Report on Crisis Management of Nokia

For the subject Advertising Planning & Implementation

Presented By:
Aniket Kumar (MAC)
URN- 2018-M-18101995
Batch 2018-20

Submitted to:
Prof. Rajesh Jawajala

December 2019

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Sr. No. TOPICS Page
No.
1. About the Company 3-5

2. Position of the company in the mind of its 6-7

customers

3. Nokia Phones Timeline 7-8

4. Origin Of the Crisis 9

5. During the Crisis (How Nokia dealt with it)

 Objectives 10
 Communication Strategy/Channels Used 11
 Information Communicated 12

6. After the Crisis

 Position 13
 Support 14
 Trust 14
 Lessons learnt 15

7. Evaluation Of The Crisis Management 16

8. Conclusion 16

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 About the Company

Nokia Corporation is a Finnish multinational telecommunications, information technology,

and consumer electronics company, founded in 1865. Nokia's headquarters are in Espoo, in
the greater Helsinki metropolitan area. In 2018, Nokia employed approximately 103,000
people across over 100 countries, did business in more than 130 countries, and reported
annual revenues of around €23 billion. Nokia is a public limited company listed on the
Helsinki Stock Exchange and New York Stock Exchange. It is the world's 415th-largest
company measured by 2016 revenues according to the Fortune Global 500, having peaked at
85th place in 2009. It is a component of the Euro Stoxx 50 stock market index.

The company has operated in various industries over the past 150 years. It was founded as a
pulp mill and had long been associated with rubber and cables, but since the 1990s has
focused on large-scale telecommunications infrastructures, technology development, and
licensing. Nokia is a major contributor to the mobile telephony industry, having assisted in
the development of the GSM, 3G and LTE standards (and currently in 5G), and was once the
largest worldwide vendor of mobile phones and smartphones. After a partnership with
Microsoft and subsequent market struggles, Microsoft bought its mobile phone business,
creating Microsoft Mobile as its successor in 2014. After the sale, Nokia began to focus more
extensively on its telecommunications infrastructure business and on Internet of things
technologies, marked by the divestiture of its HERE mapping division and the acquisition of
Alcatel-Lucent, including its Bell Labs research organization. The company then also
experimented with virtual reality and digital health, the latter through the purchase of
Withings. The Nokia brand has since returned to the mobile and smartphone market through
a licensing arrangement with HMD Global. Nokia continues to be a major patent licensor for
most large mobile phone vendors as of 2018 Nokia is the world's third-largest network
equipment manufacturer.

Finns viewed the company with national pride, as its mobile phone business made it by far
the largest worldwide company and brand from Finland. At its peak in 2000, during the
telecoms bubble, Nokia alone accounted for 4% of the country's GDP, 21% of total exports,
and 70% of the Helsinki Stock Exchange market capital.

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In 1992, Ollila decided to turn Nokia into a 'telecom-oriented' company, and he eventually
got rid of divisions like the power business. This strategy proved to be very successful and
the company grew rapidly in the following years. Nokia's operating profit went from negative
in 1991 to $1 billion in 1995 and almost $4 billion by 1999.

In 1998, Nokia co-founded Symbian Ltd. led by Psion to create a new operating system for
PDAs and smart mobile phones as a successor of EPOC32. They released the Nokia 9210
Communicator running Symbian OS in 2001 and later that year created the Symbian Series
60 platform, later introducing it with their first camera phone, the Nokia 7650. Both Nokia
and Symbian eventually became the largest smartphone hardware and software maker
respectively, and in February 2004 Nokia became the largest shareholder of Symbian Ltd.
Nokia acquired the entire company in June 2008 and then formed the Symbian Foundation as
its successor.

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Nokia Corporation is a Multinational communication and information technology corporation
headquartered in Keilaniemi, Espoo, Finland. The Nokia Corporation is engaged in
manufacturing of mobile phones and portable IT devices. Nokia has sales in more than 150
countries also 123000 employees in 120 countries and is the world’s second largest
manufacturer of mobile phones after Samsung. Nokia produces mobile devices for every
major market segment and protocol, including GSM and CDMA. In India Nokia started, its
business in the year 1994 and they set up a factory at Sriperumbudur in Tamil Nadu and is
globally the second largest production site in Asia, after the China plant.
Nokia being one of the market leaders in Mobile Communication has always focussed on
customer, relationship and trust. Building friendship and trust is the heart of Nokia Brand.
Even the logo of Nokia shows their brand personality.

