Contemporary Operations Of Nokia Corporation - Case Study Example

Contemporary Operations Of Nokia Corporation Table of contents Executive summary------------------------------------------------------------------2 Part 1 Introduction--------------------------------------------------------------------2 Nokia Corporation---------------------------------------------------------2 Competition-----------------------------------------------------------------3 Product design-------------------------------------------------------------4 Part 2 Global market trends-------------------------------------------------------5 Advantages for Nokia----------------------------------------------------5 Recommended strategies for Nokia----------------------------------6 Maintain higher quality---------------------------------------------------6 Offer better service-------------------------------------------------------6 Harness new information and communication technology----7 Redefine marketing strategies-----------------------------------------7 Tactical approach to recommended strategies--------------------7 Branding---------------------------------------------------------------------8 Market responsiveness--------------------------------------------------8 Conclusion------------------------------------------------------------------8 Bibliography----------------------------------------------------------------10 Executive Summary The contemporary business environment is characterised by various changes which is making it difficult for businesses to create a competitive advantage in most industries. Against this back drop, this report seeks to analyse the operations of Nokia Corporation which is a Finland based cellular communication giant. Up until the 1990s, this company was enjoying high market shares as well as profits but it apparently began to witness a downturn in business after 2000 due to several reasons. Competition from rival competitors is cited as the major challenge to the organisation’s operations in terms of market share as well as declining popularity. It has also been noted that the organisation in question is not responsive to market demands since it is found lagging behind new information and communication technology. Other competitors offer convenient marketing strategies and are responsive to the demands of the customers. Against these reasons contributing to the challenges facing Nokia Corporation, it has been recommended that it should maintain higher quality to gain competitive advantage. Better service to the customers is a virtue and it has been recommended that Nokia should improve on the services offered to the customers as a way of trying to create a situation that will give it the opportunity to regain the position it used to enjoy during the 1990s. It has also been recommended that Nokia Company should harness new information and communication technology in its marketing strategies as a way of improving the link with the customers. Above all, the organisation should be market responsive since the market is constantly changing. Introduction The global business environment is changing rapidly and the pace and intensity of the competition is making it impossible to create a competitive advantage in most industries. However, companies have to learn to survive and grow despite the ‘unsustainable’ advantages obtaining on the ground (Manning 1991). Becoming a world class competitor during the contemporary period demands better standards of performance as well as aggressive marketing strategies. The cellular industry is one that is continuing to grow and is characterised by fierce competition by different players who manufacture cell phones for the global market. Against this background, this report seeks to analyse the operations of Nokia Corporation which until the year 2000 was a leading player in the cellular industry but has dramatically lost its competitive edge to the other rival competitors in the market. The major notable competitors in the industry include Samsung, LG, Siemens and Motorola. The report will try to evaluate the current competitive strategies that are used by the organisation. The major objective of this report is to recommend strategies that can be adopted and give a critical analysis of the best method that can be implemented in order to stimulate growth of the organisation to gain its lost glory. It is still not very late for Nokia corporation to implement strategies which can play a big role in turning around the fortunes of the company. Nokia Corporation Nokia Corporation had great success in the 1990’s over the other rival competitors in the mobile phone industry (http://www.essaylib.com/blog/samples/case-study-nokia-essay.html). This is a Finland based organisation and according to the case study obtained on the given website, Nokia mobile phones and appliances were the top product in the market which made the organisation to become leading in all the corresponding areas of business through the world. However, there has been a negative development with regards to Nokia’s performance given that an authoritative study of global competitiveness put Finland down from top three to number 8 competitor in the industry. This negative trend is attributed to a decrease in its shares and popularity with the customers. Research has shown that when Nokia was enjoying growing business in the 1990s, the business situation was on the rise but with the advent of digital technology advancement, the business situation is still the same and the organisation has failed to keep pace with these. Nokia has also certainly made blunders in the way it conducts business, the reason why it has lost its leading role in the industry. “Nokia lost a lot in the value of its shares during the past several years from 60 Euros in 2000 to 10.22 currently, which is a very negative estimate for the company and the Finish industry,” (http://www.essaylib.com/blog/samples/case-study-nokia-essay.html). Nokia Corporation is a dominant player in the Finland economy and has a staff complement of 22 000. It also had more than 6000 companies that acted as suppliers and it made more than two thirds of the total value of shares traded on the Helsinki stock exchange. However, things have taken a down change where the proportion of shares has drastically fallen to below 30 percent though it is still commanding high trade. This negative trend in business is a cause for concern given that the other rival