REPUBLIC OF THE PHILIPPINES

REGION V
CAMARINES SUR POLYTECHNIC COLLEGES
NABUA, CAMARINES SUR

CASE STUDY
TECHNOPRENEURSHIP

Romano, Arjay
Agor, Jessie Robert
Buenavente, John Michael
Loyogoy, Jimmy Jr.
 Tabagan, Selwyn

ABSTRACT

Nokia is one of Finland's most widely recognized and universally liked companies
founded in 1865. It is a multinational telecommunications company that was once one of
the largest manufacturers of mobile phones. Once a market leader, Nokia failed miserably
as it could not compete with its competitors and technology.

Nokia’s failure involves the way they deal with the changing world, especially with
innovation, adaptation, and as well as to the competitors in the line of their market. Their
resistance to the evolution of smartphones, their missed opportunities, the ineffective
strategies, and the deal with Microsoft are some factors that hindered its ability to stay
competitive.

They are at the peak of the market during those times when communication,
especially SMS is a trend. The company is careless when it comes to improving its
software causing their sales to drastically decline, making other brands emerge. Nokia
paved the road to the ultimate success, and they failed miserably.

Nokia phones were robust and dependable companions of the pre-smartphone

era. However, Nokia's Java and Windows phones failed to stand out in the market
dominated by the Apple and Android phones. The Android phone manufacturing
companies like Samsung, LG, HTC, Sony, Motorola, and other Chinese smartphone
developers like MI, Realme, Oppo, Vivo, and the Apple IOS devices took over Nokia in
the mobile sector.

Nokia's failure highlights the importance of embracing change, anticipating market

trends, and continuously innovating to meet customer expectations. It underscores the
need for effective marketing strategies, strategic partnerships, and an unwavering
commitment to adaptation and innovation in today's rapidly evolving business landscape.
(startuptalky.com, May 16, 2023)

Nokia’s Story

The company that eventually became Nokia was established by mining engineer
Fredrik Idestam as a paper mill in Finland in 1865. The name Nokia was born due to the
location of the second mill, which was set up on the banks of the Nokianvirta river in 1871.

Soon the company diversified into electricity generation and later three companies
Finnish Rubber Works, Finnish Cable Works, and Nokia merged. Thus, Nokia Corporation
was born in 1967.

Nokia Corporation back then focused on paper, electronics, rubber, and cable. It
produced toilet paper, rubber footwear, TVs, communication cables, etc. The company
even constructed its own power plants. The appointment of CEO, Kari Kairamo, in 1975
played a significant role in the expansion of the company. Soon the company expanded
in Sweden, Norway, and Denmark, and then moved gradually into the rest of Europe. The
company improved its product line, established a reputation for quality, and adjusted its
production capacity.

In 1979, Nokia took its first steps into the telephone by creating Mobira Oy in a JV
with Finnish TV maker Salora, and they created the Nordic Mobile Telephone (NMT)
service. This was the world’s first international cellular network and in the 80s Nokia
launched its first car phone called the Mobira Senator. Nokia DX200, the company's first
digital telephone switch was introduced in 1982.

Nokia also started producing personal computers in the 1980s but it didn’t go well.
In late 1984 Nokia acquired Salora, the largest color television manufacturer in
Scandinavia, and Luxor, the Swedish state-owned electronics and computer firm. Salora
and Luxor combined into a single division and concentrated on stylish consumer
electronic products.

It also succeeded in satellite and digital television technology. Meanwhile, Nokia

manufactured items for Hitachi in France, Ericsson in Sweden, Northern Telecom in
Canada, and Granada and IBM in Britain. In spite of these efforts, Nokia’s profits
continued to decline in 1989 and 1990, culminating in a loss of $102 million in 1991.

The emerging success of the Nokia

Nokia began to commercially deal with large-scale telecommunication structures

and technology development and licensing in the early 1990s. Since then, Nokia
established itself as a significant mobile telephony industry operator due to its
development of GSM, 3G, long-term evolution, commonly known as LTE and the current
rollout of 5G frequencies.

