麦肯锡NO某省市市市场报告

Thisreportissolelyfortheuseofclientpersonnel.Nopartofitmaybecirculated,quoted,orreproducedfordistributionoutsidetheclientorganizationwithoutpriorwrittenapprovalfromMcKinsey&pany.ThismaterialwasusedbyMcKinsey&panyduringanoralpresentation;itisnotapleterecordofthediscussion.DiscussiondocumentDecember2000NokiaCaseStudy:

WinningintheU.S.FINGERPRINT–NOKIARationaleFocusedonhighgrowthcategories(e.g.,mobilephones,digital)AnticipatedshifttodigitaltechnologyintheU.S.beforepetitorsanddirectedresourcestooptimizeopportunity;tailorsproductstotargetcustomers(e.g.,fashioncoversforyoungersegment)Somedifficultytoattractingtop-tierlocalseniormanagementduetoglassceiling(e.g.,allseniorleadershipinFinnish0;FinnishmanagersusedtomanageU.S.operationsSucceedsinattractingtopengineersbecauseofattractiveproductsLocalmanagershelimitedautonomyandaccountabilityexistsattheunitlevel,butheadofficeretainsfinalinputDifficultytranslating“TheNokiaWay”toU.S.(“Theculturedoesn’thethesamerichnessorvalueasitdoesinEurope”)Devotessufficientresourcestolocalorganizationtowininmarket(e.g.,providedresourcesforU.S.towininmobilephonesegment)Outsourcesnon-coretechnologies(e.g.,microprocessorsfromIntel,ponentsformMotorola)andusesstandardponentstoseonR&Dspendandreactfastertochangingtechnologiesthanitspetitors;leveragespartnershipsformoreefficientR&D(e.g.,JVwithCisco,Geoworks,HP)N/ACreatesbroaddistributionreachthroughnumerous,innovativerelationshipswithretailersanddistributors(e.g.,Sears,AT&Twirelessservices,Tandy)Developsandlaunchesinnovativemarketingcampaigns(e.g.,firsttotargetconsumersratherthanprofessionals)Successfullyalliesandacquirestogaincapabilities(e.g.,jointventurewithTandyfordistribution,acquisitionofMobiratoenterpromisingmobilephonearea)HighLowEncouragessharingofbestpracticesbuthasnotbeenverysuccessfulatdoingsotodate1NJ-262408.756/001031NdkocHR1NOKIAKeyfactsLargest1-3yearrevenuesgrowthofpetitorsLargestmobilephonemanufacturerandsecondlargestproviderworldwide(behindEricsson)ProductsMobilephonesGSM/DSCnetworkspetitorsEricssonMotorolaTimeline18651990sDevelopedintoconglomerate(flooring,TV,footwear,etc.)untilrefocusingonhighgrowthmobilephonesegmentinlate1980sand1990sDivests

non-corebusinesses19951999AmericasROWEURRevenues

$BillionsStockappreciation(1998-99)NokiaS&PS&Pcelland

wirelessindexCAGR%CapabilitiesFirsttousemassmarketersasdistributors

(e.g.,sellingmobilephonesinRadioShack)Usesalliancesfordistributionchannels(e.g.,AT&TWirelessServices,Sears)Adoptsconsumerratherthanprofessionalfocusinmarketing,unlikepetitorsUsesalliancesinR&Dtogrowdevelopmentcapabilities

(HP,Cisco,Geoworks)OrganizationAutonomyprovidedtoseniorleadershipinlocalsubsidiariesTopmanagementisallFinnish;obstacletohiringtopU.S.talentStrongemphasisoncorporatevaluesandculturewith“TheNokiaWay”–teamwork,innovation,production;difficulttoimplementinU.S.Excellentopportunitiesforadvancement-fastcareertracks,earlyresponsibility,rotationprogramsHierarchyandbureaucracyreducedYoung,innovative,non-rigidleadershipstyleRatedinFortunetop100firmstoworkforintheU.S.ProductGrewmobilephonesegmentfrom16%oftotalsalesin1991to66%in1999Alliedtogainproductexpertise(e.g.,Motorolatostandardizetechnology,CiscoandHPtodevelopnetworkproducts)Technologydesigninnovator;firsttomarketwithmanyproductinnovationsTailoredproducttotargetkeycustomers(e.g.,phoneswithfashionable,changeablecoverstoattractyoungsegment)BackgroundLeversforsuccess19.86.2Foundedaspapermill58%CAGREntersU.S.throughTandyJVGrowsmobilebusinessinU.S.19881983AcquiresMobira1981Operates

