CASE STUDY NOKIA’S STRATEGY IN INDIA
TRIPTI YADAV
Regn No.: 200721594
SYMBIOSIS CENTRE FOR DISTANCE LEARNING, PUNE, 2010
1
Introduction The case presents an overview of Nokia’s entry and expansion strategies in India. In the past one decade, Nokia has emerged as one of the most recognized brands in India, surpassing some of the Indian business conglomerates in terms of revenue. While Nokia considers India as one of the most important markets for its future growth, the company has been facing stiff competition in the recent years from Korean players like Samsung and LG.The case high light Nokia’s strategies to compete with Korean companies and its products expansion plans in the near future. The case describes the marketing strategies of Nokia in India and examines how Nokia brand has become synonymous to mobile phones in the country.
“We see great potential for the continued growth of mobile telephony in India where mobile penetration is relatively low. As the leading brand in mobile communication in India, Nokia will continue to deliver products which cater to the needs and preferences of Indian consumers” Robert Anderson, Senior Vice president, Nokia mobile phones Asia pacific, in 2003
Nokia – Made in India In April 2005, Nokia India, a subsidiary of Finland based Nokia, announced that it was setting up a manufacturing facility for mobile devices in Chennai, the state capital in Tamil nadu.Nokia planned to invest US$ 100-150 million in the facility, where the production was expected to begin in the first half of 2006.
Pekka-Ala-Pietila, President and Head of Customer & marketing operations, Nokia Corporations said,” Establishing a new factory in India is an important step in the continuous step in the development of our global manufacturing network.”India was ideal for Nokia new production facility. Each mobile handset has more than 400 parts and the average production capacity of each manufacturing unit of Nokia is around 20 million units. 2
This level of manufacturing involves a total of 8 billion components per annum, requiring strong logistical support. Nokia’s manufacturing facility needs to be located close to a major international Airport or sea port for quick supply of components. India met all these requirements, and also enjoys cheap manpower costs and proximity to the rapidly growing Asia Pacific markets.
Besides, Nokia was the market leader in mobile communication devices in India. The company has been carrying out sales & marketing, customer care and research and development activities in the country. Nokia considers India as one of its most important markets. The company code’s division Multiple access(CDMA) facility is located in Mumbai and provide software and technical support to CDMA customers in India and other Asia Pacific countries. In 2004, Nokia was chosen as the most respected consumer durables company by business world.
One, that its, strategies – including ones like developing a phone specifically for India- are respected. But, more importantly, Nokia’s win is also an endorsement of the importance of the ubiquitous cell phone as a durable in today’s world. After all, unlike its competitors, most of which offer a slew of durables, Nokia is mostly a cell phone company.
In 2005, Nokia was recognized as the “Brand of the Year” by the confederation of Indian Industry, India’s Apex industry association. The company was chosen for this award because of its high brand recall, well established distribution channels and being most preferred by the consumers.
Enamored of Nokia’s success in the Indian market, Harvard University has invited Nokia India to talk on ‘How Nokia cracked open the Indian Markets?’ 3
The Indian Mobile Phones Industry The mobile phone industry made a slow start in India in 1995.Several private players who have entered the industry in 1995 exited in the next few years due to the unfriendly telecom policies of the Indian Government, high licensing fees and absence of a proper telecom regulatory body.The growth in the subscriber base of mobile phones remained sluggish initially,reaching the 1 million milestone in 1998. In 1999, Government of India announced a new telecom policy.This Policy plannes to provide telephones on demand by 2002.
Among other things, the policy allowed unrestricted private entry into almost all mobile service sectors.The government allowed cellular mobile service providers to share infrastructure with other operators.It also allowed existing operators to migrate from fixed licence fee to one time entry fee with revenue sharing. This policy helped many private operators to break even faster. By 2001, the demand for mobile services was growing well. The private companies concentrated on providing basic telephone services to consumers. The number of Mobile phones crossed five millionby 2001 and doubled to 10 million in 2002….
About Nokia Nokia was found in 1865 by Fredick idestem in Finland as a paper manufacturing company. In 1920 Finnish Rubber works become a part of the company and later on in 1922, Finnish cables work joined them. All the three companies were merged in 1967 to form the Nokia group.
