Building a global telecommunications business
A Nokia case study

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Page 1: Introduction

Nokia 4 Image 1The twentieth century will be looked back on as the period when telecommunications revolutionised people’s daily lives - from the first telephone call and short wave radio transmission, to the modern era of mass instant global telecommunications patterns. Telecommunication is the science of communication by telephony, radio, television and computer networks.

One of the most significant changes in recent times is the agreement, signed in February 1997, which liberalised the world telecommunications market. It is estimated this will lead to international phone charges falling by 80%. This will, of course, have a dramatic impact on the world economy. Customers will be able to contact suppliers all over the world for almost the same price as ringing their local supplier.

The telecommunications revolution is leading the trend towards increasingly global lifestyles. Any organisation involved in telecommunications must therefore think beyond its domestic market. Global businesses are seeking global telecommunications suppliers.

The need for telecommunications has no limits. More and more users will want a thousand times more data (bits) than is being transmitted on today’s networks. The increased number of bits, however, does not only mean that a single person will require and receive larger amounts of information. It means that quality will be vastly enhanced, resulting in clearer images and sounds at the chosen destination. Telecommunications will eliminate distance related problems. Global telecommunications organisations are therefore required to meet growing consumer demand for rapid, competitively priced methods of communication.

This case study focuses on one such organisation, Nokia, a Finnish company which has become a key global player in the telecommunications industry. Nokia's main markets were in both Eastern and Western Europe until the transformation of the Soviet bloc of countries in the late 1980s and early 1990s. The liberalisation of trade with the former Soviet bloc led to increased competition for Finnish companies who had previously considered the Eastern European market their own. Nokia therefore looked to expand globally - concentrating on its strengths and cutting out its least effective lines.

The business writer Tom Peters has described this process as one of 'sticking to the knitting'. It is something that some of the most successful companies like Coca-Cola did in the 1990s. They concentrated on their best lines and cut out what they were not so good at. They also decided to look to future markets rather than past successes. Telecommunications will, of course, be the major growth industry of the post millennium era.

Nokia 4 Diagram 2Nokia is a leading international telecommunications company. The roots of Nokia go back to 1865 and the establishment of a forest industry enterprise in south-western Finland by mining engineer Fredrik Idestam. The year 1898 witnessed the foundation of Finnish Rubber Works Ltd and in 1912, Finnish Cable Works began operations.

In 1966, the three companies were merged to form Nokia Corporation. At the beginning of the 1980s, Nokia started to strengthen its position in the telecommunications and consumer electronics market. Today, Nokia is a leading international telecommunications group with net sales of FIM 52.6 billion in 1997. Headquartered in Helsinki, the Nokia Group employed in 1997 over 36,000 people in 45 countries where it is strongly positioned as a global telecommunications business.

Nokia | Building a global telecommunications business