Nokia established itself as one of the most successful mobile phone companies in
the world. Nokia has one class of shares. Each Nokia share is entitled to one (1) vote at
General Meetings of Nokia, and to a fixed annual dividend amounting to 10 percent of the
par value of the share.1 Nokia shareholders resolved at the Annual General Meeting 2000
to split the par value of the share on a four-for-one basis. With effect from April 10, 2000,
the par value of the share is EUR 0.06. The minimum share capital stipulated in the
Articles of Association is EUR 170 million and the maximum share capital is EUR 680
million. The share capital may be increased or reduced within these limits without
amending the Articles of Association.

On December 31, 2000, the share capital of the Parent Company was EUR 281
772 763.38, and the total number of shares and votes was 4 696 212 723. The total
number of shares included 4 079 425 shares owned by the Group companies with an
aggregate nominal value of EUR 244 765.50 representing approximately 0.09 percent of
the total number of shares and voting rights at the parent company.

Nokia’s net sales in 2000 increased by 54% compared to 1999 and totaled EUR
30 376 million (EUR 19 772 million in 1999). Sales in Nokia Networks grew by 36% to
EUR 7 714 million (EUR 5 673 million) and in Nokia Mobile Phones by 66% to EUR 21
887 million (EUR 13 182 million). Sales increased in Nokia Ventures Organization by
106% to EUR 854 million (EUR 415 million). Operating profit (IAS, International
Accounting Standards) grew by 48% and totaled EUR 5 776 million (EUR 3 908 million in
1999). Operating margin was 19.0% (19.8% in 1999). Operating profit in Nokia Networks
increased to EUR 1 358 million (EUR 1 082 million) and in Nokia Mobile Phones to EUR
4 879 million (EUR 3 099 million).

The operating margin in Nokia Networks was 17.6 (19.1% in 1999) while the
operating margin in Nokia Mobile Phones was 22.3% (23.5% in 1999). Nokia Ventures
Organization showed an operating loss of EUR 387 million (loss of EUR 175 million).
Common Group Expenses, which comprises Nokia Head Office and Nokia Research
Center, totaled EUR 74 million (EUR 98 million). Financial income totaled EUR 102 million
(financial expenses of EUR 58 million in 1999). Profit before tax and minority interests
totaled EUR 5 862 million (EUR 3 845 million). Taxes amounted to EUR 1 784 million
(EUR 1 189 million). Net profit was EUR 3 938 million (EUR 2 577 million). Earnings per
share were EUR 0.84 (basic) and EUR 0.82 (diluted) compared to EUR 0.56 (basic) and
EUR 0.54 (diluted) in 1999.

On December 31, 2000, net debt to equity ratio (gearing) was -26% (-41% at the
end of 1999). Total capital expenditures in 2000 amounted to EUR 1 580 million (EUR 1
358 million). [Nokia Insights, 2000]

The year 2000 was characterized by continuing GSM expansion, as operators

responded to growth in the GSM subscriber base by investing in network capacity. In
addition to delivering GSM network expansion to its existing customers, Nokia won 13
new customers in 2000, and its total number of GSM customers rose to 100. Operators
invested in wireless data capabilities, such as GPRS, a forerunner for 3G. GPRS
shipments accelerated during the year, and Nokia has now delivered well over 50 GPRS
networks to leading operators in Europe, the US and Asia. By the end of the year, 15
operators had launched GPRS services based on Nokia solutions, accounting for more
than half of all commercial GPRS launches worldwide. Nokia signed its first contracts for
3G networks and had by the end of the year been chosen as a 3G supplier by a total of
13 operators in Asia, the US and Europe. Nokia combined its mobile Internet
infrastructure solutions into one division to increase focus on critical points in the mobile
Internet value system. Product launches included Nokia mPlatform, an open platform to
implement mobile Internet services, and Nokia mPosition Solution, an end-to-end solution
for location-based services in mobile networks. Nokia also entered into cooperation with
several companies operating in the mobile Internet area. Underscoring the company’s
commitment to being one of the first to deliver fully 3GPP-compliant WCDMA networks in
2001, Nokia continued to introduce industry-first radio access solutions that dramatically
reduce costs and improve capacity. Launches included a new family of WCDMA base
stations and the Nokia Common Radio Resource Management solution, which will
increase radio network capacity and simplify the operation of future multi-standard mobile
networks. Nokia also introduced the Nokia 3G All-IP Core, an IPv6 based concept for 3G
core networks, and 3G functionality for mobile switches. Nokia expects its first 3G
deliveries in the first half of 2001, with volume deliveries commencing in the second half.
In 2000, Nokia prepared for volume rollouts of 3G networks both in production and
network implementation. This included verifying the capacity of the Nokia supplier
network, signing agreements with a significant number of suppliers and subcontractors,
and signing cooperation agreements for turnkey implementation of 3G and GSM with four
major companies; ABB, Bovis Lend Lease, MKI, and Wireless Facilities Inc.

