Nokia 2015 Annual Report Download - page 43

41NOKIA IN 2015
Business overview
Continued operational eciency
improvements
In 2015, Nokia Networks continued to
focuson operational improvement across
itsbusiness. In order to continue to make
theNetworks business more ecient and
high-performing and positioned for long-term
success, we aim to further strengthen our
productivity, eciency and competitive
coststructure. To help to achieve this, we will
bring performance excellence methodologies
such as Kaizen, Lean, and Six Sigma to the
operations acquired from Alcatel Lucent.
TheNetworks business will also pursue further
eciency gains from increased automation in
delivery of Global Services andin other areas,
as well as continued improvements in R&D
eciency and agility.
Cost of components and raw materials
There are several important factors driving
the protability and competitiveness of
ourNetworks business: scale, operational
eciency, and pricing and cost discipline.
Thecosts of our networks products comprise,
among others, components, manufacturing,
labor and overhead, royalties and licensing
fees, depreciation of product machinery,
logistics and warranty and other quality costs.
Targets and priorities
Due to the acquisition of Alcatel Lucent, we
believe it is not appropriate to provide an
annual outlook for the Networks business at
the present time, and we intend to provide
our full year outlook in conjunction with our
rst quarter interim results announcement in
May 2016. The 2016 net sales and operating
margin, excluding special items and purchase
price accounting-related items, are expected
to be inuenced by factors including:
■a flattish capex environment in 2016 for
ouroverall addressable market;
■a declining wireless infrastructure market
in2016;
■competitive industry dynamics;
■product and regional mix;
■the timing of major network deployments;
and
■execution of integration and synergy plans.