Finland and Nokia: Creating the World’s Most Competitive Economy Harvard Case Solution & Analysis

Finland and Nokia: Creating the World’s Most Competitive Economy Case Study Analysis

PESTLE Analysis


Political interference has a negative impact on Nokia, due to the following reasons;

  • Political resistance on nationalizing the poorly performing private operators in the market.
  • Never materialized their policy for these poorly performed companies/operators.
  • Finland's government granted third-generation mobile network licenses without restricting the choice of standards.


Nokia face different economic issues that are discussed below;

  • In Europe, the economic turmoil hits them so hard, even the purchasing power of Nokia from their homeland was limited.
  • Low research and development capabilities with low development of new products.
  • Lack of financial resources to finance its different financial project. Like research and development projects to launch new devices.


The social impacts on Nokia are discussed below;

  • The change in culture affects customer behavior and not adopting the new culture affects them badly.
  • Nokia limit itself to utilize the Microsoft Windows phone to move them towards a huge downfall.


The technology impacts on Nokia was negative which are discussed below;

  • The resistance to using Microsoft Windows phone affects them badly.
  • Nokia resistsitselffor some potential markets including wearables etc.


The legal impacts on Nokia are discussed below;

  • Nokia facesa different legal environment because of operating globally.
  • The international market takes action against google to use Android.


  • Increase in the cost of recycling of its products.
  • Different environmental policies will increase their cost of production like; China designed its environmental policy to develop greenhouse gasses.

Suggested Alternatives

After analyzing the problem, the suggested alternatives are discussed below:

Alternative 1: Skilled Labors and Increase Employment Rate

One of the suggested alternative is that the company and the country increase the employment rate and skilled labor. Finland’s education is based on quality and internationalization. However, the company is facing the challenges of lack of skilled and qualified labor, and threats of unemployment. Therefore, the country should open new universities in order to raise the level of educationas well asto provide more opportunitiesfor the people for pursuing their education. This could prove to be beneficial in such a way that when the country generates skilled and qualified students; Nokia would hire the eligibleemployees for the company, resulting in an increase inthe employment rate. Additionally, the country can also provide incentives internship to the students and training to the employees.

Alternative 2: Shrink Public Expenditure

Another suggestive alternative to the country and the company is to shrink the public expenditure while improving service delivery. The main focus should be on non-critical sectors, such as: redirect investment on more worthy areas like R&D, public health care, and infrastructure. A huge investment in R&D can help to overcome the crisis and increase the country’s GDP. Effective research and development department surveys the changing trends of the consumer’s preferences. The Government should monitor the mergers and acquisitions in the private sector to reinforce the overall R&D’s efforts.

Alternative 3: Accelerate Diversification

One of the suggestive alternatives is that the government should develop a strategy to accelerate the diversification of the electronics and mobile sectors, to sustain its growth. The purpose is to create a multi-polar economy through growing investment in other sectors, such as: financial department and health care services. However, the country is less focused on the financial and health care services, and these sectors are less amenable to automation. Therefore, the country should enhance technology and increasemarket development to create value-added products and services. Moreover, diversity will help Nokia to gain a competitive advantage because it removes the barriers and conflicts between the employees.

Alternative 4: Evolution of Standards

As a rapid growth industry attracts many new handset competitors; it also increases fierce competition in the mobile communications industry. Many competitors with a background in consumer electronics, such as: Samsung, Sony, and Motorola joined the competition in the mobile industry. New standards also developed mobile internet services to enhance mobility. Finland and Nokia still maintain their position as a world’s leading economy and company, but the challenges from other competitors threaten their positions. Nokia should constantly update its standards through adopting new technologies. However, Nokia licensed some of its parts and components to other handset manufacturers,in order to encourage the adoption of its standards globally. Moreover, a new trend is on the verge of growth, regarding smartphones, for which the company can undertake the R&D department to leverage the new segment.


Using the analysis above; the firm and the country are recommendedto consider the second alternative,which is to shrink the public expenditure. They should develop a strategy to redirect the investment towards more worthy areas, such as: R&D, public health care and infrastructure. Effective research and development focuses on advancing the technology and telecommunications. With this strategy, the country and the company can gain a worldwide competitive advantage through private and public partnerships.

Moreover, the government should fund R&D in the telecommunication sector, in order to increase the GDP of the country. The company is focused on R&D for increasing its revenue by 9%,which also benefits the country for increasing the GDP. Nokia’s R&D facilities are located close to the leading universities and research centers, to attract students from around the globe. Furthermore, R&D should redefine its business strategy, and emphasize over the requirement of collaborating with the members of telecommunication cluster.

Moreover, the product and market development should be emphasized on, in order to gain the competitive advantage. This strategy will also help the company in mitigating the unemployment threat, low-skilled labor and enhancement of its research and development structure. This strategy plays a significant role in developing the future landscape for Finland, and provides new opportunities to exploit the leveraging of new technology. Investing in the home country creates new opportunities for the company. Moreover, targeting new emerging markets helpsthe company in mitigating the challenges and issues, and increasing its revenue and profits.

By leveraging the research and development; the company can play an important role in developing the future landscape of Finland. Furthermore, the company can provide more opportunities to the local citizens, in order to maintain its key position in the economic as well as the technological development. Apart from this, the company can also leverage the technological skills and knowledge that reside in Finland, to cope up with the issues that could rise with rapid innovation.................................


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