competitors are thriving in the same market. According to the economists, the future fore cast of the organisation looks gloomy and there are little chances that it will claim its lost position of being a leader in the cellular industry. Nokia is a global company though it has its roots in Finland. Even globally, it can be noted that the market is now characterized by other strong competitors. Though some studies posit to the effect that Nokia is doing well globally, it is difficult to conclude that it is the world’s leading cellular manufacturer. The emergency of the state-of-the- art phones like iPhones has seen a dramatic shift in the interests of the consumers as far as cell phones are concerned. There are a lot of developments taking place in the world of communication and these play a pivotal role in determining the organisation’s competitiveness. Nokia is still lagging behind as far is these developments are concerned the reason why its popularity has declined over the recent years. Competition Nokia is facing difficulties in trying to regain its lost glory the reason why this report attempts to find strategies that can be put into effect. The major cause of this trouble is competition in the market. It can be noted that there are competitors such as LG, Siemens, Motorola as well as Samsung. These competitors are responsive to the market demands and they present their products in a desirable fashion which is convenient to the customers. The marketing strategies used by these companies outpace those used by Nokia Company and their products are designed in a way that is attractive to the customers. This negative trend has not only affected Nokia Company but has also affected the economy of Finland at large. The competitors have a competitive advantage over Nokia especially through their pricing structures. They have lower prices on products which are equally attractive to the customers. Given the global economic recession that recently gripped the whole world, customers have since become price sensitive and would opt to go for something that is affordable while at the same time retaining quality. Where there are substitutes in the market, chances are high that the customers will shift their attention to something that can satisfy their interests. Essentially, marketing has a great role to play in any business. Every organisation is in existence because of the need to satisfy the needs of the customers profitably. The other issue that contributes to Nokia’s decline in the market share is the way it presents its product to the market. The organisation has been using strategies which can be said that they are outdated given that the business environment is dynamic and is constantly changing. The marketing mix of any organisation forms the basic foundation for its success given that the aim of doing business is to make profits. The product should always appeal to different end users and must be readily available on demand. Some organisations often fail to gain a competitive advantage as a result of the fact that customers often fail to get what they want on time in the market. Product positioning is one of the basic tenets of marketing and it ought to remain the guiding principle of each organisation. Product design One notable factor that is worth mentioning in the negative trend characterizing Nokia Corporation’s viability is that rival competitors are particularly concerned with product design where they make every effort to introduce new features in their products that will appeal to the customers. With the advent of cutting edge digital technology, some companies are able to come up with attractive products that are fairly priced compared to Nokia’s product. Gaining competitive advantage in the market is always the number one desire for any organisation that is seriously concerned with making profits. Indeed, competition is healthy in the business environment but there is every need for this former cellular giant to try to close the gap that may exist among the competitors in the industry. Nokia Company has the belief that since they have a renowned name they can still command a lion’s share in the market. Given all the factors that contribute to Nokia’s problems, it is never too late for Nokia to turn around its fortunes to regain its lost glory in the cellular industry. Though the organisation is currently experiencing difficulties in the market, it still stands better chances of regaining its position it enjoyed in the 1990s due to the reason that its products remain unique and are of great value to the end users. Nokia is believed to be the founder of the cellular industry and it still commands a lot of respect globally. The major contributor to its problems can be attributed to marketing strategies that are employed by the organisation. Reaching its lost pride is the main aim of this report given that it is still regarded as a leading company in the cell phone industry. The only problem is that the industry is not static but is changing by each day. However, given the popularity Nokia commands in the market because of its uniqueness, the organisation can still make it to the top by virtue of carefully setting its value expectations that can meet the needs and interests of the customers in a profitable way. With concerted efforts in place, the organisation can be better positioned to gain more profits which will also positively contribute to the growth of the Finish economy as a whole. The next section seeks to critically analyse the strategies that can be put in place so as to ensure that the organisation is better positioned to reclaim its position it has lost to the other rival competitors. Recommendations will be given such that well informed decisions based on the market trends are taken into consideration in the operations of Nokia Company. Part 2 Global Market trends Just like products and companies, it can be seen that industries also have their lifecycles and they cannot remain static forever. They are often confronted by different upheavals where some often fail to make a turnaround against them. According to Manning (1991:35), “Consumers for everything behave differently than yesterday. In developed countries, they are older, better educated, richer more discriminating and values are under threat...” it can be seen that buyers are increasingly becoming self conscious, brand conscious and price conscious. Consumers today are well informed and they really know what they desire