asaconglomerate1960s2NJ-262408.756/001031NdkocHR1CONTENTSpanyoverviewU.S.marketentrystrategyProductsCapabilitiesOrganization3NJ-262408.756/001031NdkocHR1NOKIAPANYBACKGROUNDFounded1865,inFinland,asapulpandpapermillEnteredU.S.in1983,whencellularservicewasjustlaunchingintheU.S.Globalemployees55,260;inU.S.10,500CEO:JormaOllila(Finnish)MostseniormanagersforU.S.:Kari-PelekaWilska,PresidentofAmericasRichGeruson,HeadofUSASalesandMarketingforNokiaMobilePhonesKeydivisions:MobilePhones,NokiaNetworks,municationsProductsMarketcap:$193.3billion(asofOctober27,2000)Keyindustryoffocus:Mobilephones(65%of1999totalsales)Number1mobilephonemakergloballyNumber2GSM/DCSmobilephonenetworksprovidergloballypetitors:Motorola,Ericsson4NJ-262408.756/001031NdkocHR1PANYEVOLUTION

Source: InternationalDirectoryofpanyHistories1800sFounded1865inFinlandaspulpandpapermanufacturerConstructsownpowerplantsasindustrybesenergyintensive1960sMergeswithFinnishRubberWorksandFinnishCableWorksin1966aspartofdiversificationplanBeginstodesignandmanufacturedataprocessing,industrialautomation,andmunicationssystemsNokiaconglomerateconsistsofintegratedcableoperations,electronics,tires,andrubberfootwearMakesfirstpublicshareofferingin19661970sOilcrisisin1973reducesrelianceonexports(timberproductsandmachinery)toSovietUnion(12%ofsales)KariKairamo,appointedCEOin1975,realizesthatforNokiatogrowithastoexpandabroad;expandsNokiainScandiniaandEuropeSellsswitchingsystemsunderlicensefromallocated(French)Helpsdesignworld’sfirstinternationalcellularsysteminthe1970s1980sAcquiresnearly20electronicspaniesoverthedecadeandpleteskeymergersAcquiresMobira(Finnishmobilephonepany)in1981,togainfootholdingrowingmobilephonesegmentMergesSalora(largestTVmanufacturerinScandinia)andLuxor(Swedish-stateownedelectronicsandputerfirm)in1984Throughthe‘80s,manufacturesOEMequipmentforHitachi;Ericsson,NorthernTel,Granada,IBMEntersU.S.,in1983throughJVwithTandyCorporationtosellNokiaphonesunderTandynameLaunchesfirstproduct(mobilephones)marketedinternationallyunderNokiabrandnamein1986Nokiahasevolvedsubstantiallysinceitsfoundation,movingfromaFinnishpapermill,toadiversifiedFinnishconglomeratetoaglobalwirelessleader.1990sAggressivelygrowsmobilephonebusinessintheU.S.BuysTandy’sshareofJVin1993tofullyownfactoriesinU.S.andSouthKoreaSignssignificantcontractstoincreasedistributionchannels(e.g.,AT&TWirelessServices)ConglomeratephaseExpandsinScandiniaandEuropeAcquiresandallysintomobilephonesandU.S.AllystostrengthenU.S.position5NJ-262408.756/001031NdkocHR1TimeHorizon1DrivecoregrowthHorizon2BuildmomentumofemerginggrowthenginesHorizon3SecurefutureoptionsProfit“Wearenowbenefitingfromthevisionarytechnologicalsolutionswemadeyearsago;thelong-termsuccessofourpanyrequiresconstantagilityinpositioningourselvesinthis

dynamicindustry.”–JormaOllila,CEO“Toidentifywhatisrequiredinthelongtermyouneedthepetenciesandtheproducts;gettingtherightfocusisthe

toughpart.”–JormaOllila,CEO“TheCEOhastounderstandthedynamicsofeachbusinessthepanyisin;inordertounderstandwherethefuturelies.”–JormaOllila,CEO

