Nokia and the Global Mobile Phone Industry

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Case Details:

Case Code : BSTR167
Case Length : 12 Pages
Period : 1999-05
Organization : MG Rover
Pub Date : 2005
Teaching Note : Available
Countries : Global
Industry : Mobile Phone

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Positive Signs Contd...

Net profit rose 18 percent to $1.1 billion. Global handset sales rose 11 percent, prompting Nokia to increase its estimate of the size of the global handset market in 2005 by 100 million to 740 million.Commenting on Nokia's improved performance, Jussi Hyoty (Hyoty), an analyst at securities firm FIM Securities, said, "Nokia's result was definitely better than expected, and it shows that it's a growth company again."3

However, despite these positive signs, several analysts wondered whether Nokia would ever be able to dominate the industry as it did in the late 1990s and the first two years of the new century, especially in light of the aggressive competition posed by several new Asian companies as well as more established players like Motorola and Sony Ericsson.

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Despite the relatively recent emergence of the mobile phone industry globally, Nokia's company history goes back to the 1800s.

The company was first set up on the banks of the river Nokia (after which it was named) in southwestern Finland in 1865 by Fredrik Idestam, who was a mining engineer. The original Nokia was a forest industry enterprise that primarily manufactured paper.

In 1898, Carl Henrik Lampen, a shopkeeper, and J.E. Segerberg, an engineer, set up the Finnish Rubber Works Ltd. (FRW) to manufacture rubber and associated chemicals. In 1912, Konstantin Wikstrom, an engineer, set up the Finnish Cable Works (FCW) to manufacture electrical cables for lighting purposes. These three companies had business dealings with each other through the early 1900s and eventually merged in 1967 to form the Nokia Corporation. The new company had four major businesses - forestry, rubber, cable and electronics.

By 1980, Nokia was a large business conglomerate with several businesses ranging from tires to televisions and computers to telecommunications.

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3] "Nokia Sees Double-Digit Growth in Its 1Q,"


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