Analysing the failure of a business. Students should choose a case study and discuss it in detail, following the outline provided below.
Write about the Nokia
Introduction to case study
What were the key failings?
What could have been done differently?
Introduction to Case Study
Nokia-Connecting people, a tagline which resonated with people across the globe, a brand which ensured quality, strength and superior products, a name synonymous to trust and loyalty. Nokia was a worldwide technology leader providing communication services to service providers, enterprises, government and consumers. The company developed some cutting edge products which still are remembered by its audience. Nokia 3310, 1100, Nokia E series were examples of fine product line, millions of people across the world used their phones and connected with them. Finland based company came into existence in the year 1865, employees people of more than 100 nationalites spread across in over a hundred countries, headquarters of the company being at Espoo (Yrkko, 2001). Presently the company is led by Rajeev Suri of Indian origin who is the acting CEO since 2014.Bell labs, Alcatel mobile, Nuage networks and NGP capital are some of the subsidiaries of Nokia(Haiko, 2002)
Nokia Corporation was established in 1865 and it is engaged in consumer electronic goods industry. The company is popular for manufacturing and distribution of mobile phones in the global market. Their mobile phones were known for fulfilling the unique demands of various segments of audiences. In very short time period, company was known as the leader of the mobile phone industry (Grunewalder, 2014). This helps the organization to build a strong goodwill through which the demand of their products was very huge. But Nokia was not able to adopt the trending technologies as per the dynamic environment and with changing customers’ tastes and preferences like other companies such as Samsung, Sony, etc. and this lead the company towards the downfall (Latour, 2001). Under this report, company’s failure will be analysed and the reasons will also be evaluated which lead to company towards the downfall situation.
“Analysis of Nokia’s decline from marketing perceptive”, a case study which was given by Jianzhong & Yuchan in 2015 stating the journey of the Nokia Corporation in the telecommunication industry. Nokia has made various records in their peak period and the wrong decision taken by their management, etc. is focused by the authors in this case study. Authors have also discussed about the alternatives which could have been used for avoiding the downfall scenes. Along with this, the case study also focuses over certain crucial decisions taken by the management of the organization which generated negative outcomes for the organization and organization lost its competitive advantage over Samsung, Sony and other companies (Santala, 2009).
Primary discussion of the case study is the journey of Nokia from its peak towards failure in the consumer electronic goods market. Further, case study also includes the Nokia Corporation’s strategies through which they gained the success in their industry. In the initial period, Nokia adopted various unique and advanced strategies in order to improve their devices as per the consumers’ requirements (Weinnman, 2014).
Along with the above topics, case study also includes the critical evolution of the Nokia Corporation and its phones and smartphones from 1990-2011. Apart from this, it will also focus over the new entrants in the industry and the strategies used by them to compete with Nokia. Additionally, case study includes the view of stakeholders which plays vital role in the success of the organization. Stakeholder’s reaction over the changing designs of the smartphones of Nokia and the impact of those reactions will also be covered under this case study (Sigurdson, 2001).
Key Failings of Nokia
The last part of the case study includes the downfall of the Nokia and the strategies used by the new entrants and the other existing companies to enhance their market share for gaining the competitive advantage over Nokia. Thus, the case study includes the Nokia’s whole journey which consist the both peak and lowest positions in the market.
Nokia was known for its qualitative phones and organizational tagline “connecting people” failed when company sold its assets to Microsoft in a span of 5 years. This was the greatest question for Nokia’s consumers and of its stakeholders’ too. The company which was ruling the whole industry is selling its assets to Microsoft was the biggest downfall for the organization (Zeng, 2012). Microsoft acquired Nokia in 2013 and from then, various studies have been conducted already with the view to ascertain the reasons for Nokia’s failure. Some of them are as follows:
The early mobile phones came in the market for the purpose of calling, people had no idea what could be the next level of improvement with the phones, they never imagined that phones could be used for clicking pictures, recording video, accessing mails, sending information, shopping, social media, all these things were absolute surreal to human. Nevertheless, with time, and progress and development of science and technology, smartphones entered into people life and soon it became a necessity rather than an accessory (Teecee, 2010)
Earlier when the mobile phones were popular in the market almost a decade ago, people used to buy phones on the basis of actual benefits, such as battery life, durability, strength etc., their purchase behaviour was rational, objective and real, however in a quick span of few years, as the income of people increased, their taste and preference gradually changed and the process of buying a mobile phone was not as careful and objective driven like the earlier times, it became more of an intuitive and an emotional purchase behaviour.
