Presented By: Saif Siddique

Class: MS 1st

Roll No: 23952

Subject: Strategic Management

Topic: Faded Signal (Nokia Case Study)

Presented To: Dr. Alia Sheeraz

 Faded Signal: A Case Study
Questions:
1. What strategic mistakes did Nokia make in the U.S. market?

First of all, Nokia’s biggest mistake was that it did not realize the changes in American
consumer taste and the emerging trend of smart phones. Nokia thought that it knew
what the customers wanted better than the customers themselves. Ignoring the iPhone
hype, Nokia neglected the growing fondness for apps and touch screens, believing that
its one-size-fits-all products were superior.
Nokia’s second mistake is its ignorant attitude to competitors. Despite the entrance of
many new manufacturers into the market, Nokia did nothing about it: no change, no
innovation, no new products. In 2008, when new manufacturers like Samsung or HTC
already found roots to extend their market share with touch screen mobiles, Nokia felt
that touch wouldn’t have a scope in the near future and did not follow the common route
Last but not least, it was the difference in technologies used by cell phones that made
the fruitful business turn sour. While roughly half of American cell phone users used the
CDMA format, the models of Nokia was still based on a European communications
standard called GSM. Nokia has adapted too slowly to this US technology.

2. Why do you think a “smart” company makes “dumb” mistakes?

One reasonable explanation for these mistakes is that giant companies tend to be the
victim of their own success, because they are very likely to overlook potential threats
and only react when it is already too late. Nokia was no exception. Indeed, in 2002,
Nokia led the American market with 35% of mobile phone market share. With such a
high growth rate and high market share, Nokia’s leading mobile phone business can be
identified as “Stars” using the BCG Matrix. The most important strategic implication of
this tool is that the “Star” requires heavy funding to exploit the market growth and
maintain high market share. As for Nokia, due to lack of innovation, the advantages
brought by the “Star” quickly deteriorate dafter the introduction of the iPhone in
2007.Nokia had chosen to ignore this by saying that they were “unimpressed by its
engineering” and still refused to change 3 years later, which obviously was not so
“smart”.
In addition, mistakes also resulted from their inability to adapt to changes. Innovation is
the center of American business, thus firms who stand still will quickly lose their
competitive edge. In this case, Nokia did not anticipate changes in American consumer
tastes and hence no alteration was made. In industries where technology and consumer
taste changes day by day, stopping to innovate and adapt can be seen as a suicidal
action.
3. What strategies is Nokia using to revitalize its North American
business?

First of all, Nokia implemented a customer-oriented strategy, which involved securing

partnership with American giants such as AT&T, Qualcomm and Microsoft to adapt their
model; and setting up liaison offices expanding to different markets where top
business operators have units such as Atlanta, Settle, New Jersey, and Dallas. Also, it
had tried to revamp the operations in the American market to coincide with the major
operators in each of these cities. To diversify their products to match that of the current
demand, Nokia has also partnered up with Microsoft for a windows design mobile
software applications for phones that already have the original Nokia European
communication software. These steps will help Nokia maintain a footing in the industry,
but it is not enough to make it a big competitor for giants Apple and Samsung.
On one hand, this could be viewed as a growth strategy. Take this statement from the
case, “Everything you see us doing is to build the broad set of capabilities to take us
broader and deeper into the U.S. market.” On the other hand, in light of their resent
failures, what they are doing could be viewed as a turnaround strategy to create a
balance for Nokia to stay tuned in the market.

4. How could Nokia have done better at using strategic management?

What does this case story tell you about strategic management?

In order to understand how Nokia could have improved it strategic management, let’s
first do a SWOT analysis on this Corporate: (which is step 2 and 3 in the strategic
management process)
An Internal analysis gives us an insight into the company’s strengths and weaknesses.
 While Nokia’s strengths are:
 Advanced technology over competitors in the mobile industry
 Market leadership in the mobile industry
 Strong brand name and company image in the global market and
 Product innovation,
 Its Weaknesses are
 Arrogance attitude and the one-size-fits-all mentality, and
 Inadequate focus on customers and their interests in customization
Now let’s turn to an External analysis.
Nokia did have many great opportunities in the US market, including an initially
strong leading position in the market. It also had chances to cooperate with other
industries and company in the U.S so as to get deeper into the U.S market,
which allows better analysis and better groundwork for long-term success.
However, Nokia could have thrived and prospered if they had suppressed their ignorant
and arrogant attitude and instead taken the threats from the external environment into
account. These threats are:
  New strong competitors and loss of market share
 Dramatic change in consumer tastes towards the “cool” touch phones

What does this case story tell us about strategic management?

The lessons learnt from the case are;
 Firstly, strategic management has proven its importance in any business
development plan. If a company wants to success and remain on top, it should
best to revise and follow the 6 step in strategic management regularly.
 Secondly, it is crucial to pay attention to both internal and external environment,
also to some of your strongest competitors. Or else you will never know when
these competitors make moves and grow stronger. Once your company fails this,
regardless of the size and fame, the way from being on top to bottom is sure be
shorter.