Source: Annualreports;pressclippingsLEADERSHIPMITMENTACROSSTHREEHORIZONSWhenplanningNokia’sfuturedevelopment,CEOJormaOlliladistinguishesclearlybetweenthreewes.ThefirstweemphasizesthecontinuousexploitationofNokia’scorebusinesses.ThesecondwerequirestheidentificationofcapabilitiesandproductsthatwillheimpactonNokia’ssuccessintheimmediatefuture.Finally,thethirdwedeterminesthepany’sfuturedirectionthroughsettingaspirationsandplacingoptions.6NJ-262408.756/001031NdkocHR1PLANNINGACROSSTHREETIMEHORIZONSProfitHorizon1Horizon2Horizon3DrivecoregrowthBuildmomentumofemerginggrowthenginesSecurefutureoptionsProducts•Boostmobilephonesalesthroughbrand-buildingefforts•Makeproductextensionssuchas“Swatch-likeneon-coloredmobilephones”•Expandproductrangethroughnewfeaturesandplementaryaccessories,suchasphonecoversordifferentbatterysizes•CreateR&Dalliancesforproductdevelopmentinwirelessdatatransmissionandterminaltechnology•Increasesalesoffixedandcellularnetworktopublicteloperators•Winprivateteloperatorsasnewcustomers•Launchfirstwirelessproducts(e.g.,Nokia9000municator,aportablewithphone,fax,email,Internetaccessallinone)Markets•FurtherpenetrateScandinia,partsofWesternEurope•ImprovepositioninginAsia/Pacific,US,otherEU-countriesthroughstrongerdistributionnetwork•PrepareforfullderegulationoftelindustryandentryintoremainingmarketsTimeHorizon1DrivecoregrowthHorizon2BuildmomentumofemerginggrowthenginesHorizon3Securefutureoptions

Source: McKinseyanalysis7NJ-262408.756/001031NdkocHR1SENIORMANAGEMENT

Source: AnnualReport

Spent6months

intheU.S.in1999

Spends50%of

histimeinSilicon

Valley8NJ-262408.756/001031NdkocHR1*AsofJanuary2000 Source: EpsBusinessIntelligenceNOKIAORGANIZATIONALSTRUCTURE“IaminfluencedbytheAmericanwayofmanagingpanies;solvingproblemsthroughorganisingandmotivatingpeople,ratherthanseekingatechnicalsolution.”–JormaOllilaNokiaGroupJormaOllila,CEOHeadofficefunctionsCFOInternationalTradePolicyTechnologyResearchCenterGeneralCounselHumanResourcesmuni-cationsInternationalTradeAffairsNokiaNetworksNokiaMobilePhonesNokiamunicationsProductsNokiaMultimediaTerminalsNokiaIndustrialElectronicsNokiaVenturesNokiaResearchCenterNokiaInternetmunicationsNokiaVenturesFundInternalVenturingUnitNokiaWirelessBusinessmunicationsNokiaWirelessSoftwareSolutionsNokiaIPApplicationandConnectivityPlatform9NJ-262408.756/001031NdkocHR1WorldtelequipmentindexS&P500NokiaNOKIASTOCKPRICEPARISON$Thousands

Source: DatastreamValue198819891990199119921993199419951996199719981999Nokiaclearlyoutperformsthemarketanditspetition.10NJ-262408.756/001031NdkocHR1Asia-PacificEurope19951996199719981999NOKIASALESBYREGIONEuroMillionsNokia’ssalesinNorthAmericahegrowndramaticallyinthelate90’swithaCAGRof58percent,whileEuropeancontributiontosaleshasdiminishedsteadilyshrinking.NorthAmerica6,1916,6138,84913,32619,772CAGR

Percent34372658

Source: Annualreports100%=11NJ-262408.756/001031NdkocHR1ROWFinland

(676)1991100%=EURO2,600ROW1999100%=EURO19,772Finland(395)Nokia’ssalesinFinlandhefallendramaticallyasapercentageoftotalsales.

