Nokia's Fall: A Case Study

This assignment delves into the reasons behind Nokia's downfall, focusing on internal conflicts, fierce competition, and the company's failure to adapt to evolving customer needs and industry trends. The research utilizes a qualitative approach, drawing insights from various sources including academic literature, news articles, and company reports. The aim is to provide a comprehensive understanding of Nokia's challenges and offer valuable lessons for other businesses facing similar difficulties.

Running head: BUSINESS RESEARCH METHODS
Business Research Methods
Name of the Student
Name of the University
Author’s note

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Contents
Title: Failure of Nokia.....................................................................................................................2
Problem Statement...........................................................................................................................2
Research objective...........................................................................................................................4
Prior work/Literature review...........................................................................................................5
Hypothesis.......................................................................................................................................9
Probable Approach........................................................................................................................10
Value of the study..........................................................................................................................15
Reference list:................................................................................................................................16

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Title: Failure of Nokia
Problem Statement
Technology is highly dynamic in its update and advances and it is very important for
business organizations to keep up with the changes. Nokia Corporation was established in the
year 1865 as a paper manufacturing company which later expanded into the electronic industry.
Nokia ventured into the telecommunication sector in the year 1968. Nokia Corporation was one
of the leading mobile device manufacturing companies. Regarded as a pioneer of the mobile
information society and devices Nokia has set several benchmark in the process of its growth.
The aim of Nokia mission is to enable people to connect with one another in order to
communicate in an easy and Hassel free manner. The technology and applications that are
created by the company are at par with the utilities of human requirements. Nokia was identified
as the world's fifth most valuable brand in the year 2007 and is topmost mobile vendor from
several years. At present the company is in a mature stage, the point of breakage that happened is
during the time platforms like IOS and Android was developed to use in mobile devices giving
rise to the Smartphone era. Mobile phone industry is regarded to be saturated as almost everyone
has a mobile device and internet connectivity to keep them connected with the people who are
located geographically apart. In order to create new demand the only way is the option of
upgrading the existing product and service. This encourages creativity and innovation and
emphasizes the focus of the company in the research and development sector. The mobile phone
industry is a highly competitive market hence it is important for the manufactures to also focus
on the value added service in order to combat the demands of the consumer (newyorker.com,
2017).

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This research report is about the failure of Nokia Corporation. The research is undertaken
to understand the dynamics and the factors that is responsible for a company like Nokia to fall
off the best rank of telecommunication industry to be sold to Microsoft. This study is conducted
to understand the reasons and aspects that are associated with this fall and how can it be avoided
by other companies who are in a similar situation. The problem that has been identified can be
both the rise and rapid growth in terms of innovation by competitors like Apple and Samsung.
Another issue is the clashes in between the higher managerial officials. The competition that
Nokia has encountered in last few years is tough. Players like of Apples’s iPhone, RIM's
Blackberry and Google's Android are high in technology and serves the purpose of
communication way better than what Nokia was providing, customers and the
telecommunication industry had moved way ahead of Nokia in a span of about few years.
Features like customizable ringtones and a game of snake was not enough to meet the
expectations of the customer. The consumers of mobile devices were being aware of the reach of
internet and wanted to incorporate the facility in the mobile devices that they were using
(Laamanen et al. 2016).

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Figure: Average selling price of Nokia Phones in Euros
Source: networks.nokia.com 2017
Research objective
Nokia was sold to the technology and information giant Microsoft in the year 216.
Nokia’s failure to sustain the customer base has been the subject of study for many. Competitors
were coming up with ground breaking technologies and services that a mobile device was
equipped to offer. Nokia has launched N97 on the same date as Apple launch its Iphone 3GS, the
Nokia model had failed miserably in front of the new and improved technology use by Apple.
The main aims and objectives of this report are:
 To identify the fundamental reason which cause the failure of a company like Nokia
 To understand and analyse the challenges faced by the company
 To come up with a plausible solution for the company and for organisations who are in a
similar situation.

