Report: Describe the situation and two reasons for the failure of Nokia Company. Introduction

Transcription

1 Report: Describe the situation and two reasons for the failure of Nokia Company. 1. Introduction General topic of research describe subject of report include definition of key terms if necessary Aim of the report describe report goal Brief background and/or history of company include descriptive details e.g., when, where, how it started and/or grew Importance of topic mention why other businesses should be aware of this company Sequence list paragraph topics using bullets Nokia established company since late 19 th century (Text 1- Satpathy, 2014) Fell quickly from highly valued mobile phone producer to nearly becoming bankrupt in the 2000 s (Text 4-Rubino, 2012) Analyze evidence and reasons for Nokia s failures / what we can learn from their mistakes 1865: Founded by Fredrik Idestam Finland Text 1- Satpathy 1967: became Nokia Company various industries Text 1 - Satpathy 1998: world s biggest phone manufacturer Text 3- Surowieki, 2008: one of most valuable brands worldwide - Text 3- Surowieki 2012: nearly bankrupt Text 4-Rubino from market leader failure (< 5 years) evidence of failure 2 reasons for failure conclusions Introduction The general topic of this analytical report is Nokia, Inc. It was founded in the late 19 th century. It fell quickly from being a highly valued mobile-phone producer to becoming almost bankrupt in the 2000s. The aim of this report is to analyze the evidence about Nokia s failure and discover what can be learned from its errors. Nokia was founded in 1865 in Finland by Fredrik Idestam. It was involved in many businesses. In 1998, it was the biggest mobile phone manufacturer in the world. Unfortunately, by 2012 it was nearly bankrupt. This topic is important for other businesses because they can learn why Nokia failed and try to avoid those mistakes. The sequence of topics in this paper are: evidence of Nokia s market failure the first reason for Nokia s failure which was failure to innovate the second reason for Nokia s failure which was inferior technology conclusions 1

2 2. Write main idea: Evidence of Nokia s market failure Main idea Provide evidence of the company s success/failure. use revenue changes, market share, # of customers, etc include supporting data when possible 2008 profits dropped 3 rd quarter - 30% Text 2 (Statistics Portal) sales decreased 3.1% Text 2 (Statistics Portal) same period: iphone sales increased about 330% Text 2 (Statistics Portal) 2009 laid off 1,700 employees around world Text 2 (Statistics Portal) job losses continued / company kept declining + losing customer base Text 2 (Statistics Portal) 2012 stock prices fell < $2 (from around $ ) Text 4 Rubino, 2012 nearly bankrupt Text 4 Rubino, 2012 Evidence of Nokia s Market Failure There is a lot of evidence that shows Nokia s failure. First, one report showed that profits from the third quarter of 2008 declined 30% ( The Statistics Portal, n.d.). Furthermore, the same report indicated that customer purchases dropped by 3.1% but during this same period, iphone sales rose by 330%. Next, in 2009, there was more negative evidence about Nokia. It dismissed 1,700 employees in many countries and from 2010 to 2011, more employees lost their jobs and the number of customers decreased ( The Statistics Portal, n.d.). Finally, in 2012, Nokia was nearly bankrupt. The value of its stock fell below $2 this year, which was a huge decrease from the value of $40 in 2007 (Rubino, 2012). 2

3 3. Write main idea: One reason for Nokia s failure: slow to innovate Main idea Explain the main factor for the success/failure: provide an overview of the factor use of supporting data (quantitative) use of supporting examples (qualitative) 1. Management - not willing to embrace smartphone revolution in time had been earning >50% - all profits from mobile phone industry (not smartphones) / thought investing in smartphone market high risk Text 3 - Surowieki, : released first touch smartphone - 1 year after 1 st generation iphone Text 2 Statistics Portal thought superior hardware designs keep users / could catch up to Apple quickly Text 3 - Surowieki, 2013 this was mistake people want innovation and new products much of customer base went to Apple - Text 3 - Surowieki, Culture of Fear at Nokia Nokia employees scared to put forward new ideas to management fear of losing jobs Text 5, O Connor, 2017 As result managers did not get info to help make important changes Text 5, O Connor, 2017 First Reason for Nokia s Failure: Slow to Innovate One main reason for Nokia s failure was its slowness to innovate. This reason has two parts. First, Nokia management resisted smartphones. In 2007, Nokia was earning over 50% of all profits in the mobile phone industry according to a report from Surowieki (2013). The same report said these profits did not include smartphone sales because Nokia still believed smartphones were a large risk and did not produce them. However, in 2008, Nokia finally put its first touch smartphone into the market, which was one year after the first generation iphone ( The Statistics Portal, n.d.). Nokia management believed superior hardware designs would retain its customers and it could quickly catch-up to Apple s iphone but this was a mistake because people like innovation and new products more than hardware design, according to research from Surowieki, (2013). According to the same research, most of Nokia s customers moved to Apple. Secondly, there was a culture of fear at Nokia. Nokia employees were afraid to offer new ideas to management because they thought they might lose their jobs and as a result, managers did not receive information to help them make important changes (O Connor, 2017). 3

