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Nokia Mobile Phones - Streamlinging Logistical to Create Values

Essay by   •  November 14, 2010  •  Case Study  •  818 Words (4 Pages)  •  1,066 Views

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Nokia was founded in 1865 in Nokia Finland as a timber and paper company. One could say Nokia from the beginning was a communication company. On the turn of the century the company started producing rubber. It was not until the 1960s when Nokia started the electronic venture. It was only in 1987 that with their major acquisition they brought the venture into reality and entered the electronic competition. With a rapid growth Nokia became one the leading European electronic companies. To increase profit Nokia was divided into five business groups which Nokia Mobile Phone is one of them. According to the case "in 1990, 68% of Nokia's sales came from electronics, compared with only 10% on 1980. " . Nokia's global competitions at the time were Motorola, Nov Atel, NEC, Panasonic, Mitsubishi, Phillips and Ericsson. Motorola, the industry's leader was "engaged in the design, manufacturing and sales of electronics" .

After having several years of growth, Nokia was facing a challenging year. In 1991 Jorma Ollila began his strategy meeting with his executives began by saying with communication industry transforming so rapidly the competition is intensifying and old technology is becoming obsolete very quickly. Also since the world of technology changing constantly, it is becoming more challenging for Nokia Mobile Phone to maintain dominant world class manufacturer of mobile phone. With that said, they knew they has to react so they applied the concept of "Dominance or Death" meaning it was time to change they way they ran things.

Nokia at that time was facing many challenges other that the fact of the global and local competitors. Among the challenges were logistics, miscommunication, processing, and manufacturing. Manufacturing all by itself consisted was a hassle from purchasing, assembly, packing, sales and distribution. In addition, all of these obstacles came from not having a set of information technology in place and this had to be changed. Customers and consumers both needed the product fast and it meant the 29 to 45 days of processing a sale had to be shortened.

At the time technical standards was different from country to country and not all mobile phones were compatible with the networks. There were "10 different network standards around the world" and that meant producing separate phones for each network in order to remain competitive in all geographic. The discontinuities Nokia faces were the move to the digital network. This shift would mean changing the focus to digital phone from analogue. Since digital phones were easier and faster to connect that that meant higher demand. Also the fact that analogue network was running out. So, not only new consumers were switching to digital phones but also the veteran consumers were switching to digital as well. Another discontinuity was in production at that time. The geographic distance between suppliers and plants can come to mind.

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