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Prior work/Literature review
Rise and fall of Nokia:
According to Ciesielska (2017), Nokia is regarded as one of the pioneer in the
telecommunication and mobile devices manufacturing industry. But Nokia developed a model
that was a mixture of attributes, which is arranged in conflicting principles derived from closed
and open mode of association. There was a trail of execution challenges and issues that was
faced by the company which resulted in Nokia’s struggle to attract open source partners. The
organization also faced a lot of challenges that was growing within the organization. The in-
house management resources of the company were going through an internal clash of interest
which ultimately lead to the failing of innovating and developing a new mobile operating system.
This is one of the reasons the company lagged behind form the fast moving and research
encouraging competitors who were prompt enough to take advantage of the situation the
company was in and steals the show. Innovation and development is a continuous and dynamic
process for a company who is involved in the technological field it is even more evident to have
an open mind in terms of innovation. This is directly influenced by the equation and the
relationship dynamics that the company shares with the management and the employees share
among each other. The hybrid model that was adopted by the company in order to create a new
mobile based operating system had failed.

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Figure: Percentage of Nokia Market share
Source: networks.nokia.com 2017
On the other hand according to Vuori and Huy (2016), say that the high level and the
middle level managers had a clash of interest and miscommunications during the transition form
the simple mobile phones to the Smartphone generation. The behavioral pattern of these high
level officials as well as the mid level managers caused a disruption in the process of developing
a system that would keep up with the demands of the people. There was a shared fear that was
being developed among the officials owning to the past instances. The competitors form the
external business environment created a sense of threat among the top level managers as they
were unsure of their endeavor was good enough to combat the competitors. Whereas the middle
level managers were primarily troubled with the internal groups which included seniors and
colleagues. This fear was created due to the suspense created by the top level managers on the
lower level staff members regarding the threat that was hovering over the company. The mid
level managers were unsure of the severity of the competition they were facing. The
interpretation was biased that caused a stir among the employees. This situation gave rise to

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hoarding of information by the mid level staff to the high management, this led the management
to believe that the company was still in a position that was on the positive side they believed that
the technological innovations were good enough to combat the external competition hence
neglecting being farsighted and long term decisions of the company. The higher management
already knew that it would take a lot of time to innovate and create a new operating system and
they are scared to publicly acknowledge the inferiority of their products. The culture that was
prevalent among the members of the company was to “please upper administration”. Suppression
of information, ignoring and not acknowledging basic issues faced by the mid level managers
also gave rise to mistrust among the management and the employee.
Figure: Turnover and operating profit of Nokia
Source: networks.nokia.com 2017

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Initially the company has neglected the potential of US as a competition which questions
the farsightedness of the company officials. Nokia was focusing on the European market and was
expanding in the Asian market but neglected the US. In a matter of five years IOS was developed
by Apple and Android was created by Google, which lead to a global decrease in the market
share of mobile phone devices.
In another report Singh (2017), states that mobile phones are no more used only for the
purpose of calling it has evolved in being much more than that, it can be easily said that the
Smartphone that are available in the 21st century are mini computers in the palm of every person.
The features of a simple phone call and text message is not enough anymore. Video calling real
time message exchange browsing of internet and internet platform facilities are all packed in a
small Smartphone. Nokia is a pioneer when it comes to manufacturing of mobile devices but the
technological drawback of the company and severe competition from Samsung gave the
company a setback.
In the contrary, Majava and Isoherranen (2016), mentions in their findings that Nokia has
effortlessly incorporated care requirements and customer service needs into the process of
product development, which was already in the product conception phase.

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Figure: Annual shipment of Smartphone
Source: networks.nokia.com 2017
Hypothesis
Hypothesis 1
Null hypothesis: The conflict in between the top level and mid level managers of the company is
one of the significant reasons of the downfall of the company
Alternate hypothesis: The conflict in between the top level and mid level managers of the
company is not one of the significant reasons of the downfall of the company
Hypothesis 2
Null hypothesis: Failure in developing a mobile operating system is one of the main crises faced
by the company

