GLOBAL INVESTING: Nokia goes from humble origins to global success: The world's leading maker of cell phones has always had to look beyond its Finnish roots THE AWAY GAME
Financial Times; Mar 7, 2002
By PAUL TAYLOR
Perhaps more than any other company, Nokia's name is synonymous with the cell phones that over the past 20 years have become an essential business tool and sometimes personal fashion statement.
But it was not always this way. The company was set up in 1885 and takes its name from a small mill and river near the city of Tampere in southern Finland where it began business as a paper manufacturer.
Since then it has produced rubber boots, raincoats, hunting rifles and cables. It went into consumer electronics in the 1950s and made television sets and generated electricity.
But significantly Nokia has always had to look outside Finland, a country with a population of 5m, for its growth. By the late 1980s, Nokia was Ireland's leading supplier of toilet paper, the world's only supplier of studded winter bicycle tyres and the provider of electricity to 350 Egyptian villages.
Nokia's success in the fiercely competitive global telecommunications market owes much to Jorma Ollila, chief executive since 1992.
Mr Ollila joined Nokia in 1985 and was chief financial officer between 1986 and 1989 when Nokia made its first - failed - attempt to transform itself from a traditional industrial group into a high-tech conglomerate. He then spent two years in charge of Nokia's mobile phones division just as the market was beginning to grow strongly.
As chief executive, Mr Ollila re-focused Nokia on the mobile telecoms market and the emerging pan-European Global System for Mobiles, which has become a world standard for digital mobile communications. Nokia supplies the mobile telecoms network equipment as well as the handsets for use on these digital networks that span the globe.
Today the company is organised into two business groups, Nokia Networks and Nokia Mobile Phones, together with a separate venture capital unit and corporate research and development organisation - Nokia Research Center that employs about 35 per cent of its total workforce.
It is the world's leading manufacturer of mobile phones ahead of its arch-rivals, Motorola of the US and Ericsson of Sweden, and has 18 production facilities in 10 countries, research and development facilities in 15 nations and more than a dozen joint ventures, including eight in China.
With 35 per cent of the mobile phone market, it had sales in more than 130 countries of Euros 31.2bn (Dollars 28.1bn) last year and pre-tax profits of Euros 3.5bn. Nokia has broadened its overseas markets and has expanded particularly aggressively in the Americas, which account for 25 per cent of sales up from virtually nothing a decade ago.
The US is now Nokia's biggest single market with sales last year of Euros 5.6bn followed by China (Euros 3.4bn and Britain (Euros 2.8bn). Sales in Finland last year totalled Euros 453m.
Meanwhile the Nokia brand is now ranked by the Interbrand consultancy as the world's fifth most valuable after Coca-Cola, Microsoft, International Business Machines and Intel. Nokia is the only non-US company in the top 10. It was in 2001 the 10th largest traded stock on the New York Stock Exchange.
Just over 40 per cent of its 54,000 employees are in Finland and the group has become increasingly international in both its outlook and character.
But despite outward manifestations of globalisation, insiders say Nokia still retains its 'Finnishness', including a certain corporate stoicism. Dan Steinbock, author of The Nokia Revolution, a history of the company, says being based in Finland means Nokia "has endured Russian oppression, a Bolshevik revolution, a struggle for independence, a civil war, a worldwide depression, two world wars and the premature death of key executives."
Indeed for years, many customers of Nokia's nascent consumer electronics business thought it was Japanese - a misapprehension that the company, which then needed all the help it could get, apparently did little to dispel.
Copyright: The Financial Times Limited 1995-2002
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