Presentation on theme: "Finland and Nokia: Creating the World’s Most Competitive Economy"— Presentation transcript:
1 Finland and Nokia: Creating the World’s Most Competitive Economy Team 8Martina Martina, Adrien Monvoisin, Ronen Eckhouse
2 Summary of Situation in 2001: Finland Finland is still a leading competitive nationGDP growth is decliningIncreased unemployment among the low skilled laborsTelecommunications cluster accounts for 6.9% of GDPShortage of skilled Finnish workersFinland is the first to grant licenses to all 3G systemsNational Tech. Agency facilitates the emerging digital media industryThe Finnish Venture Capital Association has been formedFirst Nordic country introducing the Euro
3 Summary of Situation in 2001: Nokia Nokia was the leader of the Telecom industryMarket share: handsets 31%, Infrastructure 10%Motorola lost mobile phone leadership to NokiaMarket share: handsets 15%, Infrastructure 13%Severe downturn in the Telecom.Slow/Delayed transition to 3G systemNokia stock fell 38% during 2001 (MOT fell 30%)Revenue grew by 9% in 2001 (compared to 43% in 2000)Shortage of skilled Finnish workersNokia foreign employment grew 4 times faster than Finnish employmentFinnish suppliers produce highly customized inputs
4 Porter’s Diamond: Finland/Nokia Factor ConditionsOne of the world’s most homogenous, united and stable societiesNational competitive strategyTradition of innovative engineering and telecom industrySophisticated education and university systemRelated and supportive industriesLocal supply for highly customized inputsTelecom cluster with more than 4,000 specialized firmsHighest public R&D spending in EuropeMany R&D centers of global companiesVenture capital forumTekes facilitates stake holders in the emerging digital media industryHarsh history and natural conditionsSixth happiest nation in the worldMost population speaks English60% had a secondary degreeEarly adopters (internet)World Economic Forum rank’s Finland’s tertiary education #1 in the world
5 Porter’s Diamond: Finland/Nokia Demand ConditionsNMT created the world’s largest single mobile marketFirst to have severe competitionFinland is a member of the European common market since 1995A market of early adopters with very high standardsMobile phone is a “national symbol”Finland amongst the world leaders in mobile penetrationFirm Strategy, Structure and RivalryFinnish telephone network is never monopolized by stateTraditionally, operators engage actively with equipment manufacturesA national industrial message for national competitivenessOpen marketNo restrictions for foreign ownershipServe distinct customer needs with out constraints on standardsHarsh history and natural conditionsSixth happiest nation in the worldMost population speaks English60% had a secondary degreeEarly adopters (internet)World Economic Forum rank’s Finland’s tertiary education #1 in the world
6 Porter’s Diamond: Finland/Nokia GovernmentVery stable (6 year terms) with a long-term viewInitiatives to improve national innovative capacityAssurance of technological neutralityOpen socialist economyA policy of minimum interferenceWhat else should the government do?Remove centralized wage settings mechanismsEncourage young and low-skilled to join the work forceEncourage more global firms to open R&D centers in FinlandHarsh history and natural conditionsSixth happiest nation in the worldMost population speaks English60% had a secondary degreeEarly adopters (internet)World Economic Forum rank’s Finland’s tertiary education #1 in the world
7 Economic Transformation in Finland Early 1990s CrisisBerlin wall fell -> dried up Finnish exports overnightSevere economic crisis (GDP fell, high unemployment)Finland was forced to float its currencyMid 1990s turn-aroundLowered taxesGovernment expenditures cut-backHigh interest ratesDevoted resources to R&D, competitiveness and innovationsExpanded the capacity of higher educationLiberalized and opened local marketsThe emergence of Finland as a telecom powerhouseTraditional expertise (army) and traditionally not monopolizedNMT and the Nordic Region (Finland was always too small a market)Finnish charactersTelecommunication cluster
8 Cluster Program Historically: pulp/paper, wood, engineering metal Cluster goal: Strengthen Finnish competitivenessWorld-wide competitive advantage through private-public partnerships83,000 employees, >4,000 firms, 6.9% of GDPOperators, content providers and equipment manufacturersEquity capital: new important source of fundingR&D focused on technology and telecommunications
9 Nokia’s worldwide leadership International operations in various fieldWorldwide joint venturesHighly skilled work-forceNordic identity through the “Nokia way”Low production cost and short product development cycleBroad market: serves distinct customer segments with different needsFocus on R&D (15 countries, 9% of its revenue)Nokia is always ahead of its competitors (design, internet, software, …)
10 Nokia Current Business Handset is major driver with majority business comes from Europe & Asia PacificNokia revenue stream:Nokia market distribution is shown belowThe fastest growing regions (Q2 07) are Asia Pacific & Middle East/ Africa followed by Europe & China.
11 Nokia vs. Motorola Nokia Motorola Strength Low-cost phone Focus on emerging market with big investment in InfrastructureBroad product line to sustain long-term growthHigh-end phone (RAZR)But RAZR is backfired as it is commoditizedWeaknessStrong presence but not market leader in smart phoneWeak presence in North America, which prefers to clamshell phonesSingle smash hit is not sustainableSmart phone continues losing market shareOpportunityStep up in multimedia-rich user experience via acquisitionThreatFalling average selling priceFierce competitionOverall, Nokia has grown faster and is positioned to grow faster than Motorola thanks to its broad portfolio and strong global presence especially in emerging countries
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