Overview of Swedish Corporation Nokia
Overview of Swedish Corporation Nokia
In a global economy, the success of a business goes beyond just fulfilling the needs of its customers. To survive in this internet age, a company must be able to provide a product or service that is in-tune with the ever-changing consumer taste. Innovation is no longer just a catch word but a necessity.
In this essay, we will do a case study on Nokia Corporation (Nokia), the world leading mobile phone maker known for its high quality and versatile mobile phone products. We hope that through a detailed study of Nokia¡¯s design of product and service, much insight could be gained on how Nokia managed to turn itself from a small Finnish company to a mobile phone giant. The finding should be interesting and relevant to any company who inspires to become a global giant.
2. BACKGROUND OF NOKIA
Nokia¡¯s business objective is to strengthen its position as a leading systems and product supplier in the rapidly evolving global communications industry. Nokia‘s strategic intent is to strive for leadership in the most attractive global communications segments through speed in anticipating and fulfilling evolving customer needs, quality in products and processes, as well as openness with people and to new ideas and solutions.
Nokia is named after a lumber mill built on the banks of the Nokia River in southern Finland in 1865. Its current business, cellular telephones, has evolved from the Finnish Cable Works in 1967, its very first venture into the electronics business. Today, Nokia is a giant in the communication world, offering products and services in mobile and broadband networks, mobile phones, mobile internet and messaging, WAP, digital home communications, virtual private network, IP solution, convergence, professional mobile radio, and many more.
At the end of 2000, Nokia has established in over 130 countries with 23 production facilities in 10 countries and a workforce of 60,289. Nokia has 55 R&D centers in 15 countries, a global network of distribution, sales and customer services, as well as other operational units. Nokia also sees its sales reaching EUR 30.4 billion (USD 27.0 billion) in the same year, firmly establishing itself as the biggest mobile phone manufacturers in the world. Not surprising, it has also captured the largest share in Europe’s mobile phone market.
3. ANALYSIS OF PRODUCT AND PROCESS DESIGN
Right from the beginning, Nokia knew it was working in an industry where rapid changes in technology and customer preferences were constantly making phone models obsolete. To stay competitive, Nokia rolls out new models to the market faster than any one else, typically 24 different models a year. To maintain its dominance, Nokia must continue to look for ways to improve itself.
In the coming sections, an attempt will be made to give a full analysis of Nodia’s product and process design, and finally a recommendation will be made based on the findings obtained.
3.1 Product Strategy
Under the Product Life Cycle (PLC) theory, there are 4 distinctive stages: i.e. start-up, rapid growth, maturity and decline. To maximize the revenue and capture the biggest market share, different marketing and product strategies will be employed at each of these stages.
With the rapid change in technology and customers preferences, the PLC of new products has been reduced from years to just months. Most Nokia products went obsolete in less than a year.
Due to this product characteristic, Nokia has developed the following product strategies to achieve its business objective and strategic intent:
l Product Diversification
- Develop new technologies that lead to new products
l Market Diversification
- Venture into the lucrative international markets which offer high growth rate
3.2 Product Design Process
Nokia endorses Dr. Robert Cooper’s product design/development process model which consists of 13 phases:
Initial Screening Prelim Mkt Assess Prelim Tech Assess Detailed Mkt Study
Predesign Bsn/Fin Analysis Product Design In-house Product Tests Customer Product Tests Trial Sell Trial Production Pre-commercialization Bsn An Production Start-up Market Launch
3.2.1 A Cyclic Activity
Pentti Routio (2001) suggests that Product design in a mature, competitive operating business is an interminable, cyclic activity.
In Nokia, an existing product provides the inspiration for its new series. By repeating the 13 phases of PDP model, new products have been successfully developed and released to the market continuously.
3.2.2 Connecting People
Nokia‘s slogan is “connecting people”, and it is the quintessence through the process of design and manufacture process.
As the world’s largest mobile phone manufacturer, Nokia design its technology around human needs. Its mission is to make it easy for people to connect with each other – and to a range of information, entertainment and other wireless services ¨C at any time, wherever they are.
Nokia treats its customers like King. It encourages customers’ participation in the whole product design process. Customers are also welcomed to give their feedback at different phases.
Nokia has been using QFD (Quality Function Deployment ) since mid 1990s, after its successful introduction into the US automobile industry, in the mid 1980s. Arthur V. Hill(2001) suggests QFD is the only comprehensive quality system aimed specifically at satisfying the customer and focuses on delivering value by seeking out both spoken and unspoken needs, translating these into design targets, and communicating this throughout the organization.
It addresses several areas of Nokia‘s product development process.
1. Identify normal, expected, and exciting requirements.
2. Determine the benefits, features, and hidden feature requirements of the product
3. Receive Feedback from customers about important features, rating of its existing products and competitors’ product comparison.
4. Improve weak or under performing features
5. Assure the products is able to deliver its quality features
The above gave us a big picture on why and how Nokia competes on speed. It keeps up with the technology but is not always the leaders in the latest technology. Nokia mobile phones always gave the customers a trendy impression. They have a sleek design and interchangeable colorful covers. Chief designer Nuovo, who has been employed full-time since 1995, controls all the designs for the outer appearance of the phones. Design ideas come from all over, yet he has the final choice, and is responsible for the continuity of the face and soul of the product.