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Position of the company in the mind of its customers

More than a technology brand, Nokia India is advertising journey has been about
‘Connecting People’. Nokia starts the journey to be the ‘People’s Brand’

A year after India welcomed private organisations in the telecom sector and distributed
cellular services licenses; Nokia grabbed the opportunity in 1995.

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The first phone call on a cell phone in India was made on a Nokia handset through Nokia
network in July 1995 when Jyoti Basu, the then CM of West Bengal Chief had ringed then
Union Telecom Minister Sukhram in New Delhi.

Nokia India had struck the right chord was when it rolled out its very first ‘Maa’ commercial
in 1997 urging people to buy mobile phones to give their dear mom a call , and thus the
journey to be a ‘People’s Brand and ‘Connecting People’ was kicked off. At this time, major
brands were aiming to integrate ‘patriotism’ in their products; Nokia in 1998 touched
millions of Indian hearts when it launched ‘Saare Jahan Se Acha’ ringtone on a Nokia 5110
handset. Prior to this, it had already garnered a massive fan following for its classic Snake
game.

Nokia in many moves like introducing the first phone with a user menu in Hindi in 2000 to
launching its first Made in India Nokia 1100 showed its affinity towards the country and its
apt sense of understanding market sentiments. Nokia 1100 is the bestselling phone yet,
selling over 250 million devices. At its peak, the company sold 475 Million devices back in
2008.

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Some of the outstanding achievements by Nokia:

 In October 1998, Nokia became the best-selling mobile phone brand in the world;
 Nokia’s operating profit went from $1 billion in 1995 to almost $4 billion by 1999;
 The best-selling mobile phone of all time, the Nokia 1100, was created in 2003;
 By the end of 2007, half of all smartphones sold in the world were Nokias, while
Apple’s iPhone had a mere 5 per cent share of the global market.

Nokia Phones Timeline

1990’s:
Nokia’s top leadership decided to focus solely on the telecommunications market, and as a
result, the company’s data, power, television, tire, and cable units were sold off in the first
few years of the decade.

1991:
The then Finnish prime minister, Harri Holkeri, made world’s first GSM call. Unsurprisingly,
it was made using Nokia equipment. The next year, the company’s first hand-held GSM
phone Nokia 1011 was launched. The device reportedly had a talk time of 90 minutes and
could store 99 contact numbers. It was also known as Mobira Cityman 2000.
A couple of years later, the company launched its 2100 series of phones, which were also the
first to feature the iconic Nokia Tune ringtone. While Nokia projected to sell 400,000 units,
the series turned out to be a blockbuster with around 20 million handsets sold worldwide.

1996:
Nokia 9000 Communicator was launched. The all-in-one phone, which carried a price tag of
$800, allowed users to send emails, fax, and browse web, besides offering word processing
and spreadsheet capabilities. Although the phone managed to create a dedicated following, it
was not commercially successful. In the same year, the company also launched the Nokia
8110 slider phone. Nicknamed "banana phone", the device featured in the popular 1999
science fiction action film The Matrix.

1998:
The spectacular success of Nokia’s 6100 series - the company sold nearly 41 million cellular
phones in 1998 - helped the company surpass Motorola and become the world’s top cellular

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phone maker in that year. It is worth mentioning that the Nokia 6110 was the first phone that
came with the classic Snake game pre-installed.

Nokia’s net sales increased over 50% year-on-year, operating profits shot up nearly 75%, and
stock price skyrocketed a whopping 220%, resulting in an increase of market capitalization
from nearly $21 billion to around $70 billion. The year 1998 also saw the company launching
the Nokia 8810, its first phone without an external antenna. The flagship was also one of the
Nokia’s first phones with chrome slider shell.

