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How fear of change, lack of innovation led to Nokia’s failure?

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The aim of the paper to investigates the reason for business failure using Nokia as a case study. The paper applies the explanatory conclusive research design since there are cause and effect relations that seek to provide a better understanding of the reasons for the market failure. The mobile manufacturing sector is the most interesting and innovative of all in the “Information & Communications Technology” sector (ICT). Nokia was once known as the market’s dominant company, leader, and pacesetter until it underwent a tremendous market failure. The aim of this research is to shed light on Nokia’s failure in the market due to its complacency & fear of change, lack of innovation moving too slowly in terms of being too late in making decisions & inventing of the iPhone. Paper elaborately discusses and analyses the failure reasons supported by a literature review in addition to the characteristics of this industry and its market structure. Finally provide advice for business makers
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INTERNATIONAL JOURNAL OF BUSINESS ECOSYSTEM & STRATEGY 2(4) (2020) 43-48
* Corresponding author. ORCID ID: 0000-0001-5050 -6104; Email:dsalman@msa.edu.eg
© 2021 by the authors. Hosting by Bussecon International Academy. Peer review under responsibil ity of Bussecon International Academy.
http://dx.doi.org/10.36096/ijbes.v2i4.222
How fear of change, lack of innovation led to Nokia’s failure?
Doaa M. Salman Abdou(a)* Ranim Hussein(b)
(a) Professor of Economics and Finance, Head of economics department, Associate Dean , October University for Modern Sciences and Arts, Egypt
(b) October University for Modern Sciences and Arts, Egypt
A R T I C L E I N F O
Article history:
Received 15 October 2020
Received in rev. form 29 Nov. 2020
Accepted 10 Decemb er 2020
Keywords:
Market failure, Nokia, Mobil Industry
JEL Classification:
M30, M31, M39
A B S T R A C T
The aim of the paper to investigates the reason for business failure us ing Nokia as a case study. The
paper applies the explanatory conclusive research design since there are cause and effect relations
that seek to provide a better understanding of the reasons for the market failure. The mobile
manufacturing sector is the most interesting and innovative of all in the “Information &
Communications Technology” sector (ICT). Nokia was once known as the market’s dominant
company, leader, and pacesetter until it underwent a tremendous market failure. The aim of this
research is to shed light on Nokia’s failure in the market due to its complacency & fear of change, lack
of innovation moving too slowly in terms of being too late in making decisions & inventing of the
iPhone. Paper elaborately discusses and analyses the failure reasons supported by a literature review
in addition to the characteristics of this industry and its market structure. Finally provide advice for
business makers.
© 2020 by the authors. Licensee Bussecon International, Istanbul, Turkey. This article is an open access
article distributed under the terms and conditions of the Creative Commons Attribution 4.0
International license (CC BY) (ht tp://creativecommons.org/licenses/by/4.0/).
Introduction
Through history many companies were challenged with many factors due to the inability to adjust with the fast changes. A status that
foster failure and getting out of the market. This paper digs deeper for the reasons of failure of mobile companies and what re the
lessoned learned from this case. It is undeniable that the mobile industry has caused a mind-blowing revolution in the
telecommunication business making life easier for individuals. The mobile industry has evolved rapidly outgrowing the needs of
people and giving them the ability to experience new aspects of development.
The emergence of cellular networking technology was a huge turning point for the mobile industry easing communication for people
and providing them with high levels of expediency and flexibility. The mobile industry driven by technology and innovation, as
people are always expecting the mobile industry to exceed their needs and expectations (Al-Debei, M. M., & Avison, D. (2011).).
The mobile manufacturing industry is indeed an extremely interesting and innovative one, the creativity and capacity of firms must
be tested. In addition, it is actually a great source of income whereas countries with mobile manufacturing companies can have an
effect on their country’s GDP where they are able to increase it (Sharma, S. (2015).Over all, the shocks can be internally or externally
that hit the business sustainability and lead to shut down. There are generally many reasons for a market to fail such as monopolies,
externalities or even environmental concern related reasons. However, the mobile industry can have more specific market failure
reasons mostly related to lack of innovation and not being up to date enough. In this research paper, we are going to discuss Nokia’s
market failure case, as it was one of the greatest failure cases in the mobile industry. Nokia evolved in southwest Finland in 1865 to
being the Nokia mobile manufacturing company we now know. Whereas Nokia’s market failure case -can be taken - as a great lesson
to any company competing in this industry, moreover Nokia’s failure was actually followed by many new entrants that seized this
opportunity (Sharma S., 2015). Recently, Salman D. & Seiam, D. (2020) emphasis on how firms can avoid failure via future planning
and avoid high leverage finance.
