Introduction to Supply Chain Management
Nokia’s Supply Chain Management Case Analysis
This case study is an analysis of two very similar companies, Ericsson and Nokia, in the same situation and how they react. The case shows the repercussions of the reaction or lack thereof and how each company was ultimately affected by their decisions. There are several major issues that need to discussed. This analysis will look at each company individually and what they did right and what they did wrong, in hindsight, realizing that it is very easy to look back at an event but usually not so easy when the event is unfolding.
The first company is Nokia. According to the case, Nokia was the world’s leader in cell phone sales and the largest corporation in Europe by market capitalization in the year 2000. The company originally started out in wood pulp production but converted to electronics by 1999. They had $19.9 billion is sales and 60,000 employees. Cell phones accounted for 70 percent of Nokia’s revenue. In 1999 Nokia sold 128 million phones. Nokia accomplished this transition by investing profits into new technology and electronics. Nokia was always on the cutting edge and cell phone become their core business.
The second company looked at in the case is Ericsson. According to the case, Ericsson was founded in 1876. Ericsson started out as a telephone manufacturer. By 2000, Ericsson had 100,000 employees and their net sales were $25 billion. Ericsson continuously struggled to keep up with its competitors in manufacturing phones and was branching out to building landline and mobile networks.Network building was Ericsson’s core competency.
On March 17, 2000, a fire at Royal Philips Electronics effected both companies. This is because both companies used the same same chip manufactured at this plant. Together they used 40% of the plant’s capacity to manufacture this chip. Both companies were basing new phones on this chip technology and both were set to launch shortly after the fire happened.