Nokia's Strategic Decisions: Analyzing the Downfall and Rebirth

This report provides a comprehensive business analysis of Nokia, focusing on its decline and subsequent rebirth in the mobile phone industry. It examines the company's strategic decisions, particularly its partnership with Microsoft, and evaluates the factors contributing to its downfall, including the rise of Android and the failure to adapt to changing market trends. The report analyzes the decisions made, including the adoption of the Windows Phone operating system, and critically assesses their effectiveness. It also suggests alternative approaches that Nokia could have taken, such as embracing the Android operating system. The report includes a stock market analysis, investor reactions, and a trend analysis of share prices, providing a holistic view of Nokia's journey and the impact of its decisions. Finally, it concludes by highlighting key lessons learned and offering recommendations for future strategic planning in the technology sector.

Running Head: DECISION MAKING 1
Decision Making and Problem Solving:
The Downfall and Rebirth of Nokia

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Table of Contents
Introduction......................................................................................................................................3
Purpose of Report.........................................................................................................................3
Company, Problem and Approach Used to Solve........................................................................3
Company Introduction..............................................................................................................3
The Issue (The Down fall and Rebirth of Nokia, 2008-2013).................................................4
Reasons behind Nokia’s Downfall...........................................................................................5
Analysis...........................................................................................................................................6
Critical Evaluation of Approach Used by the Organization........................................................6
Improvements Suggested in the Approach Used.........................................................................8
Other Available Approaches........................................................................................................9
The Best Approach.....................................................................................................................11
Stock Market Analysis...................................................................................................................11
Reaction of Investors to Problem and Solution.........................................................................11
Trend Analysis of Share Price during the Period.......................................................................12
References......................................................................................................................................14

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Introduction
With the growth in competitive business environment, the organizations may face different
issues, which can impact the operations and revenues of that company. These issues may be
related to different aspects, like; competition, deficiency in operations, dissatisfaction of
employees and lower employee morale etc. Sometimes, it may happen with the organizations,
which are well-established in the market. For this analysis, the issue of Nokia Company is taken
into consideration. Nokia was a well-established name in the mobile phone industry for a long
time. With the launch of Smart Phones, the organization had confronted different issues.
Purpose of Report
The major objective of this report is to discuss a major issue, which has been handled by the
company and that has been already resolved. This report is prepared to analyze the issue and
solutions, implemented by company utilizing decision making and problem solving theories.
Another objective of the task is to recommend alternative approach, which could have brought
better solution to the company. This report will first provide the description about the
organization selected for this analysis, i.e. Nokia and then it will include the issue, confronted by
the company. Moreover, it consists of the decision, which this organization has made to resolve
that issue. Following will be the critical analysis of the approach by evaluating theories and
recommend an alternative approach to get a better solution. These suggested solutions using the
theory will be briefly included by the use of objective setting framework that will conclude the
goals of the report.
Company, Problem and Approach Used to Solve
Company Introduction
Nokia is the international information technology, communications and consumer electronics
organization, which was established in the year 1865. The company is headquartered in Espoo,
Uusimaa in Helsinki metropolitan area. As of 2016, the company has provided employment to
around 101,000 people in more than 100 nations and operated its business in over 130 countries.
Moreover, it has reported the yearly revenues of € 23.6 billion. It is a public company that is
listed on New York Stock Exchange and Helsinki Stock Exchange. This organization has had
several sectors in its history of 152 years (Carral & Kajanto, 2008). For many years, Nokia has

