Dear Reader

Business Development is a complex topic. In such case the questions raised are more important than potential answers. Therefore, this blog will focus on presenting questions. There will be answers, full or partial, to be supplamented by links presented when relevant. The answers from my experience will be clearer once the questions are clearer.

While this is not a discussion forum, readers are invited to comment, and the comments will help determine the topics and current issues to be explained in the future.


Monday, February 14, 2011

Nokia Downsizing

Nokia and Microsoft coming together worry the Finnish unions as well as the government. The relatively large impact of Nokia in the Finnish economy and the potential negative impact any policy change in the company may have on the economy has worried the government for several years. The downsizing expected (size not known yet-introduce link here) of even 10% only of the 20,000 employees the firm has in Finland could mean 2,000 new job seekers on the market at one go. For a relatively small country to absorb such a rush of people would take time and some effort.
In Israel there have been talks that the economy needs some international local giants. However it is important to remember that once such giants are created, any strategic change, whether in response to market changes, technology shift, emergence of new markets, mergers and Acquisitions, could lead to massive lay-offs and thus to economic and social crisis.
Medium size companies "well entrenched" in the local economy with a view towards export would seem to have a better chance of stabilizing the economy. They can increase production, or retract with marginal over-all effect on the economy. Even if purchased or merged into others they will lay-off smaller numbers of employees that the sectors will absorb faster than large numbers. If such firms are dispersed over diversified sectors they will also reduce the national economy sensitivity to international market changes.
A variety of firms with 50-200 Million $ in sales will enable a stable economy that can deal with changes in international markets, provide employment on reliable basis and one that is less sensitive to the changes in any single firm.
Finland has been trying for several years to encourage the growth mechanisms of small companies so that they could grow into medium size players- so far with limited success. The change in Nokia will create a crisis in the Finnish economy, hopefully not too sever. It could also be the break that Finland needs from the decisive role Nokia plays in its economy. Unfortunately due to the trouble it is having with its southern parts the EU will probably be able to assist Finland only in a limited way.