4 4. Write main idea: Another reason for Nokia s failure: inferior technology Main idea Explain the secondary factor for the success/failure: provide an overview of the factor use of supporting data (quantitative) use of supporting examples (qualitative) 1. Nokia s operating system (OS): Symbian Slow / dull / out of date compared to iphone s superior software Not as user-friendly iphone software Nokia kept focus on hardware designs rather than software programs customers valued software more than Nokia predicted, Symbian couldn t compete 2. Nokia s App Store 2007: Nokia - 10,000 apps, Apple 100,000 apps 4 versions of apps needed to work on all Nokia phones (only 1 version needed for iphone): too expensive / too much time to create apps apps not available to buy most countries / app store Text 5, O Con nor, 2017 Text 4 Rubino, 2012 Second Reason for Nokia s Failure: Inferior Technology Another reason for Nokia s failure was inferior technology and this reason has two parts. First, Nokia s operating system (OS), Symbian was slow, dull and out of date in comparison to iphone s better software according to research (O Connor, 2017). Also, the same research said Symbian was not as user friendly as iphone software, so in the end, Symbian was unable to compete. Secondly, there were problems with Nokia s app store. A report explained that in 2007, Nokia offered only 10,000 apps while Apple offered 100,000 apps (Rubino, 2012). difficult to use (Apple s apps easy to buy worldwide) Many customers from Nokia to Apple b/c of app store issues Furthermore, the same report said Nokia had four versions of its apps but iphone only needed one version. Because Nokia used four apps, they were expensive and time-consuming to create (Rubino, 2012). Finally, the report said that in many countries, consumers were unable to pay for the apps and the app store was difficult to use in comparison to Apple s apps which were easy to buy worldwide. Due to the app store issues, many customers changed from Nokia to Apple (Rubino, 2012). 4

5 5. Conclusion Restate the aim Summarise main ideas use bullet for each include key data Future recommendations apply what was learned to make recommendations to other companies use bullets for each recommendation Examined the evidence / reasons for Nokia s failures Evidence for failure: , stock prices declined, $40-$2 1 st failure reason - Slowness to innovate: o 2008, released 1st touch phone, 1 year after Apple o culture of fear; employees afraid to share information 2 nd failure reason -- Inferior technology o Nokia s OS, Symbian was less user-friendly than iphone s OS. o Nokia phones needed 4 different apps, but iphones needed one. Innovation companies should not delay; shld look at other comps innovation & level of success from it. Managers shld create culture of participation ; make employees feel comfortable sharing ideas w/o punishment. Companies -- evaluate its products, are they user-friendly?; comps can do this with cust. surveys or comparing its products w/ similar prods from competitors. Streamline Services: if comp has 4 ways to deliver svcs, should try to simplify these to 1; will save money, time & keep customers. Conclusion The aim of this report was to examine the evidence and reasons about Nokia s failure. Two major reasons were identified: Slowness to innovate: o 2008, Nokia released first touch smartphone, a full year after Apple s first touch smartphone o a culture of fear so employees did not share information Inferior technology o Nokia s OS, Symbian was less user-friendly than iphone s OS. o Nokia phones needed four different apps, but iphones needed one. Based on what was learned about Nokia, several future recommendations can be made: A company should not be slow about innovation, especially if competitors have made successful innovatations. Managers should create a culture of participation among all employees so they will share information easily. A company should evaluate its products to see how user-friendly they are. This can be done through customer surveys or comparing it to a similar product from its competitors. A business should look for ways to streamline its services to customers. In other words, instead of creating four different ways to deliver a service, it should try to decrease these to only one. It will save the company time and money and keep customers. 5

6 References O Connor, T. (2017, March 1). Was fear the reason for Nokia s downfall? Retrieved from /2017/03/01/nokia-outsmarted-collective-fear Rubino, D. (2012, July 7). Nokia drops below $2 a share. Windows Central. Retrieved from Satpathy, S. (2014, April 26). A Brief History of Nokia. BGR. Retrieved from -of-nokia-from-a-paper-mill-to-the-worlds-biggest -mobile-company-to-being-acquired-by-microsoft Surowieki, J. (2013, September 3). Where Nokia went wrong. The New Yorker. Retrieved from The Statistics Portal. (n.d.). Global market share held by Nokia smartphones. Retrieved from /market-share-held-by-nokia-smartphonessince-2007/ 6