Business Strategy by Nokia - Case Study Example

BUSINESS STRATEGY Scholes (2008) define strategy as follows "Strategy is the direction and scope of an organisation over the long-term: which achieves advantage for the organisation through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations". This is a very important tool to any business that has a dream of excellence. It gives a road map to the desired future. The strategy is like a war plan. It gives the events to unfold at various level of operation of the business. This can be explained in laymen terms as an illustration of where the business is trying to get to in the long term. A strategic plan entails all aspects of the business. Of paramount importance to any business is the market. This comes before the actual business is initiated. The plan will illustrate the kind of market to venture in. In the case of Nokia Telecommunication Company, the details of the market of target could include: office managers, the business world, students who really on research and could benefit from the internet. Nokia could also target the general public who needs very cheap and affordable phones due to their low economic status. Another market is the very rich citizens of the society. These are people who always go with class. A class in this respect is measured in terms of wealth. One is of a higher class if they have very expensive gargets. Nokia phone whose value range is 800 is the best for such a group (National statistics, 2007). The strategic plan should also give a summary of activities that take place in the market. This explicitly gives the account of the market size and scope. Nokia targets the global market as a whole. However the greatest of this is in the major markets like USA. The United Kingdom is one of the world's most globalised countries, ranking fourth in one recent survey. The capital, London is one of the three major financial centres of the world, along with New York City and Tokyo. Such a market is large and very dynamic. New inventions arrive and go at a very high frequency. Nokia is therefore put to task of introducing new inventions at the market rate. As the fashion industry expands in creativity, Nokia is also forced to maintain the pas of assimilation. This is so because the buyers taste is influenced greatly by what is current in the market. A strategic plan of a business also will contain information about the competitors that a company will meet in the market. It is a must to have competition in any sphere of life. The truth however is that no one gets pleased about this, especially when a rival has an advantage over them. A Strategic plan gives details on how to be on top of the other players. Normal competitive pressures are not able to drive down a firm's earnings to the point where they cover all costs and just provide minimum sufficient additional return to keep capital invested. Most forms of competitive advantage cannot be sustained for any length of time because the promise of economic rents drives competitors to duplicate the competitive advantage held by any one firm. Firms get to improve their products, and lower the cost of purchase of their products. Sustainable competitive advantage simply an advantage that one firm has relative to competing firms. The source of the advantage can be something the company does that is distinctive and difficult to replicate. This is known as core competency in business terms. Nokia has advanced in leading the market through Cost Leadership, Differentiation Focus and Cost Focus. A company must have the right resources like finance, assets, and technical competence to thrive well in the competitive environment (Scholes, 2008). The environment may also affect the competition levels in the industry. The ways in which the environment does this are obvious. These include the number of companies in the market, the prices used by the competitor and the strengths of the host company. Strategies exist widely at several levels in any organisation - ranging from the overall business through to individuals working in it. In practice, a thorough strategic management process has three main components, shown in the figure below: (Scholes, 2008) The corporate Strategy - this is concerned with the overall purpose and scope of the business to meet mainly stakeholder expectations. The business Unit Strategy - this again is concerned more with how a business competes successfully in a particular market. It concerns strategic decisions about choice of products like in the case of Nokia; the products include phones and electronic parts. Other strategies include meeting needs of customers, gaining advantage over competitors, exploiting or creating new opportunities etc. The operational Strategy - is generally concerned with how each part of the business is organized so as to deliver the corporate and business-unit level strategic direction. Operational strategy therefore focuses on issues of resources, processes, people etc. STAKEHOLDER ANALYSIS A stakeholder analysis in business management is a technique which can be used to identify and assess the importance of key people, groups of people, or institutions that may significantly influence the success of once activity or project. One can use this technique alone or with your team members. This analysis is very important to the management of a firm. It comes in handy when deciding on the firms or people to pursue during an expansion. Members of the quality improvement team use it often. The main reasons for using a stakeholder are as follows: 1. To identify the key groups of people, groups and institutions that will influence once initiative. This influence can either be positive thus creating the desired results, or the change can be negative hence acting as a threat to the firm, 2. Develop strategies to get the most effective support possible for the firm's initiatives to progress and reduce any obstacles to successful implementation of the programs 3stakeholder analysis yields useful and accurate information about those persons and organizations that have an interest in healthy reforms. These grouping could include companies to be bought or those to form mergers and collisions with. These include fashion firms with could co-share branding of items. 