[/b]
[/b]
[/b]
[/b]
[/b]
KC COLLEGE[/b]
SYBMS[/b]
STRATEGIC MANAGEMENT PROJECT BY PROFESSOR TONIA MEHRA[/b]
Date: 15/09/2010[/b]
Business Environment and Strategies of Nokia Company
Purpose of Study
Nokia is one of the best mobile companies in the market. They work not only for profit but also customer’s satisfaction. Their aim is to earn profits through providing better services to the consumers. They believe in maintaining good relations with consumers and it shows how they have managed to maintain. We have selected this project because nokia is one of leading companies and it is leading having only one product line in such a competitive market and still its leading, this shows that their strategies vision is very powerful and it would be useful for us to learn its environment and it strategies.
Overview of the Company
Nokia was established in 1865 as a pulp and paper mill in Finland. During the 1960s, they expanded into the rubber and cable industries through a series of mergers. In 1975, they expanded into many industries such as computers, consumer electronics, and cell phones. In 1979, Nokia and Mobria entered into a joint venture, which Nokia took over later to design and manufacture mobile phones1 . Since 1998, Nokia has been the market leader in the mobile phone industry transcending the boundaries between countries and continents.
Nokia is the world’s number one mobile phone company and a successor in the global phone Industry. Being an Industry leader on a Global level, Nokia is fully engaged into excelling environmental performance and assume Cooperate responsibility in all their operations. It therefore maintains its position by living up to its slogan, “Connecting People”, by abiding to three main objectives; Speed of anticipation and fulfilling evolving customer and market needs, strong customer recognition and upholding a solid and positive relationship with its stakeholders. However, as any other organisation,
Nokia faces many challenges which forces flexibility and ease of transformation on their way of executing operations.
External Environment
v POLITICAL/LEGAL ENVIRONMENT[/b]
Political/Legal environment are usually considered as one because they are enforced by the nation’s government. It is vital for Nokia’s operation because different nations with their respective government have different Political/Legal platforms respectively; Nokia operating on a Organisational and Social Environment: Group Assignment global level must abide to ground rules and regulation in different markets of host countries around the world. To its success, Nokia surveys its scope of limits in order to isolate prohibited actions, regulations and aid from the government so as to withstand the international trade. Quotas (limit to goods imported), embargoes (restrictions), tariff and tax charges, subsidies and patents over certain technology or equipment are decided by the government so Nokia works hand-to-hand with authorities to gain maximum advantage to the Nation’s target market. Laws of copyright and abuse of phone usage keeps Nokia ahead, it limits any space of intrusion or misuse of their products.
v Economical Environment[/b]
Economy in tells the production and consumption of goods and services. As far as Nokia is concerned, the economic system is critical as it can control what the organisation is to produce, how it should produce and the category of recipient who should use their end products. On one hand, aspects of international trade is important for Nokia being the global supplier of mobile phones and on the other hand, the knowledge concerning the nation’s economic status (Type of economic system practiced, Inflation rate, level of employment and exchange rate) is equally as
important to realize future plans for personal and financial safety together with enhancing entrepreneurship.
v Social Environment [/b]
Socio-culture focuses on how Nokia blends in with components in a society; that is culture, social class, lifestyle and demographic and psychological factors making up the society. Nokia operates in a diverse number of culture and society as it widespread in different countries like china, India, Japan, etc. As their slogan says connecting people they believe in helping people to stay in touch with their dear ones. It has ranges varying for different class of people so that any common man can afford to be in touch with their dear ones.
v Competitive Forces[/b]
Nokia has many threats to tackle to maintain its position as market leader. The threats like emerging of other mobile companies in market. The companies like moto, Sony Ericson, Cingular (US) etc. These companies have come to stand of tough competition with nokia in the field of mobile phones. Threats can be like providing cheap phones, new features, new styles and type, good after sale services etc. So nokia has to keep in mind the growing competition around.
On the process of Nokia’s development, the company achieved success because it could balance these two approaches well. Once it failed to do so, the company immediately suffered the fall in 2004, lost market share and decreased the revenue. However, the company quickly recovered because it followed the market trends, and simultaneously its strong internal strengths neutralised the external threats. In addition, I will argue that Nokia can maintain its market share and its market leader position in the following years based on the good market opportunities in mobile phone industry and its strong internal resources basis.