The 2000s - a new era:

Although Nokia was the world leader in the mobile phones market, the new decade brought
along a new set of challenges for the company. The wireless and Internet technologies were
converging, and the 3rd generation of wireless technology - that promised enhanced
multimedia capability - was evolving.
Responding to the changes, the Finnish company started churning out both sophisticated
multimedia handsets as well as low-end devices. The year 2001 saw the company launching
the Nokia 7650, its first phone to feature a built-in camera. It was also the first to sport a full
colour display.

2002:
Launch of it’s (as well as the world’s) first 3G phone, the Nokia 6650, in 2002. The same
year, the company also launched the Nokia 3650, the first Symbian Series 60 device to
appear in the US market. It was also Nokia’s first phone to feature a video recorder.

2003:
In 2003, the company launched the Nokia 1100, a budget-friendly phone that sold around a
whopping 250 million units, making it the bestselling phone as well as the bestselling
consumer electronics product in the world. Incidentally, it was also the company’s billionth
phone sold later in 2005. The year 2003 also saw the launch of the company’s unorthodox-
looking N-Gage device. Running Symbian OS 6.1 (Series 60), the phone/hand-held gaming
system wasn’t much successful commercially as only 3 million units were sold.

2004:
The following year, the Nokia 7280 "lipstick" phone was launched. Part of the company’s
"Fashion Phone" line, the device was listed as one of the best products of the year by Fortune
Magazine. It also featured in the Pussycat Dolls' "Beep" music video.

With Apple launching its first-generation iPhone in 2007 and the growing popularity of
touch-screen phones, Nokia outed its first all touch smartphone in 2008. Dubbed the 5800
Xpress Music, the device was also the first to run the touch-driven Symbian v9.4 (S60 5th
Edition). It was decently successful as the company managed to sell around 8 million units of
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the device, but it did not manage to create die-hard following as it touch-experience was sub-
par.

Origin of the Crisis

On August 14, 2007 Nokia announced a product advisory for a certain batch of BL5C
batteries (46 million approximately) manufactured by Matsushita between December 2005
and November 2006. There had been approximately 100 incidents of overheating reported
globally and Nokia took prompt action to inform consumers that they could get their batteries
replaced free of cost, if they were found affected. Over 50 models seemed to be impacted.
Incidentally, this was a product advisory and not a product recall. The difference between the
two being that the former is a voluntary approach while recall is a legal obligation. No one
knew the exact scale of the impact and which country was impacted the most at the time of
the issuance of the advisory. The only thing that stood out was that consumers had to be made
aware of the issue. For a company like Nokia where they were the pioneers of establishing
friendship and trust, this crisis came as a huge blow.

List of affected Nokia devices:

Nokia 1100, Nokia 1100c, Nokia 1101, Nokia 1108, Nokia
1110, Nokia 1112, Nokia 1255, Nokia 1315, Nokia 1600,
Nokia 2112, Nokia 2118, Nokia 2255, Nokia 2272, Nokia
2275, Nokia 2300, Nokia 2300c, Nokia 2310, Nokia 2355,
Nokia 2600, Nokia 2610, Nokia 2610b, Nokia 2626, Nokia
3100, Nokia 3105, Nokia 3120, Nokia 3125, Nokia 6030,
Nokia 6085, Nokia 6086, Nokia 6108, Nokia 6175i, Nokia
6178i, Nokia 6230, Nokia 6230i, Nokia 6270, Nokia 6600,
Nokia 6620, Nokia 6630, Nokia 6631, Nokia 6670, Nokia
6680, Nokia 6681, Nokia 6682, Nokia 6820, Nokia 6822,
Nokia 7610, Nokia N70, Nokia N71, Nokia N72, Nokia N91,
Nokia E50, Nokia E60
Key Messages:
In 2007, Nokia issued a warning over its BL-5C batteries across the world with the message
that the battery is overheated while charging. Every Nokia phone user with a BL-5C battery
will be provided with a new battery if the user reach out to the nearest Nokia customer care
centres. This was the key message from the management of Nokia. The management also
added that one should not panic about the condition of the battery and apologized heartily for
the major inconvenience caused by the company (Cox 2012). It was exclaimed that due to
over usage and frequent charging of the battery, it is being deformed. However, there is
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nothing to panic because the Company can manage the crisis. The message was delivered
with the intension of creating a faith on the product and service of an experienced telecom
company.

