Leadership And Change Management

Change refers to any alteration which occurs in over all work environment of an organization. It may relate to change in technology, organizational structure, working processes, work environment, organizational policy and even the roles people play. Introduction of change in one part in an organization forces change in other part. If the change is beneficial people accept it willingly. If it is not desirable, there is great resistance. If it is of no consequence to the people, they may adopt an attitude of indifference. If they consider the change detrimental to their growth and prosperity, they may resist through counter pressure. This reaction is based not necessarily on the reality or facts but on their perception. The change therefore should be sufficiently strong enough to overcome the counter pressure. Due to advancement of technology and social environment change has become a necessity. If the change takes place, a balance or equilibrium is achieved by the organization. Thus people learn to expect various environment relationships within the organization. They learn adaptation. The essence is that when people feel that there is need to change, and when they change, they actually are adjusting to changed situation thus equilibrium is achieved with the changed environment. This process carries on and is never ending because change takes place continuously.

1.1 Change Processes

1Lewin developed a theoretical structure to deal with change process and carried out a program of search on change. The result was a good theory that has indeed turned out to be very practical. Recent work suggests that Lewin’s force-field analysis applies within a limited domain and that Lewin’s views are less applicable beyond the boundaries of that domain. Lewin’s views on change came under attack as simplistic and outmoded, but today they continue to receive strong support (Burnes 2004)

1.2 Lewin’s Force Field Theory of change

2As we know a wide variety of forces make organizations resistance to change and a wide variety of forces push organizational change. According to his force-field theory, these two sets of forces are always in opposition in an organization. When the forces are evenly balanced, the organization is in state of inertia and does not change. To get an organization to change, managers must find a way to increase the forces for change, reduce resistance to change or do both simultaneously. Any of these strategies will overcome inertia and cause an organization to change.

The following figure illustrates Lewin’s theory. An organization at performance level P1 is in balance: forces for change and resistance to change are equal. Management , however ,decides that the organization should strive to achieve performance level P2.To get level P2 , managers must increase the forces for change(the increase is represented by lengthening of up-arrows) ,reduce resistance to change(the reduction is represented by shortening of down-arrows),or do both. If they pursue any of the three strategies successfully, the organization will change and reach performance level P2.

1.3 Evolutionary and Revolutionary Change in Organizations

Evolutionary change is gradual, incremental and narrowly focused. Evolutionary change involves not drastic or sudden altering of the basic nature of an organization’s strategy and structures but a constant attempt to improve, adapt, and adjust strategy and structures but a constant attempt to improve, adapt, and adjust strategy and structure incrementally to accommodate to changes taking place in the environments.

Revolutionary Change is rapid, dramatic and broadly focused. Revolutionary change involves a bold attempt to quickly find new ways to be effective. It is likely to result in a radical shift in ways of doing things, new goals and new structure. It has repercussions at all levels in the organization-corporate, divisional, functional, group and individual. Reengineering, restructuring and innovation are three important instruments of revolutionary change.

2.0 My Organization’s study

3The history of Nokia goes back 1865 when the company was established as a forest industry enterprise in south-western Finland on the Nokia River by a mining engineer called Frerik Idestam.This was not particularly remarkable event as numerous forest industry enterprise existed in Finland at the time. Later, Nokia came into contact with two enterprises that were outside the traditional forest industry. These firms were the Finnish Rubber works Ltd (founded 1898) and the Finnish Cable Works Ltd (founded in 1912).The gradual concentration of the ownership of these companies led in 1966 to the establishment of Nokia Corporation, into which all the above-mentioned companies were merged.

Nokia grew fairly rapidly in 1970s and 1980s, partly because of the then-flourishing (bilateral) Soviet trade, which was boosted by the oil crises in 1973 and 1980.When the Soviet trade collapsed in 1991.Nokia ran into difficulties. Serious consideration was given to selling Nokia in its entirely to the Swedish company Ericsson , but the merger did not materialize .Nokia’s solution to the crises was to concentrate on the production of the electronics( and thus to abandon the production of paper and pulp ,tires , rubber boots ,cables and so on) ,to invest massively in R & D and to adapt a new management strategy that relied extensively on domestic and foreign subsidiaries and subcontractors .Nokia also actively sought to become a genuinely international firm

By Finnish standards , the management strategy was really revolutionary because previously companies had tried to be as self-sufficient as possible in production .Nokia decided to concentrate solely on final product and on the high tech end of the production .Nokia’s new strategy also involved investment in R & D .Besides investing heavily in research and development , Nokia created a very useful network of research contacts between universities and itself .This cooperation has been of great benefit to both Nokia and Finnish universities.