China is the largest market by sales and India is predicted to become the second largest market by 2010 (BBC website, 2007). Africa, South America and Eastern Europe are also growth markets. Nokia's experience in developing markets may provide a competitive advantage over competitors who are only just beginning to venture into what is relatively unknown territory. The fact that Nokia has existing distribution channels (Ewing & Lakshman, 2007) combined with competencies such as knowledge, understanding and experience of these markets (India, China and South America for example) will provide a competitive advantage over their competitors. Further, Nokia's ability to keep costs down through economies of scale and effective operations means that high margins can be maintained even in the face of price competition. This is important for developing markets as the demand will be for low-cost entry-level handsets until the mobile industry has been established and customers upgrade as they become more sophisticated (Virki, 2007). Nokia's ability to cater for the demands of the market whilst maintaining profits provides a significant competitive advantage and acts as a barrier to potential entrants
v Industrial Analysis - Structure
Mobile Solutions is responsible for developing and managing our portfolio of Smartphone and mobile computers. The team is also busy developing a world-class suite of internet services under the Ovi brand, with a strong focus on maps and navigation, music, messaging and media. Mobile Phones is responsible for developing and managing our portfolio of affordable mobile phones, as well as a range of services that people can access with them. Markets manages our supply chains, sales channels, brand and marketing activities, and is responsible for delivering our mobile solutions and mobile phones to the market.
Nokia Siemens Networks, jointly owned by Nokia and Siemens, provides wireless and fixed network infrastructure, communications and networks service platforms, as well as professional services to operators and service providers.
NAVTEQ is a leading provider of comprehensive digital map data and related location-based content and services for automotive navigation systems, mobile navigation devices, Internet-based mapping applications, and government and business solutions.
Service structure
Services is one of the three units that make up the main part of Nokia. Devices creates the best device portfolio for the marketplace. Markets manages Nokia’s supply chains, sales channels and marketing activities. Services develops Nokia’s consumer internet services and software products.
With its focus on internet services and creating new business opportunities for Nokia in the online world, Services is at the heart of Nokia’s strategy. But the unit can’t exist on its own. In Nokia we create solutions. Only by working closely with the other units can we bring the best possible services and experiences to consumers.
PORTERS FIVE FORCES
a) Threat of entry
Microsoft Corp announced its decision to enter the mobile phones market, it could the big threat to Nokia. However, it is only an announcement. New network operators can supply the customized, operator-specific handsets.
New emerging competitors from Asia
So, Nokia will meet more intensive competition than before.
b) Threat of the substitutes
There is no direct substitute in mobile phone industry, especially for Nokia’s advanced products
c) Bargaining power of suppliers
Since Nokia is the market leader in the mobile phone sector, Nokia is in the strong position.
d) Bargaining power of buyers
In handsets market, end users are not directly purchasing handset from Nokia, instead they purchased from the service providers. Since the market becomes more sensitive to the price, Nokia could meet the strong bargaining power from the buyers.
e) Rivalry among existing competitors
There is intensive competition in mobile phone industry. The competitors include Samsung, LG, Sony Ericson and other new emerging manufactures.
INTERNAL ENVIRONMENT
Internal environment analysis is the analysis of factors within the organisation that make give an organisation advantages and disadvantages. Some of them are discussed below.
Human resources: It’s the count of all the skilled or unskilled staff a company hires towork for them. Nokia do hire highly skilled staff due to its nature of technology work and providethem with training to keep them update and create opportunities for program developers who canwork from home to compete in a competition to win prices and even offer them jobs.In this time ofrecession and economy down turn every company is looking to cut cost by making their unwantedstaff redundant. Nokia as a mobile manufacturing giant has taken loses and make 1000 of its staffvoluntary redundancies and are planning to cut even more staff by 600 due to poor profits. We can see the change in the annual report of the first quarter of 2009 of Nokia.
Physical resources: These resources of a company can be seen in the form of building, land, equipment and factories all over the world. Nokia in this respect has factories all over the world.