Business Ecosystem & Strategy
IJBES VOL 2 NO 4 ISSN: 2687-2293
Available online at www.bussecon.com
Journal homepage: https://www.bussecon.com/ojs/index.php/ijbes
Salman Abdou & Hussein, International Journal of Business Ecosystem & Strategy, 2(4) (2020) 43-48
44
The paper divided into a literature review indicating the market type and structure of this industry in addition to explaining what a
market failure is and giving general reasons for it, followed by a brief history on Nokia in addition to the main characteristics of the
industry. Further, we find the barriers of entry to this industry as well as the reasons for Nokia’s market failure in addition to a
conclusion and recommendations.
Literature Review
The market success as a competitive market that allocates its resources efficiently and starts to develop in contrast to that markets
fail when they are not able to introduce efficiency and then the search for methods to improve begins. He later explains how
previously, a minor group of economists have rejected the market failure approach as a whole, which has led other economists to
improve market failure analysis even more and research the main reasons for market failure, which referred to monopoly,
externalities, common property and public goods, Randall, A. (1983).
Sharma, S. (2015) consider the mobile manufacturing industry to be of an oligopoly structure. He defines an oligopoly market to be
one that consists of a few firms dominating the industry, and although each firm has a high share of the market but it cannot influence
or set the prices alone, as the firm alone has no authority to do so. In addition, he also states that in an oligopoly, structured market
each firm is aware of the other firms’ actions which applies to the mobile manufacturing industry whereas there are a few numbers
of firms with mainly Apple and Samsung dominating the market. The mobile manufacturing industry characterized by an oligopoly
market, which depend on the nature of barriers to entry and pricing are in such an industry. As for the barriers to entry, he describes
them as very high and difficult for any new firm to enter because there are many barriers including very strong customer loyalty for
the existing brands and existing patents (we will go through more barriers in details further in this research paper).
However, externalities is a much broader term with types and explanations than to just mean being inefficient. Moreover, Rashid,
M., & Antonioni, P. (2015) simplify more reasons of market failure as that market failure can also occur if the firms are producing
something the society does not want, or even not providing the society with what they want. In addition to Randall’s reasons, the two
writers also add asymmetric information; which is neither consumers nor producers have complete information, and too few or too
many property rights; which can both cause failure problems. Moreover, the two writers also give simple definitions for the term
“public goods”, because public goods are not excludable from people it’s hard to price them, and externalities; which is the cost or
benefit a third party pays or gains from someone else’s actions. Finally, the market failure whereas it describes it as a state of
disequilibrium that occurs in the market caused by distortion in the market; in other words, it is when the quantities of goods or
services supplied are not equal to the ones demanded. The CFI also lists some reasons for market failure such as externalities, public
goods, market control and imperfect information in the market. Market control is further explained to occur when one party (the
consumer or the supplier) has power and is in more control of the prices that they do not allow prices to be set according forces of
the market. Further, explained that this situation can occur mainly in oligopolies, just like our case here, or monopolies.
Methodology
The research applies an explanatory approach. It starts with investigating the characteristics of the mobile industry, barriers in the
market, products specification and contracts and the behaviors of the management decision.
