Nokia Case Study

             How does a 139-year-old Finnish company whose major product lines once included diapers and rubber boots become a leading-edge technology company? When questioned by MIT economist Bengt Holmstrom, Company CEO Jorma Ollila of Nokia insists that there is "no secret code" to the success of the company based in an inhospitably cold home market of just 5 million people. The key to success for Nokia is establishing the right balance between innovation and execution. According to Ollila, "in a technology business, you need a tremendous amount of innovation, but with these volumes and growth you need to execute or it will kill you...I think we have done that better than anybody else."i
             Nokia Corporation is a world leader in global communications headquartered in Espoo, Finland, just outside of Helsinki. Nokia's global presence is established by its 16 manufacturing facilities and 11 research and development centers in 11 different countries around the world. Their 51,000 employees contributed to the sales of 179 million units in 2003, which translated to over $36 billion in net sales and an operating profit of $6.3 billion (appendix i). Nokia's $99.1 billion market capitalization makes it the largest company in the telecom equipment makers industry. In 1998, Nokia surpassed Motorola to become the world's leading maker of mobile phones and has a 34% market share in 2003 (appendix ii). The company has been listed on various exchanges, such as the London Stock Exchange, but it was not until 1994, that Nokia finally listed on the New York Stock Exchange under the NOK ticker symbol where the majority of their cash was generated to buy-out the antsy Finnish shareholders during their troubled early years. Between 1997 and 2000, the stock had increased 2,300% to the delight of their shareholders and proved that Nokia was able to adopt shareholder-value-based thinking.
             In 2004, Nokia reorganized its organizati...

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