During the Crisis

(How Nokia dealt with it)

Objectives Of Nokia In Dealing With The Crisis

While managing the crisis related to BL-5c battery, the organization’s objectives were:

 To understand the severity of the situation.

 To communicate with their customer base in order to start damage control process.
 To understand the effect of product recall on Nokia’s brand image.
 To figure out the steps that should be followed during product recall process.
 To analyze whether Nokia would be able to regain trust of its customers or not.

One of the top and the most important priorities for Nokia was to handle the battery crisis in
an intelligent manner so that is does not raise any questions to the brand name of the
company and also the integrity of the company. The warnings issued by Nokia created a
nation-wide panic among the consumers. The consumers checked their Nokia handsets and
rushed to the nearest service centre. The Company clarified the problems relating to the
batteries and also offered to replace the batteries free of cost to the consumers.

The head of customer and market operations at Nokia, Mr. Robert Anderson said “By
reacting swiftly and responsibly, and by being fully transparent, we believe that the
consumers view Nokia as a responsible and a trustworthy brand”.
The panic all over the nation in the minds of the consumers created havoc and also affected
the brand image of Nokia. To overcome such problem and to appease the growing fear in the
mind of the customers, Nokia through advertisements in various national newspapers and TV
networks made it clear for the safety of the consumers it had issued a product advisory for the
BL – 5C batteries and not a total recall of the product.

Nokia took all possible actions to ensure customer safety and satisfaction. Nokia launched a
customer service program to help customers and retailers recognize non original batteries.
They also introduced the scheme of customers could check online by keying the battery
number from the website of Nokia. The customers can check the status of their batteries by
stating the 26 character battery identification number, the customers were even allowed to

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SMS the battery identification number specified by the company. If the battery was found
defective and was eligible for replacement then the customers were to fill an online form
where the new battery was dispatched to the consumer’s registered address with a “postage
prepaid” envelope to send the old defective battery back to the Nokia office address.
All these options were not enough because there were also some independent mobile service
and buyers and because of that Nokia was unable to reach among all its consumers. To
overcome this problem a toll-free telephone helpline was placed at each Customer Call
Centre as well as the Nokia Priority Dealers. With the help of the toll-free number Nokia was
able to reach the local customers easily. There were more than 150000 phone calls within a
couple of days. All the batteries were sent to the CCCs and the RDs which came directly
from the consumers.
In order to determine if a battery is subject to this advisory, it is necessary to remove the
battery from the device. A Nokia battery will have "Nokia" and "BL-5C" printed on the front
of the battery. On the reverse, the Nokia mark appears at the top and the battery identification
number (consisting of 26 characters) is found at the bottom. Consumers should refer to this
identification number to determine if their battery is among the batteries manufactured by
Matsushita between December 2005 and November 2006. A comparison of that number with
those subject to this advisory will determine a consumer's ability to obtain a replacement free
of charge.

Communication Strategy-Channels Used To Reach Out To Public

(Internal And External)

While managing the Bl-5c battery crisis, Nokia did not hide anything from the media and
from the consumers. The CEO of Nokia conducted a worldwide conference where he asked
for apology from the customers who were affected. The conference was shown in all the
news channels across the globe (Nokia 2015). Radios installed in the mobile phones were
also used by the organization to communicate with the public. Mobile radios had its coverage

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even in remote areas. Thus, the public relations team of the organization could easily reach to
a wider audience.

Information Communicated Using Media

As pointed by Newsom, Turk and Kruckeberg (2012), media plays the most vital role in
communication at the time of crisis management. According to Coombs and Holladay (2013),
using media in a correct way helps in remodeling the opinion of people. If media is used in
the correct way, it helps to propagate any message to the targeted group of people and can
make people aware of the crisis.