Characteristics of the Industry and Brief History on Nokia
In order to visualize the mobile industry and get some hints on its characteristics we will first give a glimpse upon Nokia’s history,
from how it started lead by its success then finally its fall in the market. As mentioned previously, Nokia evolved from just a wood
pulp mill in southwest Finland in 1865 to being “Nordic Mobile Telephone” service. Which was the first international cellular
network in the world alongside the first to provide international roaming services. In 1981, from which later on it started introducing
its first mobile phones starting with the first car phone “The Mobira Senator’ in 1982, “The Mobira Talkman” (a portable car phone)
in 1984, then finally “The Mobira Cityman” which was the first handheld mobile phone weighing 800 grams with a price tag that
said “24,000 Finnish Marks” in 1987. In 1991, the then prime minister made what the world knows as the first “global system for
mobile communications” call with a Nokia. Along the coming years, Nokia starting launching more mobile series and including new
features which in return grabbed people’s attention (and money) to the extent that in in 1994, after the launch of the 2100 series
which included the “Nokia Tune Ringtone Feature”, Nokia’s target was to sell 400,000 phones meanwhile they actually sold 20
million worldwide. Finally, in 1998 Nokia has become the world’s number one leader in the mobile phone market which in close
years (from 1996 to 2001) its turnover increases from 6.5 billion euros to 31 billion euros, however in 2001 it initiated a profit
warning and stated it would be cutting off a number of 1,000 jobs . Nokia continued to add new features and grab buyers; however,
in 2004 although the company was still a market leader, it stated that it has been losing shares to its rivals. In 2007, Nokia faces one
of the world’s biggest product recalls after admitting that 45 millions of its products may be concerned with battery faults. However,
as it was dealing with this “short-term” problem, another “long-term” problem enters the market, Megerle, K. (2019).
The iPhone by Apple from which in 2008, Nokia reported a fall of 30% in its 3rd quarter profits, and fall of 3.1% in its smartphone
sales meanwhile Apple’s iPhone grew 327.5% the same year. In 2009, Nokia continued to cut off another 1,700 jobs worldwide as
the global recession hit the mobile phones’ sales. Nokia then starts a plan to fight back phones like the iPhone after it admits it had a
Salman Abdou & Hussein, International Journal of Business Ecosystem & Strategy, 2(4) (2020) 43-48
45
slow reaction because it was already too late since they had their first loss. In 2010, Nokia is facing serious challenges due to its new
threats (iPhone and now Android based mobiles) and cuts off another 1,800 jobs but on the other hand has a rise in profits. In 2011,
there was an announcement for a strategic partnership for Nokia with Microsoft in order to compete with Apple, Google’s Android
that was ignore. However, Nokia cuts off another 4,000 jobs and overtaken by its competitors as its sales, and profits heavily decrease.
Moreover, in the same year Nokia finally launches new smartphones. In 2012, things started to fall even more as Nokia cut down
4,000 more jobs, its shares fall heavily, they state a profit warning and encounter a loss of 1.3 billion euros, then it cut 10,000 more
jobs and an announcement of its last factory in Finland closing comes out. In 2013, the company finally gains some profit after it has
been encountering losses for somewhat 18 months, however Microsoft buys Nokia’s handset business for 5.44 billion euros. The
previous timeline shows Nokia’s market share over the time summarizing. This market share reach peak in the fourth quarter of 2007
but gradually falling afterwards. The graph also illustrates the main decisions taken by Nokia over the years, Megerle, K. (2019).
Characteristics of the Mobile Manufacturing Industry
As we have previously mentioned, the mobile manufacturing industry is of an oligopoly structure whereas few firms dominate the
market and control prices together making it hard for any new entrants. However, there are also some features or characteristics that
shape up the mobile manufacturing industry differentiating it from other industries. One of the first means of communication ever
have been fixed land lines whereas people installed them at their homes as a way of facilitating communication with others, however
due to the lack of advancement, innovation and creativity in fixed land lines mobile phones/portables/handhelds were invented. One
of the main characteristics of the mobile manufacturing industry is the manufacturing firm’s constant need for a huge amount of
investment in order to develop better yet cheaper phones in order to be able to compete in the market. For example, in the years 2009
till 2013 $1.8 trillion were invested in research & development as well as infrastructure by mobile manufacturing companies whereas
the mobile manufacturing industry’s value chain generated about $3.3 trillion and had created 11 million jobs in 2014 (Sharma, S.
(2015). More characteristics of the mobile manufacturing industry include the huge customer loyalty that a firm may share with its
customers, which can sometimes lead to the existence of both old and new technologies in the market when loyal customers are still
not sure about new technologies and have not adapted to them yet.