4. Another significance of the analysis is its application in strategic planning, institutional assessment or application of computerized programs 5. The policy makers and managers may use it in open discussions to build consensus. This always provides a go ahead to growth and development. ORGANISATIONAL AUDIT. Nokia is a world leader in mobile communications and systems. This lucrative company has established itself as the leading preferred brand in many markets where it is present. This being a leading provider, it has spread seriously throughout the world. Backed by its experience, innovation, user-friendliness and secure solutions, Nokia is the world's leading supplier of mobile phones, fixed, mobile and IP networks. Nokia expanded into new fields, mostly by acquisitions. Through this the company was able to buy other relate companies. This brought with it great profits. However in the late 1980s and early 1990s, the corporation ran into serious financial problems, a major reason being its heavy losses by the television manufacturing division. These problems became intense and may probably have contributed to Kairamo: the CEO then, taking his own life in 1988. Nokia responded by streamlining its telecommunications divisions, and by divesting itself of the television and PC divisions. Jorma Ollila, who became the CEO in 1992, made a strategic decision to concentrate solely on telecommunications. Thus, during the rest of the 1990s, Nokia continued to divest itself of all of its non-telecommunications divisions. The exploding worldwide popularity of mobile telephones, beyond even Nokia's most optimistic predictions, caused a logistics crisis in the mid-1990s. This prompted Nokia to overhaul its entire logistics operation. Logistics continues to be one of Nokia's major advantages over its rivals, along with greater economies of scale. The management was working together towards this advantage. One of the greatest achievements in the history of Nokia is the Nokia-Siemens merger. A lot of organizational maturity was displayed by Nokia during the process. At one time just before the merger, the Nokia team realized a massive corruption allegation on Siemens staff. This brought the deal to a standstill for some time as this was being investigated (Andrew 2006). The Nokia management is of great structure. There is proper correspondence in all departments. All the offices across the world have regional directors, then a team of very able professionals. This is what gives the company great strength to push a head in the market. ENVIRONMENTAL AUDIT The environment in this respect is simply the market of target. Mobile phone market in Europe and across the world is going through major changes due to the dynamics of the society as a whole. Key players are losing market share and at the same time and phase, new and young companies, are coming to the market. These new companies are mainly from the east: Asia and great USSR. The world market is also slowly expanding. This observation comes because people are buying more phones than ever. The whole process of buying mobile phones has changed in the last few years. People no longer carry the same phone year in year out, but they change their phone every year, some even twice a year. This is quite amazing. Once a very rare commodity the phones in this era are like handkerchiefs that one may have as many as possible! One reason for this change is the fast technological development of the phones. But also consumer's attitudes towards mobile phones have changed. Mobile phones are no longer seen as expensive, hi-tech products, but they have become accessories like jeweler or a piece of clothing. Nokia is still the largest mobile phone company in the world, but its long-term dominance is now challenged more than ever. Observers have begun asking whether the cutting edge that has turned Nokia into the No 1 vendor still exists, as Nokia's market share and revenues have been on the decline. Falling average sales prices (ASPs) and market share have had an impact and forced Nokia to further re-think its strategy towards developed and emerging markets. This tough ground makes any one to wake up from a midnight sleep of contentment. The market is actually dynamic. This is the kind of place that Nokia eyes to lead. As a result, many changes have been proposed by the management. The Siemens- Nokia Alliance is one such change. This aims at expanding the network across the world, while at the same time riding on the advantage of minimized expenditure in venture. This comes because of cost sharing. The details gives an overview on what is happening on the mobile phone