Nokia: Global Market - Essay Example

? International Business Strategy - NOKIA on Global Market Table of Contents Table of Contents 2 Porter's Five Forces of Competition 3 Buyer power 3 Threat of Substitutes 3 Degree of Rivalry 4 PEST Analysis- Nokia 6 Political Factors 6 Economic Factors 7 Social Factor 7 Technological 7 Recommendations 8 Segmenting & Targeting 9 Price 11 Reference 13 Porter's Five Forces of Competition Buyer power Rise of the Smartphone has forced retail buyers to stock products in advance while some market players such as Apple, Samsung are filliping forward integration by setting their own online and offline retail sales (Slatter, 2006, p. 125). Buyer power is relatively high due to following reasons. Plenty of alternate brands are available (blackberry, iPhone, Samsung Galaxy, HTC and others). Customers can search capabilities and features of Smartphone by using secondary sources (internet, published data, consumer feed forum) hence chance for retailers to manipulate customer decreases. Every company is gearing up to develop new applications in their Smartphone offering which ultimately decreases scope of creating differentiation for customers. Mobile industry review has pointed out companies need to customize their offering with Android OS in order to fulfil demand of customers. High buyer power has forced companies to adopt technological innovation in Smartphone in order to achieve product differentiation. Threat of Substitutes Fixed line telephones can be classified as direct substitute for mobile phones. For example, fixed line phones play important role in big organizations in comparison to mobile phones. It can be inferred that threat of substitutes becoming lower due to mobile phone’s multi application and wider geographic coverage. Mobile manufacturing companies need to adopt more technological innovations in their offering in order to increase acceptance in big organizations and decrease threat from substitutes further. Degree of Rivalry Smartphone manufacturers are competing with each other in terms of implementing new technologies, gaining access to new market, advertising exposure and many others. Few Smartphone are doing legal battle with each other in terms of feature and application counterfeiting (for example Samsung paid huge amount to Apple after losing legal battle of counterfeiting of design and application of iPhone). Some companies are using Android operating system for their Smartphone’s while others are focusing on windows phone. Fixed costs associated with smart phone market are high due to requirement of investing in latest technologies. Hence it can be concluded that market rivalry is high. Global Smartphone market condition can be explained in the following manner. (Source: Deloitte, 2012) The diagram is showing that Global mobile phone market is dominated by Android OS while Apple iPhone OS is the second largest contributor. Companies are banking on Android OS to develop new products. Mobile manufactures try to establish equilibrium between Smartphone and features. The market segregation can be explained in the following manner: (Source: Deloitte, 2012) In future Companies will face specific threat from counterfeit products. Mobile manufacturers complemented by low resorce capabilities tend to imititate features and design of Smartphone manufacturered by reputed companies such as Nokia, Samsung and Apple. Impact of such threat will increase in future. For example, small companies in copycats has counterfeited Nokia X6 product and launched in the market. Picture of counterfeited Nokia X6 can be used to analyze extent of counterfeiting in telecommunication industry. (Source: Delaney, 2012) Companies need to take strict legal action against counterfeits in order to maintain not only market share but brand image among customers. PEST Analysis- Nokia Political Factors Companies needs to follow respective government rule of different countries in order achieve sustainable business growth and demographic advantage (Zikmund and Babin, 2006, pp. 12-15). Global economy is complemented by international trade rules. Telecommunication companies will face tumultuous political situation in Latin America (especially in Colombia, Venezuela) (Nuechterlein, 2000, p. 145). Indian market is getting de regulated day by day hence Smartphone manufacturers have the opportunity to increase amount of FDI in the country. Companies need to change their human resource strategy in accordance to labour law of various countries. For example, factory of Nokia was shut down in China due to labour strike and industry analysts believe that on that situation Nokia violated labour laws (read law regarding working hour) of the country (Chan, 2010, p. 137). Global mobile market is more or less regulated by governments of respective countries hence telecom companies need to be careful on deciding entry strategy for particular market (Sjovaag and Eliassen, 1999, p. 174). China and India have emerged as largest mobile market in recent years. Companies need to open more manufacturing units in China in order to fulfil demand of Chinese customers (Tornroos, 2002). Mobile manufacturers need to establish strategic partnership with local telecom carriers such as China Telecom in order to increase penetration in market. Economic Factors World Bank data shows that the world is facing threat of high unemployment rate for last three years. Adverse weather condition in Asia has dampened financial growth of countries like India, Nepal and Myanmar. Siemens has allocated huge amount of investment on renewable energy in order to achieve long term boom. Cost of research and development has increased by 13 percent in recent years. In conclusion it can be said companies need to use their financial resources carefully for achieving product differentiation in order to survive in volatile market (Reuters, 2012). Social Factor Multidimensionality (in terms of demographic aspects such as age, gender, income level, social class and family life cycle) of world population gives opportunity to mobile manufacturers to reshape their offering. Blackberry has emerged as hot cake for business persons while Apple becomes popular among students