Furthermore, firms in this industry tend to have the ability of constantly reinventing themselves whenever new technologies produced
whereas product innovation is such a main and very important feature of the industry. Moreover, in order for firms to be able to attain
a great market share in this industry they must be able to provide such a great product value in addition to product differentiation in
order to push customers into buying their product. So, the uniqueness of the product such as a new size, technology, or even feature
in addition to its scope, which is basically the span of different services or features the product offers are very important characteristics
for the mobile manufacturing industry (Gressgard, L. J., & Stensaker, I. (2006). Furthermore, innovation in the mobile manufacturing
industry can be divided into two parts; first innovating the same product (like creating newer versions of it). Second innovating in
order to create more different products, which leads us to the concept of diversification, which is an essential characteristic in this
industry whereas some firms work on diversification in terms of creating various products for each segment of the society.
Finally, the last characteristic in this industry is the idea of a dominant design in the market that is able to lead it. The concept of a
dominant design is simply explained as the emergence of a totally new product or idea in the market by one firm making it the
dominant design where the other competing firms follow this new “trend” in order to acquire part of the market share as well (Cecere,
G., Corrocher, N., & Battaglia, R. D. (2015).). A great example on the concept of a dominant design is how Huawei. It was the first
to introduce the new trend/feature/option of having a mobile with a triple-camera setup in its Huawei P20 Pro mobile, and ever since
then almost all other competing firms have introduced their newest phones with the same feature as well starting from the iPhone 11
or Samsung Galaxy S10 (Mullis, A. (2019). On the other hand, even as simple as how Apple was the first to introduce the concept
of a smartphone in 2007 and urged all firms to switch their production from normal mobile phones into the production of smartphones
with a software.
Barriers of Entering the Mobile Manufacturing Industry
As the mobile manufacturing industry is one of the most prominent oligopolies and is highly successful, it also has many hard barriers
to entry due to also the power of the competing firms inside. The nature of the structure of the market usually stresses a number of
barriers depending on the structure, for example, the nature of an oligopoly market stresses the existence of high or many barriers to
enter the market. Due to that, the industry is full of many barriers, which is why I grouped and summarized those under five main
points: first; economies of scale simply mean that as one firm’s production increases, its cost per unit of the product decreases. It is
usually associated with industries that maintain high levels of production just like mobile manufacturing companies, which simply
makes it difficult for any new entrant. As they will have to keep up with the level of production forcing them to produce at high
levels (or low levels in other cases) forcing them to have a cost disadvantage. In addition, technology related business is usually of
very high costs because primarily cash is required. In order to invent a new technology or even buy an already invented technology.
For example, in the mobile manufacturing industry the main costly technology required is initiating and implementing an operating
system (mobile software) for in order to be able to manufacture a smartphone that is able to compete with the already existing
technologies in the market. Moreover, costs incurred for entering the mobile manufacturing industry do not only have to do with
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46
adopting a new technology but also now smartphones are much more complicated. Then just an old normal mobile phone so in order
to compete the entrant needs to pay money for highly skilled and trained engineers.
Also, a cloud service, an application store with at least hundreds of different applications, Also, developers and optimizing device
drivers, not to mention that a new entrant will need an access into supply chains with the best components (Case, A. (2015). Finally,
other high costs in this industry are the ones for research & development or advertising and marketing campaigns, because especially
in this industry with competitors of such high power the need for an efficient research & development team as well advertising and
marketing campaigns is an investment a new entrant must make. In addition to high “switch costs” which are simply the costs
experienced by consumers when wanting to switch suppliers. In order for a new entrant to actually enter the market there are a couple
of essential things the firm needs in order to succeed, but with the already existing firms being in control of almost everything in the
industry in addition to having access to everything as well resulting with nothing actually left for a new entrant. Already existing
firms in the market, like Apple and Samsung, have control of everything like essential raw materials in addition to their loyal
customers who already have trust in the company they buy from, making it hard to switch to a new company. Furthermore, new
entrants in this market will need to gain access to a number of things such as access to distribution channels/distributors, data
networks. which is basically that now there are many data updates (3G, 4G...) meaning that carriers are now more involved into the
development process of a smartphone and what carriers do is that they request certain features in a smartphone, change specs in terms
of their technology (Case, A. (2015).
