

their primary concerns. With new bluetooth technology, Nokia is providing peace of

mind in information transfers. Data synchronization and wireless Internet capabilities are

also part of Nokia’s advanced mobile technology. Also using advanced technology is the

digital television service they provide, but pioneers in this field they are not.

As can be imagined with any large employer, Nokia offers many different

employment opportunities. These opportunities are available for almost every

educational level, with jobs varying from janitor to research development specialist. As

both a manufacturer, service provider and research development firm there are many

different positions available. In the service field there are phone assistance that work

with customers and their accounts, while actual technicians work in the field fixing

disruptions in service and connecting accounts. The research department creates new

technology for the manufacturing sector to put into production. Obviously, there are the

necessary departments such as accounting and human resources that facilitate the

everyday operation of the company. The management team coordinates the focus and

strategy of the overall company and works to improve upon existing procedure. The

entire employment structure is tiered in the fact that each member of each department is

accountable to an overseeing authority. In fact, even the chief executive officer of the

company is accountable to the board of directors. This accountability forces the ethical

behavior of each member of Nokia, since the board is ultimately accountable to the

stakeholders of the company. The entire structure is similar to and umbrella in shape,

funneling together towards the peak, but then funnels back out to the stakeholder at the

top. Everyone is accountable.

Nokia’s group structure is slightly different than its employment structure. The

business structure is entirely segmented while the employment structure is segmented but
yet connected through the manufacturing process. The structure is actually segmented

with separate functions in each area

(www.nokia.com).

Key Success Factors

Nokia is upping the ante in the growing battle over digital convergence. The

Finnish mobile-phone giant has staked a claim in the nascent business of wireless music-

on-the-go, announcing a little-noticed deal on Aug. 9 with Loudeye a Seattle-based

startup, to collaborate on technology for downloading songs over the air to mobile

phones. If the partnership works, mobile phones could become stronger competitors to
portable music players such as the Apple iPod. Equally important, Nokia could help

mobile operators develop a lucrative new revenue source from selling and distributing

digital music.

For the world's leading mobile-phone maker, this is only the latest step in a

protracted effort to evolve handsets into multimedia gizmos. Nokia's phones have long

included simple personal organizers and electronic games. In recent years, it has added

digital cameras, FM radios, and support for downloadable ring tones and Java games.

Nokia even launched a handheld videogame player last October, called the N-Gage,

that doubles as a mobile phone.

Indeed, the company is so serious about digital convergence that it reorganized

late last year, breaking out multimedia products from conventional voice phones. The

multimedia group had revenues of $3.1 billion in 2003 and should grow 63% this year, to

$5.1 billion, predicts analyst Richard Windsor of Nomura Securities, vs. $20 billion in

2004 sales for conventional phones.

If Nokia gets the kinks worked out, the opportunity could be

enormous. Informa figures that sales of MP3-enabled phones will more than double, to

25.3 million next year, and hit 116 million by 2008. Meanwhile, operators stand to rake

in big money from services. They're already doing well with downloadable ring tones

that let consumers personalize the sound of their phones: Strategy Analytics figures ring-

tone sales last year topped $3.6 billion globally. Downloadable mobile music could be far

bigger, topping $17.6 billion annually in 2009, the firm estimates (www.nokia.com).

Key Weakness Factors

Nokia posted translated U.S. earnings per share of 21 cents, vs. 19 cents, in line

with lowered guidance. S&P estimates a handset market share loss of over 2%, as share

was hurt by a gap in the mid-range portfolio offering. To retain share, Nokia is initiating
an aggressive price-cut offensive, negatively impacting near-term margins. S&P is

lowering the 2004 earnings per share estimate to 82 cents, from 97 cents. Still, the stock

trades at a significant discount to peers on a price earnings and enterprise-value basis.

S&P is lowering the 12-month target price to $19 from $23, on weaker growth

expectations in S&P's blended valuation model (www.nokia.com).

 WORK ORGANIZATION

WOR
K
• Overseas Allocation
SYSTEM • Outsourcing

• Immediacy
• Flexibility
CONTROL SYSTEM INDUSTRIAL RELATIONS

• Network Management • Segmentation

• Culture Management • Downsizing
• Knowledge Management • High trust
Relations
• Relationship Management

• Information Infrastructure

HUMAN RESOURCE PRACTICE

 • Learning Organization: New Skill formation system
• Integration of thinking and doing
• Fluctuating wages depending upon demand

BUSINESS ORGANIZATION

BUSINESS STRATEGY ENTERPRISE ORGANIZATION

• Mass Customization • National • Networked
• Innovations • International •
Agile
• Growth • Global • Communica
ted