Growth in Nokia’s mobile phone sales continued to exceed market growth in 2000
as a whole and in every quarter. Overall, Nokia sold 128.4 million mobile phones in 2000,
representing 64% year-on-year growth. In 1999, Nokia sold 78.5 million units worldwide.
According to Nokia’s preliminary estimates, the global mobile phone market volume in
2000 was approximately 405 million units, representing 45% growth in the previous year.
Market volume for 1999 was estimated at approximately 280 million units. Replacement
sales account for an estimated 40% of the 405 million total volume of estimate for 2000.
This share is expected to rise to around 50% of total volume in 2001.

Nokia’s setbacks and the unprecedented downfall

After Nokia’s era from its establishment to 2012, it reaches the end in 2013. The
world is perhaps shocked by this event but we cannot deny the fact that the reason of its
collapse is not the Nokia itself, but the people behind the brand.

In the fast-paced world of technology, companies that fail to adapt to changing

trends and consumer demands can quickly find themselves left behind. Nokia, once
synonymous with mobile phone supremacy, experienced a significant downfall due to its
resistance to smartphone evolution. As competitors embraced the shift towards
smartphones, Nokia's reluctance to fully embrace this revolution became one of the key
reasons for its failure.

Nokia failed to take advantage of the Android bandwagon. When mobile phone
manufacturers were busy improving and working on their smartphones, Nokia remained
stubborn. Samsung soon launched its Android-based range of phones that were cost-
effective and user-friendly.

Nokia's management was under the impression that people would not accept
touchscreen phones and would continue with the QWERTY keypad layout. This
misapprehension was the start of its downfall. Nokia never considered Android as an
advancement and neither wanted to adopt the Android operating system.
 After realizing the market trends, Nokia introduced its Symbian operating system,
which was used in its smartphones, faced usability issues, and lacked the app support
and developer ecosystem that rival platforms like iOS and Android offered. The clunky
user experience and limited app selection hampered Nokia's ability to compete effectively.
Also, it was too late by then with Apple and Samsung having cemented their positions. It
was difficult for the Symbian operating system to make any inroads. This is the biggest
reason behind Nokia's downfall.

Nokia was slow to recognize the potential of smartphones and the shift from
feature phones to touchscreen devices. They failed to anticipate the demand for
devices with advanced capabilities, such as app ecosystems and touch interfaces. This
led to a loss of market share to competitors like Apple's iPhone and Android-based
smartphones.

Another reason for Nokia's failure was the ill-timed deal with the tech giant,
Microsoft. The company sold itself to Microsoft at a time when the software behemoth
was fraught with losses. Nokia's sales screamed the mobile phone maker's inability to
survive on its own. At the same time, Apple and Samsung were making significant strides
in innovation and technological developments.

It was too late for Nokia to adapt to the dynamic and rigorous changes in the market.
Microsoft’s acquisition of Nokia was one of the biggest blunders and was not fruitful for
either side.

The partnership limited Nokia's ability to differentiate itself and left it dependent on
Microsoft's success in the mobile industry. The Windows Phone platform struggled to gain
traction, further impacting Nokia's market position.

One notable misstep in Nokia's marketing approach was its unsuccessful

implementation of umbrella branding. Companies like Apple and Samsung
successfully adopted the umbrella branding model, with flagship products like the iPhone
and Samsung Galaxy series acting as the focal point for expanding their product lines.
However, Nokia failed to follow suit and capitalize on the umbrella branding strategy,
missing out on the opportunity to create a cohesive and recognizable brand identity.