and opinion leaders (Rogers, 1995, p. 293). In conclusion it can be said companies need to change their offering after doing careful investigation on demographics of particular market. Technological Companies such as Samsung, Apple others are trying to upgrade OS in order to develop new products in accordance with predefined segmenting strategy (Cravens, 2009, p. 121). Companies are banking on Android OS to edge to diversify product line (Firtman, 2010, pp. 76-78). Recently Microsoft has launched Windows 8 hence it will be interesting to see whether smart phone manufacturers adopt Windows 8 in their offering (O'Mahony, 2012). In conclusion it can be said that companies need to back their technological innovation with strong integrated marketing communication to increase penetration in market (Belch, 2003, p. 198-200). Recommendations Nokia needs to focus on their Windows phone backed by advertising campaign and need to add more application in addition to MS Office application (Black, 2011, p. 139). They need to offer colourful range of Windows phone in order to generate interest among customers. The company needs to piggyback their already developed OS technology in order to decrease cost regarding investing money on developing new OS. They need to bank on offline as well online sales channel in their next offering in order to segregate their offering from their competitors (Reponen, 2003, pp. 52-62). The company need to increase depth of product offering by customizing the design of the phone in accordance with requirement of multi segment customers rather than designing the phone for specific segment. Nokia need to create multi application platforms like jawbone’s audio gear, easy file-sharing (Apple has already incorporated such features in their iPhone) in the windows phones. Management of the company needs give importance on implementing stable quad-core processor (for example, Samsung Galaxy is using such processor) in their smart phones. Product design should more focus on creating metallic look and polycarbonate framework for Windows phone in order to attract customers (study shows that Asian and Scandinavian customers prefer metallic look of mobiles). Segmenting & Targeting The company needs to design segment specific strategy for fulfilling requirement of all the customers. Nokia needs to maintain equilibrium between segmentation strategy for niche market and target strategy for mainstream market. In real world practice niche segmentation emphasizes on smaller customer group with particular product demand. Occupation Target Market Features need to be offered Professional Young men and women working in office and they also need on the applications in phone MS office, instant messaging, e mail and Blackberry messenger like features Students Undergraduate and Management students. They need use PowerPoint presentation as a part of their study. Students prefer to hear music and like to play games. Nokia music gallery and iPod like features needed to be incorporated in Smartphone. PDF reader and power point making software. Entrepreneur They need specialized software which can schedule contact details Wireless calendar access, wireless appointment checkers Medical Users Doctors and hospital authorities Cloud computing facility and wireless data scheduler can help them to reduce burden of paperwork. Segment Purchase Pattern Strategy Tech Evangelists These customers use advanced applications and features of the Smartphone. Customers belong to these group prefer to purchase product complemented with latest technology. Nokia needs to add more technological features in order to attract Tech Evangelists Impulse Buyers They purchase product to satisfy instant gratification. Customers belong to this group can be attracted with innovative advertising. Nokia need to launch low end Smartphone for attracting impulse buyers Experimental Adopters These customers get influenced by the media exposure and peers. Customers belong to this group purchase Smartphone in accordance to personal status High end design of the Smartphone is needed Pragmatic Purchasers They purchase Smartphone after doing cost benefit analysis and detailed product research. These customers purchase product from the view point of functionality of the device Nokia need to implement point of difference applications in the Smartphone. Applying Web OS technology can be a game changer Green Buyers Purchase decision is directed by ecological impact of the mobile device Nokia needs to decrease carbon footprint and use of polythene in the Smartphone Disengaged Functionalists These customers give importance on functionality of the mobile device instead of design and style. Nokia needs to manufacture low end Smartphone low on style but high on quality. Price Apple Samsung Nokia Blackberry Sony iPhone 5 is priced at ?620.00 Samsung Galaxy S3 is priced at ?383.00 Nokia Lumia 800 is priced at ?160.00. Price comparison shows that Nokia need use competitive pricing in order to survive in the Market. They need to launch product complemented with new features in the price range of ?200 to ?300 in order to decrease Cost of Goods sold in near future. Blackberry Curve is priced at ?135.00 Sony Xperia is priced at ?135.00 Reference Belch, G. E., 2003. Advertising and Promotion. 6th ed. New York: McGraw-Hill Education. Black, K., 2011. Business Statistics: For Contemporary Decision Making. Hoboken, New Jersey: John Wiley & Sons. Chan, C. K. C., 2010. The Challenge of Labour in China: Strikes and the Changing Labour Regime in Global Factories. London: Routledge. Cravens, D. W., 2009. Strategic Marketing. 8th ed. New York: McGraw-Hill Education. Delaney, I., 2012. Spot a fake phone. [online] Available at: [Accessed 29 November 2012]. Deloitte., 2012. Open Mobile: The growth era accelerates. [pdf] Available at: [Accessed 24 November 2012]. Firtman, M., 2010. Programming the Mobile Web. 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Nokia Mobile Phones & the Chinese Market – Managing Culturally Based Strategic Nets. [pdf] Available at: [Accessed 24 November 2012]. Zikmund, W. G. and Babin, B. J., 2006. Exploring Marketing Research. Stamford, Connecticut: Cengage Learning. Read More