Nokia: Envisioning a Connected World.

What brand of cell phone do you have? If you're living in the United States, chances are it isn't a Nokia. But if you're living any-where else in the world, it probably is. While the Finnish electronics company grabs only a single-digit slice of the U.S. cell phone pie, it dominates the global cell phone market with close to a 40 percent share.

Few companies dominate their industries the way that Nokia does. Half of the world's population holds an active cell phone one in three of those phones is a Nokia. In 2007 alone, Nokia sold 437 million phones. That's 26 percent more phones than it sold the year before and almost as many phones as were sold by its four closest rivals Samsung, Motorola, Sony-Ericsson, and LG combined!

You might think that Nokia has accomplished this feat by being the product leader, always introducing the latest cutting-edge gadget. But Nokia has actually been slow to take advantage of design trends such as clamshell phones, "candy-bar" phones in that slide open and closed, and ultrathin, blingy, multifunction phones. Rather, Nokia has risen 'to global dominance based on a 'Simple, age-old strategy: sell basic products at low prices. Although Nokia markets a huge variety of cell phone models, it is best known for its trademarked easy-to-use block handset. Nokia 'mass-produces this basic reliable hardware cheaply and ships it in huge volumes to all parts of the world.

FROM PAPER TO CELL PHONES

While Finland's largest company leads the world's most high-tech industry, it is not a new company. In fact, Nokia started humbly in 1865 as a wood-pulp mill. A few mergers and a hundred years or so later, the Nokia Corporation was making not only paper products, but bicycle and car tires, footwear, computers, televisions, and communications cables and equipment. Starting in the 1960s, one Nokia division made commercial and military mobile radios, a business unit that ultimately morphed into the cell phone giant that Nokia is today.

In 1984, Nokia marketed one of the world's first transportable phones, the Talkman. It weighed 1 1 pounds. Within three years, Nokia had slimmed the phone down to only 28 ounces. But that smaller model, the Cityman, cost a whopping $5,000! Believe it or not, even at that price, Nokia could hardly keep up with demand.

But the 1990s brought on a mobile phone explosion that vastly exceeded even the most optimistic predictions. The growth was accompanied by many challenges. During that period, Nokia focused on logistics and scale, two competencies that now serve as Nokia's major competitive advantages.

GAINING STRENGTH AS THE VOLUME LEADER

Based in Finland, Nokia's single most profit- and revenue generating region is Europe. But the company's global strategy has been likened to that of Honda decades ago. Honda started by focusing on developing markets with small motorbikes. As the economies of such countries emerged and people could afford cars, they were already loyal to Honda.

Nokia has followed that same model. It sells phones in more than 150 countries. In most of those countries, it is the market leader. Nokia has a real knack for forging regional strategies based on the overall needs of consumers. But Nokia has filled its coffers by understanding the growth dynamics of specific emerging markets. Soren Peterson, Nokia's senior vice president of, mobile phones, understands that concept more than anyone. He spends a great deal of his time studying the needs of consumers in emerging markets. And for the most part, these consumers need cheap phones.

Recognizing the need to make less expensive cell phones, Petersen is on a crusade throughout his company. Although it has been a bit of a battle, Petersen has convinced others that Nokia can make as much profit as the competition without charging more than $72 retail per phone. As a result, Nokia has relentlessly pursued the goal of bringing down costs and making phones less expensive.

Petersen cites an example of one cost-cutting tactic that sparked a chain of events at Nokia. While on a visit to Kenya, he stopped by an "excessively rural storefront, " where he noticed that all products were displayed in plastic bags. When he asked the merchant where the boxes and manuals had gone, the man replied, "Make good fire. "

Petersen quickly realized that packaging for many areas of the world barely needed to "last the journey. " Packaging changes resulted in a savings of $147 million a year. These numbers alone lit up a whole new drive within the business for these kinds of things," Petersen reported. Illustrating the magnitude of the large-scale manufacturer, Petersen explained that one cent in cost represents a million dollars for Nokia.

Among other notable discoveries for emerging markets, Petersen recognized that although many such customers spend a significant portion of their salary on one device, many of them will never know how to read or write. This led to an icon-based address book rather than the usual text-based version. Now, millions of people around the world identify their contacts by simple pictures, such as a soccer ball or a flower. And once it realized that many people in less-developed countries share their phones with up to a half-dozen other people, Nokia also added multiple phone books to its devices.

Because cell phone demand is growing so rapidly in emerging nations, Nokia will do well if it just holds its current market share in such countries. In India, for example, millions of people each month are buying their first cell phone. But Nokia isn't just holding on in such countries. In China alone, Nokia sold more than 70 million phones in 2007, a 38 percent increase over the previous year and a 35 percent share of the Chinese market. China also represented one-sixth of Nokia's unit sales.