market today and analyses Nokia's market position in the mature European market. Many factors are considered before conclusion is made. Some aspects the market environment that Nokia always considers include: the demographic or population status of a place. The young generally provide very good market for electronic products like phones. The European market categorically constitute the youth of age bracket between14 yrs to 35 yrs old. Literacy level is another key factor that drives the market. This means that for a very literate society many people can use phones without risk of embarrassment. Nokia manufactures a variety of phones because the entire learned population has various needs. The learned also have a taste of style and fashion. A beauty model creates a light moment by saying that she normally puts on a mono color dressing style. The implication of this is that; all accessories have one common color. For example, she can be in a blue skirt, blue blouse, blue handkerchief, blue head gear, hand bag, shoes, and as if that was not enough, she would be carrying a blue colored phone! Amazing isn't it However this is the kind of environment that entrepreneurs target in this generation. Indeed mobile phones are fashionable. They are thing to be carried all around. A phone is like part of an individual. It is something to be carried all around. This calls for it to be very smart and attractive. And fit for the occasion. Population of Europe in 2000 was 729.3 million (United Nations, 2005). People live mostly in urban areas. This population is amazingly Population is ageing due to falling birth rates. People in Western Europe are generally well educated and literate. This is a catch for fashion .the main people who matter in the society and them who are influential actually are of this caliber. The serious cultural differences that existed in the ancient world have all faded away with time. What does this mean This is a very simple solution question! With one food preference, a hosting mistress can cook a universal food. This is the meaning derived from a Chinese proverb. Nokia can therefore target the whole world by a single strategy: fashion and style. PESTEL ANALYSIS OF NOKIA This is one way of evaluating the potential of a company. The analysis targets very important aspects of the society or market. These are factors that keep on changing, and they have great dramatic influence on the market status. This theory is coined from one word: PEST. This word is broken down as: P- Political changes in the environment. These range from international regulations, tax regulations, political stability, employment laws, and competition regulation among the rest. Al these factors influence the business from the outside. The mother country of Nokia is Finland. The political stability in this country is a major driving force towards expansion. Another important factor is the government regulation on investors like Nokia. The Finnish government best facilitate the efficient functioning of the economy by directing its resources to the reduction of market failures. The state is also in pursuit of an industrial and economic policy that provides a stable macroeconomic environment for enterprises. These include general macroeconomic stability, low interest rates, stable currency conditions and the international competitiveness of the tax system. E- Economic changes in the environment. The economic factors include, taxation, inflation, consumer confidence, interest rate and monetary policy and general economic growth in the environment. Any variation in the economy of a country has drastic effects on the businesses it houses. An example is when Finland faced challenges in its economy as a result of events in the neighboring Russia. This resulted into inflation and reduction in the value of the currency. Nokia must also avoid investments in poor economies like Zimbabwe. S - Social changes in the environment. Social changes in the environment include population distribution, labor, education level of people, fashion and hypes in the society, living conditions and income distribution in the environment. Social factors like education level have increased in Finland. This implies that there is more market for technology products. The fashion of people has also greatly improved. This comes handy with the increase in the living standards of the people. Such a society needs very sophisticated products, which go with trends. Such include beautiful and nice colored items, good ring tones and brands, which sell mostly in the market. T- Technological changes in the environment. This includes the innovations and discoveries. Currently people use the Internet in large numbers. Nokia has therefore created products that dispense Internet services. In the 1980s, people trend to microcomputers and Nokia try to match the tendency to produce its main products, such as computers, monitors and TV sets. This later changed to mobile phones and is in the verge of changing again. In conclusion, any company should study its environment in order to create very relevant and specific products that will sell and make good profits. Nokia has obtained the success of mobile phone market, and Finnish Government has established its position of technology development. This is what it takes to succeed. STRATEGIC POSITIONING TECHNIQUES OF NOKIA The world population is large, diverse and in great demand for satisfaction. At the same time the service