MgMT20144 Business Analysis: Nokia and Microsoft Structure Comparison

This report provides a comparative analysis of the organizational structures of Nokia and Microsoft, exploring the environmental factors that influence their decision-making processes. It examines the hierarchical arrangements, functional areas, and divisional structures of both companies, highlighting how they adapt to market trends. The report delves into the environmental aspects impacting Nokia and Microsoft, including political, economic, and social factors, and assesses the associated risks, such as competition, regulatory delays, and cyber threats. It offers strategic recommendations for both companies, suggesting ways to improve corporate practices, capitalize on market opportunities, and enhance customer experience. The analysis underscores the importance of adaptability and strategic decision-making in a globalized business environment, drawing on insights from the telecommunications and software industries.

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STRATEGIC MANAGEMENT

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Table of Contents
Outline........................................................................................................................................2
Structure of Organisation...........................................................................................................2
Environmental Aspects..............................................................................................................4
Risks Exploration.......................................................................................................................5
Ideas and Recommendations......................................................................................................7
References..................................................................................................................................8

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Outline
Decision making is an important function of management with having its network of
roots in the whole organisational structure. None of the basic function of management can
effectively be performed in the absence of decision making tree. With ongoing developments
in technical fields and due to globalisation, it is necessary for an organisation to make right
decision at the right time and assess its implication to all over business enterprise (Black,
2019). This report glimpse about various environmental factors that are having significant
impact over the decision making of an organisation, company different organisational
structure, noteworthy risks that companies are facing and suggestions with ways on how
company can improve its business practices in a globalised world. However, to understand
these management concepts in a better way, two organisations have been carefully chosen i.e.
Nokia (Finnish multinational telecommunications) and Microsoft (one of the leading US
software company).
Structure of Organisation
According to Shaw (2019), organisation structure is a framework that influences how
a business operates from the inside out and how various departments are separated into
smaller group grounded on specialised functional zones like IT, finance, research and
development, IT, human resources and so on. Considering both Nokia and Microsoft, there is
a distinctive hierarchical arrangement of lines of power, communications and privileges and
responsibilities of divisions. The Nokia governance structure is horizontal allowing higher
elasticity and quick communication amid various diverse divisions. The devices unit
undertake various practices for the management and development of mobile devices group
which is directed at all major customer sections belonging to middle and upper class.
However, in 2017, Nokia publicised deviations in its organisations and group leadership team
to increase the speed of business strategy for the success in 5G era (globenewswire.com,
2017). According to Rajeev Suri (Head and CEO of Nokia Group), these changes will
strength organisation ability to strengthen their ability to offer robust economic performance,
bring progress in services, fulfil varying consumer demands in mobile network and respond

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positively to the strategic innovation paving around the world and across Nokia business
networks.
In relation to the organisation structure of Microsoft, it is divisional in nature and like
the Nokia, the executives of the company also announced a modification in the organisation
structure of the company in 2015 so that to synchronise their strategic direction with the
higher productivity and network of business. This plan also impacts on the HR department
leading to elimination of nearly 7,400 positions in the year 2016 (microsoft.com, 2016).
According to Kharitonov, Svetlov & Voronin (2016), the divisional structure consists of self-
contained divisions signifying a strategy of organising by which members of the company are
grouped on the basis of products, services, consumers and geography. At present, Microsoft
CEO is Satya Nadella, an engineer and Indian American business executive held leadership
roles in together in customer business and company.
In comparison of organisation structure of Microsoft and Nokia, the basis of Nokia
organisation structure is functional areas where managers do not have autonomy of decisions
and on the other hand, Microsoft organisation structure basis is the specialised divisions
presenting autonomy of decisions to the managers. Both Nokia and Microsoft bring changes
in the organisation structure as per the market trends and necessity and this leads them to
achieve their strategic goals in a better way.

