Risk Management And Communication Network

Lightning bolt struck Philips electronics manufacturing plant on March 2000. Small fire caused little damage but the smoke contaminated millions of chips ready for shipment to Nokia and Ericson. Through daily mentoring, Nokia estimated the damage and anticipated more losses from the delay in its cell phone production. Nokia sent an executive team to Philips to develop alternative production plans and setup another team to redesign the chips so as Philips and non-Philips manufactures can produce them. Another team was organized to look for additional manufacturers to produce the chips (Mukherjee, 2009). Ericsson and Nokia use 40% of the Philips’ plant production but Ericsson did not anticipate the risk in the plant’s production delay so Ericsson reported a major loss in that financial year while Nokia reported good profitability for the same year (Mukherjee, 2009). Risk management and excellent communication thorough a well establish business network helped Nokia overcome the delay and manage the risk efficiently.

References:

Mukherjee, A. (2009). The spider’s strategy: Creating networks to avert crisis, create change, and really get ahead. New Jersey, NY: Person Education.

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