Alarm Ringing: Nokia in 2010 - Essay Example

Moreover, the Finnish phone manufacturer failed to build up presence in the U.S., which is the world’s largest smart phone market. Its low-end marketing was, in part, to blame for the negative image in the U.S. and other established markets that sought high-end phones. The smart phone OS market was another area where competitors were catching up with Nokia and its Symbian platform. To reverse its fortunes, the Corporation opted to bring in Elop in a dramatic shift for them; they had never had a non-Finnish executive in this position.

The Corporation had already lost a large share of the smart phone market to competitors with a significant decrease in market capitalization. Time was fast running out for Nokia to make strategic decisions, and the decisions that Elop took would determine Nokia Corporation’s ability to regain their glory or capitulate to the emerging competition. The following is a PEST analysis for Nokia Corporation in the smart phone industry. Political/Legal Environment In the past several years, the smart phone market has undergone a plethora of lawsuits concerning patents within the industry.

Give the highly competitive environment within which the smart phone industry operates; handset manufacturers have been very aggressive in the protection of intellectual properties via suing rivals and competitors by claiming patent infringement. For instance, in March 2010, Apple sued HTC for apparently infringing on twenty patents (Ahmad, 2011: p23). Apple Inc. also sued Nokia in the same year for similar infringement of patents. The International Trade Commission, in April 2010, however, recommended that neither Nokia nor HTC was liable for any infringement.

Additionally, Microsoft came to a licensing agreement with HTC in 2010 that paid royalties on handsets based on the Android system. More recently, Apple Inc. sued Samsung, in April of 2011, with claims that they had copied various design features into their Android phone Galaxy line from the iPhone (Ahmad, 2011: p25). This covers just a small part of the legal challenges that smart phone manufacturers have faced in the past three years. It is vital to recognize that the manufacturers are utilizing the patent portfolio, to ensure that it is more difficult for competitors to attain a larger amount of market shares.

Most of the lawsuits dogging in the industry have been of a dubious nature. In addition, the costs that have been associated with these legal battles have acted to hamper or slow down any release of handsets, and this has made it more difficult for competitors, including Nokia, to remain competitive (Ahmad, 2011: p25). Economic Environment The US economy is still in the process of recovering from 2008’s financial crisis. The major factors for Nokia Corporation to consider in this market is the relatively high unemployment rates and decreased consumer spending.

In the month of September 2011, The U.S. had an unemployment rate of 9.1%, which was way below that between 1948 and 2010, which averaged at 5.7% (Dziri, 2011: p44). The current high rate of unemployment prevalent in the U.S. will most likely have an effect on the reduction of smart phone sales. The current rate is indicative of approximately twenty eight million Americans without work. This high rate of unemployment in the United States has acted to negatively impact the confidence of consumers and resulted in consumer