Case Nokia – Week 10 Strategic management
1. Determine the business level strategy(‘s) that Nokia has used over the years
and determine if the implementation of that strategy was optimal. Think along
the lines of structure and controls. Your answer might differ over the years.
The traditional strategy of Nokia is based on maintaining a large market share and
the economies of scale which both accompany and support such a share (pg. 9). The
business level strategy belonging to this is product differentiation. As is stated on
page 9, the company should have been focusing on higher margins (cost
leadership) earlier, as they might be losing scale advantages at the end of 2007.
Thus, the implementation of the traditional strategy lumbered somewhat in the late
2000s. Experts in the field recommended Nokia to raise prices and rebuild its brand
by relying more on external suppliers. As the scale advantages could turn into a
vulnerability for Nokia.
Nokia underwent an internal reorganization in 2003, which reorganized the company
in a functional structure, creating separate units for mass-market, business, and
multimedia phones. Nevertheless, this made the company lose focus of their
strategic objectives. In 2003 the company adjusted its portfolio and adapted to the
market by cutting prices on selected handsets to reclaim market share (which can be
attributed as a cost leadership strategy).
After this gaining of market share, Nokia bounced back and wanted to focus again on
operational excellence (or product differentiation) by exploiting its in-house
production and reacting quickly to customer demand.
Business level strategy Year Implementation
Product differentiation Throughout Quite successful in the beginning but loses
different years some of its effectiveness at the end of 2007.
Cost leadership strategy 2003 A short period in which Nokia cuts prices to
gain market share
Product differentiation After 2003 back Exploit in-house production and reacting
quickly to customer demand. Also during the
takeover, the company focused on niche
markets and operational excellence within
these markets.
CLS: two ways of looking at it
- Portfolio view (Rumelt, single product count etc.)
- Individual moves
Nokia is a serial diversifier. They reshaped their organization, but first got rid of the
old. They were the hardware phone manufacturer, but now go into 5G. You can also
name this horizontal expansion. Serial diversification was not discussed in class, but
this is the way you would call this strategy of Nokia. Nokia was very focused. The
importance of the core business of Nokia is a dominant business firm. The company
focuses on one product during its existence.
1. Determine the business level strategy(‘s) that Nokia has used over the years
and determine if the implementation of that strategy was optimal. Think along
the lines of structure and controls. Your answer might differ over the years.
The traditional strategy of Nokia is based on maintaining a large market share and
the economies of scale which both accompany and support such a share (pg. 9). The
business level strategy belonging to this is product differentiation. As is stated on
page 9, the company should have been focusing on higher margins (cost
leadership) earlier, as they might be losing scale advantages at the end of 2007.
Thus, the implementation of the traditional strategy lumbered somewhat in the late
2000s. Experts in the field recommended Nokia to raise prices and rebuild its brand
by relying more on external suppliers. As the scale advantages could turn into a
vulnerability for Nokia.
Nokia underwent an internal reorganization in 2003, which reorganized the company
in a functional structure, creating separate units for mass-market, business, and
multimedia phones. Nevertheless, this made the company lose focus of their
strategic objectives. In 2003 the company adjusted its portfolio and adapted to the
market by cutting prices on selected handsets to reclaim market share (which can be
attributed as a cost leadership strategy).
After this gaining of market share, Nokia bounced back and wanted to focus again on
operational excellence (or product differentiation) by exploiting its in-house
production and reacting quickly to customer demand.
Business level strategy Year Implementation
Product differentiation Throughout Quite successful in the beginning but loses
different years some of its effectiveness at the end of 2007.
Cost leadership strategy 2003 A short period in which Nokia cuts prices to
gain market share
Product differentiation After 2003 back Exploit in-house production and reacting
quickly to customer demand. Also during the
takeover, the company focused on niche
markets and operational excellence within
these markets.
CLS: two ways of looking at it
- Portfolio view (Rumelt, single product count etc.)
- Individual moves
Nokia is a serial diversifier. They reshaped their organization, but first got rid of the
old. They were the hardware phone manufacturer, but now go into 5G. You can also
name this horizontal expansion. Serial diversification was not discussed in class, but
this is the way you would call this strategy of Nokia. Nokia was very focused. The
importance of the core business of Nokia is a dominant business firm. The company
focuses on one product during its existence.
