Planning Strategic Change in Nokia Company - Report Example

Report On Planning Strategic Change Introduction The report has evaluated the planning of strategic changes of Nokia Company, a leading global information technologies and communication organisations. Nokia was established in the year of 1871 by Fredrick Idestam and Leo Mechelin. The organisation is headquartered in Finland. They are focused on providing large-scale telecom infrastructure, online mapping and technology licensing (Marketline, 2014a). The first step of strategic changes analysis involves the understanding of different approaches of change management and relating them to various organisational changes. It also involves the assessment of different strategic intervention techniques and their value on the organisation (Pettigrew, 1987). 1.1 Different approaches of change management and their relevance to Nokia Change management has been considered as a systematic approach of any organisation to deal with the internal and external changes. The major approaches of change management are learning and communication, organisational development and lean production. All these approaches vary from each other in terms of analysing the change in an organisation (Higgs and Rowland, 2005). The lean product approach mainly focuses on zero defects of products and elimination of waste of inventories. This approach motivates highly-skilled employees to improve and enhance the product quality and minimizing waste (Burnes, 2004). The learning and communication approach ensures the proper access of information regarding resources and operations across all the departments of the organisation. Organisations face obstacles in their change management when there is a resistance in communication and information sharing across the organisation. Effective communications and learning process assist employees to understand the logics in the change efforts (Higgs and Rowland, 2005). Organisational development approaches focuses on team building, participation and involvement of the employees. This approach emphasises on continuous feedback collection during the change processes to evaluate the success of this processes (Higgs and Rowland, 2005). The current change strategy of Nokia influences their activities towards providing excellent mobile services throughout the world. Due to their less attention towards the current market trends and demands, the organisation has lost a huge market share to the competitors. To properly execute their current change strategy, the organisation is changing the structure of their management teams to ensure the proper utilizations of skills and competencies. They are also working on the improvement of their operating model by reducing the unnecessary operating expenses (Marketline, 2013). Nokia is also emphasizing on the learning and communication procedure of their employees. The organisation is investing a huge amount for the training facilities of their employees. The human resources department is responsible for organising different training procedure to improve the information and skill sharing process within the workforce (Marketline, 2013). The organisation is changing the bureaucratic culture of the organisation by promoting the in participation and involvement of all the employees in different activities of the organisation. Their complex and conservative work culture has caused a lot of damages to the organisation. Their strategically change management is focusing on the proper team management and involvement of each employees in the change processes (Riley, 2012). 1.2 Strategic intervention techniques and their value on Nokia Different techniques of strategic intervention are aimed towards the improvement of organisational performance and effectiveness through various actions, events and activities. The most important techniques of organisational strategic intervention are merger and acquisition, cultural change and innovation (Gilbody, Whitty, Grimshaw and Thomas, 2003). The merger and acquisition technique assist the organisation to utilize the resources and capabilities of another organisation for the improvement of their products and services. This technique also assist organisation to create a strong position in the market by diversifying their products and services. It helps organisation to broaden their customer database and serve their demands in a better manner (Appelbaum, 1997). Partnership of Nokia with Microsoft has improved their global reputation. Their merge with the technology giant has assisted them to restructure their product and services as per the current market trends (Marketline, 2014b). The creativity and innovation intervention is essential for Nokia as they are lagging behind in terms of the development of smartphone applications as per the customer preferences. Nokia is facing huge competition by other telecom companies such as Apple, Samsung and HTC in terms of the software and mobile application development. The management of the organisation need to focus on the innovation and creativity in terms of strategic intervention to revive their market position (Marketline, 2012). The cultural change of any organisation involves the change in the work pattern and employee relationship. To implement a global strategy, organisation needs to focus on the required changes in the work culture (Riley, 2012). The current market condition of Nokia has also revealed the poor work culture of the organisation. Their leadership and employee management procedure is not very well developed. Various bureaucratic activities and office politics is restricting the innovative ideas of employees (Marketline, 2012). Therefore, the change management of the organisation needs to focus on the cultural restructuring of the organisation to ensure healthy work patterns and employee relationships. It will also assist the organisation to increase their productivity. 