providers are in amazing overflow and in pursuit to conquer as many clients as possible. Any service player must therefore be at its best to win many clients. Nokia as one of the players has done a lot of adjustments to satisfy the needs of its greatly esteemed costumers. The company has invested heavily in innovation. The designers and engineers are at work all the time. The customer feedback mechanism is also very effective. Nokia believes that, customers should rush into buying their products upon realizing the fabulous features. Nokia further believes that design, and brand is the main customer catch. With the increase in civilization, ease of use and price further become the mainstream mobile phones' most important considerations to customers. Nokia's product portfolio includes camera phones with features such as mega pixel cameras and MP3 players which appeal to the mass market. This comes with increase in technology which comes with many demands. An average person desires to have a radio, a camera, a phone and a garget to dispense internet services. Nokia (2006) Nokia brands like 6300, and 6030 all have the fashion and style greatly demanded for. This illustrates how Nokia is greatly concerned with increase in the same rate as the fashion and style industry. A strategic statement gives a general overview of a company. It gives the ways in which a company exists within the market place. Circuit City, a company in the city is a good example. It's an electronic department store that is making excellent profit margins while their competition is going out of business. They've taken a unique strategic position, being number one in service and taken that all the way down to their USP which is "Service Above Beyond All That Is Expected." It's almost impossible to be the best in all and that's why you need to figure out what makes your unique and what your strategic positioning is going to be. What's your number one calling card or claim to fame going to be There have been tons written about this very important subject called positioning. Positioning has been the marketing philosophy for most successful companies over the last ten years. Proper positioning has also given Nokia a big cutting edge ahead of its competitors. The main competitors of Nokia are Samsung, Siemens although the two have merged at per now, Alcatel, Sanyo among others. Proper positioning is the key to leadership. But what is it And how can you use it What place do you hold in the public's mind If the answer is none, then again, you have a problem (Chebian, 2008). The first step towards winning any battle is to have victory in the mind. This is the secret of marketing. A firm must therefore do a lot of emphasis on marketing. Nokia does this by doing a lot of advertisements in many media outputs. These are through internet, radios, billboards, televisions and newspapers. Many magazines are on the run in today's global market. Some common ones include cosmopolitan, Elle, Msafiri magazines. Nokia has greatly invested in buying space in these magazines some as to do advertisements. The results of this are amazing. Many people now sing of nokia. This is to mean that the company has a great market. Many other companies have also given Nokia a great deal of competition. For example Sony has been first at innovation. They always try to be first in whatever's next in technology. K-Mart the cheapest price store that won't be undersold is their outsource. Price and full lines are their battlefields for your mind. What's the best battlefield (Strategic Position) for you to take This is obviously a kindergarten kind of question as per now. You've got to understand that any decision to buy or use something takes place in the mind. So, if you're not in mind then they probably won't buy from you or use you. You basically, "aren't there" without a position! Some of the most common examples of positioning are service, speed of delivery of service, latest technologies, Guarantees, and lowest price. Your company probably has already carved out a niche for itself of some kind. The problem here is that too many of you owners out there don't even realize what the identity of that niche is. Often times the salespeople know what it is better than the owners do. Obviously this is true but the manager should know there products well, and be the first consumers of the technology. The customers really know best. Good marketing strategy always does customer follow-up, to know their satisfaction level. What you need to do is find out from your best customers why they are doing business with you instead of someone else. This tells you what your real niche or core competency is within your company right now. Nokia is very sensitive to the changes in the market. This has helped to know what is relevant to the market. The company also performs checks to know how their products progress in the market place. In May 2007, Nokia announced that its Nokia 1100 handset, with over 200 million units shipped, is the best-selling mobile phone of all time and the world's top-selling consumer electronics product (Reuters, 2007). Apart from the most selling variety the company has also identified some trends that motivate the society into progress. This includes diversity and expansion. Nokia has programmed their items in many international languages. Kiswahili is one of this. This is what position strategy implies. Positioning strategy makes a firm to know where to lay more