Product Differentiation and Innovation
One of the most essential characteristics of this industry is that its different firms each differentiate their products with certain features
or qualities. In order to succeed or compete in this industry the firm needs to have a strong product differentiation and always add up
new technologies or features due to the fact that this industry is very fast and always changing that it’s sometimes very hard to keep
up with. In addition, to its constant need for innovation. For example, in this industry many competing operating systems whereas
the leading system and most significant and successful is Apple’s IOS.
Contracts, Patents & Licensing
The contracts, patents and licensing encrypted with this industry make it very difficult for new entrants to enter the markets because
they give already give protection to the already existing firms in the market which have already won contracts, own license or even
hold the patent. For instance, just like how contracts between certain suppliers with retailers are able to exclude other retailers from
entering the market. Nokia’s failure as a smartphone company was of great shock to the world especially that it was known to
dominate the market and was a pace-setting mobile maker (Surowiecki J., 2013) Nokia was actually the first to create cellular network
and has been a market leader for mobile phones in the late 1990s and early 2000s (Aaslaid K, 2018). There are indeed many reasons
for Nokia’s market failure however, they grouped into three main points, which are complacency and fear of change, lack of
innovation, moving too slowly and inventing of the iPhone.
Complacency and Fear of Change
Complacency simply means a feeling of satisfaction that is uncritical with yourself or your own achievements; self-satisfaction in
other words. The feeling of complacency that Nokia had of itself was actually one of the main reasons to its market failure. For
instance, when Apple launched the iPhone in 2007, which was the first touch screen phone that overwhelmed everyone, Nokia was
still taking pride in its E-series ignoring how a new concept has actually changed the way a smartphone should be. The iPhone’s
success did not actually have any impact on Nokia in comparison to for example Samsung that quickly transitioned to smartphones.
Therefore, Nokia failed to understand and adapt itself to a new change. Moreover, Nokia overestimated itself as a brand and the
strength of what it can achieve. It believed it can just pop in late in the smartphone market and actually succeed because it had this
much trust in its brands and customers when it decided to compete with Android in 2008; however, it was too late for Nokia (Aaslaid,
K. 2019). Nokia imprisoned by its own past success they insisted that their hardware was superior and would still win its people over;
they ignored the importance of transitioning and changing. Nokia was the brand that used its marketing to change the idea of mobile
phones from just ordinary handsets into accessories worn by huge celebrities on red carpets (Surowiecki J, 2013). The main reason
Nokia feared change was because it feared losing its current customers if it changed too much in terms of adding new software or
experiences.
Lack of Innovation
Nokia’s lack of innovation was probably the most important reason on why it had a tremendous market failure, the fact that Nokia
just did not grasp the new concept of having a software with endless applications and new experiences and that hardware did not
actually matter as much as it did before brought Nokia to failure (Aaslaid, K. (2019). Nokia was always known to have invested more
in its hardware, to the company producing durable hardware was their main goal, they didn’t understand Apple’s concept of 50% on
hardware and 50% on software because simply it was a hardware-oriented company. All along, the hardware engineers always
dominated Nokia’s development processes while software engineers marginalized. Apple and Android simply crushed Nokia, while
Nokia underestimated the power of a software. Surprisingly, Nokia actually came up with its first smartphone earlier in 1996 it even
Salman Abdou & Hussein, International Journal of Business Ecosystem & Strategy, 2(4) (2020) 43-48
47
built a prototype that had a touch-screen and was internet-enabled it even spent tons of money on research & development, however
Nokia was simply unable to convert all this research & development work into products that people can actually buy (Surowiecki, J.
