Strategic Management at Nokia - Coursework Example

Strategic Management at Nokia Introduction Nokia has established itself as the leading mobile communication provider by enabling mobility in its different businesses. Through the services and devices provided by the company, businesses are able to create innovative mobile products for their customers around the world. Currently, Nokia together with Microsoft is inclined towards creating a global ecosystem that can offer customers with different alternatives for android and iOS (Nokia, 2013a). This study focuses on strategic thinking, decision making process, organizational structure and business environment of Nokia. The strategic thinking Strategic thinking is defined as “an intent-driven approach to strategy based on critical theory and supported by a complex cluster of cognitive capabilities that are distinct and different from strategic planning” (Sloan, 2013, p. 35). It can be clarified further as a cognitive process that is quite different from the strategic planning process and can stand independently as a formally created planning process. It depicts itself differently irrespective of being generated by an organization, team or an individual (Grundy and Brown, 2002). The main purpose of strategic thinking is problem solving and leading a rigorous process of challenging, exploring and examining the underlying premises of the strategy and at the same time, generating new options for creating a sustainable, innovative and winning strategy. Strategic thinking is imaginative, inclusive and based on critical-reflective process. Positioning of future competitive advantage for the organization is the heart of every strategy (Davies, 2006). In this regards, strategic thinking should reflect this essence. Strategic thinking is the process that helps in driving the strategy. Positioning the future competitive advantage signifies that competitive advantage of an organization erodes with time and strategic thinking is required in this respect for continuously strengthening and developing it (Abraham, 2012). In an organization, the executives, the policy makers and senior line managers are seen to exhibit strategic thinking. A similar situation is also observed in case of Nokia. The smart phone strategy implemented by the CEO of Nokia, Stephen Elop is a manifestation of strategic thinking. This strategy change was necessary for the organization since it was facing a decline in its market share caused by the fierce competition in the smart phone segment. Nokia experienced profound changes after initiating the smart phone strategy and has marked the end of an era. Moreover, the CEO of Nokia had correctly found that the present battle in the smart phone segment was not about the devices but the ecosystem. In this context, the CEO of Nokia had shown strategic thinking and had foreseen the future. Thus, the company ended up merging with Microsoft as both of them has positioned themselves to construct a competitive and viable mobile ecosystem (Blandford, 2011). Decision making processes Decision making is the process of selecting the best alternative that caters to the organizational goals and implement them in a proper manner. Decision making process is not a single step method but involves a series of steps such as defining the goal or the purpose of the organization, developing and assessing the alternatives, selecting the best fit alternative, implementing it and monitoring the outcome in order to ensure that the organizational goals are achieved. The entire process starting from setting the goal to the monitoring of the same thereby ensuring the achievement of the goal is called decision making process (Covell et al., 2012). The whole process of decision making can be formally restricted to problem identification and problem solving. These are the two major steps in this process. In case of problem identification, information regarding the organizational and environmental condition are collected and monitored in order to see whether the performance is satisfactory and identify the causes for any shortcomings that are prevalent. On the other hand, in the problem solution stage, all the alternatives that can help in achieving the goal are created and the best alternative is chosen and implemented (Daft, Murphy and Willmott, 2010). The norms, values and culture of Nokia are heavily supplemented by an efficient decision making system, which acts as the core ability of the company to seize the unpredictable opportunity. Nokia has consistently implemented a large number of organizational mechanisms that supports adaptability and flexibility and thus, had created the name, “stability for change”. In the year 1998, Pekka Ala-Pietilä, the head of mobile phone division in Nokia, spoke at Strategic Management Society Conference about both time and speed and also, the necessity for considering the ‘hows’ and the ‘whats’ at the same time. He had also spoken about the fast decision making and experimenting and had emphasized on soft concepts like, culture and learning (Alänge and Miconnet, 2001). Therefore, it suggests that Nokia supports a fast decision making process, which is more evident from the decision to acquire the mobile phone division of Nokia by Microsoft. This news had shown its immediate results when the shares of Nokia was seen to jump up by 35 percent in September, 2013 (BBC News, 2013). Thus, this decision proved to be beneficial for