Immediately after acknowledging the fault from their end, the management used different
media platforms to disseminate the information related to the crisis. The primary message
sent by Mark Squires, head of Nokia’s communication in the UK, was to aware people of the
crisis that occurred as a result of engineering defect. By the time, Nokia recognized the
problem of the battery, there were many users who were not aware of the problem. Therefore,
primarily, Nokia made people aware of the problems and assured them for rapid recovery
from the current crisis situation. Nokia used social media that was already popular in
countries like America to reach Nokia users. In this respect, it has to be mentioned that India
was also an important market for Nokia at that time. However, at that time, social media was
not popular in India. It is for the same reason, Nokia selected traditional approach of
connecting with people. The management called for press conference and stated that every
user will be served with a new battery (Wearden, 2007).

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 After the Crisis

Position Of Nokia At The End Of Crisis

The After Affects of the crisis was that during the 2nd quarter of 2007, Nokia sold 101
million mobile phones, which was around 29% increase from the previous year. Nokia
continued to be the market leader even after the crisis this was because Nokia had a strong
sense of Social Responsibility. This scheme was a big hit for Nokia and their customers were
more than satisfied with the customer service. In the end instead of being a damage control
exercise, it turned out to be Marketing and PR campaign for Nokia with even more word-of-
mouth publicity was created.
As per 2007 statistics, Nokia had almost 36% of mobile market worldwide (Wray and
Wearden 2007). Therefore, it cannot be denied that majority of people relied on the service of
the company. The crisis management went for quite a long time. It took almost a couple of
months time to replace the batteries of the prospective users. The crisis resulted in wiping off
of almost half a billion pounds from the Nokia’s stock market when the company announced
that 46 million products are at the risk of overheating. The company had to knock down
about 557 million pounds off its market capital. Nokia had lost 1% of its share on the very
same day. The incident marked on the reputation of the Company.

Support
Leading mobile operators in India, such as Bharti Airtel and Hutch, have come to support
Nokia’s efforts in facing this crisis. They appreciate the responsibility that it has taken over
its fault in the matter and the fast solutions that it has started deploying. Nokia will have to
suffer a major step backwards, in profits and brand credibility, one that it must accept in order
to reconfirm its name’s having always been linked to product quality.

Trust
There were of course a few disgruntled customers who felt left out as they weren’t eligible to
avail a ‘free’ replacement of their batteries, but then that would be a few dissatisfied
customers no matter what ever scheme or gimmick was tried. But on the whole, since an
overwhelming majority was happy in the end, that is more than enough to declare and state
the scheme, operation and exercise as a success.

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Nokia managed to prevent a mad scramble at their authorized service centre (ASC) network
and causing an overload on their staff, by making this exchange scheme / offer available from
the customers home/office itself, so this benefited the customers too from having to take time
out specially to visit a Nokia ASC and then end up spend hours in a queue.
It was also important for the company to communicate clearly and transparently with its
consumers. Nokia contended that it had acted swiftly and transparently in the best interests of
its consumers and hoped to come out of such a crisis. Nokia won the hearts of the customers
to successfully defuse the crisis that could have generated a bigger loss to the Company as
well as its well built image. In the end both Nokia and its customers were happy.
Nokia at that time had truly ubiquitous connectivity. The company has emerged as a world
leader in the mobile technology. Position of Nokia was undoubtedly moving towards making
their vision successful of creating a connected world. The goodwill and service that Nokia
provided with its mobile handsets generated loyalty among its users. Therefore, the users
trusted on the approach undertaken by the management of this telecom company and it was
found that people cooperated with the unfortunate engineering defect

Lessons Learnt

 Earning your consumers’ trust: When Nokia faced the battery advisory in 2007,
they were honest, open and transparent. They went the extra mile to ensure that their
consumers were aware and were not left second guessing. No wonder then that post
one of the biggest product advisories in the telecom space, Nokia in India emerged as
the #1 Most Trusted Brand as per the Economic Times Trusted Brand Survey 2008.
That win was most precious to each and every employee because it stood for the
consumer’s trust in us as an organisation, as a brand. It stood for their pride in the
Brand Nokia.

 Open and transparent communication from Day 1: As soon as the issue was
picked globally, Nokia issued a global press release about the advisory. Consumers
could check online using their IMEI number whether their battery was impacted or
not. In markets like India, where internet penetration was low at that time and more
importantly, not an accessible option for most consumers, we set up an IVR and SMS
service within 24 hours. Over the next 24 hours, we also made this service available
in our Care centres to check and replace affected batteries. In 48 hours, all our 800
Care Centres were geared up. What worked for Nokia was quick open, transparent
communication at all levels – internal and external — so they were all singing from
the same song sheet. Their communication during the crisis days was frankly to the
point of over communicating.

