【正文】 versification plan ? Begins to design and manufacture data processing, industrial automation, and munications systems ? Nokia conglomerate consists of integrated cable operations, electronics, tires, and rubber footwear ? Makes first public share offering in 1966 1970s ? Oil crisis in 1973 reduces reliance on exports (timber products and machinery) to Soviet Union (12% of sales) ? Kari Kairamo, appointed CEO in 1975, realizes that for Nokia to grow it has to expand abroad。 difficult to implement in . ? Excellent opportunities for advancementfast career tracks, early responsibility, rotation programs ? Hierarchy and bureaucracy reduced ? Young, innovative, nonrigid leadership style ? Rated in Fortune top 100 firms to work for in the . Product ? Grew mobile phone segment from 16% of total sales in 1991 to 66% in 1999 ? Allied to gain product expertise (., Motorola to standardize technology, Cisco and HP to develop work products) ? Technology design innovator。 leverages partnerships for more efficient RD (., JV with Cisco, Geoworks, HP) ? N/A ? Creates broad distribution reach through numerous, innovative relationships with retailers and distributors (., Sears, ATT wireless services,Tandy) ? Develops and launches innovative marketing campaigns (., first to target consumers rather than professionals) ? Successfully allies and acquires to gain capabilities (., joint venture with Tandy for distribution, acquisition of Mobira to enter promising mobile phone area) High Low ? Encourages sharing of best practices but has not been very successful at doing so to date 1 NOKIA 542513682119Key facts ? Largest 1 3 year revenues growth of petitors ? Largest mobile phone manufacturer and second largest provider worldwide (behind Ericsson) Products ? Mobile phones ? GSM/DSC works Competitors ? Ericsson ? Motorola Timeline 1865 1990s ? Developed into conglomerate (flooring, TV, footwear, etc.) until refocusing on high growth mobile phone segment in late 1980s and 1990s Divests noncore businesses 1995 1999 Americas ROW EUR Revenues $ Billions Stock appreciation (199899) 521622Nokia SP SP cell and wireless index CAGR % Capabilities ? First to use mass marketers as distributors (., selling mobile phones in Radio Shack) ? Uses alliances for distribution channels (., ATT Wireless Services, Sears) ? Adopts consumer rather than professional focus in marketing, unlike petitors ? Uses alliances in RD to grow development capabilities (HP, Cisco, Geoworks) Organization ? Autonomy provided to senior leadership in local subsidiaries ? Top management is all Finnish。 tailors products to target customers (., fashion covers for younger segment) ? Some difficulty to attracting toptier local senior management due to glass ceiling (., all senior leadership in Finnish0。CONFIDENTIAL This report is solely for the use of client personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the client anization without prior written approval from McKinsey Company. This material was used by McKinsey Company during an oral presentation。 it is not a plete record of the discussion. Discussion document December 2023 Nokia Case Study: Winning in the . RatingP r od uct? P r od uc t an d c at eg or y s e l ec t i on? P r od uc ts o pt i m i z e d f or US m ar k etCapabili t ie s? Resourc es? Researc h a nd d ev el op m en t? Ma r k et rel at i on s? Di s trib u ti on a nd s a l es c ha nn e l s ? Ma r k et i ng? A l l i a nc es a n d ac q ui s i t i o nsO r ganiz ation? A s pi r at i o n an d pr i ori t y? T al en t? Decis i o n m a k i ng a n dr es po ns i b i l i t i es ? Cul t ure, v a l ue s a nd s t y l e? Coo r d i na t i o n m ec ha ni s m s FINGERPRINT – NOKIA Rationale ? Focused on high growth categories (., mobile phones, digital) ? Anticipated shift to digital technology in the . before petitors and directed resources to optimize opportunity。 Finnish managers used to manage . operations ? Succeeds in attracting top engineers because of attractive products ? Local managers have limited autonomy and accountability exists at the unit level, but head office retains final input ? Difficulty translating “The Nokia Way” to . (“The culture doesn?t have the same richness or value as it does in Europe”) ? Devotes sufficient resources to local anization to win in market (., provided resources for . to win in mobile phone segment) ? Outsources noncore technologies (., microprocessors from Intel, ponents form Motorola) and uses standard ponents to save on RD spend and react faster to changing technologies than its petitors。 obstacle to hiring top . talent ? Strong emphasis on corporate values and culture with “The Nokia Way” – teamwork, innovation, production。 first to market with many product innovations ? Tailored product to target key customers (., phones with fashionable, changeable covers to attract young segment) Background Levers for success Founded as paper mill 58% CAGR Enters . through Tandy JV Grows mobile business in . 1988 1983 Acquires Mobira 1981 Operates as a conglomerate 1960s 2 CONTENTS ? Company overview ? . market entry strategy ? Products ? Capabilities ? Organization 3 NOKIA COMPANY BACKGROUND ? Founded 1865, in Finland, as a pulp and paper mill ? Entered . in 1983, when cellular service was just launching in the . ? Global employees 55,260。 expands Nokia in Scandinavia and Europe ? Sells switching systems under license from allocated (French) ? Helps design world?s first international cellular system in the 1970s 1980s ? Acquires nearly 20 electronics panies over the d