Nokia shipped 1 50 million phones to emerging markets in 2007. For every five phones Nokia sells, one of them is an entry level device, up from one in ten only two years ago. Most of those entry-level phones end up in developing countries. So,whereas Europe accounts for 39 percent of Nokia's net sales, Asia, Latin America, Africa, and the Middle East account for 56 percent. The United States, with its market structure driven by the network carriers, produces only 5 percent of Nokia sales. With cell phone volume growing faster in developing regions, the gap will likely widen even more in coming years.

CAPITALIZING ON MARKET LEADERSHIP

Just as Honda used strength gained from selling motorbikes in emerging countries to establish itself as a manufacturer of virtually every kind of passenger vehicle, Nokia aims to do the same in the mobile phone industry. Although Nokia remains committed to the entry-level market and to emerging nations, it has developed a comprehensive global strategy. According to the company's own vision statement, that strategy has three facets: growing the number of people using Nokia devices, transforming the devices people use, and building new businesses.

For the first part of this plan', Nokia projects that global phone usage will almost double by 201 5 to 5 billion users. Even': if Nokia simply holds its current share of the market, that means that approximately 1 .7 billion people will be holding Nokia phones, 67 percent more than today.

As for transforming the devices that people use, Nokia is becoming more than just an entry-level phone provider. Of its 1 12,000 employees, 30,000 of them work in research and development. Nokia hopes that as its customers in developing nations gain the resources, they will trade up and stay with Nokia. It's also aware of the changing needs and trends in Europea the United States, and the rest of the developed world.

To that end, Nokia may just become the first company to release a serious contender to Apple's iPhone. Internally codenamed the "Tube," Nokia's new phone should hit the market in the second half of 2008. The company says only that its smart phone will feature many of the trademarks associated with its next-generation series of phones, including a global positioning system, Java application support, Web browsing, 3G data transmission speeds, and of course, a touch screen.

Whereas Apple's iPhone sales of more than 4 million units in less than a year have more than met expectations, one Nokia vice president was heard to say, "We've done that since we've had dinner last Friday." But whereas Apple's sales represent a very small share of the total market, Nokia's answer to this product indicates a recognition that this niche may grow into something much more substantial.

Nokia has also been experimenting with nanotechnology and flexible materials. At the Museum of Modern Art in New York, it recently unveiled a phone called the "Morph" as part of a "Design and the Elastic Mind" exhibit. The phone literally flexes and twistsyou can wrap it around your wrist like a watch. Although this exact phone may never reach the market, it suggests that future Nokia phones might become far thinner, more stretchable, more durable, and more energy efficient.

Nokia also recognizes that the biggest trends in mobile devices are music, navigation, and gaming. Focusing on these activities, it is collaborating with the best minds in the business to find ways to add value for the consumer. Nokia appears poised to take advantage of the convergence of the Internet, media, and the cell phone. In fact, at its 2008 stockholder meeting, Nokia announced a shift to the Internet business as a whole. It no longer wants to be seen as just a phone company. ft wants to be a company that keeps people connected to everything important in their lives, whether that's other people, information, commerce, or entertainment.

This new emphasis creates a very logical transition to the third leg of Nokia's strategy, building new businesses. Last year, Nokia sold more than 200 million camera phones (far more than Canon's camera sales) and 146 million music phones (Apple sold only 52 million iPods). Thus, through its mobile handsets, Nokia can claim to sell more computers, portable music players, and cameras than any other company. However, it has yet to find a way to secure a steady income stream from its devices once they are in place.

Nokia is spending a lot of money and resources on an ambitious plan that it calls "Ovi. " The goal is to accomplish something that has eluded many mobile network operatorsbuilding a profitable business in mobile services. Nokia has acquired software companies like digital map maker Navteq. It hopes that satellite location services will be big in the future, charting a new path to sales and profits. Nokia has also lured executives from Yahoo!, Microsoft, eBay, and IBM to help build this business venture.

In expanding beyond the borders of its more traditional business, Nokia has a lot going for it. Beyond selling tots of phones, it is also one of the most trusted brands in the world. With a brand value of more than $33 billion, Nokia is now the fifth most valuable brand in the world. "The trust is so high, it has less trouble than other brands getting a customer back who may have tried out a competing brand," says a branding expert. And Anssi Vanjoki, head of Nokia's multimedia business group, quickly points out that the company's push into new products and services is not a case of the brand stretching for acceptance in new segments, like Volkswagen trying to sell luxury cars. Rather, it is all simply a

natural extension of the company's product line to better meet the needs of its customers. "[We're] delivering on what our customers expected from us all alongthere's a big difference in terms of managing your brand.

INSTRUCTION

Answer below questions based on company case Nokia: Envisioning a connected world.

Question 1

There are ten critical decisions areas that are accountable by the operation manager. Discuss all the TEN (10) decisions areas that might be faced by Nokias operation manager. Support your answers with examples.

(Ten decision give comprehensive and clear.)

Question 2

Determine TWO (2) modes of transportation that might be used by Nokia. Determine TWO (2) advantages of using these transportation modes.

Question 3

The seven basic tools of quality support the management of the product or process quality in any industries. Discuss and illustrate any FIVE (5) tools of Total Quality Management (TQM)