Question

There are both advantages and disadvantages in doing business internationally. Read Case # 2, Missed Call, on page 210 of your text. Also, review the list of potential advantages and drawbacks in Table 7.1 on page 198. What international strategy advantages and drawbacks can you see in this case.

Do you remember your first or even second mobile phone? Chances are it might have been one made by Finnish company, Nokia Corporation. Mine was. It was a beautiful steel blue color and was, I thought, pretty slick. Nokia phones back then were quite popular with consumers and positioned the company as one of the leading mobile phone makers. In 1998, Nokia sold more than 40 million mobile phones to surpass Motorola as the world’s #1 mobile phone company. During this time period, Nokia was light years ahead of its rivals with digital phones. However, “Nokia was caught sleeping in 2007 when Apple Inc.’s iPhone redefined the cellphone as a PC-like device with a touch screen and sleek software.” Since that crucial time, Nokia has lost 75 percent of its market value and is struggling to catch up to Apple and Google Inc.’s Android.

Despite its failure to recognize the market-changing characteristics of Apple’s iPhone, Nokia is still the world’s largest handset manufacturer by volume. Europe is the company’s largest combined market, with about a third of sales. Somewhat surprisingly, China is Nokia’s largest single-country market, accounting for nearly 20 percent of sales. And the United States accounts for only 4 percent of sales, and India (another important target) accounts for only 7 percent of sales. The company has been crafting strategies it hopes will help position it as a dominant force once again in this industry. New CEO Stephen Elop, the first non-Finnish leader and a former top Microsoft executive, pledged to turn around the struggling company.

CEO Elop’s initial plans were aimed at streamlining its smartphone operations costs and speeding delivery of new products. He said, “Nokia has been characterized as an organization where it is too hard to get things done.” More than anything else, the changing market dynamics demand that we must improve our ability to aggressively lead through changes in our environment.” Getting its products to market faster would be a key failing that would have to be improved. In addition to the first round of 1,800 jobs cut, Elom eliminated several senior officials on the company’s group executive board. He also sent a memo to Nokia employees that compared the company’s predicament in catching up to Apple and Google in smartphones to “that of a man who was standing on a burning oil rig at sea. Standing there, he needed to make a choice and he decided to jump.” He went on to say that “Nokia, too, had to jump metaphorically—to take bold action to make up for lost ground.” And bold actions it has taken.

In February 2011, Jo Harlow, the head of smart devices at Nokia, “stood before a packed convention hall at the Mobile World Congress, the cellphone industry’s most important trade show, to explain the Finnish company’s new software alliance with Microsoft.” That agreement had been announced in London only a few days earlier. But, “the need for the deal had been so urgent that Nokia and Microsoft, grasping for a foothold in a mobile computing industry that was quickly slipping away from them, had gone public without a definitive legal agreement, just a handshake and a promise to work together, somehow.” She told the audience that Nokia and Microsoft would produce their first phone using the Windows operating system by the end of the year—a pace two to three times faster than Nokia’s past product introductions. Getting that done would “require an accelerated, effective collaboration with a completely different corporate culture in a creative endeavor so intimate that both would have to discard mutual distrust to make it work.”

By mid-2011, Nokia had unveiled a new smartphone and three lower-priced handsets as initial steps in its transition to Microsoft software. Although analysts described the products as well-designed with an intuitive user interface, they also said the products would be unlikely to help improve the company’s difficulties as there was no carrier support or apps developers. In early fall 2011, the company sold 2,000 wireless patents and patent applications to Ottawa, Canada-based Mosaid Technologies. Many technology companies are using this strategy to “essentially outsource the sometimes expensive process of squeezing revenue out of their patent holdings.” In addition, the company announced another 3,500 job cuts by closing a factory in Romania and transferring production to more efficient plants in Asia. Elop said, “We are seeing solid progress against our strategy, and with these planned changes we will emerge as a more dynamic, nimble and efficient challenger.”

Now, it’s do-or-die for Nokia. One year after the announcement of the Microsoft alliance, the company’s Nokia Lumia 900 smartphone was introduced at the Consumer Electronics Show in Las Vegas in February 2012. “The high-end device marks perhaps the company’s last chance to re-establish itself as a serious player in the U.S.” Will the market once again hang up on Nokia or will it take the call?

Answer 1

Nokia was one of the top most mobile selling brands in the world, but after Apple came into the market, it lost its market. But to make up with the losing markets it has made some international strategies which will help the brand to stand once again in the market. But these international strategies has some advantages and disadvantages too.

The advantages of the international strategy in this case are: streamlining its smartphone operations costs which would help in cutting cost, speeding delivery of new products would create great market accessibility to the customers, job cuts would save operating costs which are not bringing any benefits, strucking a deal with microsoft would bring good name to its brand and customers would again have their eyes on Nokia, closing a factory in Romania and transferring production to more efficient plants in Asia would again bring efficiency in production.

The disadvantages of the international strategy in this case are: announcing to produce their first phone using windows operating system in a short span would require an accelerated work , effective collaboration, and the employees to work with a completely different corporate culture in a creative endeavor so intimate that both companies(nokia and microsoft) would have to discard mutual distrust to make it work. This would pressurise the employees to work with a completely different culture and that too effectively in a short span. Job cuts are again the major disadvantage for their employees and this would spread a bad name about the employment conditions of Nokia in the world. Nokia was in its self(sleeping) without looking around in the market that what competitors are bringing in new and this became its greatest disadvantage. One should not be self-obsessed.

Thus, Nokia will still have to come up with new international strategies to once again have a hold on the market or else, market will take up the call.