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Environmental Aspects
Teece (2016) argued that if a business needs to be effective in the market, it is
essential for management to completely recognise what factors exercise impact on the
decision making of the business and this will help in initiating any strategic marketing plan.
In relation with Nokia, the company is having its presence in nine countries and it is
important for Nokia to meet the terms and position of each country in order to ensure success
for a longer period of time. Political factors of any respective country can lead to decrease
performance of the company such as US/EU policies impacting Nokia business. In 2018,
various European banks have advised Nokia to consider reducing its deposits with them to
avoid losing money as of negative interest rates in the Eurozone (Gupta, 2018). Overall, to
improve its performance, Nokia needs to sustain a firm standard of the laws implemented by
each country government with complete orderliness. The economic factor also impacts on
Nokia performance such as Finland’s economy has had a torrid time since the onset of the
financial and euro crisis. It leads to decline in one of the country major exporting companies
i.e. Nokia. In relation with social factors, Nokia decision to adopt the Microsoft windows
phone in past withdraw the interest of many customers as most of the users are comfort with
customizable android OS. This also impact the company dissolution from the market while
impact negatively on the jobs of nearly 7800 individuals (Fiegerman, 2015). From future
perspective, Nokia needs to invest more in research and development to fulfil the demand of
IoT, cloud network and 5G network users in advance so as to attain competitive edge in the
marketplace.
Economic
Politica
l
Social Technological

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Considering Microsoft, the company having its operations in more than 200 plus
countries, however, the major revenue comes from the US market i.e. 51% and the stability in
the political environment of US also benefit Microsoft to gain success from past many years
and there is an increase of 13.65% increase year over year for the quarter ending September
30, 2019 (macrotrends.net, 2019). Although, different countries government imposing several
rules and terms on the software industry that may have negative influence on the performance
of Microsoft in near future. In relation with economic environment, there are various
variations in the economy of one nation and other. Strengthening of USD in relation to
particular foreign currencies within the fiscal year 2017 adversely impacted stated income
and decreased reported expenditures from Microsoft global expenses (microsoft.com, 2017).
This impact company performance and revenue indirectly or indirectly. Considering social
factors, not shifting to new trends could be disastrous and may negatively impact on business
performance. Unfortunately, Microsoft is a leading software and Technology Company had
not adapted to smartphone easily and most of the company product is built for PC systems.
Hence, if the company seek to gain more success, Microsoft requires to shift their thinking to
include smartphone as a major part of their campaign. In the end, Microsoft needs to raise its
performance with developing and distributing digital software so compete with two major
rivals including Apple and Google. The company performance can effectively be increase
due to positive cash flow of the company where Microsoft held $136.6b in cash and short
term investments.
Risks Exploration
To outperform in the competitive market, it is important for any business to
proactively assess various sorts of risk having direct or indirect influence over the
organisation performance. In relation with Nokia, the top three risks include 5G regulatory
delays in Europe, strong competition from various companies and risk against patent
licensing business. The first risk related to delay of 5G regulatory in Europe remains stymied
as of some structural issues and it is difficult to say what happens in the future as this is the
first time a new standard has been launched into a mature market (cbronline.com, 2018). The
second risk is the string competition in the market as Nokia recently made a comeback and it
is challenging for the company to grab market share easily irrespective of its global brand
image. Nokia also sees strong competition in the marketplace for 5G networks and the

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company also reported net loss for the January-march period as of 166 million euros (Tanner,
2019). The last risk is the patent and licensing where it is required for the company to
emphasize on patent, brand and technology licensing with targeting speedy growth in digital
health, however, Nokia's effective patent licensing business is not in scope of strategic
changes.
In a similar way, there are various risks confront by Microsoft while bringing out
various challenges to the company. The first risk for the company is growing trend of shifting
browsing on smartphone in comparison of desktop and this negatively contributes in the sales
of company. According to the corporate StatCounter, many individuals around the globe are
retrieving the internet from smartphone than from computers systems for the first time in
2016 (Etherington, 2016). The second risk is related with the rivals coming with unique and
different revenue models and products. For instance, many companies have started using ERP
and CRM software and applications with a replacement of Microsoft Excel with an aim to
gain better insights. In the end, the last risk is cyber-attacks threats that can negative impact
Microsoft from security perspectives. In 2017, March and Microsoft identified that more than
50% of respondents perceive cyber-attacks in relation with top-five risk with the time when
in 2017, the world has noted the harm originated due to Wannacry ransomware flare-up and
the US administration have putted the blame on North Korea (microsoft.com, 2019).