Currently , Nokia accounts for more than 20 percent of Finland’s total exports and its growth contribution is estimated at 1.5 percent .Nokia alone accounts for about 40 percent of the R & D expenditures by private enterprises in Finland .Moreover , it accounts for 70 percent of the stock market value of the Helsinki Stock market

Almost 60 percent of Nokia’s workforce is currently outside Finland .Its success shows up most dramatically in its earnings and market capitalization values. Thus, in 1999 Nokia’s profits equaled the combined profits of its two main rivals Ericsson and Motorola and its market capitalization was over $ 200 million almost twice Finland’s GDP

2.1 Nokia Environmental Analysis

There are several forces surrounding the external environment of Nokia including demographic, economical, natural, social-cultural, technological and political-legal environment

The Demographic Forces

4Population-wise, Europe is made up of five largish countries (France, Germany, the United Kingdom, Italy, and Spain) , with Germany well ahead with some 82 million inhabitants. The rest are small countries with only Netherland qualifying as middle-sized country. Urbanization is highest in Belgium and Israel and lowest in Switzerland, Finland, and Italy. This is modestly correlated with population density , the Netherlands being the most crowded , followed closely by Belgium and then three of the big five: the United Kingdom ,Germany , and Italy; the least crowded countries are Sweden and Finland

The Economical Forces

People in Europe are reasonably wealthy and income distribution between people is relatively even. Growing economy in Europe leads to increasing income of the people. People will buy more luxury goods (such as mobile phones).If the economy of Europe is in decline the average income will not increase and even more likely to decrease. In this case the people will have less money for luxurious goods and will spent less on mobile phones, which would be very negative for Nokia

Nokia has big share in European market which is 37% which is now heavily hit by global economic recession. This has affected customer’s potential to buy mobile phones which in turn causes in reduction in Nokia’s profit. As we know technological innovation is the main competence of Nokia but due to this recession Nokia is spending less on R & D budget in this way Nokia is losing its competitive advantage and may signal to move away from product differentiation which is a chief outcome of Nokia R & D activity

Nokia has strongly differentiated product and services at the same time Nokia is the cost leader too, as product differentiation is capital intensive while the differences with the cost savings are inevitable in these conditions these two strategies are usually incompatible .Nokia product differentiation strategy has also diminished due to the introduction of Iphone, flip phones, RAZR etc

5Nokia is not focusing on the following issues in the rapidly changing economic environment,

Technological invention of a new substitute product like IPod, Iphone

A foreign government’s adverse economic policy affecting the company’s product

Diversification by high profile organization into the company’s existing products

Slowing down in the market growth

Change in the habits and tastes of the consumers

Potentially damaging demographic changes

Changing technology and digital convergence

6In this rapidly changing world, Nokia is facing challenging threats on which they need to focus. The biggest threat for Nokia in Europe is the increasing mature market in Western Europe. Almost everyone in Western Europe has a mobile phone and there are a lot of competitors on the market. If Nokia wants to keep their market share it have to keep innovative, keep working on their image and most important they should keep listening to their customers. The danger of mobile phone radiation through wireless electronics is not more a fantasy. For instance, the new way to communicate per internet gains more and more fans

7Technological development of mobile phones is an important technological force because the technology in the mobile phone business is constantly innovating and developing which can lead to big chances for Nokia .There is a constant research going on within the mobile phone business to try to develop new gadgets and new systems for mobile phones. Nokia has to be aware of these developments, because when the competitors develop a new gadget that Nokia does not it means that the competitors will have a comparative advantage over Nokia.

The technological development of substitutes is important when there will be a new developed substitute, it can mean that people will buy this product instead of Nokia mobile phone and so sales for Nokia will drop along with the profit

8According to Nokia due to fast speed internet information technology ,media ,music and mobile communications are converging to one industry.Net books and other computer based products are posing new threats of substitute for Nokia as phones and PC’s become more homogenous. The customers are becoming more sophisticated due to rapidly changing technological environment and now Nokia can heralds the threats of mighty Microsoft who has more experience and resources as compared to relatively in-experience Nokia which may result in comparative disadvantage for Nokia. Through merger and acquisition Nokia can overcome this threat which still Nokia is not considering. Nokia is financially very strong company, there is need for the company to enter into new markets to achieve new experience and market shares by overcoming the weak rivals. Nokia new possible target can be Acer which has 11.9% share in the notebook market (Kwong, 2009)

9The advancement of new technologies is also creating new threats in the areas of security. Nokia can provide security by creating sound business practices and careful processes. The company’s threat scenarios include as the worst root causes of threats:

