Fredrick Idestam established the Nokia Corporation by taking over a cable company and a rubber firm. It is one of the top mobile supplying companies around the globe which delivers extraordinary services to its customers. The problem has been the decline in the share of the company in the European market and specially the 13 percent reduction in Finnish market. In this scenario, Nokia, the Finnish organization, has been facing numerous problems because there has been a change in the taste/preference of the potential consumers; the technology being used had been outdated and there are far better options available to the consumers with advanced technology; and there has been an increase in the competition from abroad which has hurt the market share.
Nokia could not cope up with the changing conditions of the market and consequently ended up in losing its customers to its competitors; the appearance and the technology in use by the company was obsolete whereas, its competitors were offering hi-tech mobiles with good quality. The company is affected by social change of consumer preference which led to declining the share of the company and so the retailers also switched their brand favor. But most importantly the Finnish economy has been adversely impacted: the loss in jobs raised the unemployment percentage; and the country’s leadership status in technology has been taken away. The environmental factors are interlinked together.
Change is the only element which ensures the sustainability and continuity of the business in today’s dynamic environment. The business environment is on a continuous change due to the evolutionary technologies and the globalization; businesses require incorporating dynamism in the core structure; if change is not incorporated into the business, it would lose its competitive edge and its survival would be doubtful. In order to remain competitive and survive, businesses require analyzing its internal and external environment to identify the need to change. The most significant forces which make the change necessary for survival include the political forces, economic environment, social forces and the technological forces (Cooper and Taylor, 2007).
The business operations are affected by internal and external factors both; in order to survive; the company must be aware of the changes and cope up by implementing simultaneous changes in its operations as well as structure. The environment plays a critical role in identifying the goals, strategies and the duties within the organization (Cooper and Taylor, 2007). The external environment in particular is being changed rapidly due to globalization and the businesses must identify the required changes so that it can change accordingly. Any change in political environment, economic environment or even in the technological factors is critical for the operations of the business; change in technology is important for businesses so that it may not lag behind others; any change in legal requirements in doing business or legal policies must be adhered to whether it is regarding quality assurance or consumer laws. Economy is interlinked to business operations; a boost in economy means businesses have chances of growing and so they must act accordingly. Businesses who do not act according to the changing environmental factors lose their share (Koumparoulis, 2013).
The method of multiple-cause diagram helps in untangling of thoughts; it helps to communicate understanding; and the most important thing is that with the help of this method, businesses tend to identify the mutual points which lead to causing any event (Hopkins, 2009). For Nike, this diagram can be really helpful; it is an international brand which requires clear identification of the constant changes taking place in the economy and also must be fully aware of all the different causes and links between the problems to the company. This also includes what and how the company is being affected by its external environment through PEST analysis. This diagram method in particular, would help the company in finding the intervention points which are identified through the environmental analysis of the company.
The diagram method would guide the company in identifying the problems that are leading towards the crisis through the situation analysis; moreover, it helps to plan according to the multiple causes that are identified. The management can then bring changes into its strategies and operations which lead to the organizational growth (Tseng, 2010). Specially, with the ease in access and globalization, the foreign competition plays significant roles; Nike and all other companies must prepare for international forces of competition. Using such methods can be very helpful to them as it covers all the aspects of the business from the strategic perspectives.
Cooper, C. and Taylor, H. (2007). Organizational Change--Threat or Challenge?. Journal of Organizational Change Management, 1 (1), pp. 68-80.
Hopkins, B. (2009). Cultural differences and improving performance. Farnham, England: Gower.
Koumparoulis, D. (2013). PEST Analysis: The case of E-shop. International Journal of Economy, Management and Social Sciences, 2 (2), pp. 31-36.
Tseng, M. (2010). An assessment of cause and effect decision-making model for firm environmental knowledge management capacities in uncertainty. Environmental monitoring and assessment, 161 (1-4), pp. 549--564.