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Alternate hypothesis: Failure in developing a mobile operating system is not one of the main
crises faced by the company
Probable Approach
In order to carry out the any research study there are two methods that are followed one is
the secondary research process and the other is the primary research method. Secondary research
method is the process by which a researcher gathers information regarding the topic of research
form journals, books, e-documents that are available at the disposal of the researcher. The
researcher bases the rest of the study on the information that he or she gathers from the
secondary research, it helps the researcher form a base of knowledge which is going to take the
study further ahead. Primary research is the process by which the researcher gathers information
by data collection processes and this information is new information and is not derived from
previous work. Some of the instruments that are used to derive the primary data are interview of
the people associated with the topic of research along with internal people from the organization
as well. The researcher can conduct a survey as well to understand the dynamics of the variable
in the study.
The research design has three types of approaches firstly analytical, then descriptive and
lastly the explanatory. The approach that has been chosen to conduct this particular study is
analytical as well as descriptive design. The secondary research or the literature review is
undertaken using a descriptive approach so that the researcher and understand the concepts and
the dynamics of the variables associated with the research in a very in depth way. Every details
of the secondary research have to be through in order to come to a conclusion with a proper
argument. Analytical and descriptive mode of research design always guides the researcher to

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carry out the study on the topic in much detailed and descriptive form. This approach also
defines the title of the research in a critical procedure so that the end result of the study is used
by the companies for futher recommendations and this is the reason why the researcher chose
this design (Schilling 2014).
Types of research
Both quantitative and the qualitative approach by the researcher is applied in order to
complete this research. Qualitative research is based on the more descriptive part of the report
where it has to use the language of communication in a written form to analyze and review the
findings and the data that has been used in the study. Whereas charts diagrams and numeric
approach towards the research paper that the researcher undertakes is the quantitative method it
is the measurable and quantifiable terms of the process of research (Robinson 2014).
Research strategy
Conducting a research study depends on the time and the resources that are allocated to
the researcher. Hence it is important for the researcher to develop a strategy in order to use the
time and recourses to the optimum. A strategy will help the researcher to move towards a
direction of clarity and efficiency. There can be several research strategies some of the most
commonly used examples are case studies, focus group, survey methods and interview
procedure. Interviewing the people who are directly associated with the topic of research gives
the researcher an in-depth and insightful idea about the hypothesis this is heavily dependent on
the correct formation of question and communication skills that the researcher posses,
communication skill is important as basically it is a process by which one person communicates

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with another in order to derived targeted information. Hence we can say that the study that is
taken up by the researcher is field study (Schilling 2014).
Sampling method and choosing sample size
After sorting out the process that will be undertaken to derive the primary information the
next step is to select the sample size of the research. There are two process that researcher
undertake in order to select the sample size of the study: probability method and the non-
probability method. In this case the research is going to take both the methods. Random
sampling technique has also been used so that the researcher can gain a better understanding of
this topic. 20 staff members and 5 senior management officers are taken as samples in order to
conduct the interview while the survey will include 90 consumers of Nokia that have upgraded
their mobile phones to a Smartphone. The expected return of response is 80% which is 72 people
(Ritchie et al. 2013).
Data collection
Data collection is the process by which the researcher gathers primary and new
information about the topic. The tools and the instruments that are commonly used by the
researcher in order to gather information is: personal observations, checklists or a list of criteria,
interviews, surveys or questionnaires. In this study the researcher has undertaken the process of
interview and survey in order to collect fresh data and information (Petty et al. 2013).
Interview: it is a qualitative method of the research process in which the research is concentrated
upon the comprehension of the point of view of the person who is associated with the company

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in this case it can be a staff of Nokia or a manager. Interview is basically an interpersonal
communication process hence it is very important for a researcher to develop interpersonal
communication skills in order to strategically communicate the perspective of the interviewer.
Background knowledge about the person and the organization is very important, preparation of
questions is also important but it should also be flexible in nature as it should flow with the
conversation that is taken place in between the researcher and the interviewee. Researcher should
be able to build questions in order to gather relevant information without wasting time (Flick
2014).
Survey: Questioner and survey is one of the most effective tools of primary research. It not only
helps the researcher in quantitative method it also provides for a qualitative approach. A survey
will provide mathematical and measureable analysis as well as aid the researcher in reviewing
the topic of research. This provides the researcher a fundamental base to create the hypothesis of
the study which is established on numeric and logical reasoning. In order to initiate the survey
process questionnaire is used as an instrument; the question that are formulated in the
questionnaire should be in simple language so that the people can easily understand and do not
skip a question, the questions should also be to the point and close ended. The survey will
include 90 consumers of Nokia phones who have upgraded to a different company. With the help
of the this survey the researcher can analyze the situation and the perspective of the consumers
the researcher can come up with charts, numbers and figures to back up the discussion or the
qualitative research that has been done earlier. The questions will be distributed via e-mail as it is
the most effective easy and fast way to gather survey information. It will also save cost as the
hard copy printing has a cost in itself (Bryman 2015).

