Nokia in 2004: Losing the Grip


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Case Details:

Case Code : BSTA039
Case Length : 24 Pages
Period : 1865 - 2004
Organization : Nokia
Pub Date : 2004
Teaching Note :Not Available
Countries : Global
Industry : Communications

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Please note:

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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"But it will be many months before Nokia's current difficulties reveal themselves to be just another blip, or the signal that its dominance of the industry is coming to an end"

- The Economist1

Introduction

In early 2004, Nokia, the global leader in mobile phones, saw its market share plunge from 36% (in 2003) to 28%. This was the first time since 2001 that the company's market share had dipped below 30%. Nokia also announced its first quarter sales had dropped by 2% and indicated zero or negative sales growth for the second quarter. The company was still the world's largest maker of cell phones ahead of rivals such as Motorola, Siemens, and Samsung among others. But increasing competition from low-cost Asian players and inability to introduce 'hot' products worried analysts. Even as competitors successfully launched newer products, Nokia had stuck to its older models. Nokia's share price had fallen from an all time high of about $60 in March 2000 to about $10 by June 2004.

One report2 summed up the challenges facing Nokia in mid-2004:

"there are troubling signs that Nokia is off its game..the Finns may have lost their renowned feel for consumer taste. Even Nokia's brand is showing signs of slipping in consumer surveys." The top management of Nokia wondered what to do, to put the company back on track...

Excerpts >>

1] "Nokia, Too many candy bars?"19th June 2004.

2] Business Week, 31st May 2004.

  

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