Additionally, Nokia's marketing efforts struggled to maintain the user trust that the
company had built over the years. Inefficient selling and distribution methods further
eroded consumer confidence and made it difficult for Nokia to reach its target audience
effectively.

While Nokia attempted to regain momentum by introducing hardware and software

innovations, these offerings were often late to the market and lacked the uniqueness that
would have set them apart from competitors. Rivals had already released similar features
and devices, diminishing Nokia's ability to capture consumers' attention and regain
market share.

The failure of Nokia's marketing and distribution strategies played a significant role
in its ultimate decline and exit from the mobile industry market. Without a strong brand
identity, effective distribution channels, and timely innovations, Nokia struggled to
compete with rivals who had successfully aligned their marketing strategies with evolving
consumer preferences and market dynamics.

Nokia's failure to keep pace with changing technology and trends played a
significant role in its decline. While the company had earned a reputation for its
hardware, it did not prioritize its software lineup, which proved to be a crucial oversight.

Initially, Nokia was cautious about embracing technical advancements in order to

mitigate the risks associated with introducing innovative features to its phones. However,
this approach hindered the company's ability to adapt to the rapidly evolving market.
 The business needed diversion but it was too late by the time Nokia realized this.
Instead of being amongst the early initiators, Nokia transitioned when almost every major
brand had already started producing awesome phones.

This case study shows Nokia's failure to keep up with changing technology and its
delayed response to industry trends significantly contributed to its downfall.

Nokia overestimated its brand value. The company believed that even after the
late launch of its smartphones, people would still flock to stores and purchase Nokia-
manufactured phones. This turned out to be a misconception, as consumer preferences
had shifted towards other brands.

People still make predictions that Nokia will retain the market leadership if it uses
better software at its core. However, this is far from the truth as seen today.

The company got stuck with its software system which is known to have several
bugs and clunks. Nokia felt its previous glory would help alleviate any sort of trouble.
Unfortunately, things didn’t play out that way.

Unfortunately, the market dynamics had changed, and consumers were no longer
willing to overlook the shortcomings of Nokia's software. Competitors had surpassed
Nokia in terms of user experience and software innovation, leaving Nokia struggling to
regain its position.

Nokia's lack of innovation in its products significantly contributed to its failure case
study. While brands like Samsung and Apple came up with advanced phones every year,
Nokia simply launched the Windows phone with basic features, failing to keep up with the
industry's rapid progress.

The Nokia Lumia series was a jump-start measure, but even that collapsed due to
a lack of innovation. The unattractive and dull features did not help. In the era of 4G,
Nokia didn’t even have 3G-enabled phones. Nokia also came up with the Asha series but
it was game over by then.

Wrong decisions and risk aversion brought the decline of the mobile giant. Nokia
refrained from adopting the latest tech. Nokia's failure became a powerful case study that
made organizations realize the importance of continuous evolution and enhancements.
The journey of what was once the world’s best mobile phone company to losing it all by
2013 is quite tragic. Nokia's failure was not solely due to its lack of innovation but also its
shortcomings in leadership and guidance. These factors, combined with its inability to
adapt to market demands and technological advancements, sealed the company's fate.

Learn from the ruins of failed success

It has been said that without leadership, all other business elements lie dormant.
Strong leaders can help an organization to maximize productivity and achieve business
goals, whereas weak leadership can hurt productivity and put the health of the business
in jeopardy. Leadership is not one blanket characteristic that cures all ills, however, there
are many different elements that must be present for an organization’s leadership to be
considered adequate.

It should also be considered that there are many different effective-and ineffective-
leadership styles. Just because one manager is jovial while another is refined doesn’t
mean that either style will be more effective than the other. To rate the leadership
capabilities of the managers in your organization, consider how well each manager does
the following.
Managers should be able to provide meaningful guidance and advice for
employees. If needed, managers should be able to show employees how to perform their
job tasks more efficiently and effectively. Managers should also be able to provide the
support that employees need to grow and develop.
 Good leaders motivate employees to work hard and meet organizational needs
through one means or another. Some leaders may inspire employees to work hard, while
other managers may cause employees to fear the consequences of not working hard.
Both methods work to drive motivation and one may work better than the other depending
on the manager’s specific style and the culture of the organization.