(2013)
In contrast, Samsung for example invents new phones almost every year that are at least slightly modified from the previous ones,
on the other hand Nokia’s Windows phone (which was in collaboration with Windows) was introduced to the market as late as 2011
and was missing some of the basic technology important features that could have driven Nokia’s sales. In addition, Nokia didn’t
create those trendy shiny attractive designs like that of Apple or Samsung and besides from the looks, Nokia didn’t even install a
front camera in the device whereas front cameras enable the phone into 3G which was simply disappointing to the people. Most of
the reasons mentioned above could have been overcame if only Nokia had not been moving too slowly. Nokia has moved too slowly
and took actions much later that it got slow responses in return, Willard, W. (2014). The fact that Nokia was too slow to understand
that the new change and generation has occurred (by Apple basically) and it mainly focuses on data and not voice as the future of
communication has put Nokia so much far behind in the market. For instance, Nokia depended on “Symbian” (its device operator)
for far too long until it finally decided to enter a partnership with Microsoft in 2011. However even this huge shift in Nokia hadn’t
really succeeded as expected due to the fact that it was simply too late whereas Apple and Samsung were already dominating their
market and relatively their operating systems ,iOS and Android, just did not leave any much role for Windows
Inventing of the iPhone
We can sum up all the past reasons to the inventing of the iPhone whereas the last successful mobile phone that Nokia has launched
before the iPhone was the Nokia N95 in 2006, which included the most updated features at the time. The inventing of the iPhone
simply changed the whole smartphone concept, kicked companies like Nokia and Blackberry out of the market, and affected the
mobile networking companies as well. Five years after the launch of iPhone to the market and the industry is full of thrive and
innovation. The previous graph illustrates Nokia’s market share slightly before and after the invention of the iPhone, and how the
iPhone eaten up Nokia’s market shares. Whereas, by June 29, 2007 (which was the day the iPhone was launched) Apple’s stock price
was $122.04 and reached $335.36 less than a week later with a market capital of $310 billion. In comparison to Nokia’s stock price
being at $23.63 of the same, date reaching $6.11 less than a week after with a market capital of $22.7 billion, Benton, G. L., & Koch,
R. (2014).
Figure 1: Top 7 Smartphone Companies Market Share 2007 Second Quarter VS 2010 Second Quarter;
Source: Tofel, K. C. (2010)
The previous illustration shows how Apple has dominated the smartphone market share within exactly 3 years of launching its iPhone
1. Apple has introduced a new concept to the market and was able to lead it, and snapped Nokia’s position in leading the market.
Nokia’s profits, non-IFRS profits and sales over three years quarterly (2010-2013) from which we can notice how each of them has
been dramatically decreasing over the quarters due to the reasons mentioned which are: complacency and fear of change, lack of
innovation, moving too slowly and the inventing of the iPhone. However, we can see a slight raise starting from the second quarter
of 2012, which was due to Nokia and Microsoft collaboration. Moreover, Nokia’s market capitalization amounted 14.8 billion euros,
which was a drastic fall from an amount of 110 billion euros in 2007. Concluding, Nokia’s fall from the mobile manufacturing
market was a tremendous one, whereas in 2007 Nokia’s market share for smartphones was as dominant as 49.4% however it decreased
to 43.7% in 2008. Further to 41.1% in 2009, and 34.2% in 2010 whereas in the first quarter of 2013 the market share has tremendously
decreased to only 3%, Lee, D. (2013)
Conclusion
In conclusion, Nokia actually had the chance to evolve and reinvent itself however due to its complacency and fear of change, lack
of innovation, and being too slow it just missed out on many chances and couldn’t see the danger signs. Nokia’s market failure is
one of the greatest among many failures because it was once one of the greatest dominant pace-setting mobile makers expected to
adapt and lead the market rather than fall. Its market failure was also able to make it lose as many employees, customers, and market
shares than ever expected. Nokia was successful in introducing new concepts, experiences and technologies (at its time) that people
will never forget. However, it was also able to give out a great lesson to all innovators and technology related business. There are
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indeed many proposed recommendations for Nokia to be able to re- enter the market again, one of which includes changing its
operating software into one that is more dominant in the market by initiating a collaboration such as that with Android. Another
recommendation for Nokia is to diversify its products a bit meaning that it doesn’t have to necessarily depend on manufacturing
mobiles only as it can for example start supplying hardware to different mobile manufacturers as well. Nokia has always been good
at manufacturing hardware it basically had the knowledge to do so, so maybe if it claims the opportunity of already being in the
market and averts to hardware manufacturing as well, it may just succeed in it. Finally, this has been one of the most interesting yet
sad case studied conducted simply because Nokia has failed to meet all of our expectations.
