Nokia: Integrating Risk into Corporate Strategy
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Case Details:
Case Code : BSTA038
Case Length : 16 Pages
Period : 1865 - 2004
Organization : Nokia
Pub Date : 2004
Teaching Note :Not Available
Countries : Global
Industry : Communications
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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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Introduction
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In early 2004, Nokia, the global leader in mobile phones, saw
its market share plunge from 36% (in 2003) to 28%. This was the first time since
2001 that the company's market share had dipped below 30%. Nokia also announced
its first quarter sales had dropped by 2% and indicated zero or negative sales
growth for the second quarter.
The company was still the world's largest maker of cell phones ahead of rivals
such as Motorola, Siemens, and Samsung among others. But increasing competition
from low-cost Asian players and inability to introduce 'hot' products worried
analysts. Even as competitors successfully launched newer products, Nokia had
stuck to its older models.
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Nokia's share price had fallen from an all time high of about
$60 in March 2000 to about $10 by June 2004. Nokia believed risk management had to analyze, review and manage all opportunities, threats and risks related to its objectives, not merely to eliminate risks.
The principles documented in Nokia's Risk Policy and accepted by the Audit Committee of the Board of Directors required risk management and its elements to be integrated into business processes. One of the main principles was that the business or function owner was also the risk owner. However, Nokia believed that it was everyone's responsibility at the company to identify risks preventing Nokia from reaching its objectives...
Excerpts >>
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