emphasis and so drop other less profitable ventures. On April 2003, the troubles of the networks equipment division caused the Nokia Corporation to resort to streamlining practices on that side, including layoffs and organizational restructuring. This decreased investments in the networks departments. STRATEGIC PLAN OF NOKIA CORPORATION Everyone has Great and amazing needs to communicate and share. Nokia helps people to fulfill this need and helps people feel close to what matters to them. Nokia puts focus on providing consumers with very human technology - technology that is intuitive, a joy to use, and beautiful. This implies that style and fashion are basic requirements in this strategy. We live in an era where connectivity and information are becoming truly ubiquitous. The communications industry continues to change and the internet is at the center of this transformation. Today, the internet is Nokia's quest. Nokia's strategy relies on growing into greatness, transforming, and building the Nokia business to ensure its future success. This calls or alertness and accurate observation of the market trends. The gargets that sell most in the market include cameras, radios, internet, good music and great shapes and designs. Nokia has taken advantage and exploited these markets. Some of the most recent phone varieties include, 6300, 2110 varieties. These are a real catch both to the young and the old generation. A summary of strategic plan of Nokia corporation is as below MISSION STATEMENT Nokia Corporation is a Finnish multinational communications corporation, focused on wired and wireless telecommunications. VISION STATEMENT The company has a dream to sea the consumers satisfied with communication products which are all inclusive and efficient. VALUE STATEMENT -efficiency -integrity -delivery -maximization -reliability SWOT ANALYSIS Strengths: Good professionals Enough capital Good marketability Market coverage Right technology. Better sales output compared to competitors Large Market Threats: Stiff competition from rivals like Sanyo Very fast change in techno Large investment in technology with uncertainty in the market Political instabilities in some countries of heavy investment. Weaknesses: Corruption within the staff Lack of maximum work output in some work Low sales of some phone varieties, which hold capital Opportunities: Dynamic industry Ever rising technology Increase in the literacy level of the society Urbanization and rise in fashion awareness in the world. STRATEGY PLAN The threats above are to be eliminated. Competition from companies is to be eliminated by marketing and merger and acquisition. This will leave only Nokia in the industry. Technology changes very first. To avoid loss of resources due to expiry partial investment in equipments is required. Another way to avoid this risk is to use outsourcing method (Shmeer, 2008). Political weakness can be overcome by temporary suspension of any investment ventures in the affected environments. Design of any new product is to be done after doing proper research on the customer desires. This will prevent redundancy. STRATEGIES TO REACH THE GOALS The first step is to set the house in order. New staff with skills on programming and design will be employed competitively The management has capital to start off. The main focus at the time is to give clients products which contain many features in fashion. These include camera, good ringbones, radio, mp3 and internets. The marketing has to be boosted upon testing that the system works. This will be done via the internet and media. MINITORING OF PROGRESS This is very important. The designers will do a great deal of the work. A team will be initiated to supervise the work and give periodic reports. Upon completion, the product will be released to the market. A follow up will be conducted to find out how the consumer responds to this new product. More improvements will then be initiated to maintain customer satisfaction. This is a summary of the plan. Any business venture must have a plan to be followed to reach the desired end, The factors that drive fashion into mobile handsets are many. This is majorly the need to consolidate many things into one. The current man is very much civilized and uses many gargets in the day. These gadgets include phones, cameras, radios, internet providers among many other things. Beauty is another driving force of the civilized man. The need to have all these things in one working place has pushed the communication provider to invent products which will bring satisfaction to the human race (Nokia 2006). The Nokia Corporation has therefore manufactured new phone varieties and PDA that contain as many features named above as possible. The fashion strategies that motivate sales in the mobile sectors include: Shape, color, size and sound quality. Great sales have been realized on the phone varieties that have smart shapes. Some are sleek, other plum, others having shapes of common phenomena like heart shape or orange. The more the shape variety, the better. Sound quality sells volumes in this generation. Installing some sweet music greatly attracts buyer into that commodity. A good color and relatively small size items are a real catch. It actually goes without doubt that fashion and sales can never be divorced. For this reason, Nokia has resorted to this strategy of being at per with the fashion and style trends. 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