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been worked as a market leader in the mobile phone industry. In the year 2013, the company was
acquired by Microsoft and its mobile phone business was owned by this company.
The Issue (The Down fall and Rebirth of Nokia, 2008-2013)
With the emergence of smart phones information technology industry, Nokia Corporation had
confronted various issues in the competitive business environment. The major issue, which was
faced by the organization, is its downfall due to introduction of smart phone operating system,
Android that is released by Google in the year 2008. At that time, it was became a new market
transformation. The storm of smart phones directed by Android and iPhone has demonstrated to
become market majority (Ali-Yrkkö, et al, 2013). That was the first time, when Nokia did not
occupy top position in the mobile phone industry. It has affected market share of the company in
the year 2011, which was declined from 33% in the year 2010 to 14% that was lower than
Samsung and Apple.
Figure 1: Users' future choices of mobile phones operating systems
(Source: Jia & Yin, 2015)
According to the Mobile user’s behavior research survey, 2012, published by CNNIC, 53%
users of Nokia planned to purchase the smart phone in the future. From them, 43.3% selected
Android System and 28.6% chose IOS system by Apple. This customer switching indicated that
market share of the company will be declined more in the future. In this situation, the company
was not only faced how to strive for new mobile users, but also how to retain existing users
(Anderson et al, 2015).

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Figure 2: Sales of each mobile phone brand in 2012
(Source: Jia & Yin, 2015)
Reasons behind Nokia’s Downfall
There are so many reasons, which cause the downfall in Nokia’s lifespan. These factors are the
major reasons, why there was decline in the sales of Nokia’s mobile phones and its market share.
These reasons are stated below;
Executives at Nokia were unable to grasp the market:
There were changes in the demands and preferences of customers, but the executives of Nokia
were unable to understand the market. Still, it had adopted the product oriented and technology
oriented strategies. For instance, the company was attempting to make its phones hard to broken
and introduced new ways to enhance its battery’s life. Thus, they have ignored the needs and
taste of customers by considering different characteristics (Borhanuddin and Iqbal, 2016). The
decision making, which was not done on the basis of demand of customers, led Nokia to isolate
itself from the industry.
Deviation in the business tactics of organization:
There was the deviation in the marketing tactics of the Nokia Company. It means the company
should pay attention on the customer needs, but Nokia just valued the hardware business and
avoided the software business (Carral & Kajanto, 2008). The operating system of this mobile
phone was Symbian. This system was old and not compatible.
Lack of Teamwork at Nokia:

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The major mistake of the company was that it had denied co-operating with other mobile phone
producers in business operations. There are so many Android camp companies’ cooperation was
not sufficient to compete with Nokia.
Analysis
Critical Evaluation of Approach Used by the Organization
To deal with the issues, Nokia has implemented various approaches and theories. The major
approach, which is used by the company, is strategic partnership approach with Microsoft. To
deal with the situation, Nokia made the decision to sell its mobile phone segment to Microsoft
Corporation for $7.2 billion in the year 2013 (Ciesielska, 2017). This collaboration between both
the organizations enhanced. In February, 2011, the organizations declared the plans to develop a
wide strategic partnership, which would utilize their expertise and strengths to create an
innovative global mobile eco-system. The companies made this decision to adopt Windows
Phone Operating System like the major smartphone platform for the company’s devices.
Figure 3: Revenues of Nokia's Business Units
(Source: Carral & Kajanto, 2008)
Under this approach, The Head of Microsoft Business division restructured the Executive
Management Team and all over hierarchy of company, piercing Services & Devices business
unit into Mobile Phone and Smart Devices units. This department of the company clearly let to
new strategic direction (Doz, and Wilson, 2017). It assisted the organization in regaining the

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effective leadership in the market of Smart Phones and for retaining at the top position in mobile
business segment. It has reformed its operational structure that is given below;
Services & Devices
Smart Devices Mobile Phones
Windows Phone Portfolio
MeeGo Computers
Strategic Business Operations
Symbian Smartphones
Focus on Growing Markets
After this approach, the company had discontinued the MeeGo and Symbian platforms. After
that, Nokia had introduced its first Windows Phone smartphone in the year 2011 under its brand
name, i.e. Lumia for directly competing with the Android devices and IOS of Apple. After 2
years of this collaboration, in 2013, the firms announced that Microsoft will buy all the services
and devices unit of Nokia, its patents, license and mapping services of the company. This
strategic partnership with Microsoft assisted Nokia in obtaining success with the assistance of
this cooperative development. This was the rebirth of Nokia after the collaboration (Ferrell and
Fraedrich, 2015). This introduction of new phone assisted the company in making its brand
recognition again.

