Nokia: Business Interests vs German Pressures

1807 Words May 5th, 2012 8 Pages
Nokia: Business Interests vs German Pressures

Nokia is the largest mobile handset maker in the world with a 40% market share. The mobile handset industry is marked by declining prices and depressed margins making companies look at low-cost production options. Nokia, to be more competitive, is relocating its German plant to Romania where the wages are 10 times lower. This abrupt announcement however stirs a wave of resentment with employees, trade unions, politicians and business leaders who condemned Nokia's move. Nokia is also accused of being insensitive to German culture and greedy for misusing state subsidies. However, Nokia while refusing to alter its decision says that in a repeat scenario, the company would follow exactly the same
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 Shift production to low-cost locations. Have certain locations supply specific markets

o Finland, Germany, Hungary plants supply Europe, Middle East, Africa.

o Brazil and Mexico plants supply North and South America.

o China, India, S. Korea plants supply China and Asia-Pacific.

 Increased competition due to globalization, people can sell anywhere.
 Take advantage of a country’ resources (cheap labor, human intellect, lower taxes etc.)
 Take advantage of a country’s less strict labor laws (ex. child labor)

Q2.1: was the German backlash against Nokia justified?

No country would prefer a MNC like Nokia to close its plant and hence affecting 2300 workers and their families. a) Job less count to grow up , b)the overall economic development of the region to get affected. In this particular scenario it was obvious for German backlash as the operating plant is a profit making unit and not a sick unit. It was justified more because the Nokia authority had failed to explain clearly the reason for the closure of the plant to the employees Nokia’s refusal to enter at any kind of discussion with the German authorities to find a mid way to continue the operations. Nokia’s decision is not only unjustified but also unethical. Nokia in our opinion should have involved the labor unions that its employees are represented by as well as German authorities. Nokia could have saved its face and avoided making enemies in Europe by
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