• Integrated

WORK SYSTEM
WORK ORGANIZATION

We have included the following sections in Nokia’s Work Organization: Overseas

allocation, outsourcing, immediacy, and flexibility. Nokia’s Head office is located

in Finland, but they also have regional offices in the USA and Asia. Their work is spread

over multiple organizations and multiple countries. Nokia employs over 50,000 people

from more than 120 countries. The ten major countries where Nokia has most of its

personnel employed are Finland, USA, China, Germany, Hungary, UK, Brazil, Mexico,

Denmark, and South Korea. Since Nokia’s main focus is on developing and innovating

new products and technologies, some of their business is being outsourced to other

partners and suppliers. This is mainly done in the research department to better and faster

develop new technology. These centers are all connected in a network, and Nokia keeps a

very close relationship with them. The research and development centers are also located

throughout the world and in different markets. Because of this, Nokia’s structure depends

on good communication and close relationships between all of them. All departments

within a business, as well as different research centers are integrated through computer

software and computer networks, which allow them to work closely and more efficiently

together. Good communication system allows them to share their ideas and results very
fast, which then results in better and faster development of new technologies But not only

does this computer network allows them to share data immediately, this provides a great

deal of flexibility to their employees and teams working on certain projects

(www.nokia.com).

CONTROL SYSTEM

Network management, Culture management, Knowledge management,

Relationship management, and information infrastructure are all related closely together.

Nokia’s success so far has been very much a team effort. Their management environment

nurtures discussion and openness as well as encouraging entrepreneurism and risk-taking.

Nokia has a lot of external partners and suppliers. Alone in Finland these are about 300

companies Nokia has a close relationship with. All of these suppliers and partners need to

comply with Nokia’s values and culture. To make sure all of these requirements are met

and also kept, Nokia keeps a very close relationship with them through an affective

information infrastructure. But this relationship and informational infrastructure is also

being maintained within the company itself. Inter-firm networking and activities produce

knowledge spillovers and technology transfer. Interdependent organizations and

departments develop into a cluster, which becomes more than the sum total of its parts.

With technology spillovers come self-reinforcing advantages, such as the accumulation

of knowledge and human capital. The company relies on the knowledge of its workforce,

and it offers four fundamental elements to motivate, engage and maintain employee

satisfaction and well-being at work. These are:

• Nokia way and values

• Performance based rewarding

• Professional and personal growth

 • Work-life balance.

Nokia is also strongly committed to the highest standards of ethical conduct, and full

compliance with all applicable national and international laws. The code of conduct is

introduced and reinforced to Nokia employees through induction, training, and internal

communication. (www.nokia.com)

INDUSTRIAL RELATIONS

The following three sections where chosen for industrial relations: segmentation,

downsizing, and high trust relations. We have already talked in previous sections on how

much Nokia focuses on their relationships with both employees and partners. Employees

are encouraged to create their own development plan and take advantage of the variety of

available learning solutions and methods. On-the-job learning is also heavily encouraged.

Employees take on a lot of responsibility when doing research, and they are self-

managed. Mistakes are allowed to make, and if they have been made, everybody tries to

learn from them, and maybe even turn them around to company’s advantage.

Segmentation and downsizing play a significant role in Nokia’s history. Nokia has its

origins in the paper industry in the 19th century. But their business expanded even further

into tires, footwear, plastics, power supply, and many more. At the beginning of the

1980s, Nokia strengthened its position in the telecommunications and consumer

electronics markets through the acquisitions of Mobira,Salora, Televa and Luxor of

Sweden. In 1987, Nokia acquired the consumer electronics operations and part of the

component business of the German Standard Elektrik Lorenz, as well as the French

consumer electronics company Oceanic. In the beginning of 1990’s, Nokia has decided

to concentrate only on mobile communications, and they have built the industry at the

very beginning of its dramatic growth. Now, more than one in three mobile phones sold

globally is a Nokia phone. Just recently, beginning January 2004, Nokia has

reconstructed their business group structure, which includes the four products and
services they are offering. The following graph shows Nokia’s change

from multibranch to mobile communications (www.nokia.com):

FROM MULTIBRANCH TO

Tires • Footwear • Technical rubber • Plastics • Power supply

• Mobile Phones • Multimedia •
Consumer electronics • Monitors • Data Telecommunications • Cables
• Networks• Enterprise Solutions
Aluminum • Machinery • Robotics • Engineering • Paper • Chemicals

MOBILE COMMUNICATIONS

HUMAN RESOURCES

This section includes learning Organization: New skill formation system,

Integration of thinking and doing, and Fluctuating wages depending upon demand. As we

have already stated previously, Nokia puts a lot of trust in their employees. A high level

of education and continuous learning are prerequisites for complex and demanding

research work. Further studies are actively encouraged and rewarded. Nokia rewards
employees for good performance, competence development, and for overall company

success. This creates a positive and encouraging environment with opportunities for

employees to optimize their potential and be rewarded fairly. Higher performance and

contribution will lead to higher rewards. Because of this encouragement and rewarding,

people at Nokia continuously look for ways to improve their performance in order to stay

at the forefront of technology and to develop their own competencies. Coaching is

regarded as a vital part of continuous learning. Highly skilled colleagues at Nokia provide

their employees with rich sources of experience and knowledge. Receiving coaching and

participating in different teams will fuel employees´ development as well as give them

the opportunity, every day, to share ideas and goals with innovators and industry leaders.