[/b]
[/b]
[/b]
[/b]
KC COLLEGE[/b]
SYBMS[/b]
STRATEGIC MANAGEMENT PROJECT BY PROFESSOR TONIA MEHRA[/b]
Date: 15/09/2010[/b]
Business Environment and Strategies of Nokia Company
Purpose of Study
Nokia is one of the best mobile companies in the market. They work not only for profit but also customer’s satisfaction. Their aim is to earn profits through providing better services to the consumers. They believe in maintaining good relations with consumers and it shows how they have managed to maintain. We have selected this project because nokia is one of leading companies and it is leading having only one product line in such a competitive market and still its leading, this shows that their strategies vision is very powerful and it would be useful for us to learn its environment and it strategies.
Overview of the Company
Nokia was established in 1865 as a pulp and paper mill in Finland. During the 1960s, they expanded into the rubber and cable industries through a series of mergers. In 1975, they expanded into many industries such as computers, consumer electronics, and cell phones. In 1979, Nokia and Mobria entered into a joint venture, which Nokia took over later to design and manufacture mobile phones1 . Since 1998, Nokia has been the market leader in the mobile phone industry transcending the boundaries between countries and continents.
Nokia is the world’s number one mobile phone company and a successor in the global phone Industry. Being an Industry leader on a Global level, Nokia is fully engaged into excelling environmental performance and assume Cooperate responsibility in all their operations. It therefore maintains its position by living up to its slogan, “Connecting People”, by abiding to three main objectives; Speed of anticipation and fulfilling evolving customer and market needs, strong customer recognition and upholding a solid and positive relationship with its stakeholders. However, as any other organisation,
Nokia faces many challenges which forces flexibility and ease of transformation on their way of executing operations.
External Environment
v POLITICAL/LEGAL ENVIRONMENT[/b]
Political/Legal environment are usually considered as one because they are enforced by the nation’s government. It is vital for Nokia’s operation because different nations with their respective government have different Political/Legal platforms respectively; Nokia operating on a Organisational and Social Environment: Group Assignment global level must abide to ground rules and regulation in different markets of host countries around the world. To its success, Nokia surveys its scope of limits in order to isolate prohibited actions, regulations and aid from the government so as to withstand the international trade. Quotas (limit to goods imported), embargoes (restrictions), tariff and tax charges, subsidies and patents over certain technology or equipment are decided by the government so Nokia works hand-to-hand with authorities to gain maximum advantage to the Nation’s target market. Laws of copyright and abuse of phone usage keeps Nokia ahead, it limits any space of intrusion or misuse of their products.
v Economical Environment[/b]
Economy in tells the production and consumption of goods and services. As far as Nokia is concerned, the economic system is critical as it can control what the organisation is to produce, how it should produce and the category of recipient who should use their end products. On one hand, aspects of international trade is important for Nokia being the global supplier of mobile phones and on the other hand, the knowledge concerning the nation’s economic status (Type of economic system practiced, Inflation rate, level of employment and exchange rate) is equally as
important to realize future plans for personal and financial safety together with enhancing entrepreneurship.
v Social Environment [/b]
Socio-culture focuses on how Nokia blends in with components in a society; that is culture, social class, lifestyle and demographic and psychological factors making up the society. Nokia operates in a diverse number of culture and society as it widespread in different countries like china, India, Japan, etc. As their slogan says connecting people they believe in helping people to stay in touch with their dear ones. It has ranges varying for different class of people so that any common man can afford to be in touch with their dear ones.
v Competitive Forces[/b]
Nokia has many threats to tackle to maintain its position as market leader. The threats like emerging of other mobile companies in market. The companies like moto, Sony Ericson, Cingular (US) etc. These companies have come to stand of tough competition with nokia in the field of mobile phones. Threats can be like providing cheap phones, new features, new styles and type, good after sale services etc. So nokia has to keep in mind the growing competition around.
On the process of Nokia’s development, the company achieved success because it could balance these two approaches well. Once it failed to do so, the company immediately suffered the fall in 2004, lost market share and decreased the revenue. However, the company quickly recovered because it followed the market trends, and simultaneously its strong internal strengths neutralised the external threats. In addition, I will argue that Nokia can maintain its market share and its market leader position in the following years based on the good market opportunities in mobile phone industry and its strong internal resources basis.