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Ideas and Recommendations
In order to improve the corporate practices and performance in the market, it is
recommended to Nokia to grab opportunity of 5G network market and there is already an
increasing demand from developed nations including South Korea and US. Nokia recognises
word of mouth is the No.1 influencer of purchase and to acquire consumers involved, the
company requires to stimulate an authentic community and quickly assemble a massive
renaissance of its consumer base. In the end, Nokia needs to be fashionable again and
“connecting people” is one of the best brands ideas the management of Nokia can get.
For
Microsoft, it is recommended to raise its collaborations and partnerships with other firms so
as to progress positive externalities and due to high competition, the company also should re-
assess its vision and mission so as to build new strategic content targeting current and new
segment of the marketplace. Virtual and augmented reality is the area where Microsoft could
tap into to raise customer experience and revenue with integrating those into their current
product and services. At present, Microsoft gains its major part of revenue from the US alone
(51%) and therefore, it may be possible that other marketplaces are still un-tapped offering an
opportunity to Microsoft to gain respective market share. Ultimately, social media is another
opportunity for Microsoft to connect people in a more re-defined way together with digital
platform and therefore, offer superior services to its huge customer base.

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References
Black, K. U. (2019). Business statistics: for contemporary decision making. USA: Wiley.
cbronline.com. (2018). 5G Rollout Burns Nokia: Shares Plummet on “Risks Materialising”.
Retrieved from https://www.cbronline.com/news/nokia-5g
Etherington, D. (2016). Mobile internet use passes desktop for the first time study find.
Retrieved from https://techcrunch.com/2016/11/01/mobile-internet-use-passes-
desktop-for-the-first-time-study-finds/
Fiegerman, S. (2015). Microsoft subtly admits the Nokia deal was a failure and 7,800
employees will lose their jobs. Retrieved from
https://mashable.com/2015/07/08/microsoft-layoffs-nokia/
globenewswire.com. (2017). Nokia announces changes in its organization and Group
Leadership Team to accelerate the execution of company strategy. Retrieved from
https://www.globenewswire.com/news-release/2017/03/17/940467/0/en/Nokia-
announces-changes-in-its-organization-and-Group-Leadership-Team-to-accelerate-
the-execution-of-company-strategy.html
Gupta, R. (2018). Why EU Bankers Are Advising Nokia to Reduce Its Deposits. Retrieved
from https://www.ndtv.com/business/pepsico-to-close-british-plant-threatening-
nearly-400-jobs-1665048
Kharitonov, M., Svetlov, A., & Voronin, A. (2016). Operating core of an organizational
system: optimal control of support structure. International Journal of Pure and
Applied Mathematics, 107(4), 889-901.
macrotrends.net. (2019). Microsoft Revenue 2006-2019 | MSFT. Retrieved from
https://www.macrotrends.net/stocks/charts/MSFT/microsoft/revenue
microsoft.com. (2016). Annual Report 2016. Retrieved from
https://www.microsoft.com/investor/reports/ar16/index.html
microsoft.com. (2017). Annual Report 2017. Retrieved from
https://www.microsoft.com/investor/reports/ar17/index.html

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microsoft.com. (2019). Mobile internet use passes desktop for the first time study find.
Retrieved from 2019 Global Cyber Risk Perception Survey
Shaw, D. (2019). On misunderstanding Heraclitus: The justice of organisation
structure. Philosophy of Management, 18(2), 157-167.
Tanner, J. (2019). Nokia sees tough competition in market for 5G networks. Retrieved from
https://apnews.com/e7b4dde8cc9d438c99d459d49ce93bfe
Teece, D. J. (2016). Dynamic capabilities and entrepreneurial management in large
organizations: Toward a theory of the (entrepreneurial) firm. European Economic
Review, 86(1), 202-216.