Nokia's Competitive Position*

Abstract:

In the late 1990s, Nokia overtook then leader Motorola to emerge as a behemoth in the global mobile phone industry. Nokia's dominance continued into the first few years of the 2000s, but it suddenly came under threat in 2003-2004, when smaller Asian vendors started making their presence felt with better products at lower prices. The company's problems also had internal causes and analysts said one of the reasons could be that it had become too complacent with its success and lost its agility in reading and responding to market signals.

This case study discusses the various problems Nokia faced in 2003-2004, including the company's tardiness in introducing the clamshell phones that had become very popular and its resistance to manufacturing operator specific handsets. It also discusses the efforts Nokia made to recover its market once it realized that its performance was slipping. The case concludes with an analysis of the challenges the company faced in the future and the various options ahead of it.

Issues: » To understand the difficulties faced by an erstwhile giant in the global mobile phone industry in 2003-2004. » To appreciate the importance of innovation in a dynamic and volatile industry. » To analyze the effect of changing market conditions on companies. » To appreciate the importance of keeping abreast with changing market conditions and adapting to them speedily. » To examine future challenges that the company faced and the various options available to it.

Questions for Discussion:

1. n the late 1990s, Nokia emerged as the leader of the global mobile phone industry. However, by 2003, the company faced several problems. Discuss Nokia's rise to the top and its eventual downfall.
2. In its heydays, Nokia was well known and recognized for its innovativeness and rapidity in introducing new products. However, one of the main reasons for its troubles in the early 2000s was that it had failed to read market signals and lagged behind in product development. What were the reasons for the company's problems? Do you agree that complacency had taken its toll on Nokia?
3. Comment on Nokia's efforts to recover its lost market share. Do you think that the company will be able to recapture its position in the mobile phone market? Discuss in light of Nokia's future plans.

Key words:
Nokia,Global Mobile Phone Industry,Jorma Ollila,Motorola,Sony Ericsson,GSM,Yrjo Neuvo,Microsoft Corp,Samsung,LG,N-Gage,Vodafone,RAZR V3,Sony PSP,Nintendo

*Note : This case is a simplified version of a longer case study, and is intended for learners for whom English is a foreign language. The longer version of this case study (BSTR167) is available at: http://www.icmrindia.org/casestudies/catalogue/Business%20Strategy2/BSTR167.htm