In the late 1970, nokia started taking a active interest in the power and electronics businesses and by 1987, consumer electronics become Nokia’s major business. Nokia created the NMT mobile phones standard in 1981 and launched the first NMT phone, Mobira Cityman in 1987. The company delivered the first GSM network to Radkilinia, a Finnish company in 1991, and in 1992, Nokia 1011- a precursor for all Nokia’s current GSM phones- was introduced. 4
In the 1990, Nokia provided GSM services to 90 operators across the world. Another significant move of the company during this period was the divestment of its non core operators like IT. The company focused on two core businesses- mobile phones and telecommunications networks. Between 1992 and 1996, the company exited from the rubber and cable businesses as well.
Nokia in India Nokia entered the Indian markets in 1994. The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995. When Nokia entered India, the telecom policies were not conductive to the growth of the mobile phone industry. The tariffs levied on importing mobile phones were as high as 27%, usage charges were at rupees 16 per minute and, at these high rates, consumers did not take to mobile phones. Nokia also had to face a tough completion from other powerful global players like Motorola, Sony, Seimens and Ericsson.
Issues • • • Entry and expansion strategies of Nokia in India. Marketing Mix of Nokia to tap the Indian market. Challenges faced by Nokia in the Indian market.
The Problems Inspite of its strong marketing, Nokia’s problem at the global level had an impact on the company’s Indian Venture. Globally, Nokia had been experiencing tough times with revenues falling to 29 billion euros in 2004from 32 billion euros in 2001. The company operating profits decreased from 5 billion euros in 2003 to 4.3 billion euros in 2004.
5
Bouncing Back Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market share. Globally, during the first quarter of 2005, the company sales reached 7.4 billion euros, with the company selling 54 million phones during the period. In India, Nokia continued its leadership in GSM with market share of 74% in March 2005. Nokia also surpassed Samsung in color mobiles in the GSM segment, recording a share of 55% in the same month.
Nokia recognized itself at global level in 2004. At this point, a multimedia division was formed. The division’s Indians operations concentrating on promoting the concept of high end telephones in smaller towns while going in for higher volumes in larger cities. The marketing divisions of the company concentrated on making distributors in small towns sell high end products. Though, the distributors were skeptical to start with, by the end of 2004, the process was streamlined and result started to show.
The Future Prospects According to industry analysts, the mobile phones industry in India will be driven by voice, multimedia and mobile services for organization. The tele density in India was estimated to increased, with mobile subscription rising by that time. In many instances, the cell phone has become the only basic telephone link of a household/enterprise in India, rather than a landline phone. It was turning out to be more economical and efficient than fixed line telephone. So there was a great scope for further expansion with reduction in the cost of ownership.
SWOT Analysis of Nokia Nokia Corporation is one of the world largest telecommunications equipment manufactures. It has since established a leading brand presence in many local markets, and business has expanded considerably in all areas to support customer needs and growth of the telecommunications industry.Nokia also produces mobile phone infrastructure and other telecommunications equipment for applications such as traditional voice telephony, ISDN 6
broadband access, professional mobile radio, voice over IP, wireless LAN and a line of satellite receivers. Nokia provides mobile communication equipment for every major market and protocol, including GSM, CDMA and WCDMA.
Strengths:• Nokia has largest network of distribution and selling as compared to other mobile phones company in the world. • It is backed with the high quality and professional team in the HRD dept.The financial aspect is very strong in case of Nokia as it has many more profitable businesses. • The product being user friendly and have all the accessories one want that is why is in great demand making it NO.1 selling mobile phones in the world. Wide range of products for all class. • The resell values of Nokia phones is high compared to other companies products.
Weakness:Nokia has much strength and some weaknesses. Some of the weaknesses includes:• Price of the products offered by the company. • Some of the products are not user friendly. • Not concern about the lower class of the society people. Not targeting promotion towards them. The price of the product is the main issue.
Opportunity:Nokia has ample of opportunity to expand its business. With the wide range in products, features and different price range for different people, it has an advantage over the 7
competitors around. With the opportunity like Telecom penetration in India being at the peak time, Nokia has an opportunity to increase its sales as well as the market share. As the standard of living in India has increased the purchasing power of the people increased as well, so Nokia has to target right customer at right time to gain the most of the situations.
Threats:Nokia has many threats to tackle to maintain its position as market leader. • The threats like emerging of the other market operators in the market. The companies like Motorola, Sony Ericssion, and Cingular (US) etc. these companies have come to the stand of tough competition with Nokia in the field of Mobile phones. • Threats can be like providing cheap phones, new features, new style and type, good after sales service etc. So, Nokia has to keep in mind the growing competition around. Nokia has to make strategies to tackle problems in the present and the near future. • The growing demand of WLL network can cause drop in sales for Nokia, as Nokia provides many less CDMA phones to the customers.