from their own money. Globalisation has also brought about dramatic changes in the business environment the world over. Manning (1991) suggests that the globalisation of knowledge will have more impact than the globalisation of manufacturing. These forces will be responsible for altering the way people think, shop as well as the way business is done across the spectrum. This is a result of improved communication links especially through the advent of the internet. In view of this scenario, this section of the report seeks to outline some of the strategies that can be adopted by Nokia Company so that it will be better positioned to regain its top position it enjoyed in the 1990s. Advantages for Nokia The given case study shows that despite the challenges that have affected Nokia of late, it still has the competitive advantages that can be positively implemented for the betterment of the organisation and the economy of Finland as a whole. One major notable advantage of Nokia is its uniqueness. This organisation is believed to be the founder of cellular communication and those consumers who use Nokia products are sort of addicted to them for they do not want to change the brand for good reasons that this particular brand is unique and has various advantages compared to the other brands in the market. Market trends have shown that Nokia is no longer enjoying the market share it used to enjoy in the 1990s but chances are high that it can still manage to turn around its fortunes to match booming business it used to enjoy. The major threat to Nokia as noted is competition from the rival competitors who have convenient marketing strategies and are responsive to market demands. Marketing has been defined by several observers as the art of finding, keeping and growing profitable customers (Kotler 1999). Yesterday’s marketers were primarily concerned with hunting for new buyers but this is in contrast to today’s marketers. Nokia has a big advantage in that it has a huge customer base which guarantees it a steady flow of income where there is need to maintain these and attempt to attract more customers. It should attempt to harness the loyalty among customers to increase the number of end users as well as encourage buyers to return and buy the products again. Recommended strategies for Nokia Kotler (1999) suggests a set of winning strategies that can be implemented by any business to gain a competitive advantage over the rival competitors through the use of world-class marketing. As such, the following strategies are recommended to Nokia Corporation in a bid to turn around its fortunes to the high position it enjoyed during the 1990s. Maintain higher quality It is generally agreed that poor quality is not good for the success of any business. The moment customers get a poor product, they will obviously bad mouth about it which will scare away even other potential customers. Whilst the issue of quality may be difficult to explain at first glance especially with regards to electrical gadgets, it should not be compromised in any way. It is recommended that Nokia Corporation should keep pace with the technological changes so as to ensure that the company is better positioned to enjoy higher market share. For instance, Motorola which is a competitor boasts of highest quality with its 6 sigma (Kotler 1999). These are changes in quality that began to affect the market share for Nokia during its hey days in the 1990s when the other competitors began to capitalise on the state-of-the-art technologies. There are some loyal customers as well as new customers who can afford to buy the products with exceptional quality standards and this would help keep the brand alive in the market. The organisation ought to maintain high quality which will help it to achieve greater market share. Offer better service Good service to the customers is a recipe for success in any business. Whilst the concept of a service can be defined in different ways by the customers, it remains a basic tenet of good marketing strategies. It has been noted in the case study that other competitors offer quality service to their customers compared to Nokia. They are better positioned to meet the demands of the customers in a timely manner and they actually value the interests and needs of the customers more that what Nokia does. It is recommended that Nokia Company should revise the ways it conducts its business with regards to quality service provision to the customers. In business, the customer is king and he should always get the best service so as to create loyalty among the different buyers. The organisation should embark on market research so as to be able to obtain all the interests and need of the customers. Armed with the correct information about the needs and wants of the customers, service offered is likely to improve. It has been observed that the other competitors are always responsive and they employ convenient marketing strategies which help improve the quality of the service offered to the customers. Harness new information communication marketing strategies The advent of new information and communication technology has brought about dramatic changes in the ways organisations conduct their business across the spectrum. Knowledge transfer across the borders has been made easier as a result of the changes in communication technology. Information can be transferred instantaneously to millions of people across the globe and the internet has certainly made it possible to link people from different parts of the globe. Nokia is a well known and popular cellular manufacturer globally and it can successfully harness on marketing communication with the aid of the internet which is aimed at raising awareness about a product among the customers as well as creating loyalty among them. In theory, marketing communications can be defined as, “the process of presenting an integrated set of stimuli to a market target with the aim of raising a desired set of responses within the market target and setting up channels to receive, interpret and act on messages from the market to modify present company messages and identify new communications opportunities,” (Lancaster and Reynolds, 1999). It can be seen that the use of new information and communication technology in marketing various products by the marketers helps make both the customers and the organisations stay in touch. With the use of the internet, transactions can be instantly done on line and