Employees who are careless and over-trusting

Sub-contractors who also work with the company’s competitors and implement lax security measures

Poor information security that compromises data

Industrial espionage by competitors, either alone or with the assistance of state investigation agencies

Social engineering specifically as a means of industrial espionage

Specific environments in so-called emerging markets which pose new threats to personnel security such as kidnappings and ransom activities and can give rise to large-scale armed robbery of valuable cargoes

The Political-Legal Forces

Finnish law

European law

Domestic laws in each of Nokia’s foreign markets

International Laws

Health regulations

Because Nokia is a Finnish company and has its headquarters in Finland, the board of directors has to be run in accordance with The Finnish law. Since Nokia is also an international company, it has to comply with the international laws such European law, International laws are actually a collection of treaties, conventions and agreements between nations .Nokia must also comply with every foreign country’s domestic laws , which it is doing business with laws affect every aspect of Nokia’s business product safety, consumer protection dealing with competition , packaging and labeling and advertising etc

Legislation is useless if it is not enforced. Nokia has to know the legal environment because it constitutes as “the rules of the game”. At the same time, it “must know the political environment because it determines how the laws are enforced and indicates the direction of new legislation”. Health regulations are also important because of danger of mobile phone radiation and the way Nokia has to handle with this threat.

The natural Forces

Environmental Issues are something that has become more important in the last few years. People are becoming more aware of pollution and want companies to do something about that. Nokia should be aware of this growing sense of awareness for the environment and should change the ways of production and should focus on producing environmental friendly products.

The Social-Cultural Forces

The population is very diverse. People can be divided into different subcultures that have several ways to spend their money .Subcultures could be different age groups ,interest group and immigrants .They have also different attitudes towards mobile communication

Trends in the market

10During the last few years, multimedia applications, such as camera, Mp3 player or radio have become trends that reveal the shape of the future and provide many opportunities for new mobile phones. The crucial factors in fad period are features feel , look ,shape ,coolness especially for teenagers. One example of fad is Nokia N-Gage .This is a mobile phone and a game computer as well .It failed because it could not compete with big game device manufacturers such as Nintendo

Consumer Buying Behaviour

The changes of such personal factors like age, family life cycle or social class and changes of reference groups unquestionably influence the buying behaviour on the whole mobile phone market and corresponding on Nokia’s target market. Nokia should know this and has to develop solutions for all these life circumstances

11Global changes like changes of consumer needs, tastes and preferences, the emergence of new technology or nay new development in the marketing environment could potentially affect the fortunes of brand .Nokia also made a straightforward mistake: It didn’t produce the clamshell-design mobile phones that customers wanted. And the customers jumped ship so that the company’s sales Went down .Consequently, Nokia faced a loss of $6 billion in equity . Nokia faced a very difficult time particularly in year 2004.There were many drawbacks in Nokia strategies like failure to read market trends and act according to these trends. Also Nokia was not up to the demands of his customers which wants innovation in the designs of Nokia sets.

The old days were Nokia classic style dominated the market are not returning and company needs to accept it .Nokia always insist on removing some functions or screwing up the keypad. For customers sometimes it is frustrating to have some phones with Bluetooth support but not having Wireless LAN, mp3 support but no FM, camera but no Mp3 and etc .As a result Nokia has lost customers, average sales prices have fallen .Therefore Nokia decided to change its policy in developed and emerging markets

3.0 Assessment of Implementation of change Issues

12Nokia the world’s biggest mobile manufacturer , had a bad year in 2004.Its shares lost over half their value between march and August-from a high of $23 to a low of $11 on 13 August-its sales declined and its market share, having stabilized around 35 percent for many years , fell to a low of 28.9 per cent. And in April 2004, one of its main rivals Samsung over took Nokia in market capitalization. However, some commentators thought that Nokia’s decline began even earlier than this. Sales peaked at £ 30.4bn in 2000 when 128m phones were sold. In 2003 despite selling 179m handsets revenues was £29.5bn .Samsung in contrast was able to achieve higher average selling prices for its photos, even though its volume were lower

Although some thought that Nokia’s problems were partly because it had reached saturation in its main markets as well as facing increased competition, others laid the blame for Nokia’s problems at the company’s strategy of focusing on high volume, lower price sales and ignoring design. The needs of increasingly fashion-conscious young mobile phone owners were ignored and Nokia was accused of missing the change “from brand to style. This is surprising given that Nokia had previously been the pioneer of the handset as a fashion item with choices of colors and styles. But in 2003/2004 Nokia was sticking to its traditional ‘monobloc’ or ‘candy bar’ format for its handsets; meanwhile his rivals were bringing out more innovative models