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Questionnaire for the consumers:
Which model of Nokia mobile did you last use?
Ans.
Why did you discontinue using Nokia device?
Ans.
What did you like about the device?
Ans.
What did you dislike about the device?
Ans.
Did you like the design of the mobile?
Yes
No
What was your reaction towards the sell out of the company?
Positive
Negative
Do you want to purchase a Nokia mobile in the future if is infused with the latest
technology?
Yes
No
Do you know anyone who still uses the old Nokia models?
Yes
No
What are your expectations form the Nokia’s new launch?
Ans.
What do you think of Nokia as a brand?
Ans.

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Value of the study
The downfall of Nokia came as a shock to many as the brand image was strong the brand
also have a very effective positioning and loyalty base strategized for the company. There was a
time when people used to recognize Nokia as the medium of connection; the tag line also said
“connecting people”. Nokia was also responsible for making the mobile device available for the
common people; previously it was identified to be a device that was related to elite and rich
section of people. Therefore when the company was sold out in the year 2016 to the Information
technology giant Microsoft people regarded it as an end of an era. This study that has been
undertaken is to analyze the factors and the aspects that are responsible for the downfall of the
company. The perspectives of both the internal management of Nokia as well as the consumers
of Nokia are taken in to consideration while reaching a conclusion. This study will benefit those
companies who are at a risk of takeover and losing out on the market share due to competition
and internal conflict. It will help the management of the company to at least know what no to do
in case of an emergent situation like the one Nokia had faced. Though the researched is based on
a company that is related to technology, the outcomes that are going to be recorded can be used
by any industry. It will add value and evidence to the data that already exists as well as grow
awareness and consciousness among the companies who are going through a hard time in
engaging with the customers’ requirements and needs. Changing the process and developing the
business objective with the dynamic of the industry form the very being is also one of the points
that this research wants to convey to the companies.

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Reference list:
Bryman, A., 2015. Social research methods. Oxford university press.
Ciesielska, M., 2017. NOKIA ON THE SLOPE: THE FAILURE OF A HYBRID
OPEN/CLOSED SOURCE MODEL. The International Journal of Entrepreneurship and
Innovation.
Flick, U., 2014. An introduction to qualitative research. Sage.
Gray, D.E., 2013. Doing research in the real world. Sage.
Laamanen, T., Lamberg, J.A. and Vaara, E., 2016. Explanations of success and failure in
management learning: What can we learn from Nokia’s rise and fall?. Academy of Management
Learning & Education, 15(1), pp.2-25.
Majava, J. and Isoherranen, V., 2016, December. Excellence in integrating care into the product
development process: A case study of Nokia. In Industrial Engineering and Engineering
Management (IEEM), 2016 IEEE International Conference on (pp. 1131-1135). IEEE.
networks.nokia.com. 2017. Annual reports. [online] Available at:
https://networks.nokia.com/investors/annual-reports [Accessed 15 Oct. 2017].
newyorker.com. 2017. Where Nokia Went Wrong. [online] Available at:
https://www.newyorker.com/business/currency/where-nokia-went-wrong [Accessed 7 Oct.
2017].
Petty, N.J., Thomson, O.P. and Stew, G., 2012. Ready for a paradigm shift? Part 1: Introducing
the philosophy of qualitative research. Manual therapy, 17(4), pp.267-274.

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Ritchie, J., Lewis, J., Nicholls, C.M. and Ormston, R. eds., 2013. Qualitative research practice: A
guide for social science students and researchers. Sage.
Robinson, O.C., 2014. Sampling in interview-based qualitative research: A theoretical and
practical guide. Qualitative Research in Psychology, 11(1), pp.25-41.
Schilling, N., 2014. Surveys and interviews. Research methods in linguistics, p.96.
Singh, S., 2017. SAMSUNG DETHRONED NOKIA BY SECRETE STRATEGY-AN
ANALYTICAL STUDY. International Education and Research Journal, 3(6).
Vuori, T.O. and Huy, Q.N., 2016. Distributed attention and shared emotions in the innovation
process: How Nokia lost the smartphone battle. Administrative Science Quarterly, 61(1), pp.9-
51.