The times and the market was changing rapidly, but Nokia was still focussed on its technology oriented and product oriented strategies to guide the innovation of products, it continued to strengthen its inherent properties: making hard for cell phone to break, extend the battery life, increase pixel of phone and similar things. The team was busy focussed on the product and technology that in the process they completely ignored what the consumer is looking out for in a mobile phone. Decision making that wasn’t based on consumer’s demand lead Nokia to not only separate itself from the market, ignore the real needs of the market but also to do much idle work (Wang, 2013)
It had been a long time since the 4P theory (Product, Price, Place & Promotion) transformed into the 4C (Customer, cost, Communication & Convenience).It means that the companies should care more about what the customer needs, what his sentiments are, his pain points. It was more important to pay attention to the customer demand rather than the product, so that the product innovation can take care of the real needs of the consumers and not blatantly innovate the products without any research (Shang, 2012) In case of mobile phones it was really essential to understand what the customers care about, the hardware or the software?
Unable to understand the sentiments of the consumers
Nokia since the start had been focussing on making it a magical phone, a phone which is hard, durable and does not break; they completely ignored the fundamental problem of compatibility of the hardware with the operating system. The OS of Nokia was Symbian, it was a popular OS back in the machine age and it had earned Nokia a lot of market share in the past, but as the technological advancement took place, the Symbian OS start falling behind other OS like android and IOS. The problem with Symbian phone was not being compatible, it had many incompatible versions and also had no ability of backwards compatibility, this lead to Saipan 7 and Saipan 8 which was clumsy and had shortcomings of its own. The Saipan 7&8 was unable to support touch screen, multimedia, new operation interface which pointed that Nokia phones were disadvantage in the market, and when Saipan was working on development of 2G, it could not keep up with the 3G momentum going in the industry(CNNIC, 2012)
Inadequacy of Symbian to not adapt to the technological advancement was not the only problem, the fault lied at the inadequacy of Nokia to develop another operating system and cooperate with Google Android to develop an OS superior to both Android and Symbian.
One of the biggest and fatal mistakes which Nokia made was its refusal to cooperate with other Mobile Manufacturers in the business ecosystem. Symbian in itself was a closed operating system, which has dual effect; one by raising the barriers of entry for any other handset manufacturer, second was being totally blind to what was happening in the outside world, both these reasons contributed towards the failure of Nokia to not foresee its future. Nokia operated in monopoly and thus refused to work and share its technology with other manufacturers to boost its profits. Though this strategy worked, Nokia did well in its own inherent market, but the problem was cropping with Symbian, it was too difficult to develop and operate application with Symbian, which made it extremely difficult to meet the demands of its consumers. At the same time, most of the other handset manufacturers joined hands and have joined the camp of “Android”, companies such as Samsung, HUAWEI, HTC, Sony, and Coolpad & ZTE were part of the camp. The joining of other handset manufacturers in the Android camp was a fatal blow to Nokia, as now they had a better understanding in relevance with the audiences’ requirements and many of the companies moved together in the direction of developing large number of applications based on Android operating systems in order to strengthen and securing the system.
Nokia entering in a partnership with windows to save its boat from sinking did the reverse of what the company management thought. The OS of windows was nowhere close in comparison to the ease of use provided by android and IOS, windows operating system was way too complex for people to operate and understand, and thus the partnership could not yield a positive effect for Nokia. The phones of Nokia were still comparable to other competitor’s smartphones; it was the Operating system which was failing them over and over.