Aside from the above mentioned, It is critical that leaders initiate action by planning
out who will perform what tasks, when the tasks will be completed, and by what means
the tasks will be accomplished. Without a clearly defined plan to complete business goals
and good communication between managers and relevant parties, an organization will
fail no matter how strong the other aspects of managerial leadership are. Managers
should be able to initiate fast action to utilize human resources to complete business
needs.

Good leaders drive employee productivity by building confidence in employees and

creating a positive environment that is conducive to productivity. When employees feel
stressed or distracted, job performance and job satisfaction suffer. When managers build
morale, it can help to improve retention, increase employee job satisfaction, and may
favorably impact the bottom line.

One of the most important things that every manager must do in order to be
effective is to align employee needs and organizational needs. Employee talents,
interests, and scheduling needs can all either benefit or detract from an organization,
depending on how well a manager works to align these things with organizational needs
and goals. The best managers will find a way to efficiently align each employee’s needs
and talents with the organization’s goals.

Lastly, It is possible for leaders to delegate too much and it is possible for leaders
to delegate too little. Strong leaders know what to delegate and what to handle so that
the organization is as productive as possible. Adequate delegation is also necessary for
maintaining employee satisfaction, as employees may take advantage of a manager who
delegates too little and resent a manager who delegates too much.

Innovation is the key to sustainability

Innovation and creativity are often used synonymously. While similar, they are not
the same. Using creativity in business is important because it fosters unique ideas. This
novelty is a key component of innovation.

For an idea to be innovative, it must also be useful. Creative ideas do not always
lead to innovations because they don't necessarily produce viable solutions to problems.

Simply put: Innovation is a product, service, business model, or strategy that is

both novel and useful. Innovations do not have to be major breakthroughs in technology
or new business models; they can be as simple as upgrades to a company's customer
service or features added to an existing product.

Innovation is easier said than done. It often requires you to collaborate with others,
overcome resistance from stakeholders, and invest valuable time and resources into
generating solutions. It can also be highly discouraging because many ideas generated
during ideation may not go anywhere. But the result can make the difference between
your organization's success or failure.

The good news is that innovation can be learned. If you are interested in more
effectively innovating, consider taking an online innovation course. Receiving practical
guidance can increase your skills and teach you how to approach problem-solving with a
human-centered mentality.
 Innovation is vital in the workplace because it gives companies an edge in
penetrating markets faster and provides a better connection to developing markets, which
can lead to bigger opportunities, especially in rich countries.

Innovation can also help develop original concepts while giving the innovator a
proactive, confident attitude to take risks and get things done.

When a company has an innovative culture, it'll grow easily, despite the fact that
the creative process isn't always simple. Tried-and-tested methods may be reliable, but
trying out new things is a worthwhile experiment.

Aside from products, innovation can also pertain to new services, business
models, processes, and functions.

Companies such as Google and Starbucks have implemented game-changing

innovations in small ways that add to the big picture.

Notice Starbucks does not do small, medium and large cups. They have their own
language such as grande and venti. They even have their own payment app designed
with PayPal.

If you use Google, you may start with search but end up using Google Docs or
Google Hangouts.

As a professor and trainer who teaches a series of innovation and creativity

programs, I can tell you from observation that innovation is not for geniuses working
alone. It is a group activity and is a teachable skill. Being innovative should always be a
part of your approach. With creative thinking, problems can be solved differently and
strategically.
 The right innovative techniques can help you save precious time and money, and
give you a competitive lead in expanding your business. Tremendous efficiencies are
experienced because of the development and use of new strategies. One way to
experience this is when distinctly different ideas come from different minds. Don't be afraid
to surround yourself with people who have ideas that differ from yours. You will come up
with diverse ideas that you can pool to achieve a different approach from what has always
been done.
A piece of cake for future businessmen

Indeed, we have a lot of setbacks and doubts when it comes to business. We are
afraid that it might go bankrupt, or you are just afraid to take any risks that may turn great
things otherwise.

Do not be afraid to learn new things and to embrace it. We are in a world where
embracing curiosity leads to success.