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affiliations.
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4.0 International License.
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... On the basis of the literature [76], we measured IU using (5). Note that the four_firm concentration ratio is the combined market share of the four largest firms in an industry, expressed as a percentage [76] IU = 1 − Four_firm concentration ratio. ...
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While many organizations are increasingly willing to invest in adopting digitalization in recent years, they might not be aware that different levels of uncertainty within and outside their organizations may impend digitalization's effectiveness. This study aims to empirically explores the performance impact from digitalization on organizations and the effect from uncertainty on the impact. More specifically, the objectives are pertinent to examining 1) the association between digitalization and operational efficiency and 2) the moderating effect of macro-level uncertainty, industrial-level uncertainty, and firm-level uncertainty on this association. Using a dataset collected from multiple sources employing innovative methodologies including natural language processing (NLP) to analyze digitalization announcements from Factiva and measuring operational efficiency based on the stochastic frontier approach (SFA), this study analyzes the impact from digitalization via 2,520 samples from 496 listed firms in North America during 2015-2021. The results show that digitalization significantly enhances operational efficiency, and this positive impact from digitalization is weakened by macro-level uncertainty and industrial-level uncertainty. Our findings provide researchers and practitioners with useful insights into digitalization's important role in enhancing operational efficiency and guidance indicating the business environments deserve extra attention so as to retain digitalization's positive impact.
... Companies were unable to keep up with the rapid developments, and many businesses throughout history faced numerous challenges. an environment that encourages failure and exiting the market (Salman & Hussein, 2020). The market failure occurs due to the inefficient allocation of scarce resources that could not be beneficial and satisfactory for society. ...
... The reasons that could result in happening market failures such as the presence of public good, the presence of monopoly business, the presence of externality (Positive and negative), the Lack of information, and the lack of property rights (Islam, 2019). Market failure is defined as a state of disequilibrium in the market that is brought on by market distortion; in other words, it occurs when the quantities of products or services supplied are not equal to those sought (Salman & Hussein, 2020). ...
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Market Failure is the exiting of the company or the business from the market. Inefficiency whether in the supply or the demand could lead to market failure. One of the actions that could be resulted because of market failure is privatization. Privatization happens when the government fail to manage the business and cope with the crisis that could happen in the market. This failure will lead to a debt increase, so the government expenditure will increase, and this will force the government to sell the company to private investor or investors (Privatization). British Petroleum Company was one of the firms that were completely privatized by the United Kingdom government in the year 1987 due to many reasons. The purpose of the paper is to present the process of privatization of British Petroleum and clarify the prerequisites for market stabilization. In addition, this paper will discuss the main recommendation and policies that can be implemented for this company to succeed to regain its market share. Also, the paper will explain the effect the market failure has on the sustainable development goal (SDGs).
... The authors examine the characteristics of the major mobile operating systems, such as iOS, Android, and Windows Phone, makes comparisons based on key standards. 14 Salman Abdou, D. M., & Hussein, R. (2020) [23]. ...
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Purpose: This article will investigate the causes for Nokia’s failure to stay afloat in the market, as well as how the company resurrected in 2017 by employing a nostalgic or sentimental marketing strategy. Technology management on a strategic level at Nokia Corporation is thoroughly examined and analyzed in this study. Nokia used to be the market’s dominant corporation, leader, and pacesetter until it had a massive market disaster. We inferred that the problem at Nokia was not the absenteeism of advancement, but in its place, it was due to a lack of innovation estimation and a misunderstanding that the requirements in the mobile phone market were not only about displaying a cell phone that makes verdicts, sends messages, and connects to the internet, but also the stage that connects all of these volumes together. Finally, this article describes how Nokia’s revival was achieved through the use of a nostalgic or sentimental marketing strategy. Objectives: We aim to present the reasons behind the failure of Nokia and its return using Nostalgic marketing approach to do a comparison analysis with its competitors and make recommendations to improve the company based on the findings Design/Methodology/Approach: Journals, as well as a variety of internet resources such as websites and blogs, were used to conduct this company analysis. A SWOC Analysis was used to analyses the Nokia corporation. Findings/Result: Till 2008 Nokia was the pioneer in the mobile phone market. Based on the study done it’s clear that Nokia failed to acquire smart phone market because Nokia couldn’t recognize the customer needs, didn’t Analyze the Market Accurately and also lack of implementing innovative technology in its product which customer needs. Nokia was focusing on implementing traditional Symbian operating system to its smart phone but Samsung choose android as its operating systems for its smartphone at the right time, which met the customer requirements. In 2017 Nokia came with nostalgic marketing approach by re-creating its old Nokia 3310 handset with modern features such Bluetooth, GPS, Wifi. Originality/Value: Based on data from secondary sources, this article investigates the reasons why Nokia failed to gain access to the smartphone market, and explores its comeback through nostalgic marketing strategies. Paper Type: Research Case Study.
