Finland & Nokia

Finland & Nokia

About Finland

Finland is an Europian country that is surrounded by the Baltic sea in the south and the west. It has a border area of 1000 mile plus with Russia in the East, and Sweden and Norway in the northwest. It had a population of 5.3 million in 2001 across the area of 130,000 square miles. Finland was a part of Sweden for six centuries until 1809. It achieved independence on December 6, 1917. But it was highly dependent on the Soviet Union. After the 1990s Finland had heavy investment in social welfare and public infrastructure.

Within 2001, Finland had become one of the fastest growing and mast competitive economies in the world. Though it faced challenge regarding the growth rates and major export markets.

PEST Analysis

Political Environment:

Finland is an independent coutry since 1917. From 1919, it had a constitution and the form of govt is 'semi-presidential'. The president had policy making powers in foreign relation and the right to dissolve parliament and call election. On March 1, 2000, Finland adopted a new constitution that is the combination of four previous constitutional acts.

Though Finland was an independent country, the country was controlled and dominated by Soviet Union. The president Urho Kekkoueu also influenced the political agenda within 1956 to 1982.

The Finnish telecommunication sector was never monopolized by state. After independence in 1917, a national public telecommunication operator (PTT) Telecom Finland was established to regulate the telecom sector.

The Soviet Union dominated the trade of Finland. In 1989, when Soviet Union dissolved, the experts of Finland decreased. For the reason of decrease in pulp and paper price Finland's export also decreased.

The country had joined the European Free Trade Assotiation (EFTA) in 1961. In 1993, the policy guideline for the implication for national competitiveness was outlined as "A National Industrial Strategy" by the minisrty of Trade and industry.

In that year, Finland joined the European Economic Area (EEA). In 1995, Finland became a member of the European Union (EU). For this reason, trade and business was influenced positively.

In 1994, the Regional Development Act strengthened the policy making powers of the region. And by this "Center's of Excellence" concept was developed as the part of the new technology policy.

In 1987, a mew Telecommunication Service Act had separated the regulatory and operator functions of the PTT, transferring regulatory authority from the PTT to an independent body under the ministry of Transport and Communications. The private operator get flexibility by this step.

In 2001, government of Finland decided to limit intervention in the telecommunication sector and granted third-generation mobile network licenses without restriction about the choice of standard.

Economic Environment:

Finland's economy was largely dependent on the natural resources and its long coastline. The three major industries were pulp and paper, wood products and engineered metal products.

From 1950s to 1980s Finland was the important supplier of manufactured products to the Soviet Union.

In financial market regulation, existing policies came under increasing pressure in the 1980s for making Finland uncompetitive.

There was the most severe crisis in Finnish economy in 1990s. In 1991, real GDP fell by 6.2%. In 1992, it last another 3.3%. Exports dropped by 13% in dollar terms in 1991. Unemployment rose from 3.5% in 1990 to 17.9% in 1993. In November 1991, the marrka was devalued by 12%.

To overcome the crisis, tight macroeconomic policies were adopted. Government cut their expenditure and floated 10 year government bonds in 1992. Finland was able to re-establish a stable parity to European Union member currencies in 1996.

Finland's financial markets were characterized by strong ties between companies and their banks. The liberalization of Finnish capital market was continued since 1980s and in 1990s households were allowed to borrow in foreign currencies.

In 1993, restriction on foreign ownership of Finnish firm were removed. For this reason venture capitalists emerged in this period.

After becoming the member of European Union (EU) in 1995, Finnish economy attracted significant amounts of inward FDI.

Social Environment:

Finland was a country of homogenious people with avery low proportion of immigrants. Its people had close cultural ties. Most of the people used Finnish language. Besides their language some people use Swedish and English also.

Finland had been a country with a very large public sector and strong welfare aspiration. It had developed a sophisticated public education and university system. This indicates that Finland had a large human capital who were well educated. It had encouraged many companies to invest in Finland because they would get quality human resources.

Wage dispersion in the Finnsh economy was low which means the society was stable compared to other OECD countries.

Technological Environment:

In 1980s, there were a series of policy change regarding science and technology. When Finland's economy was losing ground internationally, its R&D expenditure as a share of GDP was increased continuously from the early 1980s.

In 1983 the National Technology Agency (TEKES) was founded whisch became the main implementer of technology policy. In March 1987, another research related body, the Science and Technology Policy council was founded.

From past situation, in 1917, a national public telecommunication operator (PTT) Telecom finland was established and in 1921 private telephone operator founded the "Association of Telephone Companies".

In 1969, Nordic Telecom conference was held and in 1981, Nordic Mobile Telephone (NMT) Network was launched. It developed roaming technology which made the Nordic region the world largest single mobile market at that time. By 1985, the NMT standard had a leading position in a number of foreign markets.

After the financial crisis of 1990s, the government decided to make additional resources available for research and development. The increasing focus on R&D and tecnology intensive activities increased the demand for skilled employees.

Finland was among the world