Organization design is how an organization aligns its structure with its objectives intending to improve effectiveness and efficiency. On the other hand, governance structure refers to the management roles within an organization, which entail setting procedures, rules, and informational guidelines. These two aspects have to be created so that they work in harmony to help an organization achieve its set goals. However, when a conflict between the two aspects (organization design and governance structure) ensues, there is a high probability of a company developing organization challenges like departmental conflict, poor communication, inconsistency, unclear goals, to mention a few (Abraham, 2012). This essay will address the organization design and governance structure of Nokia Company and the challenge that the institution is facing.
Nokia operates under a matrix structure, which theoretically allows employees to use their different functional skills and backgrounds to cumulatively contribute to achieving the organization's goals, especially by fostering innovation. This organization structure allows a horizontal model that allows employees from different departments to freely communicate. Other objectives include; safeguarding business integrity, aligning both management and employees' interest, and promoting transparency to stakeholders and shareholders, among others (Nokia, 2020). The company focusses on producing mobile phones and other smart devices that incorporate operating systems like Microsoft's Windows OS. Nokia has corporate governance bodies, including the Nokia Leadership Team, Board of Directors (BoD), Internal and External Auditors, and Shareholders (Masalin, 2003). The function of BoD is to manage is to hold operational responsibilities and manage operations like evaluating management strategies and other strategic decisions. There are three committees under the board: the Personnel Committee, the Audit Committee, and the Corporate Governance and Nomination Committee. The Nokia Leadership Team is elected by the board to foresee the firm's operative management. The CEO chairs the whole team at Nokia. The Internal Auditors report to the Audit Committee of the Board of Directors. External Auditors are elected by shareholders and then vetted by the Audit Committee of the Board of Directors.
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Nokia has experienced various challenges over the years. At one point, it has scrapped the position of chief information officers to reorganize leadership (Borhanuddin & Iqbal, 2016). Another challenge that Nokia faced is weak innovative management but the most significant is the stiff competition that the company faces from other tech giants like Samsung and Techno Mobile Company, which have made a breakthrough due to their cheap products. Before the advent of the Android OS, the market was open for fair competition (Leswing, 2020). When this OS came into play, Samsung worked hard to adopt it while Apple worked on their iOS. These two companies among other technology giants moved first to acquire dominance in the market before Nokia made a move. Its first choice, the Symbian OS proved ineffective to wade competition. Nokia was under competitive pressure because it failed to make technological strides like Apple and Samsung. The company did not realize that success in the Smartphone business heavily relied on how the company could leverage on its resources in the business ecosystem it was in. While the other companies were building a diverse community around their respective operating systems, Nokia failed to do the same around Symbian OS. Consequently, the company has continually reduced the sales it makes to below average of what its competitors make on a yearly basis. Moving forward, the company is forced to disrupt its strategy by laying off some employees to reduce on operation costs and become sustainable.
In conclusion, Nokia is a Technology Company that produces mobile phones and other smart devices. The company uses a mixed organization structure that allows for free communication among employees. It also has a governance structure that includes a five-branch leadership style namely; the Nokia Leadership Team, Board of Directors (BoD), Internal and External Auditors, and Shareholders. The company has faced several challenges like leadership reorganization, weak innovative management, and the most significant one as stiff competition as discussed above which can be countered by activities like strategically laying off of some employees, to reduce operation costs.
References
Abraham, S. C. (Ed.). (2012). Strategic Management for Organizations . Bridgepoint Education.
Borhanuddin, B., & Iqbal, A. (2016). Nokia: an historical case study. Electronic Journal of Computer Science and Information Technology: eJCIST , 6 (1).
Leswing , K. (mar 20, 2020).February saw the biggest fall ever in smartphone sales, says analyst firm. CBNC. https://www.cnbc.com/2020/03/20/coronavirus-smartphone-market-had-the-largest-fall-ever-in-february.html
Masalin, L. (2003). Nokia Leads Change through Continuous Learning . Academy of Management Learning & Education, 2(1), 68-72. Retrieved October 11, 2020, from http://www.jstor.org.proxy-library.ashford.edu/stable/40214167
Nokia, N. (2020). Committees of the Board. Retrieved October 10, 2020, from https://www.nokia.com/about-us/investors/corporate-governance/committees-of-the-board/