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Figure 4: Annual Smartphone Shipments
(Source: Ciesielska, 2017)
But this had not paid off yet that can be seen by considering company’s Q1 earnings. However, it
was a better relationship in the documents, but it was very late over two years after introducing
the Android and iPhone picked up the market steam. After implementation of this critical
approach, the company moved very slowly in the Smart Phone market and it did not deal with
the competition at the lower end of industry (Fu, 2010). Like other smartphone manufacturers,
Nokia had seen the revolution coming, but after some time, it fell, when Apple overturned the
mobile sector upside down by introducing iPhone. Other mobile phone companies, such as;
Huawei, ZTE and HTC have attacked this company from lower end in emerging countries, like;
China. Still, the organizations did not use innovation in the mobile phones and in other smart
devices. It is said that nothing is permanent. And whatever goes up should come down.
However, it does not deny the fact that Nokia stays a huge part of mobile phone market history,
which cannot be forgotten (Goodwin and Wright, 2014).
Improvements Suggested in the Approach Used
There are some recommendations, which could be assisted to Nokia for improving its approach,
i.e. strategic partnership with Microsoft. This partnership with the company was good for the
company, but it was not that much successful to become competitive in the smart phone industry.
The Windows operating system was not successful as it was not user friendly. It was very
difficult to operate as compared to Android operating system. In the place of Windows, the

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company should have adopted android system, as windows platform is not more competitive,
because they slowly included features after other systems have, for instance; full Bluetooth
assistance (Yi, 2011). Nokia can still cover the market by making better smart phones and utilize
Android Operating System. In this way, the company can improve its approach, when it was
facing the issues.
Other Available Approaches
As discussed above, the company has gone under the strategic partnership and collaboration
approach to rise again in the Information Technology industry. From the above analysis, it can
be understood that company is confronting these issues due to lack of innovation in the mobile
phones and technology. The company has made focus on the product technology and did not
incorporate innovations in its mobile phones. There are some other decision making and problem
solving approaches, which could be used by Nokia under the situation of downfall. Although, the
growth of company was very slow after this, but somewhere it assisted the organization in
establish its brand identity again (Jia, & Yin, 2015). After looking at the above reasons behind
downfall, the organization should make changes in its marketing, leadership and management
process. Apart from this strategic partnership and other practical approaches, the company
should go ahead with the theoretical approaches.
The analysis of these approaches is stated below;
Approach Recommendation Result
Marketing Research:
Marketing research is a
systematic approach that can
be used to understand the
current market trends and
needs and preferences of the
customers. It assists the
organization in gathering the
information about the target
market and customers. The
organization can use this
If Nokia adopted this
approach, then they would
have been able to understand
the needs of people. There was
a need of grasping the market
trend accurately. By this,
organization would have been
able to understand the current
market trends. They could
understand that in the mobile
industry, the demand of
This approach will assist the
organization in understanding
the mobile phone users. It will
enable the organization in
seeking for developing the
software and the emphasis will
be shifted from quality of calls
to different applications and
operation simplicity (Yi,
2011).

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approach as an effective
business strategy.
customers has shifted from
durability and functionality to
entertaining and intelligence.
The company could have
better understanding about the
market changes by conducting
market research to get the
latest data of changes in the
customer demands
(Laamanen, Lamberg, Vaara,
2015).
Appropriate Business Tactic
Development:
Business tactics refer to the
action, which a company takes
to create their advantages and
develop space for growth and
survival. Under this, the
company considers the merits
and demerits in competitive
business environment.
Under this situation, Nokia
should leave the programs,
which are not appropriate for
the company’s project quickly.
Like; the company was unable
to meet the customer demands
and smart phone needs with
the Symbian system. The
company should learn from
the strategies of Samsung as it
adopted the android operating
system (Pal Singh, 2014). The
company should understand
that it should implement an
effective tactic to deal with the
situation.
This approach will assist the
organization in regaining the
leading position in the mobile
phone industry (Lee, 2013).
Cooperative Approach:
The organization must use co-
operative approach than
competitive approach. By co-
In mobile phone industry,
there are various players with
Android system, who grabbed
the market share of Nokia. So,
By using this approach, the
company will be able to
increase the share of profits.
Implementation of win-win

