Challenges of growth

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Challenges of growth

In the 1980s, during the era of its CEO Kari Kairamo, Nokia expanded into new fields, mostly by acquisitions. In the late 1980s and early 1990s, the corporation ran into serious financial problems, a major reason being its heavy losses by the television manufacturing division and businesses that were just too diverse.[62] These problems, and a suspected total burnout, probably contributed to Kairamo taking his own life in 1988. After Kairamo's death, Simo Vuorilehto became Nokia's Chairman and CEO. In 1990–1993, Finland underwent severe economic depression,[63] which also struck Nokia. Under Vuorilehto's management, Nokia was severely overhauled. The company responded by streamlining its telecommunications divisions, and by divesting itself of the television and PC divisions.[64]

Probably the most important strategic change in Nokia's history was made in 1992, however, when the new CEO Jorma Ollila made a crucial strategic decision to concentrate solely on telecommunications.[37] Thus, during the rest of the 1990s, the rubber, cable and consumer electronics divisions were gradually sold as Nokia continued to divest itself of all of its non-telecommunications businesses.[37]

As late as 1991, more than a quarter of Nokia's turnover still came from sales in Finland. However, after the strategic change of 1992, Nokia saw a huge increase in sales to North America, South America and Asia.[65] The exploding worldwide popularity of mobile telephones, beyond even Nokia's most optimistic predictions, caused a logistics crisis in the mid-1990s.[66] This prompted Nokia to overhaul its entire logistics operation.[67] By 1998, Nokia’s focus on telecommunications and its early investment in GSM technologies had made the company the world's largest mobile phone manufacturer.[65] Between 1996 and 2001, Nokia’s turnover increased almost fivefold from 6.5 billion euros to 31 billion euros.[65] Logistics continues to be one of Nokia's major advantages over its rivals, along with greater economies of scale.[68][6




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