Nokia employees also have access to a wide variety of training activities, as well as

management training and development of leadership skills. Since Nokia encourages their

employees to work on their own, and develop their own plans, they are integrating

thinking and doing, and not separating it. Compensation at Nokia is tailored for each

country and typically consists of elements such as annual base salary, incentives,

bonuses, possible stock options, flexible Work-Life balance solutions, and other local

benefits. The basic salary is set to meet market conditions, the demands of the job and

individual competence and performance. The variable part may consist of incentives or

bonuses and other compensation, such as overtime pay and call-out pay

(www.nokia.com).

BUSINESS ORGANIZATION
BUSINESS STRATEGY

This section includes mass customization, innovations, and growth. Nokia offers

more than just mobile phones. One of their great services is the mobile solutions offered

for business. Nokia helps business that has their employees travel a lot, connect with each

other easier, and provide them with special emailing, messaging, and uploading files on
special mobile phones created for them. Each company has different problems and

different ways of doing business. Nokia works closely with their clients to develop a plan

that best works for them, and they take their existing communication system to a new

level. This is what Nokia’s mission is: to connect people. And they do it successfully

with great new innovations and technology. Nokia spends a lot of its resources and

money in research and development. Throughout the years, they have come out with

some of the greatest developments in telecommunications. In 1981, Nokia introduced the

first car phone on the market, and then 3 years later, in 1984, they introduced the first

portable NMT car telephone. In 1992, Nokia introduced the first digital hand portable

phone for GSM networks, and they also introduced the first mobile phone with user-

changeable covers in 1998, and in the same year, they introduced the first mobile phone

with a built-in FM radio. At Nokia, growth is encouraged in both the company level as

well as individual employees. Nokia strives to be the number one company in the world

in the mobile communications market. In order for them to do so, they have to be the

leading company in developing new ideas and technologies as well. Since their research

and development employees are the heart of this, they encourage personal growth as well.

Higher education is a must at Nokia, and they offer various possibilities and opportunities

for their employees to broaden their knowledge and skills (www.nokia.com).

ENTERPRISE ORGANIZATION

Nokia is all, a national, international, and a global company. They produce and offer

services at the national level, but they also ship their products and offer their services to

other countries. However, their research and production facilities are not limited to only

one country, these are located all over the world. The head office is in Finland, but they

also have an office located in the USA for the American market, and one in Asia for the

Asian/Pacific market. All of the company’s functions and different departments, as well

as different locations are integrated in one single network. This gives them the ability to
communicate much faster and more efficiently with their different branches, as well as

their suppliers and partners. This gives them the benefit of being able to finish tasks much

faster and bring new products to the consumer (www.nokia.com).

Self Evaluations

Lindsay Salo

This is the best our group has worked together. Everyone showed up at the team

meetings when they said they were going to and everyone seemed positive when they

were there. From these group assignments I have learned that everyone in a group does

not do the same amount of work. Some people do more than others and some people do

not do much at all. I feel that if this team were in the actual business world, managers

would “weed-out” those that did not perform, or constantly needed assistance. I know

that we are a team and we have to pick each other up when we are down, but holding

someone’s hand is another story all together. I feel that for these projects I did my fair

share and then some. One of the other members of our team should feel the same way,

maybe with a little stronger conviction than I.

Ryan Cubit

I have learned that Nokia is growing company and a very successful one at that. Nokia is

at the top off its level with all of its competitor’s. The knowledge I have learned from

doing this project could help later down the road for when and if I decide to invest in a

company. Our team was very corporative and worked well together. We were

enthusiastic about the project and took well interest into our company we choose.
Jason Lenahan

I was really exited about doing this project. Yeas, some of the elements were kind of

confusing, and very time consuming, and the whole preparing for the presentation almost

somewhat stressful, but I was really excited about the company we picked. I, myself, am

a strong Nokia believer and user. I guess, it’s one of those European things, the brand

loyalty to this company. Let’s admit it, they simply have the best technology and

especially the best and most user-friendly software. It’s like the Microsoft of mobile

phones. The teamwork itself was definitely the best. I don’t remember the last time we

worked so closely together. Meetings were very beneficial and helpful, and everybody

came.

Matt Webber

After working on project five, I have a better understanding of how the Industrial

Enterprise transformed into the Information Enterprise. I see how organizations down-

size and how team members take over the task of solving complex problems. The

Information Model Work System and the Information Model Business Organization

teaches the adaptation of global and network unity. The project also shows me how

important working as a team can be productive and rewarding. I have much better

knowledge of how the Enterprise Models function within organizations

 References:

www.nokia.com