ORGANIZATIONAL RESTRUCTURING AT NOKIA.

PRESENTERS:
DEEPAK KUMAR JHA(09BS0000664)
AJAY SINGH CHAUHAN(09BS0000125)
PIYUSH KUMAR(09BS0001587)
IQBAL KASHEM(09BS0000906)
SUMAN SINHA(08BS0003427)
JEEVAK PATIL(09BS0000959)

IBS MUMBAI 12/07/2021 1

Introduction

 Nokia- a Finland based leading mobile

handsets manufacturer.
 Also a renowned supplier of fixed broadband
and internet protocol network.
 Nokia was the first to introduce the GSM
technology.
 Nokia with its phone revolutionized the
international phone market since 1987.

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 Initially Nokia had two business units : mobile
phones and networks with a separate venture
fund and research unit.
 Nokia’s major source of revenue was from
mobile phones and its revenue increased to
54% in 2000.
 Sales affected in the first quarter of 2001 due
to stiff competition from Samsung and Sony
ericsson.
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 Nokia restructured its mobile phone business
into nine units in the spring of 2002 to
resurrect its profit.
 Each unit was equipped with unique
marketing and research division but they all
have common operations and logistics.
 Nokia focused on developing countries like
India &China for its low-cost mobile phones
and market expansion.
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 Due to restructuring Nokia’s sales increased of
2% over that of 2001 and also due to increased
sales of multimedia and messaging capabilities
of new sets.
 By the end of 2002,Nokia’s sales growth was 5%
in Asia Pacific, Europe, and America.
 But after that in July 2003 Nokia’s profit fell by
28% and sales increased by only 1% due to
severe competition from Siemens and Sony
ericsson & Samsung both in the low-end and
high-end market. IBS MUMBAI 12/07/2021 5
 Nokia again announced the restructuring in
sep2003 which was implemented in jan2004.
 Company’s focus was on convergence, market
growth, and mobility. The new structure
consisted of 4 business groups:- mobile phones,
networks, enterprise solution, and multimedia.
 These vertical units were supported by
corporate-wide horizontal functions to enhance
the company’s efficiency.

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Product Releases

 In May 2007, Nokia announced that its Nokia 1100

handset was the best-selling mobile phone of all time

 In November 2007, Nokia announced and released the

Nokia N82, its first N series phone with Xenon flash

 At the Nokia World conference in December 2007,

Nokia announced their "Comes With Music" program

 In 2008, Nokia released the Nokia E71

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Challenges of Growth

 In the late 1980s and early 1990s, the corporation ran into
serious financial problems

 In 1990–1993, Finland underwent severe economic

depression which also struck Nokia

 Probably the most important strategic change in Nokia's

history was made in 1992 under the new CEO Jorma Ollila

 As late as 1991, more than a quarter of Nokia's turnover

still came from sales in Finland
IBS MUMBAI 12/07/2021 8
Cont..

 Logistics crisis in the mid-1990s

 Between 1996 and 2001, Nokia’s turnover

increased almost fivefold from 6.5 billion
Euros to 31 billion Euros

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 RESTRUCTURING IN NOKIA
FIRST WAVE OF RESTRUCTURING(2002-2003)

The late 1990's saw Nokia shifting its focus from 2G to software development. The
growth path in 2G was limited primarily because of bandwidth constraint and lack of
protocols for high speed downloads. Nokia had already begun work on 3G which would
eventually see the convergence of telephony, computing and the Internet.

Nokia's widespread restructuring at this time was an attempt to support this new
corporate strategy. A monolithic organizational structure was no longer appropriate for a
market that required flexibility and faster movement to tap opportunities.

In 2002, Nokia split its mobile phone division pillar into nine separate business centres
based on geography, charging them with working on specific markets independently,
especially Russia, China and India. Nokia had finally learnt from its folly of neglecting
these growth markets.
Contd..

September 2003 saw Nokia marching ahead with its structural changes by
dividing the company into four divisions:

 Mobile phones.

 Multimedia phones.

 Network.

 Enterprise solutions.

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The Second Wave of Restructuring (2008)

Nokia restructured itself into three main functional groups: Markets, Devices, and
Software & Services.

 Markets:
 This division handles customer, front-end sales and the go-to-market strategy
of Nokia sales worldwide.

 Devices:
 It deals with all the hardware and software requirements for the development
of a new mobile phone. Research and Development, product development
and software variants that were earlier separated in three divisions have now
been put together under a single umbrella division.

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Contd…
Software & Services:

 It was created in the restructuring exercise with an eye on the future of the industry. It
reflects the path that Nokia wants to take in the coming years and is in sync with its vision of
bringing the best of Internet to phones and offering Consumer Internet Services.

Nokia focused on four main aspects in its restructuring process:

 Product focus: Nokia was manufacturing 70 models world wide.

 Functionality focus: Technical and functional expertise was important for

cutting edge technology.

 Geographic focus: Expanding global footprint.

 Focus on Internet services: Exploring future possibilities.