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The aim of this research paper is to discuss market failure of Thomas Cook and analyse the reasons behind the market failure of Thomas Cook Group and how outdated technology, having high debts, and did Brexit lead to its collapse. Further on analysis of the reasons for failure supported by literature review across different economic schools has been elaborated. The paper provides clarification to the characteristics of the airlines and their entry barriers taking into consideration the tour operator. Further, it is described how Thomas Cook collapse affected Africa and Europe. Lastly, the conclusion is about the losses occurred in Thomas Cook Company, how other firms can avoid failure and the direct negative impact of the BREXIT on the company.
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The mobile phone industry is a very innovative segment within the ICT sector and the smartphone is becoming the standard configuration among the different types of mobile devices. Technical change and new product proliferation have made this industry extremely dynamic, even if market shares are highly concentrated in the hands of very few companies. The present article investigates whether a dominant design has emerged in the smartphone industry. In particular, it studies the evolution in hardware components relying upon an original dataset of product characteristics including all smartphones launched in the market between 2004 and 2013. Results show that, despite some convergence in the introduction of vertical innovations, product differentiation still characterizes the competition among manufacturers and a dominant design has not yet emerged.
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In this article we explore future business models for the mobile service industry. Using industry expert information, we develop four scenarios that illustrate possible different future conditions in the industry. Drawing on strategy literature, we discuss strategic challenges based on technological development and social identity and propose business models that are likely under different future conditions. We argue that the mobile services that will be developed and the strategic organisation of activities depend on whether technological development is divergent or convergent and whether societal values are individualistically or collectivistically oriented.
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The telecommunications business is undergoing a critical revolution, driven by innovative technologies, globalization, and deregulation. Cellular networks and telecommunications bring radical changes to the way telecom businesses are conducted. Globalization, on the other hand, is tearing down legacy barriers and forcing monopolistic national carriers to compete internationally. Moreover, the noticeable progress of many countries towards deregulation coupled with liberalization is significantly increasing telecom market power and allowing severe competition. The implications of this transition have changed the business rules of the telecom industry. In addition, entrants into the cellular industry have had severe difficulties due to inexistent or weak Business Models (BMs). Designing a BM for a mobile network operator is complex and requires multiple actors to balance different and often conflicting design requirements. Hence, there is a need to enhance operators’ ability in determining what constitutes the most viable business model to meet their strategic objectives within this turbulent environment. In this paper, the authors identify the main mobile BM dimensions along with their interdependencies and further analysis provides mobile network operators with insights to improve their business models in this new ‘boundary-less’ landscape.
Examples of corporations that failed to innovate
  • K Aaslaid
Aaslaid, K. (2019). Examples of corporations that failed to innovate. Retrieved from https://valuer.ai/blog/50-examples-ofcorporations-that-failed-to-innovate-and-missed-their-chance
Understanding Nokia's smartphone strategy decision
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Blandford, R. (2011). Understanding Nokia's smartphone strategy decision. Retrieved June, 12, 2014. Retrieved from http://allaboutwindowsphone.com/features/item/18293_why_did_microsoft_acquire_noki.php
Calm technology: principles and patterns for non-intrusive design
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Case, A. (2015). Calm technology: principles and patterns for non-intrusive design. " O'Reilly Media, Inc.".