2. Change analysis 2.1 Current position of Nokia The current intense competition in the smartphone market has degraded the position of Nokia from 3rd to 7th. Since 2012, the organisation has faced rapid decline in their sales and profit margin. Nokia has continued to focus on the development of their mobile phone devices rather the innovation of smartphone applications (Garg, 2014). Due to this strategy, the organisation misses the opportunity to attract the core customers of the global market. The product lifecycle of Nokia mobile phones has shortened drastically due to the development of smartphones and ecosystem application by different players. The current management system and work culture of the organisation is also facing hit due to their poor leadership system, overly bureaucratic company structure and lack of innovation (Riley, 2012). The analysis of five forces of market has assisted the organisation to understand the external factors affecting the organisation. The report has also utilized the VRIO analysis to assess the factors affecting the financial, physical and human resources of the organisation. 2.2 The five forces analysis Threat of new entrants: The threat of new entrants in the current mobile phone market is moderately high. Microsoft Corporation, Lenovo, Panasonic, ASUS are introducing smartphones in the global market. The marketing promotions of these smartphone brands have already attracted a huge number of consumers. These organisations are capable of providing operator specific and customized handsets to the customers. The threat of these new entrants in the global market is provoking Nokia to adopt some change strategies to introduce new and innovative product line as per the customer demands (Garg, 2014). Treat of substitutes: Nokia is facing low threat of substitute in the current market due to the less availability of the substitute of mobile phone and Nokia advanced products (Garg, 2014). Bargaining power of suppliers: The bargaining power of suppliers is very high due to the availability of a huge number of competitors and less number of suppliers in the market. Most of the suppliers tend to go for those organisations which provide lucrative deals and contracts. The availability of high quality raw materials is very essential to create a fully functioned smartphone. The bargaining power of suppliers influences the organisation to implement change strategy to strengthen their bond with the suppliers (Riley, 2012). Bargaining power of buyers: The smartphone market is gradually getting very price sensitive due to the competitive pricing policy of different competitor brands. The availability of huge verities of options is allowing customers to compare different features and prices before buying any mobile phone. Lack of innovative features and high price of Nokia mobiles are causing loss of potential customers (Riley, 2012). Rivalry among competitors: The competition in the mobile phone market is very intensive with the presence of leading brands such as Samsung, Apple, LG, Sony Ericson and Google. These organisations are more focused on the demand of latest technologies in term of mobile applications. The competitors are offering lucrative pricing policies to their consumers. This competition in the global market is affecting the sales and profit ratio of Nokia (Riley, 2012). 2.3 VRIO analysis VRIO framework assists the organisation to analyse the resources, capabilities and competencies of the organisation to recognise the internal factors which are influencing the adoption of change strategy of the organisation (Drejer, 2002). Resource and capabilities Valuable Rare Inimitable Organised Competitive impact Performance implications Brand Value Yes No No Yes Short term competitive advantage Over industry average Financial position Yes No No No Competitive parity Industry average Innovative information technology Yes No No No Competitive parity Industry average Human resources capabilities Yes No No Yes Short term competitive advantage Over industry average Management structure Yes No No No Competitive parity Industry average The brand value of Nokia Company is an important factor for the market competitiveness. Customers tend to analyse different brand name and reputation prior to purchaseany electronic gadgets. Due to the lack in innovative approaches, the organisation is losing their brand value in the global market (Marketline, 2012). The increase in market competition and decrease in sales is causing a serious hit in the financial structure of the organisation. The profit margin of Nokia is decreasing day by day. Less investment in the research and development facility and lack of awareness about the market demand is also resulting in loss of the potential customers (Marketline, 2012). The current complex and ineffective management structure of the organisation is also an important factor which influences the change strategy within the organisation. Lack of leadership capabilities and organisational politics are hampering the proper management procedure of the organisation (Marketline, 2013). The human resources of the organisation are showing low productivity due to the inefficient managerial structure and lack of proper knowledge sharing process (Marketline, 2013). 