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Nokia simplifies its organizational structure to accelerate
execution and innovation (2010)

 Nokia introduced a simplified company structure for its devices and

services business comprised of three units: Mobile Solutions, Mobile
Phones and Markets which was effective from July 1, 2010.

 The move aims to accelerate product innovation and software

execution in line with the company's goals of integrating content,
applications and services into its mobile computer, Smartphone and
mobile phone portfolio.

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Contd..
Mobile solutions :
 The new Mobile Solutions unit will concentrate on the company's high-end mobile
computer and Smartphone portfolio.  Based on both the MeeGo and Symbian software
platforms respectively, these devices will be tightly integrated with Nokia's Internet
services to increase the combined value for consumers.

Mobile Phones :
 This unit will focus on maintaining Nokia's leadership in the feature-rich mobile phone
market and driving the direction of Series 40, the world's largest mobile operating
system. Both the Mobile Solutions and Mobile Phones units will have dedicated
portfolio management, including product planning, R&D and dedicated software assets.

Markets :
 It will be responsible for Nokia's 'go-to-market' activities, including sales and
marketing, management of Nokia's global supply chains and sourcing operations.
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SWOT ANALYSIS

SRENGTHS:
•World Leader in the Industry.
•Strong Financial Support for investment.
•Strong R&D unit.
•Strong customers relation.
•Strong distribution network.
•Products are customer friendly.
•Robustness and long battery life.
IBS MUMBAI 12/07/2021 17
WEAKNESS:
 High price of the product.
 Nokia’s service centers are very few therefore
its after sale service is not impressive.
 Has not launched enough dualSIM phones to
counter competitors.

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Opportunities:
 Nokia can capture more market share by
innovating new product and new features of
existing products.
 Nokia can expend its market share by
introducing brand in new market and by
catering new target market as well.
 Can enter in the laptop business also.

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Threats:
 Large number of competitors and new
entrants.
 Some competitors offer products at low
prices.
 Growth of WLL network because Nokia
provides lesser CDMA cell phones so its
products can go toward the down fall with
the rise of WLL network.
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IBS MUMBAI 12/07/2021 21
QUESTION 1- NOKIA DIVIDED ITS MOBILE PHONE BUSINESS INTO 9 UNITS IN 2002
AGAIN IN 2003 THE TOP MANAGEMENT ANNOUNCE THE RESTRUCTURING OF THE
ORGANIZATION DISCUSS THE REASON S THAT LED TO
RESTRUCTURING NOKIA’S ORGANIZATIONAL STRUCTURE IN 2003?

Organizational structure
 Before 2003.
 Two business unit
 Cell phone manufacturing
 network
 Structure was common based on following
the business nature
 Two separate vertical line accompanied by
horizontal line
The need

 Problem with lack of integrity

 Proper initiative
 Control over market
 Stiff competition
 Gain flexibility and fast movements
Organizational structure

 After 2003
 Nokia followed activity based structuring
 Identified four business activity
 Mobile phone
 Networks
 Enterprise solution
 Multimedia
 Business was integrated and de-centralized
 Verticals were supported by horizontal functions sales,
marketing, logistics, manufacturing, technology, central
corporate strategy, r & d.
Organizational structure

 After 2008
 Nokia restructured its business into 3
functional group
 Market (customer)
 Devices (product development/ R & D)
 Software and services (future market)
QUESTION 2- “WITH OUR FLEXIBILITY AND THE NEW STRUCTURE WE ARE
TRULY IN THE BEST POSITION TO BRING THE BENEFITS OF MOBILITY TO
EVERYONE AND TO TAKE THE OPPORTUNITY OF THE NEXT GROWTH WAVE
IN INDUSTRY .”MENTION THE BENEFITS THAT NOKIA EXPECTED TO DRIVE
BY RESTRUCTURING ITS ORGANISATION ?

"Willingness to change is a strength, even if it means

plunging part of the company into total confusion for a
while"
Jack Welch
 September 2003 saw Nokia marching ahead with its structural
changes .
The divisions were small in size and enabled faster response in targeting
markets that were vastly different with respect to feature demand and usage.
The second wave of restructuring was necessitated by the changes in
the rapidly growing marketplace. The existing structure was strained by
this growth which magnified its deficiencies.

Trouble started creeping in as technologies began to converge

and the phones started becoming similar.
The structure was incapable of meeting such needs.
The major issues faced by this structure were:
•Repetition of work across divisions and non-standardization of product
•Poor coordination among divisional groups working on the same technology
•Inability to develop any major expertise
This led to cost ineffectiveness and called for a major revamp
and re-structuring in Nokia.
•Product focus: Nokia was manufacturing 70 models world wide
•Functionality focus: Technical and functional expertise was important for
cutting edge technology
•Geographic focus: Expanding global footprint
•Focus on Internet services: Exploring future possibilities
HOW THIS WORKED SO WELL…

Transparency in the restructuring process and a clear definition of new roles

and duties allow things to fall in place quickly ensuring a smooth transition
from one structure to another

Nokia's entry into the mobile internet application development is

important for its future growth.
These acquisitions and other collaborations form a part of Nokia's
extended firm Symbian.
THANK
YOU