Source: AnnualreportsEuroMillionsNOKIA’SFINLANDSALESPAREDTORESTOFWORLD12NJ-262408.756/001031NdkocHR1NOKIA’SINDUSTRYFOCUSANDPRODUCTMIXEuroMillions

Source: AnnualreportsSalesbyproductConsumerelectronicsCablesandmachineryMobileproductsTelmuni-cations1991

100%=EURO2,600BasicindustriesNetworksolutionsMobileproducts1999

100%=EURO19,772Home,multimedia,andotherNokia’sproductsMobileproducts–fullrangeofdigitalandanalogcellularphones,wide-areapagers,aswellasaccessoriesandponentsformobilephonesNetworksolutions–telmunicationsystemsandequipmentforbothfixedandmobilenetworks;principalproductsincludedigitalexchanges,transmissionsystems,andcellularsystems,whicharesoldtoPTT,publicutilities,newoperators,andcableTVpaniesHome,multimediaandother–includesPCandworkstationmonitors,aswellasinteractivedigitalsatelliteandcableterminalsIn1998,Nokiabecametheworld’slargestmanufacturerofmobilephones,selling40.8millionhandsets,andgrewsalesgrew51percentfrom1998to1999.“Threeyearsagowe

decidedtocreateatel-orientedpany.Wehebeenabletoimplementthechangesfasterthanweexpected.”–JormaOllila,FinancialTimes,

09/07/199513NJ-262408.756/001031NdkocHR1SUBSIDIARYLOCATIONSANDRESEARCHCENTERSNOTEXHAUSTIVE(5)(2)(3)(1)(3)(14)(3)(1)(4)(1)(17)(2)(3)(1)(5)(1)(2)(1)(5)(6)(3)(1)(3)(4)(2)(2)(2)(2)(2)(1)(2)(2)(2)(6)(1)(2)(3)(3)(1)(1)(1)(9)(7)(2)(2)(1)(1)(1)(1)(1)(1)(2)(1)(1)(1)(1)(1)(6)(7)(3)(2)ResearchNokiacoversanexpansivegeography.14NJ-262408.756/001031NdkocHR1CONTENTSpanyoverviewU.S.marketentrystrategyProductsCapabilitiesOrganization15NJ-262408.756/001031NdkocHR1STORYLINEAtthebeginningofthe1980’sNokiawasstilladiversifiedpany,relyingpredominantlyonEurope(particularlyScandinia)todrivesalesHowever,thepanyrealizedthatsignificantgrowthwouldbedependentonbuildingamajorpresenceintheU.S.market,inhighreturnsegmentsTodosotheyacquiredMobira(Finland)in1981togainafootholdintherapidlyemergingmobilephonesector.TheyrapidlygrewthisopportunityintheU.S.throughaseriesofOEMrelationships(GTE,Delco,SouthwesternBell,BellAtlantic)andajointventurewithTandyCorporationin1983Nokialaunchedtheirownbrandmobilephonein1986andpursuedaggressivebrandingandalliancestrategies(e.g.,Rooftopmunications,paq,AT&TWirelessServices)tosolidifytheirpresence16NJ-262408.756/001031NdkocHR1Nokiawasthefirstplayertousemassmarketdistributionchannelsfortelmunicationsequipment.

Source: InternationalDirectoryforpanyHistories,AnnualReports,pressclippings1992Beginstoaggress-ivelymarketownbrandedproducts198319921993199519971983CellularservicelaunchedinU.S.;JVwithTandyCorp.tosellNokiaphonesthrough6,000RadioShackstores;JVincludesjointownershipoffactories1992NokiaandTandyCorp.openamobilephonefactoryinTexas;NorthandSouthAmericanmarketsarehalfofglobalmobilephonesmarket199619941997CFOofNokiadeployedasHeadofU.S.business;U.S.subsidiaryseesimmensegrowthfrom1997-991993AcquiresTandy’sshareinbothmanufacturingpanies;overall,operates5factories;continuessellingthroughTandyretailformatsDe-emphasizesconsumerelectronicsbusiness1995NewdistributionfacilityopenedinFortWorth,TXGrantedlicensetoAmericanPortableTel(privatecellularnetworkoperator)forPCS1,900MHzproduct1996SignssignificantcontractswithAT&TWirelessServices,SprintSpectrum,andPowertel1986Launchesownbrandproductglobally1988Divestsflooring,paper,rubber,andventilationsystemsbusinesses19861988Earlyandmid-eightiesAggressivelysoughtandsignedOEMdealswithnumerousU.S.panies(e.g.,GTE,Delco,etc.)TIMELINEOFKEYEVENTSINNOKIA’SU.S.BUSINESS17NJ-262408.756/001031NdkocHR1CONTENTSpanyoverviewU.S.marketentrystrategyProductsCapabilitiesOrganization18NJ-262408.756/001031NdkocHR1Nokiamadebigbetsastowhichtechnologieswouldemerge,redirectingresourcesandpanyfocustoemphasizethesecategories.PRODUCTSTRATEGY“Thechoiceoffocusisextremelyimportant.Weconstantlystrivetomakesurewearefocusedontargetedmarketsinwhichthegrowthrateismuchhigherthanthatofthetotalmarket,Nokia’saimistogrowsomewhatfasterthanthetargetedmarketsdo.”