the organization. Management/organisational structure In order to achieve the goals set by the organization, creation of a best suited organizational structure, which is conducive to the achievement of objective, is very critical (Hefley and Loesche, 2010). The need for coordinating the interaction within the organizational members is recognised by every organization. Organizational structure is defined as “how tasks are to be allocated, who reports to whom, and the formal coordinating mechanisms and the interaction pattern that will be followed” (Robbins, S.P. and Mathew, M., 2009, p. 3). An organizational structure has three components such as centralization, formalization and complexity. Complexity signifies the extent of discrimination within the organization. This includes the division of labour, the levels of hierarchy in the organization and the extent to which the units of the organizations should be dispersed geographically. Formalization signifies the extent to which the organization relies on procedures and rules to direct the behaviour of the employees. Centralization focuses on the decision making authority of the organization. In highly centralised decision making structure, the flow of the problem is upward and the senior executives are responsible for devising the appropriate action. On the other hand, in case of decentralised structure, the authority is dispersed and the hierarchy flows downwards. The organizational structure of Nokia is given below: Figure 1 Source: (Nokia, 2013b) The smart devices are the team that is responsible for focusing on the business of smart phones and other smart devices. As the new strategy of the business, the smart devices unit is partnering with Microsoft to bring together the expertise and the complementary assets for building a global mobile ecosystem for the smart phones which are launched by the company. The mobile phone segment aims at bringing about affordable and modern mobile experiences for the customers all around the world. The team in particular aims at leveraging growth and innovation in the market. Through 2012, the HERE business of Nokia has been operating with the name Location & Commerce which aims at developing services for the customers and location-based products. It also intends to provide a platform and content services for the advertisers, merchants, internet service provider, application developers, automobile manufacturers and device manufacturers. Last but not the least the Nokia Siemens Networks is jointly owned by Siemens and Nokia, which is one of the largest providers of telecommunication services, software and infrastructure hardware (Nokia, 2013). Business environment for the organisation Environment means the surrounding or the external objects that influences the existence of a person or entity. The environment of business is the aggregate of all the influences, events and conditions that surrounds and affects it. There are two set of factors that influences the policies which in turn directs the way in which the business operates like, the external and the internal factors. The internal factors are signified as the controllable factors because the business has a control over these; whereas the external factors are the uncontrollable factors. The internal factors can be modified in ways such that they suit the organization (Shaikh, 2010). Figure 2 Source: (Singla, 2009) The manufacturing plant of Nokia in Chennai, India, is an integral part of the strategy of global manufacturing. However, the organization has highlighted on the fact that political risk in India can have negative impact on their investment decision. They have suggested that India offers the least favourable market and hence, requested both the central and the state government to bring about greater clarity in the business environment of the nation. Thus, the external factors for Nokia are not so favourable (Economic Times, 2013). However, internal factors are seen to be favourable after the acquisition by Microsoft. Nokia happened to be the leader but their sales had fallen by 24 percent in the year 2012 (BBC News, 2013). However, the sale of the new Lumia phones that runs on the operating system developed by Microsoft has increased, which suggests that internal factors are favourable. Conclusion The report shows that the executives and higher officials of Nokia exhibit strategic thinking, which in turn helps them to foresee the future and take immediate actions. These actions have proved to be beneficial for the organization. Effective and fast decision making process is also given high priority in the organization and acts as an integral part in the organizational culture. In context to the organizational structure, Nokia follows a decentralised one and the organization makes alteration in their structure from time to time facilitating their own betterment. The internal environment of Nokia is favourable but the external environment is quite unfavourable and the organization is seen to work on that. Reference List Abraham, S.C., 2012. Strategic planning: A practical guide for competitive success. Bingley: Emerald Group Publishing. Alänge, S. and Miconnet, P., 2001. Nokia: An ‘Old’ Company in a ‘New Economy’ [pdf] Chalmers University of Technology. Available at < http://publications.lib.chalmers.se/records/fulltext/175938/local_175938.pdf> [Accessed 6 November 2013]. BBC News, 2013. 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