Nokia and the Global Mobile Phone Industry

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Case Details:

Case Code : BSTR167
Case Length : 12 Pages
Period : 1999-05
Organization : MG Rover
Pub Date : 2005
Teaching Note : Available
Countries : Global
Industry : Mobile Phone

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts

Efforts at Recovery

Soon after announcing disappointing results in the first quarter of 2004, Nokia realized that it was in trouble and began to take steps to correct matters. The company not only cut prices on certain handsets to increase market share, but also fine-tuned its portfolio to adjust products to meet market needs. It killed some outmoded models and brought forward the launch of several others, including a number of clamshell phones.

In June 2004, Nokia launched five new models of phones, out of which three were clamshells. Nokia's new models were the 6260 model, a clamshell whose cover not only flipped open but also swiveled, the 6630, which Nokia claimed was the world's smallest camera phone, designed for 3G networks, another clamshell, the 6170, and two low end models, the 2650 and 2600. Several other models were also marketed aggressively.

For instance, the low end 1100 model for emerging markets and the 6230 mid range model became very popular in 2004. (The 6230 was so popular in some markets that at times, Nokia was not able to meet the demand)...

A Challenging Future

Despite Nokia's laudable efforts in the direction of recapturing its lost market position, the opinions of analysts on its turnaround were mixed.

While the company's detractors believed that Nokia had lost its competitive advantage in the mobile phone market, its supporters said the company's inherent strengths and stable financial position would help it sail through the difficulties it had faced in 2003-2004 to recover in the future. However, most of them agreed that the mobile phone industry was undergoing a vast change.

In the early 2000s, mobile phones were expected to perform a variety of functions in addition to looking stylish and being easy to operate. Nokia's competitors had understood this and were in the process of launching several models that were style statements in themselves...

Exhibits

Exhibit I: The Phone Feature of N-Gage