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Principles and Practices of Management

Notes (ii) Internal change agents may be too close to the situation to have an objective
view of what needs to be done.
(b) External Change Agents: Change agents can also be external, such as outside
consultants. They bring an outsider's objective view to the organisation.
External change agents have certain advantages:
(i) They may be preferred by employees because of their impartiality.

(ii) They have more power in directing changes if employees perceive the change
agents as being trustworthy, possessing important expertise, and having a
track record that establishes credibility.
There are also disadvantages of using external change agents. They are:
(i) External change agents face certain problems, including their limited
knowledge of the organisation's history.
(ii) They may be viewed with suspicion by organisation members.

Case Study Nokia – Restructuring a Giant

okia was established in 1865 as a pulp and paper mill in Finland. During the
1960s, they expanded into the rubber and cable industries through a series of
Nmergers. In 1975, they expanded into many industries such as computers,
consumer electronics, and cell phones. In 1979, Nokia and Mobria entered into a joint
venture, which Nokia took over later to design and manufacture mobile phones. Since
1998, Nokia has been the market leader in the mobile phone industry transcending the
boundaries between countries and continents.
Nokia has diversified its business model time and again to maintain its leadership status
in the industry. To achieve growth and success, Nokia had to go through a number of
corporate restructurings to revive the organisation and adapt to its dynamically changing
goals and visions. Restructuring allowed Nokia to come to terms with the increasing
competition in the industry, creating an organisational culture that promotes innovation
and results in low attrition rates compared to the industry. In the past six years, Nokia has
had two major waves of restructuring comprising three restructuring processes in all. The
first wave came early in the 21st century, with two restructurings in 2002 and 2003
respectively. The second wave, currently in progress, aims to place Nokia at the vantage
point with respect to the future technology.
The First Wave
The late 1990's saw Nokia shifting its focus from 2G to software development. The growth
path in 2G was limited primarily because of bandwidth constraint and lack of protocols
for high speed downloads. Nokia had already begun work on 3G which would eventually
see the convergence of telephony, computing and the Internet. Nokia's widespread
restructuring at this time was an attempt to support this new corporate strategy. A
monolithic organisational structure was no longer appropriate for a market that required
flexibility and faster movement to tap opportunities. In 2002, Nokia split its mobile phone
division pillar into nine separate business centres based on geography, charging them

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