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 Education and Awareness: As the misinformation campaign started, the issue about
the battery became doubly sensitive and for Nokia the most critical was to educate
and create awareness on the “How to” Check If my phone is impacted. Given the
panic situation and the media created mayhem, they decided to go out and take the
bull by the horns. In a matter of hours, there were live OB vans outside Nokia offices
and live studio chats happening. Nokia spokespeople went right in — into TV studios
where Nokia was being battered. One message – our consumers needed to know how
to find out of their battery is impacted or not and where to get it replaced. This was
closely followed by a massive advertising campaign in all key mainlines and regional/
vernacular media with clear messages on “How To check and replace”
Since the impact was supposedly across 50 models including the basic Nokia 1100,
they held press briefings in metros, sub-metros, even small towns with low media
coverage like Azamgarh, Siliguri, Kolhapur and leveraged the platform to educate
their consumers.

 Swift Action/ Agility: What helped Nokia the most was moving fast and taking quick
decisions. For instance, since India was one of the largest impacted countries (Nokia’s
second largest market then), the leadership ensured that they made it easy for
consumers to walk into any of the 800 Nokia Care Centers and check if their battery
was impacted and even get it replaced if it was impacted. Globally, this was not the
norm. It was all done on email and FedEx. For India that would not have worked.
There was a heavy rush of consumers to their Care Centers, and they were falling
short of replacement batteries. Nokia India leadership in conjunction with the global
teams rerouted batteries from the Chennai factory meant for exporting to reach each
and every of the 800 Care Centers in India. The entire global production and planning
got shifted to cater to India. At the end of the crisis, almost two million batteries were
replaced – impacted or not impacted!
Therefore, it is very important in such situations to pick “consumer hot issues” and fix
them quickly. It also becomes critical in such situations that there is no red tapism, no
bureaucracy and no turf wars on who does what. Consumer in this case was all that
mattered for Nokia.

 Industry joining hands: Lastly, in such crisis situations, it is important to get the
industry aligned and ready to support. Nokia reached out to our stakeholders and
partners to ensure that the entire telecom industry – mobile device manufacturers,
operators, and service providers — came together. Nokia held industry briefings on
the importance of original batteries (in normal circumstances, batteries don’t blast
unless these are fake) and also met government regulators so that they were
sensitized.

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 Evaluation Of The Crisis Management
As stated by Austin and Pinkleton (2015), Nokia’s battery blast incident was handled with
great care by the company and created an example of effective crisis management on a global
platform. The incident occurred before the advent of smart phones. Nokia had a good position
in the market due to its product durability and longevity of battery power. The crisis was
managed with full efficiency.
In the viewpoint of Coombs (2014), crisis is a part of any business. Managing the crisis
shows the efficiency of the management of a company. A company might get drowned in
major crisis but selecting the best avenue to come out of the crisis is what matters the most.
In case of Nokia, the crisis was a major one. Nevertheless, the management had come up with
right avenues to come out of the crisis. Informing people and replacing the batteries and
taking the responsibility of the crisis over themselves proved to be really fruitful to retain
customer loyalty over the company.
If the same kind of situation was to be handled by me as a Public Relation Officer, I would
have used the communication platform like television and internet. It has to be understood
that every problem has to be dealt with different approach depending upon the region of
operation. As observed by Dozier, Grunig and Grunig (2013) that a mobile user is expected
to rush to the dealer from whom the purchase is made. Therefore, another approach might
have been made at that time. The dealers would have been given the authority of replacing
the batteries rather than using only the customer care stores. This would have made the
situation less chaotic and the approach that was made to provide new batteries would have
been made easier and faster.

Conclusion
In the end, it can be said that the BL-5c battery crisis of Nokia put them in serious troubles.
The company lost a huge amount of customers in no time. However, thanks to a brilliant and
apt crisis management strategy allows the organization to rectify their faults and regain the
loyalty and trust of its customers.

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