References Website:http://www.google.com Website:http://www.nokia.com
8
doc_448855062.doc
TRIPTI YADAV
Regn No.: 200721594
SYMBIOSIS CENTRE FOR DISTANCE LEARNING, PUNE, 2010
1
Introduction The case presents an overview of Nokia’s entry and expansion strategies in India. In the past one decade, Nokia has emerged as one of the most recognized brands in India, surpassing some of the Indian business conglomerates in terms of revenue. While Nokia considers India as one of the most important markets for its future growth, the company has been facing stiff competition in the recent years from Korean players like Samsung and LG.The case high light Nokia’s strategies to compete with Korean companies and its products expansion plans in the near future. The case describes the marketing strategies of Nokia in India and examines how Nokia brand has become synonymous to mobile phones in the country.
“We see great potential for the continued growth of mobile telephony in India where mobile penetration is relatively low. As the leading brand in mobile communication in India, Nokia will continue to deliver products which cater to the needs and preferences of Indian consumers” Robert Anderson, Senior Vice president, Nokia mobile phones Asia pacific, in 2003
Nokia – Made in India In April 2005, Nokia India, a subsidiary of Finland based Nokia, announced that it was setting up a manufacturing facility for mobile devices in Chennai, the state capital in Tamil nadu.Nokia planned to invest US$ 100-150 million in the facility, where the production was expected to begin in the first half of 2006.
Pekka-Ala-Pietila, President and Head of Customer & marketing operations, Nokia Corporations said,” Establishing a new factory in India is an important step in the continuous step in the development of our global manufacturing network.”India was ideal for Nokia new production facility. Each mobile handset has more than 400 parts and the average production capacity of each manufacturing unit of Nokia is around 20 million units. 2
This level of manufacturing involves a total of 8 billion components per annum, requiring strong logistical support. Nokia’s manufacturing facility needs to be located close to a major international Airport or sea port for quick supply of components. India met all these requirements, and also enjoys cheap manpower costs and proximity to the rapidly growing Asia Pacific markets.
Besides, Nokia was the market leader in mobile communication devices in India. The company has been carrying out sales & marketing, customer care and research and development activities in the country. Nokia considers India as one of its most important markets. The company code’s division Multiple access(CDMA) facility is located in Mumbai and provide software and technical support to CDMA customers in India and other Asia Pacific countries. In 2004, Nokia was chosen as the most respected consumer durables company by business world.
One, that its, strategies – including ones like developing a phone specifically for India- are respected. But, more importantly, Nokia’s win is also an endorsement of the importance of the ubiquitous cell phone as a durable in today’s world. After all, unlike its competitors, most of which offer a slew of durables, Nokia is mostly a cell phone company.
In 2005, Nokia was recognized as the “Brand of the Year” by the confederation of Indian Industry, India’s Apex industry association. The company was chosen for this award because of its high brand recall, well established distribution channels and being most preferred by the consumers.
Enamored of Nokia’s success in the Indian market, Harvard University has invited Nokia India to talk on ‘How Nokia cracked open the Indian Markets?’ 3
The Indian Mobile Phones Industry The mobile phone industry made a slow start in India in 1995.Several private players who have entered the industry in 1995 exited in the next few years due to the unfriendly telecom policies of the Indian Government, high licensing fees and absence of a proper telecom regulatory body.The growth in the subscriber base of mobile phones remained sluggish initially,reaching the 1 million milestone in 1998. In 1999, Government of India announced a new telecom policy.This Policy plannes to provide telephones on demand by 2002.
Among other things, the policy allowed unrestricted private entry into almost all mobile service sectors.The government allowed cellular mobile service providers to share infrastructure with other operators.It also allowed existing operators to migrate from fixed licence fee to one time entry fee with revenue sharing. This policy helped many private operators to break even faster. By 2001, the demand for mobile services was growing well. The private companies concentrated on providing basic telephone services to consumers. The number of Mobile phones crossed five millionby 2001 and doubled to 10 million in 2002….
About Nokia Nokia was found in 1865 by Fredick idestem in Finland as a paper manufacturing company. In 1920 Finnish Rubber works become a part of the company and later on in 1922, Finnish cables work joined them. All the three companies were merged in 1967 to form the Nokia group.
In the late 1970, nokia started taking a active interest in the power and electronics businesses and by 1987, consumer electronics become Nokia’s major business. Nokia created the NMT mobile phones standard in 1981 and launched the first NMT phone, Mobira Cityman in 1987. The company delivered the first GSM network to Radkilinia, a Finnish company in 1991, and in 1992, Nokia 1011- a precursor for all Nokia’s current GSM phones- was introduced. 4
In the 1990, Nokia provided GSM services to 90 operators across the world. Another significant move of the company during this period was the divestment of its non core operators like IT. The company focused on two core businesses- mobile phones and telecommunications networks. Between 1992 and 1996, the company exited from the rubber and cable businesses as well.
