Nokia's Lumia deal with China Mobile raises hopes

Nokia is a Finnish multinational company, that also helped develop the GSM system for mobile communication and has been the world’s largest vendor of mobile phone for quite some time. But in the past few years since the evolution of the smartphone/ internet enabled devices, Nokia has seen its market share slowly erode away to strong completion from Apple with the iPhone & Samsung phones powered by Google’s android operating system. In an attempt to strike a balance and stop the ongoing destruction of its once mighty market share, Nokia decided to dump its existing Symbian operating system and signed up with Microsoft to use Windows as their primary operating system for high end smart phones. 

Nokia is now in talks with China Mobile – the world’s biggest mobile phone service operator, on a sales deal for the new Nokia Lumia smartphone/ handset to its subscribers. China Mobile has over 700 million subscribers and also has 4G network capability. But China Mobile is one of the providers that do not have a contract with Apple to sell iPhones. Hence China Mobile is looking to market the Nokia Lumia smart phone in an attempt to win back the market share that it lost since the launch of the Apple iPhone.

Word of this partnership in the making sent Nokia’s stock prices in an upward direction. Nokia is banking on Microsoft’s Windows 8 platform to launch itself back into the smart phone market and from what it seems is making the right moves in that direction teaming up with China Mobile. Nokia released a Lumia variant which is the cheapest Windows 8 phone on the market. It will definitely be completion to the iPhone and Samsung devices and Nokia hopes to release higher/pricier variants of the Lumia in an effort to capture different segments of the market. Now with China Mobile it will also have a 4G cellular network to back it up and provide an excellent customer experience. Microsoft is also looking to launch itself as a key player in the cellular operating system market and is banking on Windows 8 mobile operating system being a success. But it seem to be of the greatest value to Nokia since the company has seen its market share from the once 50% to almost 10% today.

What is to be seen in the days to come is how this strategy or last ditch effort as some may call it will play out for Nokia and also China Mobile & Microsoft. And also if Nokia can extrapolate its strategy globally to regain market its market share.

 

References

http://www.reuters.com/article/2012/12/05/us-nokia-china-idUSBRE8B408I20121205

http://www.forbes.com/sites/ericsavitz/2012/06/14/nokia-doomed/

http://www.forbes.com/sites/greatspeculations/2012/12/05/nokia-scores-big-win-with-china-mobile-partnership-for-lumia-920t/

Citigroup to Cut 11,000 Jobs and Take $1 Billion Charge

Citigroup to Cut 11,000 Jobs and Take $1 Billion Charge

Current Event

Issue:

Citigroup announced on Wednesday that it would cut 11,000 jobs, reducing its work force by roughly 4 percent in an effort to cut costs and increase operating efficiency.

Overview:

Citigroup announced on Wednesday that it would cut 11,000 jobs, a move that will save the company more than $1 billion annually. It will reduce their work force in worldwide by roughly 4 percent in an effort to cut costs and increase operating efficiency.

Under the reduction, 1,900 jobs will be eliminated in the institutional clients division. Another 6,200 positions will be removed from the bank’s consumer banking business, along with 2,600 jobs in the operations and technology group.

Most of the layoffs will be operations and technology support staffers.

Its repositioning plans will increase efficiency, streamline operations and optimize the company’s consumer footprint. Citigroup expects to record charges of $1 billion in the fourth quarter of this year and $100 million in the first quarter of 2013 in connection with the plans. It expects the repositioning to create $900 million in expense savings next year, and that annual expense savings will exceed $1.1 billion annually starting in 2014.

The overhaul is the first big move by new CEO Michael Corbat. Corbat took the role in October from the former CEO Vikram Pandit, who quit abruptly amid reported tensions with the company’s board. Citigroup say that these actions are logical steps in Citigroup’s transformation, which is to increase its operating efficiency by cutting branches and products where the scale does not provide for meaningful returns. Citigroup intend to continue a strategy of focusing on the bank’s core business.

Managerial implications:

The reduction can save Citigroup lots of cost in future. Citigroup is looking to drive profitability higher for its shareholders and doing it through cost savings and improved efficiencies. However, most of the layoffs will be operations and technology support staffers, often resulting in bank branches being closed. As more and more branches closed, many consumers will leave Citigroup.

Reference:

1. “Citigroup to Cut 11,000 Jobs and Take $1 Billion Charge”

http://dealbook.nytimes.com/2012/12/05/citi-to-cut-11000-jobs-and-take-1-billion-charge/?hp

2. “Citigroup new CEO Michael Corbat to slash 11,000 jobs worldwide, 1,700 in New York City” 

http://www.nydailynews.com/new-york/citigroup-new-ceo-michael-corbat-slash-11-000-jobs-worldwide-1-700-new-york-city-article-1.1213922

3. “The Citigroup Bloodbath: New CEO Cuts 11,000 Jobs”

http://www.forbes.com/sites/nathanvardi/2012/12/05/the-citigroup-bloodbath-new-ceo-cuts-11000-jobs/

United Airlines Struggling, Post Merger with Continental

Issue:

Two years after United Airlines merged with Continental Airlines, the new United is still struggling with its operations, staff, and customers.

Overview:

The United-Continental merger of 2010 was supposed to create a powerhouse Airline, servicing 8 major hubs, 5,500 flights daily, and offering passengers close to 400 destination options.  While all of this still might be true, the merger has been anything but smooth sailing for United.  In addition to the financial burden ($60million charge in 3rd quarter for merger related expense), United's booking system has failed twice, and it has the worst on-time record of all the major airlines.  There was hope that everything was supposed to be running smooth at this point, considering that Continental was among the top performing airlines.

There are also obviously merger related problems that the new airline is facing.  They are still working on merging the two computer systems, and technologies which is going to be a hassle depending on how different the systems are.  United now also has to deal with two different sets of employees, Continental was in good standing with their employees, whereas United wasn't.  This also means that United has to renegotiate both sets of contracts for the employees to come up with one new one for the new merger.  This is going to pose a problem, especially if the two separate companies treated their employees differently.  

History says that there is hope for this new merger, both US Airways and Delta experienced growing pains the years following their mergers.  Now both companies are doing well, so hopefully the United merger will follow their lead.

Manager implications:

Mergers are always difficult no matter what the industry.  There is always going to be some lag time before the new firm can run smoothly and start seeing the benefits they had hoped for.  This is of course assuming the merger can succeed, according to many studies the failure rate starts around 50%.  United use the expertise from Continental, to get their on-time records up, and improve employee relations.  They need to utilize the most important benefit from merging, and that is the sharing of information.


Mouawad, Jad "For United, Big Problems at Biggest Airline
"   http://www.nytimes.com/2012/11/29/business/united-is-struggling-two-years-after-its-merger-with-continental.html?pagewanted=all  28 Nov 2012