Nokia, Motorola and Innovation
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A shift has taken place in the cellular phone industry during the past 10 years. Motorola, which once dominated the market, lost considerable market share to Nokia, a company based in Finland. Unlike Motorola, Nokia focused nearly all of its development in the cellular phone market, and only recently expanded to include mobile, fixed and Internet Protocol (IP) networks. Motorola, on the other hand, participates in a diverse spectrum of electronics equipment and components, including semiconductors and communications systems as well as cellular products. Motorola has faced tremendous challenges during the past decade, including laying off workers and divesting businesses which did not fit its strategic vision, while Nokia has successfully built one of the most recognizable brand names in the world during the same time. This research examines the challenge of managing innovation and considers the underlying reasons for Nokia's success and Motorola's lackluster performance. For the FY 2001, Nokia had sales of 31 billion euro, with a year-to-year sales growth rate of 2.68 percent, a three-year growth rate of 32.77 percent, and a five year growth rate of 36.37 percent. The company had a gross margin of 36.56 percent and a net profit of 7.32 percent ("Stock Report: Nokia," 2002). Nokia has struggled with its staffing during the 1997 to 2001 period, expanding its workforce from 42,000 in 1997 to more than 60,000 in 2000, then reducing it
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global company, including forays into China.
Although considered a high-technology company in 2002, Nokia's beginnings were not particularly high-tech. The company began as a paper manufacturer in 1865, while the Finnish Rubber Works added rubber manufacturing to its business mix in the early twentieth century. Finnish Rubber Works' entry into rubber and chemicals that brought it into the high-technology of the day, and the Finnish Cable Works continued the expansion into high technology by becoming a cable company marketing the cable that provided electricity, telegraph and telephone service components to Finland before World War I. In 1967, Nokia (the paper company), and the Finnish Rubber Works and the Finnish Cable Works merged to form Finland's most notable high technology company ("History," 2002).
The culture within Nokia has emphasized design as well as function, and the company gained market share in the late 1990s largely at Motorola's expense--by introducing such low technology concepts as removable faceplates for cellular phones. Nokia's designs created demand for ancillary products as well as for the cellular phones themselves. However, the primary thrust behind Nokia's market share increase was its early entr
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Approximate Word count = 3181
Approximate Pages = 13 (250 words per page)
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