Nokia Case Study

Brandon Schmitz

Case Study #1

Nokia

1. What are the trends in the mobile handset industry? What is Nokia’s strategy and how has globalization changed its way of operation?

In 2007 Nokia was selling four out of every 10 mobile phones sold worldwide and their profits increased by 67% the year after that so they seemed to be doing very well for themselves. As time went on and the demand in developing markets like the Middle East, Southeast Asia, Africa, China and India started to turn up high numbers in market growth it put a big impact on Nokia. While this was happening the demand for mobile phones in the US were decreasing. In 2006 the penetration rate in the Eastern European mobile communications market was 88% and was expected to be up to 100% in 2011. This market was growing very quickly. One advantage that Nokia had while all this was happening is they were selling numerous phones for cheap. They had many phones on their shelves that were selling for $25 and $10 which was much below their competitors, but this wasn’t exactly going to save them. The trends in the mobile handset industry were also changing due to rising cost levels, declining prices and high competition. These are just a few things that are affecting the trends, but when it comes down to it many investors went there for the low wages, high productivity and simple taxes. Globalization had changed Nokia’s way of operation in a couple ways. They wanted to maintain large market share and economies of scale and they were going to do this by shifting production to low-cost locations. Globalization also increased competition for them. Literally people could sell phones anywhere. They were going to take advantage of a country’s resources like their cheap labor and lower taxes.

2. Was the German backlash against Nokia justified? How can nations make themselves more competitive?

No, the German backlash was not justified. Nokia did what they had to do in order to keep their head above...