2.4 Effect of internal and external factors on Nokia The inadequate and improper responses of Nokia towards the major change factors have caused a lot of damages to the organisation. It has also affected the financial, organisational and cultural structure of the organisation. These effects can be described as: They have sacked near about 3,000 employees from the manufacturing units of Mexico, Europe and Asia to balance their profit margin. By the end of 2012, the organisation had lost almost $88 billion market value due to the launch of Apple iPhone. The organisation is facing shortened product lifecycle for almost all of its leading brands. The current market is already saturated for the product line they are offering. Their ever rising price structure is leading to loss of customers in the competitive market. The different units of Nokia are witnessing less productivity due to the lack of motivation among the employees (Nokia, 2013). Due to the lack of proper research and innovation, the organisation has missed the major developments in the smartphone market. Lack of entrepreneurial spirit, over-bureaucracy is causing job dissatisfaction among the organisation. Nokia is also loosing important work forces due to lack of proper management (Marketline, 2012). 3. Development of change strategy 3.1 Change strategies The change strategy of Nokia needs to be designed in such a way that it can improve the product portfolio and working culture of the organisation. These strategies will assist the organisation to regain competitive position in the global market (Wilson, 1992). The organisation needs to follow Kotter’s 8 steps change model for the successful execution of change strategy. The 8 steps of the model involves increasing the urgency for change, building dedicated team, create vision, communicate the need for change with stakeholders, providing staffs the required skills, stay persistent, create short term goals and sustainability of the change. The main aim of this change management model is to prepare the organisation to easily accept the required changes (Normandin, 2012). The vision of Nokia for the change management is to create a leading position in the global competitive market and to increase their customer loyalty (Nokia, 2013). To provide essential skills and competencies to the employees and to create short term goals, the organisation need to adopt few change strategies such as building new leadership teams, restructuring operations and organisation, innovation of smart devices and mobile phones and price restructuring. To be persistent to the changes and ensure the sustainability, the management need to analyse the resistance to these changes. They also need to closely monitor the performance and implementation of these strategies. New leadership team and restructuring operations: Nokia need to rearrange their leadership team as per their skills and competencies. Their primary change strategy must involve the assessment of leadership capabilities of all the managers of the organisation. The top management need to issue new rules and guidelines to eliminate the bureaucratic practices of the organisation. The operation structure must be organised in such a way that it can allow group work and team interaction for the ease of knowledge sharing. Organisational restructuring: Nokia need to restructure various departments of the organisation. These processes should be conducted under the guidance of the top management authorities. Organisational restructuring also assist them to introduce new department to improve their market functioning. Innovation of smart devices and mobile phones: The organisation needs to focus on the innovation of technologically updated features. They need to understand the market demand and recent technological developments to offer smart devices as per customer’s requirement. Price restructuring: Another important change strategy for Nokia Company is the restructuring plan of their current pricing policy. Most of the products of the organisation are of high price structure. The current smartphone market is getting very price sensitive with the introduction of a huge number of competitors. Nokia also need to match the current pricing policies to attract more customers towards their brand. 3.2 Stakeholder engagement The potential stakeholders of the organisation are the global customers, suppliers, investors, government and their employees. To ensure the success of the change strategies, the organisation needs to involve their stakeholders in every step of the strategies. The organisation needs to utilize different promotional channels to communicate with the customers. The major channels are the television, internet and newspaper advertising. They must establish free training hubs for the new smartphone users to educate them about the basic facilities of the mobile phone. They need to conduct few surveys to understand the demand and preferences of the consumers. These surveys will also assist them to impart knowledge about the brands to the consumers. The organisation should arrange a number of board meetings and press releases to convey the suppliers and investors about their current ventures. The organisation also needs to utilize their annual report and sustainability reports to convey their change strategies and procedures to the investors and suppliers. Product demonstrating and advertisement through different tradeshows of different countries will be beneficial for the organisation to connect with the global investors. Regular communication with the employees of the organisation is also necessary for the success of the change strategy. Nokia need to conduct different surveys and feedback studies to gather the opinion of the employees about the current changes in the organisation and work process. Frequent meetings and follow ups with government regulators is essential. The organisation needs to focus on various contracts with the different governmental authorities of their partner countries for the smooth functioning of their business procedures. 