Why has Nokia reorganised – what problem is it aiming to solve?

Question

What will be an ideal response?

Answer 1

A simple answer is that its previous structures were simply not achieving the degree of innovativeness
and speed of action needed to be competitive. Unfortunately, it misjudged the speed of development and
market uptake of smartphones and related devices. It appears also to have opted for a less effective
operating system for its smartphones than some others (Blackberry, Android). Integrating various
acquisitions with different cultures always takes time and can create major difficulties such as the
persistence of ‘us and them’ attitudes. Moreover, any enterprise with over 100,000 staff is likely to find
difficulty in behaving entrepreneurially. Restructuring may assist here, but the risk is of disruptive
internal competition rather than collaboration, poor communications and buck-passing over lack of
progress.
? An out-of-court settlement with Apple Inc over alleged infringement of Nokia’s patents, involving a
cash payment of $600m and future royalties
? A partnership with Microsoft likely to result in future Nokia smartphones using Windows Phone
operating system software, thought to involve at least 4000 redundancies, 1400 in Finland itself.
This move, which signals a growing emphasis on marketing rather than internal R&D, was
reportedly not well-received by consumers or shareholders.
Since July 1, 2010, Nokia has comprised three business groups: Mobile Phones (basic phones and
related services), Mobile Solutions (smartphones and mobile computers, including multimedia and
enterprise-class devices, Ovi-branded software and internet services including maps and navigation,
music, messaging and media), and Markets (a new organization responsible for Nokia's supply chains,
sales channels, brand and marketing functions). Evidently, this restructuring raises further practical
questions of organizational co-ordination and efficiency.