Discussion Questions1. Were Nokia’s leaders acting unethically when they moved their facilities from Germany toRomania and from Romania to Asia, or was this a legitimate business decision to reducecosts and improve profits? How does this decision compare with Nokia’s actions in Iran?2. Why did Nokia’s customer base in Europe and Iran react to the company’s decisions bywithdrawing patronage? Do customers always respond to unethical decisions in this way?3. How difficult is it to ensure ethical decision making in a business that is organized as a“network of equals”? How does this impact accountability? Does this explain why Nokiakept the investigation secret? 2. Ethical and Business Setbacks for NokiaOn the morning of September 5, 2012, Nokia staged a press conference in New York Cityto announce the official launch of its new Windows 8 smartphones, the Lumia 920 and 820.The event focused heavily on the phone's PureView camera technology. Videos played at thepress conference and online emphasized the phone's stabilizing technology. One advertise-ment in particular extolled the steadiness of the smartphone's camera with a video showinga woman bicycling by a riverbank in Helsinki, supposedly shot on a Lumia 920 by a youngman bicycling beside the woman. However, the online tech magazine The Verge decided totake a closer look at the video, and while examining it, a researcher for the magazine noticeda reflection in a window of a trailer behind the woman on the bike. The reflection showed ayoung man not on a bicycle, but rather in a van-holding a large camera.52 Further investiga-tion revealed that the shot was taken by a steadicam, a professional motion picture camera,held by a cameraman in the van.53 By 4:30 p.m. Eastern time, the word was out. And by8:00 p.m. the same day, Nokia had updated the video with a disclaimer and issued a formalapology. 4Five days after the Lumia advertisement fiasco, Nokia announced that it would conduct anethics review of the incident. "What we understand to date is that it was nobody's intention tomislead, but there was poor judgment in the decision not to use a disclaimer," Nokia spokes-person Susan Sheehan said. She refused to identify the company responsible for producing theadvertisement and stated that Nokia would conduct its investigation "quickly, fairly and privately."55 The company quickly concluded its investigation, but has not revealed the results ofits investigation, other than to acknowledge that “poor judgment" was used.56 Nor has Nokia notmade public any ethics initiative or punitive measures taken as a result of the falseadvertisement.Nokia is one of the world's largest mobile phone manufacturers. It has a 120-year history ofworker- and community-centered operations, and a sterling reputation for environmental con-sciousness. Its corporate manifesto, “The Nokia Way," emphasizes people-centered decisionmaking in a network of equals.7 The camera fiasco, however, was the latest in a string of ethi-cal and business setbacks that have set the giant corporation reeling.Nokia announced in 2007 that it was moving production from its facility in Bochum,Germany, to the relatively low-wage environment of Romania. 58 A consumer backlash ensued.The company was eventually required to pay 60 million Euros ($93 million) back to the Germanstate for subsidies paid to the company for locating its facilities in Germany. In addition, a boy-cott was organized by German trade unions, and several cabinet ministers publicly changed toother brands of cell phones. 59 Nokia saw its share of the German smartphone market drop from70 percent to 50 percent between the factory closure announcement and the end of 2009. Iron-ically, Nokia's 2011 decision to close the Romanian facility and move manufacturing to Asia metwith similar reactions in Romania. 60In 2008, Nokia Siemens Networks, a joint venture between Nokia and Siemens AG,reportedly provided Iran's monopoly telecom company with technology that allowed it to inter-cept the Internet communications of its citizens to an unprecedented degree.1 The technologyenables the Iranian government to monitor voice calls, text messaging, instant messages, andWeb traffic.62 Nokia officials insisted that the system constituted "a standard architecture thatthe world's governments use for lawful intercept" and added that the company had refused tosell the technology to the governments of Burma and China. However, in June 2009, theemerging pro-democracy movement in Iran organized a boycott of Nokia devices and messag-ing services.* Finally, on June 2, 2010, Nokia Siemens Networks held a press conference toapologize for the role its technology played in the brutal crackdown on Iranian demonstratorsthe year before." In late 2011, Nokia-Siemens Networks announced that it would begin toreduce its business commitments in Iran and would no longer take on any new business withIranian customers.,6466In 2009, the company strongly supported a law in its native Finland allowing for corpora-tions to monitor the electronic correspondence of its workers. While the protection of tradesecrets is a legitimate corporate goal, and similar activities are allowed in many European Unioncountries, Finnish culture is strongly in favor of privacy and the right to confidentiality." The67campaign did little to reassure workers that the Nokia commitment to trust and open decisionmaking was going to continue.The last several years have also been a time of unprecedented financial upheaval forNokia. Since 2009, Nokia has lost over a third of its revenues, downsized its workforce byabout 25 percent, and seen its market capitalization drop by over $100 billion.68 wWhile theLumia line of smartphones continues to be the market leader in Europe, Nokia's share of theU.S. market has dropped to less than one percent.69 The public's response to Nokia's poorethical decisions has cost the company heavily. The question remains whether Nokia will learnfrom its current troubles and adapt quickly enough to satisfy its customers, shareholders, andother stakeholders.

Answered: Discussion Questions 1. Were Nokia’s…

Social Psychology (10th Edition)

10th Edition

ISBN:9780134641287

Author:Elliot Aronson, Timothy D. Wilson, Robin M. Akert, Samuel R. Sommers

Publisher:Elliot Aronson, Timothy D. Wilson, Robin M. Akert, Samuel R. Sommers

Chapter1: Introducing Social Psychology

Section: Chapter Questions

Problem 1RQ1

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Discussion Questions
1. Were Nokia’s leaders acting unethically when they moved their facilities from Germany to
Romania and from Romania to Asia, or was this a legitimate business decision to reduce
costs and improve profits? How does this decision compare with Nokia’s actions in Iran?
2. Why did Nokia’s customer base in Europe and Iran react to the company’s decisions by
withdrawing patronage? Do customers always respond to unethical decisions in this way?
3. How difficult is it to ensure ethical decision making in a business that is organized as a
“network of equals”? How does this impact accountability? Does this explain why Nokia
kept the investigation secret?