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operating with other
companies in the industry, an
organization can have various
advantages, like; increase in
market share and revenues.
the company should cooperate
with other mobile phone
providers to extend the whole
cell phone industry. It should
implement the win-win tactic
(Pettigrew, 2014).
tactic will assist the
organization in preserving
them in competitive business
environment and it will create
strategic partnerships to seek
assistance for future growth.
The Best Approach
From these approaches, the best and most appropriate approach is marketing research that can
assist the company in offering maximum satisfaction to the customers. To understand the
expectations and changing tastes of the customers, Nokia can conduct marketing research. When
Google and Apple have introduced their operating systems, i.e. Android and iOS respectively,
there was decrease in the sales of Nokia mobile phones (Proctor, 2014). The people have shifted
towards more entertainment and application-oriented phones. It can use questionnaire to know
about the taste of customers. The company should have implemented this approach effectively. It
could have helped the company in retaining its customers.
Stock Market Analysis
Reaction of Investors to Problem and Solution
As discussed in introduction section, Nokia Corporation is listed on New York Stock Exchange
and Helsinki Stock Exchange. When the organization was facing the issue related to products
and innovation, it had affected the market value of the company on share market also. Till 2008,
Nokia was the 5th most valuable brand in world (Surowiecki, 2013). Under this event, the
politicians argued that nation required a new Nokia. Most of the mutual funds decreased to make
investment of shares of their funds in Nokia. Shares of the company started to collapse, when the
first iPhone was launched in 2007 and the company does not own any product, which is close to
their product. The decline in the share price at share market shows that investors of the company
have sold their shares by looking at the problem of Nokia. They have withdrawn their interest
and shares from Nokia, which have declined the market value of the company during the period
of 2008 to 2013. When the company has partnered with the Microsoft, it has enhanced the brand

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recognition of Nokia among investors, but it has also affected their response to the Microsoft’s
shares during that period.
Trend Analysis of Share Price during the Period
As the investor’s response towards Nokia’s shares was negative, it has affected the market value
of the company adversely. The company has faced a sharp decline in the share prices, which can
be seen by looking at the below-given graph;
Figure 5: Share Prices of Nokia (2009-2013)
(Source: Jia & Yin, 2015)
The graph indicates that in the period of 2008-2013, the share prices at stock market are
decreasing. In the 2007, Apple had introduced its iOS operating system and furthermore Google
had introduced Android. It affected the business and sales of Nokia mobile phones, which are not
with attractive and entertaining applications. The share price of the company had declined from
10.55 in 2009 to 6.79 in 2013 (Taylor, 2013). There was a major decrease in the figures. After
2013, it can be seen that share prices started to increase after Nokia’s collaboration with
Microsoft. It had installed Window operating system in its phones. Thus, the issue affected the
position of company on share market adversely. By using new approaches, it would have been
able to enhance it again (Vuori, and Huy, 2013).

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Conclusion
From the above analysis, it can be concluded that Nokia has confronted a major issue due to
launch of Android and iOS operating system. This problem has declined the sale of its mobile
phone and affected its position in the market. The company had implemented an approach, which
was not more profitable to the company. There are some suggestions for the company, which
can improve the applied approach of Nokia. By using these approaches, company would be able
to enhance its performance in the smart phone market. The company can go ahead with different
approaches, like; market research, Appropriate Business Tactic Development and Co-operative
approach. The analysis concludes that the best approach for Nokia can be market research, which
would have helped it to overcome the issue.
Recommendations
It is hereby recommended that company should have implemented some other approaches, i.e.
marketing research, co-operative approach etc. to overcome this situation. The paper includes
some other approaches to handle the situation. It will assist Nokia to get its leading position in
mobile phone market. In addition to this, the company should develop the smart phones with the
android operating system, which is user friendly and offers different features to its customers.
For the readers, it is recommended that they should understand the case problem and its solutions
carefully. The given and suggested approaches can be used by the readers in further studies and
resolving the related cases for other organizational issues. This analysis will assist the readers in
understanding the issues and ways for implementation of decision making and problem solving
techniques.

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