–MattiAlahuta,President,MobilePhones

19NJ-262408.756/001031NdkocHR1Nokia’sacquisitionsintheU.S.wereprimarilytobroadenitsproductcapabilities.PRODUCTACQUISITIONS

Source: SecuritiesDataCorporationandpressclippings20NJ-262408.756/001031NdkocHR1CONTENTSpanyoverviewU.S.marketentrystrategyProductsCapabilitiesOrganization21NJ-262408.756/001031NdkocHR1Developed,launchedandraninnovativeconsumergoodsmarketingcampaignsunliketheirpetitorswhowererunningprofessionalfocusedcampaignsEstablishedbrandnameintheU.S.throughcleverconsumersegmenttargeting(e.g.,extensiveadsonMTVtoreachyoungersegments)MarketingDevelopedrelationshipswithretailersanddistributorstobroadenanddeepenmarketpenetrationJVwithTandyCorporationtosellthroughRadioShackOEMmanufacturingforGTE,Delco,SouthwesternBell,BellAtlanticmobilesystemsandothersDistributionagreementwithSearsDistributioncontractswithAT&TWirelessServiceforNokiabrandedmobilephonesDistributionR&DcontrolledoutofFinlandLeveragedpartnershipsformoreefficientR&DCooperationwithGeoworkstodevelopnextgenerationwirelessproductsJVswithHewlett-Packard,Cisco,Geoworksforhigh-techproductdevelopmentLowinvestment,highreturnR&DstrategyprovidespetitiveadvantagetoNokiawhocanreactfastertochangingtechnologiesthananypetitorUseofstandardponentstoenableoutsourcingofnon-coretechnologies(e.g.,microprocessorsfromIntel,ponentsfromMotorola,semi-conductorsfromAT&T)SimilarproductdesignallowsNokiatousethesameproductionlineformultipleproductsandenablesthemtoreactquicklytochangesindemandbyshiftingfromonemodeltoanotherR&DAlliances/partnershipsprovide

alargeportionofNokiacapabilitiesNokiahasdevelopedastrongcapabilityplatformintheU.S.;primarilydrivenbyalliancesandpartnerships.CAPABILITYPLATFORM22NJ-262408.756/001031NdkocHR1BRANDDEVELOPMENTStartingin1994,Nokiaincreasedcorporatebrandawarenessthroughvigorousadvertisingcampaigns.

Source: Annualreports;pressreleases;pressclippings;panywebsiteNokia6100Seriesphone23NJ-262408.756/001031NdkocHR1Nokiakeptitsadvertisingconsumerfriendlyandeasytofollow,incontrasttotheirpetitorswhotargetedprofessionalsNOKIAMUNICATIONSTRATEGYSincetheearlyninetiesNokia’svaluepropositiontotheconsumerhasbeensingle-mindedon‘simplicity’and‘ease’ofusingmobilephonesThepropositionof‘simplicity’isfurtherenhancedbythetoneofvoiceandvisualsusedinthemunicationThepropositionhasbeenmunicatedthroughalltheirmunicationeffortsbothinmassmediaandatpoint-of-sale24NJ-262408.756/001031NdkocHR1

Source: Pressarticles;annualreports;ECCHCollectionCaseStudyNokiaMotorolaEricssonPercentageofsalesR&DEXPENDITURES1995NokiaspendsrelativelylittleonR&D,but

