The trends in the mobile handset industry are that the demand for handsets in the U.S and Europe is decreasing. This is can be associated by the fact that since the mobile industry has been there for ling, most people have been able to purchase. The demand for cheaper phone models is increasing in Middle East, South Asia, Africa and India. This is a challenge because there are other organizations which can provide phones at cheaper prices. The availability of mobile handsets at a lower cost led to reduction on the average selling price in the market. It also contributed to the growth markets for phone costing $25 and $10. Handset companies started shifting their manufacturing plants to low cost Asian countries since it was expensive to run the plants in Germany and other European countries. The reason for the shift was majorly due to the rising costs of running the manufacturing plants in other countries, the prices were significantly reducing and the competition was getting tougher from many companies manufacturing handsets.
Nokia’s strategy was to try its level best and capture and maintain large market share and economic scale. To achieve this provided phones which were affordable to customers for even below $50. The brand they used was strong and ensured that their supply chain was efficient. They first sought to understand consumer needs in order to supply them with phones which met their needs. Nokia was also taking its place in markets which were emerging. For Nokia, China consisted the largest market while India and Germany followed. It was very expensive to run their manufacturing plant in some countries since it was very expensive. Nokia applied the strategy of relocating to locations which were cheaper to operate from.
Globalization has affected Nokia because it has come with increased competition as every body has a right to choose where to buy or sell. Since globalization makes it possible for one to trade anywhere, Nokia takes advantages of resources available in different countries. For instance; cheap labor, human intellect and low taxes. It even leads to less labor laws in which a company can employ children at lower rates.
Many other companies had withdrawn from Germany since it was expensive to run manufacturing plants there. The backlash is not justified since Nokia was trying to look for a competitive advantage. In addition, it was the last to shift from Germany. The new plant to be developed in Europe and Middle East Africa was meant to maximize out put production. Instead having a backlash towards Nokia, it should have congratulated it since it stayed in their market a little longer. For countries to be more competitive, it is important for countries to have business regulations which are easy to adopt and provide an environment in which companies can generate profi
It is important for companies to give their employees a notice before they close to give them time to look for an alternative. To control the damage, the company should announce the closure almost a year before and give the employees all the benefits incase some want to start their own businesses.
Shanul Jain & Rajendar Singh Rathore, Nokia (B): Business Interests vs. German Pressures, 2008, viewed on 7 April, 2011 from http://www.ibscdc.org/Case_Studies/Strategy/Going%20Global%20and%20Managing%20Global%20Businesses/GGL0043.htm