Deviation in the business tactic of the company
Competitors of Nokia like Samsung, Sony came up with a new phone almost every new year, they came up with new and radical designing, they realized that the market now needs a phone with superior design, shine, cool features and ease to use and all of them were doing the same to gain a sizable market share. Nokia on the other hand was not able to innovate; Nokia did not even have the front camera for a very long time, which does not even make it 3G enabled, while the industry was on the verge of entering 4G. It can be thus said that smartphones of Nokia were feature ready but not future ready.
The organization is only responsible for its own destruction and the primary reason behind this is the failure of the understanding the present requirements of the consumers. Consumers were demanding change but Nokia didn’t changed and continued with their old operating system and Android based operating system smartphones acquired the Nokia market share.
The world is changing rapidly and so is the technological landscape, technology is changing at a much faster rate than anyone ever imagined, this also leads to replacement of products and services at a much faster rate. Hence, the needs of the customer are also susceptible to the tech advancement and hence change in their taste and preference is almost inevitable. Hence it is strongly advised to not blindly follow the old marketing formulae and to not linger around the same things which the company did in the past, the time is of innovation, and if one does not innovate they certainly would die (Yang, 2013) Nokia did the exact opposite of what had to be done, they did zero marketing research and just played on their strengths, unable to adapt to the changing technological times the company flattened out. The consumers were focussed on software and wanted application in their phone, ease to use etc. were some of the features customers were looking for, if Nokia would have fulfilled those needs, the situation would have been entirely different(Zheng, 2013)
Demand of consumers is a subjective feeling and can be attributed to many factors such as product, service quality, brand influence, top of the mind recall, affordability, market trend etc.; hence it is difficult to determine one single attribute that could contribute to success of a smartphone. This requires companies to stand in leading position at all times, observe the trend of market, always ask the customer what they want and always put in an attempt to surprise the customer by providing him with everything he was thinking subconsciously. Thus, market research is a very important tool in the hands of company, and a better job at market research would lead to a better understanding of customer preference leading to enhanced product development and ultimately increase in revenue for the brand.
The present world is open and thanks to internet that everything can be accessed from anywhere. The openness in the market has made the entire world as one big major enterprise. There is no one single enterprise which is isolated, the world has become more cooperative because an enterprise is in contact with other enterprises and hence cooperation is the only source of power of long term development of enterprises. It should be understood that any organization which is unwilling to cooperate in doing something better for the world will get defeated once all of them gets united. Exactly the same happened with Nokia, when it refused other players with its technology, they all teamed up and joined android camp and came for everything which Nokia was too proud not to share.
What could have been done differently?
Hence it is advisable to work with each other to develop positive synergies, the strength and the collaborative efforts can certainly lead to great business partnership leading to great products, and thus enterprises should be more cooperative than being competitive.
Business tactics implies the reaction that an enterprise takes to form their own advantages and disadvantages and create a space for survival and development by considering the advantages and disadvantages of the environment in which the industry is operating. Business tactics are dynamic and not static, the tactic has to keep changing itself with the changes in the external environment, different strategic tools like Porter & PESTLE can come handy to analyse the external environment (Fu, 2010) The business tactic is related to the future development of the enterprise and hence it is extremely significant to investigate and analyse the market condition in order to come up with a business tactic which is in alliance with the futuristic trends. Nokia unable to realize that Symbian model was not working for its phones and moving over to Sapien could not be of any help, the company should have let go of OS development and followed the trend market was following. But the business tactic could not correctly predict the pulse of the market and thus went into pitfall. Further, Nokia moved into windows OS, which was the last nail in the coffin and forced the company to sell off its business to Microsoft. Hence, deploying a business tactic in sync with the market is must and should, the business tactic has to be developed in accordance with the consumer taste and preference and based on good marketing research (Yi, 2011)
Nokia Corporation loses its position from the industry due to certain wrong decisions and due to their non-adaptability of trending and demanding changes which were crucial at that time to retain or maintain its position in the global mobile phones industry.
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