THE FALL OF THE NOKIA COMPANY
To improve is to change; to be perfect is to change often.
Winston Churchill
Samuel Christian S (21S16020)
Yosua Nadeak (21S16009)
Introduction
Nokia is a cellular phone brand that debuted in the early 2000s. But now the name Nokia is not as popular as before. In this essay we will find out what causes Nokia to crash and what Nokia should do to prevent that from happening.
About Nokia
Nokia is a telecommunications company originating from Finland. The company is known for its mobile phone products, which include GSM, CDMA, and W-CDMA (UMTS). In the initial 15 years of its journey, Nokia Corporation experienced various obstacles in developing its products, until in 1970 they collaborated with the television company Salora. This collaboration gave birth to Nokia cellular phone products and was prominent in the 1980s. The name Nokia originates from a place on the Emakoski river in Finland and was founded by Fredrik Idestam in 1865.
The name Nokia began to be used in the early 20th century. Nokia itself was originally a pulp company that developed into a leading pulp and paper maker company in Europe.
In 1950 CEO Bjorn Westerlund predicted that the future of paper production would be limited so that a change was needed and then the electronic division became the cellular sector. In early 1981, Nokia launched a product called Nordic Mobil Telephone (NMT) which was the first multinational cellular network. NMT was introduced to a number of countries and was welcomed. Nokia experienced a crisis in the 1990s and made them only focus on cell phones and telephone networks. And finally the mobile phone market began to develop very quickly in the mid-1990s and Nokia became number one with sales of 2,100 series of Nokia mobile phones, sales of 500 thousand units in 1994, and a workforce of 54 thousand people. Sales of their products even reach 130 countries. In 1999, the launch of the Nokia 7110 product made it a mobile phone that had web functions and in 2001 launched a cellphone that had been integrated with a camera.
Nokia Cause of Bankruptcy
Nokia as a telecommunications company has suffered setbacks since the emergence of their competitors in the telecommunications industry. Since the emergence of Apple, Blackberry, and Samsung with the operating system OS Android, Windows, iOS that is more interesting to make Nokia with its Symbian Operating System began to be defeated.
In 2007–2011, Nokia began to go bankrupt with a decline in shares reaching 90%, so Nokia is experiencing financial difficulties. The company also repeatedly failed with Lumia 900 and Lumia 920 products which received many complaints and were unable to compete with competitors’ Quad Core technology. These constraints caused them to close almost all of their production companies and lay off 10,000 employees globally in 2013. Nokia, which was once famous for its motto, “a million mobile phones” eventually had to give up the market battle after Samsung Electronics Co Ltd would become a smartphone maker the biggest. Nokia always fails to innovate and lose competitiveness with other companies’ products and make them slowly retreat from cell phone competition.
Nokia’s failure factor starts internally, for example Nokia is often a pioneer in launching new products but without a better future prospect. Nokia failed to anticipate, understand or regulate itself to face the changing times. In fact you could say the latest Nokia mobile phones are features that are ready, but not ready in the future. There are also external factors, for example Chinese mobile phone vendors (Huawei, ZTE) and Korea (Samsung, LG) issue low-cost smartphones to rival Nokia’s kingdom in developing countries. We can see now, Apple has mastered the global market. Consumers are more interested in Apple brand gadgets than others even though the price is very expensive. This is because the designs made by Apple, are comparable to the quality provided. It is sad to see that Nokia, which used to lead almost in all segments of the mobile phone market, must be shifted by the onslaught of competitors. From the results of competitive analysis which includes Innovation, Application, Effectiveness and Efficiency, Nokia’s Interest in its two competitors, Apple and Samsung, Nokia is in the bottom position.
Many sources say this happened after under director Stephen Elop since 2010. Elop took a bold step by using the Windows operating system where Android is experiencing an increase at the time. Elop’s strategy, which intended to revive Nokia at the time, turned out to be the biggest failure. This is also supported by Elop’s 3-year leadership of Nokia’s price, which was originally 29.5 billion to 11 billion euros. Nokia is fall extreme under Elop.
What Nokia Should Do?
There are several things Nokia do to survive the competition, including focusing on developing the Symbian Operation System as their pride operating system. They also tried to work with Microsoft and tried to get up slowly. In addition the company tried to reduce spending and decided to focus on consumer needs. Given that Nokia is now under the of HMD Global, Nokia wants to try to get into the smartphone market. However, there are certainly many challenges that must be faced considering that now there are many emerging Chinese smartphones that dominate the market. Possible strategies Nokia can take are:
1. Bring out the characteristics to hook old customers back. Old customers can feel nostalgic when use Nokia.
2. Bring out the smartphone series from the lower, middle and upper classes to reach more consumers from various classes.
3. Bring up products with prices that can compete with other lower price smartphones
4. Creating Flagship products or superior products as proof of competition with other products.
5. Nokia want to follow the trend because as a new product back, Nokia has not been able to become a trendsetter.
According to my analysis there are 4 things that can be done by Nokia to compete again in the sale of telecommunications products. The three innovation business models are:
1. Affiliate Marketing
Nokia is trying to collaborate with other companies in developing hardware and software in its products. For example improving the quality of the camera with the Zeiss company, and the use of Google’s more renewable operating system.
2. Premium Material
Nokia is trying to pull back its consumer confidence in products with premium materials. Nokia’s own build quality was once a favorite because the premium material was considered to be a “Thor hammer” due to its hard material. In addition, Nokia is also identical with a durable and long-lasting battery with a 3,000 mAh Li-Ion battery capacity.
3. Sponsorships
Nokia can benefit if it cooperates with Google. For example, if Nokia uses Google’s Android as its operating system, they will get promotion assistance globally because Google will promote free smartphones using Google’s Android operating system.
4. Low Touch
Low touch is a step that can be used to focus on the use of technology that serves to reduce human interference. In addition to reduced labor, low touch models can reduce expenses.
In addition to the four ways, what I can do to increase the value of the value preposition of using Nokia as a characteristic to be remembered by customers compared to other cellular phone brands. Then I will carry out a massive revolution by making the best use of technological change. Learning from previous experience, we will be left behind if we cannot adapt quickly, especially changes in technology. An innovation that I might be able to suggest to Nokia besides focusing on improving cell phone products is innovation offering cloud-based storage. The progress of time with the rapid flow of information resulted in people inseparable from the data and through the data, the company is able to monetize data to see customer trends without having to conduct a market study directly. The business model is not carried out in a traditional way but rather follows the market trends until Nokia can again become the top product and can control its own market movements or trensetter.
References
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