Globalization Strategy of Nokia — страница 5

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established previously. (2) Customers’ switching costs (any customer who wants to switch from one Supplier to another faces varying costs). (3) Access to distribution channels (available channels might not be imaginable or they may be controlled by competitors). (4) Scale effects (the entrant may need large volumes and low costs). (5) Extensive need for resources (e.g. management capacity and capital) in order to be firmly established. (6) Important costs independent of scale. In order to overcome the above barriers Nokia adopted strategies such as mergers, acquisitions and partnering or collaborating with market leaders in those specific countries/industries. 4. Foreign Direct Investment This section analyzes what kind of strategy Nokia took in terms of FDI. Foreign direct

investment (FDI) occurs when a company directly invests in production and/or marketing of products in a foreign country. FDI can be categorized in to two. 1. Greenfield Investments, when established as a new operation in a foreign country. 2. Acquiring and merging with existing firms of a foreign nation (Joint Ventures). Horizontal FDI is when the company is starting business in the same industry in the foreign nation. Dubai based Telecommunication Corporation buying over Tigo Sri Lanka in Oct 2009 to enter into the Sri Lankan market is a good example (Arab News, 2009). Vertical FDI takes place when a multinational corporation (MNC) owns some shares of a foreign enterprise, which supplies input for it or uses the output produced by the MNC (Hill & Jain, 2007). In terms of

motives, Foreign Direct Investment can be categorized as: 1. Market seeking FDIs 2. Resource seeking FDIs 3. Efficiency seeking FDIs FDIs that are undertaken to strengthen the existing market structure or explore the opportunities of new markets can be called 'market-seeking FDIs.' 'Resource-seeking FDIs' are aimed at factors of production which have more operational efficiency than those available in the home country of the investor. FDI activities may also be carried out to ensure optimization of available opportunities and economies of scale. In this case, the foreign direct investment is termed as 'efficiency-seeking. For Nokia it was more or less a mix of all of the above three motives. Some of the key examples for NOKIA can be listed as follows: Mergers, Collaborations and

Acquisitions by Nokia • Nokia Siemens Networks (NSN) - To develop a portfolio of products and service solutions to help operators run their networks more efficiently. • NAVTEQ acquisition. To get in to the Maps and navigation technology, which have become tremendously popular services on mobile devices. (NAVTEQ’s advanced map capabilities are critically important, as we believe that the next phase of Internet services will be defined by local relevance and your "social location". Nokia is well-positioned to take leadership here). • Collaborate with The Symbian Operating System to broaden the definition of the smartphone, by expanding smartphone features into the mid-range, and into new categories. • Working together with certain competitors, new players and

partners in new ways to tackle global environmental issues. • Agreements with Microsoft and IBM for corporate e-mail services. • Collaborate with Qualcomm to develop smartphones for the North American markets. • Nokia and Broadcom are cooperating on technologies a next generation 3G baseband, radio frequency (RF) and mixed signal chipset system supplier for worldwide markets., including Nokia modem technology (Tolkoff, 2009). In the 1990s, Nokia internationalized its R&D function, by setting up research centers abroad. By 1998, half of the company’s R&D was conducted outside of Finland. Some of these centers, located in regional clusters of scientific excellence (e.g. Silicon Valley), have helped Nokia tap knowledge from rivals and foreign markets. In addition,

Nokia has forged collaborations with leading universities in Finland and abroad (e.g. Massachusetts Institute of Technology) and has participated in various international R&D projects, in view of expanding the scope of its long- term technology development. By the end of the 1990s, co-operation with other companies, research institutes and universities had become a central part of Nokia’s global R&D strategy. This approach triggered two-way knowledge transfers, enabling Nokia to exploit external expertise and technology. Furthermore, by end 2000 Nokia had set up ten plants for the manufacturing of its mobile devices in nine different countries. These plants have handled huge amounts of parts (e.g. more than 100 billion in 2006). The challenges of managing such huge