3.3 Resistance to change A number of different factors may cause resistance to their implication of the change strategies. Uncertainty in economical condition and scarcity of resources are the major factors to resist the change processes in the organisation. The fluctuation in economical condition of different countries can reduce their financial capacity to implement the change strategies. Unavailability of required finances, manpower and organisational infrastructure can also cause resistance to their strategic ventures. The organisation needs to divide their strategies into short term goals to compare their resource consumption and final outcome. The organisation also needs to allocate a certain portion of their profit margin for the execution of the change procedures. Another important obstacle is the rapid technological development. The market of smartphone confronts early market saturation and short product lifecycle due to the fierce development in the mobile phone technologies. The organisation needs to focus on limited production to eliminate the wastage of handsets due to the lack of market demand. Government intervention also can resist the successful implementation of the different strategies for the organisation change. The management of Nokia should be very cautious to follow all the guidelines provided by government regulators. They need to structure their strategies in such a way so that they do not breach any government regulations. 4. Implementation and monitoring The human resources department of the organisation need to arrange frequent assessment tests for the managers of the organisation which will be beneficial to analyze the leadership capabilities. These assessment programs help them to understand the suitability of the leadership capabilities as per the requirements of the different department. The HR authorities must relocate the managers as per their skills and competencies. Nokia need to create few new departments which will assist the management to gather information about the technological advancement in the market. These departments will be responsible for all kind of market researches to ensure that the organisation is developing products as per the current market pattern and customer demands. They must allocate these departments in various parts of the partner countries to collect the information about the different requirement of customers. A new service department needs to be established which will handle all their global services and developer offerings. They need to restructure their marketing department as well. The organisation needs to provide adequate training to the employees in the marketing department to enhance their knowledge about the latest technologies and the efficacy of their products. The top management needs to arrange frequent team and individual meetings to gather the feedback of employees from these departments. The organisation needs to invest in different sponsorship programs to increase their visibility in the market and attract investors. The top management need to arrange meetings with the board authorities to create a new guideline for the healthy execution of the organisational operations. These guidelines need to be circulated throughout the organisation via the intranet facility. They need to arrange few organisational meetings to convey the newly structures rules and regulations to the leaders of all the teams of the organisation. They need to allocate few members of human resources management from all the business units for the time to time monitoring of the employee attitude towards the guidelines of the organisation. The management of the organisation needs to increase their investment on the research and development facilities to cope up with the rapid development of the technologies. Few authorities from the finance department need to be assigned to assess the financial outcome against the investment in the research and development procedures. The management of Nokia needs to redesign their pricing policies for their previous and newly launched products. Competitive pricing policy need to be selected for their established products and price skimming strategy must be selected for their newly launched products. Competitive pricing will increase their competitive position among the leading competitors. Price skimming will help the new brands to create a position in the smartphone market. The authorities of the finance department need to restructure the pricing policies as per the changing demand of their products. 5. Conclusion and recommendation The study of the current market status of Nokia Company and their different change strategies has elaborated various possibilities of the company which assist them to re-position their brands in the highly competitive market. The study has imparted the details about the internal and external factors which are effecting the organisation. These factors have assisted to analyse the requirement of changes in the organisational structure and operations. The change strategies have recommended various restructuring programs to the organisation and its operation. It has further described different obstacles to the implementation of the strategies and their proposed solutions. It has also recommended a number of training, assessment and monitoring programs to understand the skills and capabilities of the human resources of the organisation. The study has suggested different engagement techniques of the stakeholders with the proposed change management strategies. Through these recommendations, the report has provided a detailed view on the market repositioning of the Nokia brand. Reference List Appelbaum, S. H., 1997. Socio-technical systems theory: an intervention strategy for organizational development. Management Decision, 35(6), pp. 452-463. Burnes, B., 2004. Managing change: A strategic approach to organisational dynamics. New Delhi: Pearson Education. Drejer, A., 2002. 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