organizational restructuring at nokia

04/11/2023IBS MUMBAI 1

ORGANIZATIONAL RESTRUCTURING AT NOKIA.

PRESENTERS:DEEPAK KUMAR JHA(09BS0000664)AJAY SINGH CHAUHAN(09BS0000125)PIYUSH KUMAR(09BS0001587)IQBAL KASHEM(09BS0000906)SUMAN SINHA(08BS0003427)JEEVAK PATIL(09BS0000959)


Introduction

Nokia- a Finland based leading mobile handsets manufacturer.

Also a renowned supplier of fixed broadband and internet protocol network.

Nokia was the first to introduce the GSM technology.

Nokia with its phone revolutionized the international phone market since 1987.


Initially Nokia had two business units : mobile phones and networks with a separate venture fund and research unit.

Nokia’s major source of revenue was from mobile phones and its revenue increased to 54% in 2000.

Sales affected in the first quarter of 2001 due to stiff competition from Samsung and Sony ericsson.


Nokia restructured its mobile phone business into nine units in the spring of 2002 to resurrect its profit.

Each unit was equipped with unique marketing and research division but they all have common operations and logistics.

Nokia focused on developing countries like India &China for its low-cost mobile phones and market expansion.


Due to restructuring Nokia’s sales increased of 2% over that of 2001 and also due to increased sales of multimedia and messaging capabilities of new sets.

By the end of 2002,Nokia’s sales growth was 5% in Asia Pacific, Europe, and America.

But after that in July 2003 Nokia’s profit fell by 28% and sales increased by only 1% due to severe competition from Siemens and Sony ericsson & Samsung both in the low-end and high-end market.


Nokia again announced the restructuring in sep2003 which was implemented in jan2004.

Company’s focus was on convergence, market growth, and mobility. The new structure consisted of 4 business groups:- mobile phones, networks, enterprise solution, and multimedia.

These vertical units were supported by corporate-wide horizontal functions to enhance the company’s efficiency.


Product Releases

In May 2007, Nokia announced that its Nokia 1100 handset was the best-selling mobile phone of all time

In November 2007, Nokia announced and released the Nokia N82, its first N series phone with Xenon flash

At the Nokia World conference in December 2007, Nokia announced their "Comes With Music" program

In 2008, Nokia released the Nokia E71


Challenges of Growth

In the late 1980s and early 1990s, the corporation ran into serious financial problems

In 1990–1993, Finland underwent severe economic depression which also struck Nokia

Probably the most important strategic change in Nokia's history was made in 1992 under the new CEO Jorma Ollila

As late as 1991, more than a quarter of Nokia's turnover still came from sales in Finland


Cont..

Logistics crisis in the mid-1990s

Between 1996 and 2001, Nokia’s turnover increased almost fivefold from 6.5 billion Euros to 31 billion Euros

RESTRUCTURING IN NOKIA FIRST WAVE OF RESTRUCTURING(2002-2003)

The late 1990's saw Nokia shifting its focus from 2G to software development. The growth path in 2G was limited primarily because of bandwidth constraint and lack of protocols for high speed downloads. Nokia had already begun work on 3G which would eventually see the convergence of telephony, computing and the Internet.

Nokia's widespread restructuring at this time was an attempt to support this new corporate strategy. A monolithic organizational structure was no longer appropriate for a market that required flexibility and faster movement to tap opportunities.

In 2002, Nokia split its mobile phone division pillar into nine separate business centres based on geography, charging them with working on specific markets independently, especially Russia, China and India. Nokia had finally learnt from its folly of neglecting these growth markets.

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Contd..

September 2003 saw Nokia marching ahead with its structural changes by

dividing the company into four divisions:

Mobile phones.

Multimedia phones.

Network.

Enterprise solutions.

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The Second Wave of Restructuring (2008)

Nokia restructured itself into three main functional groups: Markets, Devices, and

Software & Services.

Markets: This division handles customer, front-end sales and the go-to-market strategy

of Nokia sales worldwide.

Devices: It deals with all the hardware and software requirements for the

development of a new mobile phone. Research and Development, product development and software variants that were earlier separated in three divisions have now been put together under a single umbrella division.

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Contd…

Software & Services:

It was created in the restructuring exercise with an eye on the future of the industry. It reflects the path that Nokia wants to take in the coming years and is in sync with its vision of bringing the best of Internet to phones and offering Consumer Internet Services.

Nokia focused on four main aspects in its restructuring process:

Product focus: Nokia was manufacturing 70 models world wide.

Functionality focus: Technical and functional expertise was important for

cutting edge technology.

Geographic focus: Expanding global footprint.

Focus on Internet services: Exploring future possibilities.