stillachievesahighreturnonitsR&D

investmentthroughNumerousR&Dpartnershipswithoutsiderssuchasuniversities,andhigh-techpaniesOutsourcingofnon-coretechnologies(e.g.,microprocessorsfromIntel,ponentsfromMotorola,semiconductorsfromAT&T)FocusedR&Dprogramsconcentratingresourcesonfuturegrowthareas;e.g.,cellulardatatransmissionUseofcheapindustrystandardproductsasabaseratherthanmoreexpensivesystemsEverythirdNokiaemployeeworksinR&D.R&Dcentersexistin14countriesonfourcontinents.25NJ-262408.756/001031NdkocHR1JOINTR&DACTIVITIES“Wedonotaimtodoeverythingbyourselves;andwhenit’snecessaryweformpartnershipswithotherpioneersoftechnology;thismeansfocusingonwhatwearebestatandplementingitwiththeexpertiseofothers.”PartnerpanyProductsStartAT&T,U.S.GSMponents1989Quam,U.S.CDMAtechnology1990Cicso,U.S.ATMnetworks1994Geoworks,U.S.Wirelessproducts1995Psion,U.S.SoftwareforGSM1996NokiahasbuiltextensiveR&Dpartnerships.Forexample,atthebeginningof1994,NokiasignedanagreementwithHewlett-PackardtocooperateinthedevelopmentofIntelligentNetworksystemsfortelmunicationsoperators.TheagreementcentersaroundtheintegrationanddevelopmentofkeyINarchitectureelements.

Source: Pressclippings;pressreleases;InternethomepageNOTEXHAUSTIVE26NJ-262408.756/001031NdkocHR1President,NokiaTelmunicationsÌNetworkandAccessSystemsDivisionObjectiveTojointlydevelopATM-based(broadband)servicesolutionsforpetitiveteloperatorsinderegulatedmarketsthatprovideservicesfor•Corporatecustomers:needtoincreaseconnectivityacross

thepany•Residentialcustomers:requireadvanceddataandvideo(multimedia)servicesCisco•Dataandprivatenetwork/corporateapplicationsknow-how(marketleaderinswitchedinternetworking;e.g.,routers,LAN,andATMswitchesNokia•Experienceinteloperatorbusiness•Expertiseinvoicetransmissioninfra-

structureandnetworkmanagement“Thiscooperationanswerstheneedforfasterbuildingofnewpetencies,fasterR&Dcycles,andtherighttimingofproductlaunches.”

Source: Nokiapressrelease;pressarticlesNOKIA/CISCOR&DALLIANCE–EXAMPLEIn1995,NokiaandCiscoSystems,U.S.,establishedastrategicalliancetodevelopATM-basednetworkproductstoprovidetotaltelservicesolutionstopanies.27NJ-262408.756/001031NdkocHR1

Source: PressclippingsNOTEXHAUSTIVENokiausedstrategicalliancestogainanumberofproductandmarketingcapabilitiesintheU.S.;Nokiawasparticularlyactivein2000.STRATEGICALLIANCES28NJ-262408.756/001031NdkocHR1

Source: PressclippingsSTRATEGICALLIANCES(CONTINUED)NOTEXHAUSTIVE29NJ-262408.756/001031NdkocHR1CONTENTSpanyoverviewU.S.marketentrystrategyProductsCapabilitiesOrganization30NJ-262408.756/001031NdkocHR1ORGANIZATIONALLEVERSNokiahasmadeseveralmovesinthepastyearstobetteralignitsorganization31NJ-262408.756/001031NdkocHR1

Source: Annualreports;InternethomepageManagingtheflowExtensiverecruitingSelectsetofnewhires“Peoplearethemostcrucialresourceinmanaginggrowth;youhetoconstantlyrecruitandintegratethebestpeopleintoyourculture.”“Teamwork–isoneofthebasicelementsofNokia,westressmunicationandsocialskills,inadditiontoprofessionalexcellence.”• Recruitingeventsatinternationaluniversitiesandbusinessschools• CareeropportunityadsininternationalandregionalnewspapersandontheInternet• CreationofearlytiesthroughinternationalstudentexchangeprogramofferingtraineeplacementsinallNokiabusinessgroupsworldwide•Universitydegreepreferablyinscienceorbusinessstudies•Academicexcellence• Outgoing,confidentpersonalityabletosolveproblemsindependently,whileatthesametimeworkinateam“Mucheffortisinvestedinimprovinginductionprograms;butwe’vegottofindawaytooidbureaucracyandmaintainentrepreneurialspirit.”• QuicklyindoctrinatenewpersonnelintheNokiawayofdoingbusiness• InstillaspiritofcontinuouslearninginallnewemployeesNokiaviewspeopleasitsmostimportantasset.TALENTMANAGEMENTTECHNIQUES32NJ-262408.756/001031NdkocHR1“Weheachievedthebestresultsinunitswheretherehasbeenaclearemphasisoncontinuouslearning,improvingskillsandquality,ambitiousgoals,andalsorespectfortheindividual;ensuringthatthesevaluestakerootandflourishthroughouttheGroupisacentralthemepermeatingallofNokia’shumanresourcedevelopmentprograms.”–JormaOllila,CEO“NokiaWay”hasbeendifficulttoimplementintheU.S.--“Theculturedoesn’thethesamerichnessorvalueasitdoesinEurope”CustomersatisfactionContinuouslearningRespectfortheindividualAchievement