A particular problem was demand for folding ‘calm-shell’ phones , especially in Asia and North America .Motorola’s RAZR v3 model , a slim-line design with stylish aluminum shell , was a particular hit with consumers .Nokia has admitted that it failed to anticipate how successful clamshells would be .But other design features were also missing. Cameras , high-quality colour screens and user interface , that had formerly been ‘streets ahead’ of the competition , were all less well developed than they needed to be .This meant that previously loyal customers were forced to turn to competition’s models. I think Nokia just does not seem to have changed its look much over the last 10 years

Nokia’s design problems happened at the same time as mobile phone service providers were wanting customized handsets as a means of increasing their own brand differentiation .Operator specific handsets are normally locked to prevent them being used by another operator’s network thereby attempting to boost customer loyalty as well as security .Operators in Europe and America were contracting with smaller Asian’s original design manufacturers’ to provide handsets to their own design specifications .And Vodafone , the world’s largest mobile services provider ,chose to provide its ‘Vodafone live’ data services on handsets supplied by sharp.

Similar problems affected the development of 3G services Japanese and South Korean companies were some years ahead in this technology .Vodafone for one choose Samsung and Sony Ericsson to supply its 3G handsets as a result .And Hutchison Whampoa’s there , a new entrant to the 3G market in Europe ,declined to sell Nokia’s handset because it lacked video-calling capabilities to embrace customized handsets was actually the result of technological factors .Given Nokia’s reliance on volume and sale ,it could not make different handsets for individual operators without a reorganization of its value chain .Until 2005 this was oriented towards large-scale production of relatively undifferentiated handsets .It preferred to hold off adding new features , such as high-quality colours screens or higher-resolution cameras ,until the components were available in large volumes. It also preferred to customize handsets through software .Its series 60 software, which is run on high-end phones is especially configurable, allowing the same hardware to support providers various services

However ,the shock appeared to stimulate Nokia into making the necessary changes .It has since moved into operator-focused hardware customization despite its preferences for software customization and made the changes to its logistics system .Nokia’s new modular hardware designs made it easier for the company to customize products faster , and it set a target for 50 percent of its products to have alternative designs such as clamshells ,sliders and swivels by the end of 2005.One of its products the Nokia 6230 was so popular that Nokia was at times unable to meet demand and Nokia became a ‘beehive of experiments’. It launched a range of innovative handsets ,the N-series ,which had additional features as well as being phones and its 770 Internet Tablet is a hand-held computer that does not contain a phone at all but supports web-browsing e-mail and voice-over-internet calls using Google Talk software and Wi-Fi technology .Nokia’s then CEO Jorma Ollila has since retired directed R & D to areas where Nokia had particular strengths for example radio technology and mobile-phone software ,not wasting it on technologies that the company could buy it .In 2004 it spent more than $4.8bn on R & D of which 60 percent on software .At 12.8 percent of sales Nokia R & D ratio was 3 percent higher than Motorola’s and about twice that of Sony

Nokia now the largest Camera Company in the world and convergence means that its phones provide music-playing, video-recording and computing facilities so that its competitors include Apple, Sony, Canon and other consumer-electronics firms .By may 2006 Nokia described as having a renewed spring in its step .Its market share has recovered to 35 percent

4.0 Analysis & Conclusions

13In the environmental analysis, we took into account the different environmental forces which have impact on Nokia. Nokia has a very strong position in the mobile phone market in Europe. It is a strong brand because of their good quality products and powerful image and has just few weaknesses

However, changes in consumer needs, preferences or too fast development of new technologies, could have negative impact on the consumer buying behavior in Nokia’s segment. Nokia should be prepared for it

Currently Nokia sells its products in over 130 countries. The company divides the market not only into geographical and behavioral qualities of the customers are similar-to better satisfy their needs .Sometimes Nokia has a wrong strategy to keep its customers .Nokia removes some functions in its phone so that customers have the need for more .Moreover after producing new models Nokia sometimes does not focus enough on their positioning through advertising and packaging .Nevertheless, Nokia is still has the one of the best brand value in the world .The customer-based brand equity is also positive , people still prefer Nokia among the others .Customers have many associations with Nokia brand which differentiate it from other competitors .Competition is fierce and many competitors are attacking against Nokia to become the market leader .However ,Nokia has several advantages over its competitors such as economies of scales and innovative high technology .Europe is its home market ,Nokia has good possibilities to succeed and maintain its market leader position also in the future .However it cannot make misjudgments anymore. Now it is aware of the threats. It has to observe and predict what is happening in its environment and be sensitive in listening to its customers and trends

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