MAGT 304 – Apply Analytical Skills to Business Problems
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- Topic: Operations Strategy
- Words: 2000
LO7: Apply Analytical Skills to Business Problems
The following case will be used to measure the analytical skills to solve business problem as an individual case study. Each student is required to answer the questions of the case in the class time (Max. 50 minutes). Students can use other sources as the business news websites, scientific databases, corporation website to have better insight about the problem.
The Case: Nokia Rising& Falling
Read the following case and answer all the following questions?
The roots of Nokia go back to the year 1865 with the establishment of a forest industry enterprise in Southwestern Finland by mining engineer Fredrik Idestam. Other relative events were the foundation of Finnish Rubber Works Ltd in 1898, and in the year 1912, Finnish Cable Works began operations. After decades of operation, the three companies were merged to form Nokia Corporation in 1967. The world’s first international cellular mobile telephone network, NMT, was introduced in Scandinavia in 1981 and Nokia made the first car phones for it. At the beginning of the 1980s, Nokia strengthened its position in the telecommunications and consumer electronics markets through the acquisitions of Mobira, Salora, Televa and Luxor of Sweden.
In 1990 with the collapse of the Soviet Socialist Union, Nokia struggled to manage so many different areas. In 1992, Nokia made a long-term strategic decision: to focus on mobile phone manufacturing and telecommunications and sold of its other businesses. With this decision, mobile phone manufacturing became Nokia’s core business. The strategy proved a big success, as it motivates Nokia to expand their business worldwide. Due to its focused approach in mobile phone industry and early investment in GSM technologies, by 1998, Nokia became the biggest mobile manufacturer worldwide. According to Nokia “Between 1996 and 2001, Nokia’s turnover increased almost fivefold from EUR 6.5 billion to EUR 31 billion.”
With the evolution of Smartphone, a mobile phone was not just a phone but rather became a subset alternative of computer, camera, GPS navigation, internet terminal, social network device and many more. Smartphone creates a new segment in the mobile phone market and it attracts IT companies as Apple and Google to the mobile phone industry. These rivals change the dimension of competition in mobile phone industry’s fast-growing Smartphone segment.
According to Gartner Inc., mobile phone sales increased 35 percent in the third quarter of 2010 comparing with the third quarter of 2009. However,atthe same time sales of Smartphone increased 96 percent. With this sales increment of smartphones, the quantity of Smartphone sales became 19.3 percent of overall mobile phone sales. While market is expanding Nokia’s market share in the mobile phone market declined 28.2 percent from 36.7 percent. It is the lowest market-share the Nokia ever have after 1999. Even its market-share in Smartphone market also decline to 36.6 percent from 44.6 percent a year ago. While at the same time Google Android’s market share is increased to 25.5 percent from 3.5 percent a year ago.
Symbian OS is a platform for Smartphone, which was originally developed by Symbian Ltd. In December 2008, Nokia bought Symbian Ltd., the company behind Symbian OS; as a result, Nokia has become the major contributor to Symbian’s code. Mobile phone makers including Motorola, Samsung and Sony Ericsson are also using the Symbian in their smartphones. However, Symbian’s success as an open-source platform has been stymied by Android, which is also available free to mobile makers. Symbian was the world’s most popular smartphone operating system, but this was mainly due to Nokia’s ability to make great hardware at affordable prices.
According to Gartner, Mobile phone sales increased 35 percent in the third quarter of 2010 while Smartphone sales grew 96 percent in same time. These market trends indicate that if Nokia cannot adopt market oriented approached soon than it may lose the leading position in mobile phone market. Thisdata was gathered when other mobile phone maker also using Symbian. Sony Ericsson announced in October 2010 that it will stop using Nokia’s Symbian OS in their new generation smartphones. The firm justifiesthe reason behind this decision is that they wanted to focus on using Google’s Android OS, as well as together with Microsoft Window 7 mobile platform. This means that Nokia will be only significant user of its own Symbian OS. Apart from Nokia, from the beginning of Symbian OS Sony Ericsson has been the biggest supporter of Symbian.
Samsung is also focusing on Android. While other mobile phone makers’ stop using Symbian and focusing to Google Android. Nokia made a strategic alliance with Microsoft for using Microsoft windows 7 OS in their mobile phone. In 2013, Nokia sold its Device and Services business to Microsoft for €5.4 billion. For decades, Nokia had led the telecommunications (telecom) industry in handsets and networking. By the late 2000s, however, Nokia’s position as the market leader in mobile devices was threatened by competition from new lower-cost Asian manufacturers.
- Write your name, ID number and session number on the answer sheet.
- Mention in the answer sheet the question number followed by the answer.
- If you want to have more information you can feel free to access the internet and search for more facts (use your smart Phone).
- The answer sheet should be handed at the end of the class.
The Case’s Questions
- Identify the mistakes in operations strategicdecisions, made by Nokia Corporationwhich led to the fall of the corporation? (Note: identify the scope of these actions as process design, capacity planning, location planning….etc. and explain them in details)
- Analyze the environmental factors thatcause the falling of Nokia Corporation.
- What could have been the recommended operational actions for Nokia corporation to avoid the failure in the market?(Note: identify the scope of these actions as process design, capacity planning, location planning….etc. and explain them in details) and critically evaluate the effectiveness of each recommendation
- Summarize the changes in the operational competitive priorities which were adopted by Nokia Corporation in the rising and falling phases (how these priorities changed overtime), to indicate for the rising and falling of Nokia corporation, with briefing about the reasons of Nokia failure, and recommended solutions?
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