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Nokia simplifies its organizational structure to accelerate execution and innovation (2010)

Nokia introduced a simplified company structure for its devices and services business comprised of three units: Mobile Solutions, Mobile Phones and Markets which was effective from July 1, 2010.

The move aims to accelerate product innovation and software execution in line with the company's goals of integrating content, applications and services into its mobile computer, Smartphone and mobile phone portfolio.

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Contd..

Mobile solutions : The new Mobile Solutions unit will concentrate on the company's high-end mobile

computer and Smartphone portfolio. Based on both the MeeGo and Symbian software platforms respectively, these devices will be tightly integrated with Nokia's Internet services to increase the combined value for consumers.

Mobile Phones : This unit will focus on maintaining Nokia's leadership in the feature-rich mobile phone

market and driving the direction of Series 40, the world's largest mobile operating system. Both the Mobile Solutions and Mobile Phones units will have dedicated portfolio management, including product planning, R&D and dedicated software assets.

Markets : It will be responsible for Nokia's 'go-to-market' activities, including sales and

marketing, management of Nokia's global supply chains and sourcing operations.

SWOT ANALYSIS

SRENGTHS:•World Leader in the Industry.•Strong Financial Support for investment.•Strong R&D unit.•Strong customers relation.•Strong distribution network.•Products are customer friendly.•Robustness and long battery life.

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WEAKNESS: High price of the product. Nokia’s service centers are very few

therefore its after sale service is not impressive.

Has not launched enough dualSIM phones to counter competitors.

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Opportunities: Nokia can capture more market

share by innovating new product and new features of existing products.

Nokia can expend its market share by introducing brand in new market and by catering new target market as well.

Can enter in the laptop business also.

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Threats: Large number of competitors and new

entrants. Some competitors offer products at

low prices. Growth of WLL network because Nokia

provides lesser CDMA cell phones so its products can go toward the down fall with the rise of WLL network.

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Organizational structure Before 2003. Two business unit

Cell phone manufacturing network

Structure was common based on following the business nature

Two separate vertical line accompanied by horizontal line

Overall structure was centralized

QUESTION 1- NOKIA DIVIDED ITS MOBILE PHONE BUSINESS INTO 9 UNITS IN 2002 AGAIN IN 2003 THE TOP MANAGEMENT ANNOUNCE THE RESTRUCTURING OF THE ORGANIZATION DISCUSS THE REASON S THAT LED TO RESTRUCTURING NOKIA’S ORGANIZATIONAL STRUCTURE IN 2003?

The need

Problem with lack of integrity Proper initiative Control over market Stiff competition Gain flexibility and fast movements

Organizational structure

After 2003 Nokia followed activity based structuring Identified four business activity

Mobile phone Networks Enterprise solution Multimedia

Business was integrated and de-centralized Verticals were supported by horizontal

functions sales, marketing, logistics, manufacturing, technology, central corporate strategy, r & d.

Organizational structure

After 2008 Nokia restructured its business into 3

functional group Market (customer) Devices (product development/ R & D) Software and services (future market)

QUESTION 2- “WITH OUR FLEXIBILITY AND THE NEW STRUCTURE WE ARE TRULY IN THE BEST POSITION TO BRING THE BENEFITS OF MOBILITY TO EVERYONE AND TO TAKE THE OPPORTUNITY OF THE NEXT GROWTH WAVE IN INDUSTRY .”MENTION THE BENEFITS THAT NOKIA EXPECTED TO DRIVE BY RESTRUCTURING ITS ORGANISATION ?

"Willingness to change is a strength, even if it means plunging part of the company into total confusion for a while" Jack Welch

September 2003 saw Nokia marching ahead with its structural changes .

The divisions were small in size and enabled faster response in targeting markets that were vastly different with respect to feature demand and usage.

The second wave of restructuring was necessitated by the changes in the rapidly growing marketplace. The existing structure was strained by this growth which magnified its deficiencies. Trouble started creeping in as technologies began to converge and the phones started becoming similar. The structure was incapable of meeting such needs. The major issues faced by this structure were:•Repetition of work across divisions and non-standardization of product•Poor coordination among divisional groups working on the same technology•Inability to develop any major expertise This led to cost ineffectiveness and called for a major revamp and re-structuring in Nokia.

•Product focus: Nokia was manufacturing 70 models world wide•Functionality focus: Technical and functional expertise was important for cutting edge technology•Geographic focus: Expanding global footprint •Focus on Internet services: Exploring future possibilities

Transparency in the restructuring process and a clear definition of new roles and duties allow things to fall in place quickly ensuring a smooth transition from one structure to another

HOW THIS WORKED SO WELL…

Nokia's entry into the mobile internet application development is important for its future growth.

These acquisitions and other collaborations form a part of Nokia's extended firm Symbian.

THANK YOU

organizational restructuring at nokia

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