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The Steady Fall of Nokia

2 Pages 547 Words August 2018

The former mobile phone giant Nokia not only once closed a manufacturing facility in one country to open a new subsidiary in another. The worldwide known brand came in 1995 from Finland to Germany for two reasons: Labour was cheaper than in the north and the enterprise received subventions from the local government. Nevertheless, in 2008 the board of directors decided to move from Germany to Romania for the same reasons. As the company´s economic situation was stable at that time, labor unions called this an “unacceptable decision” and pressed charges against the company. But again, Nokia closed a subsidiary – this time in Cluj, Romania. This time the financial situation of the mobile phone manufacturer was different and to stay competitive in the market the company moved to Asia. Nevertheless, the newspapers of the world reported about the sad end of the Finnish brand a few years later.
As many people lost their jobs when Nokia was wandering through the countries, labour unions and newspapers called this an unacceptable behavior. But in fact, these decisions were neither cold-blooded nor irrational.
Society´s resources are not sufficient to meet all the needs and wishes of the people. Thus, Economics is about making choices due to the existence of scarcity. But while making these choices we come to realize that all the solutions discussed have several shortcomings, so-called tradeoffs. Following that, one of the tasks for the theory of economics is to detect trade-offs and thereby serve the most positive output for an institution (company, politics, etc.). Furthermore, when a decision is made the benefits of the second-best alternative are given up. These losses of benefits are called opportunity cost in the theory of economics. Since every resource (land, money, time, etc.) can be put to alternative uses, every action or decision has an associated opportunity cost.
Nokia was also making decisions due to the scarcity of res...

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