China is the largest market by sales and India is predicted to become the second largest market by 2010 (BBC website, 2007). Africa, South America and Eastern Europe are also growth markets. Nokia's experience in developing markets may provide a competitive advantage over competitors who are only just beginning to venture into what is relatively unknown territory. The fact that Nokia has existing distribution channels (Ewing & Lakshman, 2007) combined with competencies such as knowledge, understanding and experience of these markets (India, China and South America for example) will provide a competitive advantage over their competitors. Further, Nokia's ability to keep costs down through economies of scale and effective operations means that high margins can be maintained even in the face of price competition. This is important for developing markets as the demand will be for low-cost entry-level handsets until the mobile industry has been established and customers upgrade as they become more sophisticated (Virki, 2007). Nokia's ability to cater for the demands of the market whilst maintaining profits provides a significant competitive advantage and acts as a barrier to potential entrants
v Industrial Analysis - Structure
Mobile Solutions is responsible for developing and managing our portfolio of Smartphone and mobile computers. The team is also busy developing a world-class suite of internet services under the Ovi brand, with a strong focus on maps and navigation, music, messaging and media. Mobile Phones is responsible for developing and managing our portfolio of affordable mobile phones, as well as a range of services that people can access with them. Markets manages our supply chains, sales channels, brand and marketing activities, and is responsible for delivering our mobile solutions and mobile phones to the market.
Nokia Siemens Networks, jointly owned by Nokia and Siemens, provides wireless and fixed network infrastructure, communications and networks service platforms, as well as professional services to operators and service providers.
NAVTEQ is a leading provider of comprehensive digital map data and related location-based content and services for automotive navigation systems, mobile navigation devices, Internet-based mapping applications, and government and business solutions.
Service structure
Services is one of the three units that make up the main part of Nokia. Devices creates the best device portfolio for the marketplace. Markets manages Nokia’s supply chains, sales channels and marketing activities. Services develops Nokia’s consumer internet services and software products.
With its focus on internet services and creating new business opportunities for Nokia in the online world, Services is at the heart of Nokia’s strategy. But the unit can’t exist on its own. In Nokia we create solutions. Only by working closely with the other units can we bring the best possible services and experiences to consumers.
PORTERS FIVE FORCES
a) Threat of entry
Microsoft Corp announced its decision to enter the mobile phones market, it could the big threat to Nokia. However, it is only an announcement. New network operators can supply the customized, operator-specific handsets.
New emerging competitors from Asia
So, Nokia will meet more intensive competition than before.
b) Threat of the substitutes
There is no direct substitute in mobile phone industry, especially for Nokia’s advanced products
c) Bargaining power of suppliers
Since Nokia is the market leader in the mobile phone sector, Nokia is in the strong position.
d) Bargaining power of buyers
In handsets market, end users are not directly purchasing handset from Nokia, instead they purchased from the service providers. Since the market becomes more sensitive to the price, Nokia could meet the strong bargaining power from the buyers.
e) Rivalry among existing competitors
There is intensive competition in mobile phone industry. The competitors include Samsung, LG, Sony Ericson and other new emerging manufactures.
INTERNAL ENVIRONMENT
Internal environment analysis is the analysis of factors within the organisation that make give an organisation advantages and disadvantages. Some of them are discussed below.
Human resources: It’s the count of all the skilled or unskilled staff a company hires towork for them. Nokia do hire highly skilled staff due to its nature of technology work and providethem with training to keep them update and create opportunities for program developers who canwork from home to compete in a competition to win prices and even offer them jobs.In this time ofrecession and economy down turn every company is looking to cut cost by making their unwantedstaff redundant. Nokia as a mobile manufacturing giant has taken loses and make 1000 of its staffvoluntary redundancies and are planning to cut even more staff by 600 due to poor profits. We can see the change in the annual report of the first quarter of 2009 of Nokia.
Physical resources: These resources of a company can be seen in the form of building, land, equipment and factories all over the world. Nokia in this respect has factories all over the world.