As far as the inside of the phone goes, Nokia is committed to open standards and interoperability in wireless. It works with competitors to develop shared systems and standards as Nokia strongly believes that the better the mobile phone system network works, the more people will want to buy them. However, in order to stay on top of the competition, Nokia constantly develops more innovative and attractive products than its competitors.
3.2.3 Cost Issue
As mentioned, Nokia is competing in the international markets where competition is cut-throat. The factor of cost is very important as at least 2 of the 13 Product Design phases are directly involved in financial and cost analysis.
Nokia has already been producing digital phones using the GSM system for European market. It also produces mobile phones using TDMA and PDS systems for US and Japan markets. Although each of them is using different digital standards, it retains the distinguished sleek Nokia outlook. This not only enhances its corporate identity in various markets, it also helps reduce the production cost. By entering to all the international markets, Nokia is able to monitor the technology development and product innovations in each market and cross-sell to the other markets.
3.2.4 Environmental Issue
Environmental issue has become more and more important nowadays. Nokia is highly regarded for its achievement. Nokia uses Life Cycle Assessments (LCA) of products to understand their environmental impact. LCA is based on identifying and quantifying the energy and materials used, and the emissions and waste released to the environment. The environmental design is an integrated part of the whole design process.
A special area of interest is the possibility to replace relevant substances in Nokia‘s products with more environmental friendly alternatives. Nokea has already studied the options of using lead in the soldering process, and halogen-free flame retardants in components like cables and printed circuit boards.
Todate, research continues to explore the possibilities to replace chrome as the surface material in certain infrastructure products by recyclable plastics. The utmost importance is to make sure that no additional substances are added to the plastics that made them non-recyclable.
Nokia has established multi-funtional design teams for all of their products. They represent a core group of functional areas, such as R&D, finance, marketing, manufacturing, engineering and etc..
Training of individual team members is relatively informal. Team leaders or program managers, however, usually are required to participate in some kind of formal facilitator or leader training.
Team members are vital to the success of the group. They are asked to be more innovative in creating new products. In addition, teams are given greater authority and they are accountable for the success or failure of the project.
3.3 Process Design
3.3.1 Process Planning
Nokia‘s overall approach for production is not easy to define. It produces its main product, the phone, in factories using mass production techniques. Its networks solutions are a more unique service that works on project groups. Again one of the largest themes that stands out at Nokia is teamwork. Almost every assignment of any importance at Nokia is given to a team, and managing the company is no exception. Decisions are made at the lowest level possible, and the top management trusts the general managers of the factories and R&D directors to choose which equipment to use, technology to pursue, and processes to follow. The environmental factor is also under the consideration.
3.3.2 Facility Planning
As we have mentioned earlier, at the end of 2000, Nokia has established 23 production facilities in 10 countries. It has 55 R&D centers in 15 countries, a global network of distribution, sales & customer services as well as other operational units. Without any doubts, the expansion will continue.
The Chief Executive Officer trusts his facility managers to run his facilities. There are certain shared systems it keeps as standard, but the staff is allowed to be creative. This approach has allowed operations in different markets to be managed by people who are familiar with the region. Nokia understands that only the people who have the best knowledge of the markets can make a good decision.
4. OTHER KEY POINTS
Due to the size constrain of this report, I am unable to include all the issues in this topic. But there are two important points which I would like to touch on.
4.1 Service Design
As the function of service is becoming more and more important, it is increasingly difficult to separate the service design from product design. For Nokia, Dr. Robert Cooper¡¯s 13 phases of product development process is not the end of its design. After launching the product in the market, Nokia also provides maintenance and after-sales support. This is also proven to be up-to¨Cdate and quite satisfactory.
4.2 Computer-aided Tools
Nokia makes good advantage of computer-aided tools, including both hardware and software, which makes its design of product and service more efficient.
Undoubtedly that Nokia has done quite a good job to achieve its mission of Connecting People. Nokia realized some culture differences among countries. Language is obviously the most significant one. In 1996, Nokia introduced the 8110 hand phone across Asia which was the first mobile phone ever designed to give commands in English, Chinese, Thai, Bahasa Indonesia, Bahasa Malaysia, along with Spanish. The Chinese text was offered in both traditional and simplified characters to cater to the overseas and mainland markets. Yet if you compare the ways of Chinese characters input between Nokia and Motorola, you will discover that the latter is more user-friendly. By giving some intelligent choices, users need not repeat the tedious process every time. This is the area which Nokia should look into.
Nokia is not the only company eyeing at this market of 1.3 billion people. Both Motorola and Ericsson have beaten Nokia in the Chinese market by several years. Currently many Japanese manufacturers are entering into this large and growing market. In fact, many of the Japanese companies such as Sony, Panasonic and etc. have done a better job to attract young customers. Due to some cultural similarity, the Japanese designs managed to capture the hearts of the younger generations better than their European counterparts. In addition to technology improvement, it is the high time that Nokia carries out some enhancements specially for its Chinese customers. Nokia should add more cultural factors in the design of its products. Though the cost may increase as a result, but it will be well paid off by gaining a bigger market shares which will eventually lead to higher profitability.
Whenever a new model of Nokia mobile phone is launched in the market, Nokia considers that more than just another project done. Instead Nokia sees it as an accomplishment that involves the contributions from both inside and outside parties: employees, customers as well as its service and process design staff.
Just like Nokia, the development of new products, services and processes will continue to be a vital part of every organization. A competent system of product, service and process design is the only answer to an ever changing market place, and ultimately determines the long term survival of an organization.
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