1. How was Finland able to move from a sleepy economy to one of the most competitive nations in the world by the end of the 1990’s?
Finland was considered a sleepy country even after their independence from Sweden, depending its economy mainly on the Soviet Union by exporting its natural resources. Finland however slowly but constantly developed its economy up to the OECD average, following the models of its Nordic neighbors to invest highly in social welfare and public infrastructure. Also, Finland had gone though dramatic change in its macroeconomic policy starting from 1970s, featuring fixed nominal exchange rate, centralized wage bargaining, and an increasing fiscal budget though the 1980s. Strict …show more content…
Nokia was the first to build global production line in mobile communications sector, 5 to 10 years ahead of other competitors. Nokia surely was lucky to start its investment on mobile communication with no global competitor, but its foresight of seeing the possibility of mobile communications, courage to fully concentrate in one sector and aggressive strategy to prevent and differentiate from other competitors were no luck.
4. What are the critical challenges for the Finnish government in 2001? For participants in the Finnish mobile communications cluster? For Nokia?
As rapid industry growth attracted many new handset competitors, many with a background in consumer electronics such as Samsung and Sony joined the competition in mobile communication sector. Finland and Nokia still maintained their position as a world leading nation and company in mobile communication sector but constant challenge from other competitors threat their positions. New technology constantly forced the mobile communications to update their standards pressuring and invest more on the technologies. As the competitions in mobile communication overheat, companies of Finland faced declined. Nokia reduced their employees in order to cut their cost spending and Finland, where more than half of Nokia’s production line was established suffered from a great unemployment rate. Moreover as the technology improved, Finland faced shortages of