Source: Internethomepage;annualreportsNOKIAVALUESNokia’sgrowthtargetsarewellbalancedwithitslongtermvalues.TheNokiaWay33NJ-262408.756/001031NdkocHR1“Weworkhard;10hours–andifnecessary–12hoursaday…wehetomakesurethatwedon’tbe…lazy.” –JormaOllila,CEO“Nokiaisanextremelytoughenvironment;peopleworklikehell;there’sanongoingjokethatNokiaprovidesfreeeyedrops,becauseitsemployees’eyesarealways

redduetolackofsleep.”“It’saswimorsinkmentality...butifyousurviveyoucanbepresidentofasubsidiaryafter3years.”“Yes,Nokiaisperformance-driven...butit’salsoafunplacetowork;forexample,ithasroomswithpooltableswheretheteamcangoandrelaxforawhile.”“Underperformersarenotfired;theystaywithNokia,butarereassignedtolessdemandingtasks...atleastinFinland;maybethat’sdifferentinforeignsubsidiaries.”“Oneimportantbrickinbuildingasuccessfulpanyisthattheworkplaceisfunandthateverybodyknowswhytheyareworkingthere.”

–PetteriWaldea,NokiaCablePerformance-drivenculture......withmunityfeel

Source: InterviewswithMcKinseyconsultants;pressclippingsNokia’scultureisstronglyorientedtowardsperformance,temperedbyamunityatmosphereFORINTERNAL

USEONLYNOKIA’SGLOBALCULTURE(EUROPEANCULTURE)34NJ-262408.756/001031NdkocHR1Appendix1991annualreport“NokiaisaEuropeantechnologygroup.”1992annualreport“Nokiaisaninternationalelectronicsandelectrotechnicalgroup.”1993annualreport“Nokiaisaninternationaltel-municationsandelectronicsgroup”1994annualreport“Nokiaisaleadinginternationaltelmunicationspany.”Theevolvingfocusofthepanyduringtheinflectionperiodisreflectedinthechangingannualreport.PANYDESCRIPTIONS

36NJ-262408.756/001031NdkocHR1ExistingpetitivearenaMoveintonewpetitivearenavs.ExistinggeographyExpansionintonewgeographiesvs.Existingindustrystructurevs.ImprovementofindustrystructureExistingvaluedeliverysystemvs.Innovationofvaluedeliverysystemvs.ExistingproductsandservicesInnovationofproductsandservicesExistingbusinessandcapabilityplatform• Continuouslystrengthenpositioninthetelmunicationsmarket• Almost100%ofbusinessactivitiesconcentratedintelmunications•91%of1995salesoutsideofFinland,paredto52%in1988•StrongestgrowthraterecordedoutsideofEurope,especiallyin

Asia-Pacific•Newproductdevelopmentandextensionofexistingproductlinethroughnewfunctionalities(e.g.,pushintowirelessofficemunicationthroughNokia9000municatorbiningphone,fax,E-mail,andInternetaccessinoneportableunit)•Innovativeproductdesignattractingnewcustomersegments•Firsttousemassmarketdistributionchannelsfortelmunicationsequipmentoutofneedtoquicklyachievehighcoverage(e.g.,sellingmobilephonesintheU.S.throughRadioShack)•StrategicalliancesinR&Dspeedinguptechnologicaldevelopment•Contributionstodevelopmentofindustrystandards;e.g.,EFRvoicecodedevelopedbyNokiaandtheUniversityofSherbrooke,Canada,madeindustrystandardforGSMandDCSin1995Growthwasfueledthroughpursuingmultiplegrowthpaths.

Source: Annualreports;McKinseyanalysis;pressclippingsPURSUINGMULTIPLE