Nokia in India Nokia entered the Indian markets in 1994. The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995. When Nokia entered India, the telecom policies were not conductive to the growth of the mobile phone industry. The tariffs levied on importing mobile phones were as high as 27%, usage charges were at rupees 16 per minute and, at these high rates, consumers did not take to mobile phones. Nokia also had to face a tough completion from other powerful global players like Motorola, Sony, Seimens and Ericsson.
Issues • • • Entry and expansion strategies of Nokia in India. Marketing Mix of Nokia to tap the Indian market. Challenges faced by Nokia in the Indian market.
The Problems Inspite of its strong marketing, Nokia’s problem at the global level had an impact on the company’s Indian Venture. Globally, Nokia had been experiencing tough times with revenues falling to 29 billion euros in 2004from 32 billion euros in 2001. The company operating profits decreased from 5 billion euros in 2003 to 4.3 billion euros in 2004.
5
Bouncing Back Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market share. Globally, during the first quarter of 2005, the company sales reached 7.4 billion euros, with the company selling 54 million phones during the period. In India, Nokia continued its leadership in GSM with market share of 74% in March 2005. Nokia also surpassed Samsung in color mobiles in the GSM segment, recording a share of 55% in the same month.
Nokia recognized itself at global level in 2004. At this point, a multimedia division was formed. The division’s Indians operations concentrating on promoting the concept of high end telephones in smaller towns while going in for higher volumes in larger cities. The marketing divisions of the company concentrated on making distributors in small towns sell high end products. Though, the distributors were skeptical to start with, by the end of 2004, the process was streamlined and result started to show.
The Future Prospects According to industry analysts, the mobile phones industry in India will be driven by voice, multimedia and mobile services for organization. The tele density in India was estimated to increased, with mobile subscription rising by that time. In many instances, the cell phone has become the only basic telephone link of a household/enterprise in India, rather than a landline phone. It was turning out to be more economical and efficient than fixed line telephone. So there was a great scope for further expansion with reduction in the cost of ownership.
SWOT Analysis of Nokia Nokia Corporation is one of the world largest telecommunications equipment manufactures. It has since established a leading brand presence in many local markets, and business has expanded considerably in all areas to support customer needs and growth of the telecommunications industry.Nokia also produces mobile phone infrastructure and other telecommunications equipment for applications such as traditional voice telephony, ISDN 6
broadband access, professional mobile radio, voice over IP, wireless LAN and a line of satellite receivers. Nokia provides mobile communication equipment for every major market and protocol, including GSM, CDMA and WCDMA.
Strengths:• Nokia has largest network of distribution and selling as compared to other mobile phones company in the world. • It is backed with the high quality and professional team in the HRD dept.The financial aspect is very strong in case of Nokia as it has many more profitable businesses. • The product being user friendly and have all the accessories one want that is why is in great demand making it NO.1 selling mobile phones in the world. Wide range of products for all class. • The resell values of Nokia phones is high compared to other companies products.
Weakness:Nokia has much strength and some weaknesses. Some of the weaknesses includes:• Price of the products offered by the company. • Some of the products are not user friendly. • Not concern about the lower class of the society people. Not targeting promotion towards them. The price of the product is the main issue.
Opportunity:Nokia has ample of opportunity to expand its business. With the wide range in products, features and different price range for different people, it has an advantage over the 7
competitors around. With the opportunity like Telecom penetration in India being at the peak time, Nokia has an opportunity to increase its sales as well as the market share. As the standard of living in India has increased the purchasing power of the people increased as well, so Nokia has to target right customer at right time to gain the most of the situations.
Threats:Nokia has many threats to tackle to maintain its position as market leader. • The threats like emerging of the other market operators in the market. The companies like Motorola, Sony Ericssion, and Cingular (US) etc. these companies have come to the stand of tough competition with Nokia in the field of Mobile phones. • Threats can be like providing cheap phones, new features, new style and type, good after sales service etc. So, Nokia has to keep in mind the growing competition around. Nokia has to make strategies to tackle problems in the present and the near future. • The growing demand of WLL network can cause drop in sales for Nokia, as Nokia provides many less CDMA phones to the customers.
References Website:http://www.google.com Website:http://www.nokia.com
8
doc_448855062.doc