the customer would expect his product at an agreed time. Exchange of information that can be used to solve customer queries can also be instantly done online which helps improve the quality of services offered. However, a critical analysis of Nokia’s operations shows that it has not been keeping pace with these technological changes in the communication landscape. It is therefore, strongly recommended that Nokia should try to harness the use of new information and communication technology in its operations. Marketing communication is one element that influences the consumers to buy certain products in response to the messages that would have been disseminated to them about certain products. Nokia should make use of that advantage in the market in order to regain its lost pride of high market share it enjoyed in the 1990s. Redefine marketing strategies Another strategy is redefining its marketing strategies given that the market is dynamic and constantly changing instead of relying on the old ways of marketing. As a result of globalisation and communication technology advancement, it is now possible for organisations such as cellular providers to operate globally. However, this is not very easy by virtue of the effort required in positioning the organisation in such a way that it will be able to implement its marketing mix in a bid to satisfy the needs and wants of the consumers who may be located in different geographical area. In the given case study, it has been noted that Nokia is lagging behind changes in the market and this gap can be effectively bridged through the use of improved marketing strategies such as the use of improved communication technology. There is need to conduct market research where the needs of the consumers are identified. This can be done through dividing the consumers into groups known as segments on the basis of their level of income, geo-demographic factors as well as interests among others. Kotler (1999) suggests that it becomes easier for the marketer to reach the potential customers if their needs and wants can be identified rather than basing operations of an organisation on assumptions about consumer needs. Tactical approach to the recommended strategies Branding Deciding upon strategies to implement within the operations of an organisation in a bid to improve its competitive advantage is not an end in itself but part of a long process. Different tactics can be implemented as well in a bid to achieve the set strategies by the organisation. The concept of branding is tactical in the achievement of certain strategies with regards to product performance in the market. Branding gives the product an identity in the same way that a name and face give identity to that person (Strydom, 2004). The concept of branding posits to the effect that it is very important to the marketer than the physical features of the product itself because of the reason that in many cases, competing products are fairly similar in terms of physical features. As noted above with regards to product quality, it can be difficult to identify it with the naked eye but the perception created by the customers about the brand gives it the much needed identity which is a competitive advantage. It is the duty of the marketer to use something else to help consumers make a distinction between a particular product from those competing against it. It can be seen that during the 1990s, Nokia mobile phones and appliances were the top products in the market therefore the corporation was leading in all corresponding areas of business across the globe. It can still capitalise on rebranding its products given that it is a renowned cellular giant. Market responsiveness Responding to the market demands is one viable tactic that can be used by Nokia in a bid to outdo the competition posed by the other players in the cell phone industry. Other rival competitors as noted in the case are responsive to the market demands and they have convenient means of reaching their customers in time of need. Market changes are in two ways; the market environment is dynamic and is constantly changing and the needs and wants of the consumers are also constantly changing. Nokia Corporation should always strive to introduce something a bit different and better in the event that the competitors have introduced something new as a way of ensuring that it is always on top of the situation. In other words, Nokia should try to keep pace with the new opportunities presented by new technological changes taking place in the market. It must also keep pace on the needs of the customers which are also changing every time. Conclusion In conclusion, it can be noted that the global business environment is changing rapidly and the pace and intensity of the competition is making it impossible to create a competitive advantage in most industries. Against this back drop, this report sought to analyse the operations of Nokia Corporation which is a Finland based cellular communication giant. Up until the 1990s, this company was enjoying high market shares as well as profits but it apparently began to witness a downturn in business after 2000 due to several reasons discussed in detail. Competition from rival competitors is cited as the major challenge to the organisation’s operations in terms of market share as well as declining popularity. It has also been noted that the organisation in question is not responsive to market demands since it is found lagging behind new information and communication technology. Other competitors offer convenient marketing strategies and are responsive to the demands of the customers. Against these reasons contributing to the challenges facing Nokia Corporation, it has been recommended that it should maintain higher quality to gain competitive advantage. Better service to the customers is a virtue and it has been recommended that Nokia should improve on the services offered to the customers as a way of trying to create a situation that will give it the opportunity to regain the position it used to enjoy during the 1990s. It has also been recommended that Nokia Company should harness new information and communication technology in its marketing strategies as a way of improving the link with the customers. Above all, the organisation should be market responsive since the market is constantly changing. Bibliography Case study essay: Nokia (N.D) 22 July 2010. http://www.essaylib.com/blog/samples/case-study-nokia-essay.html Kotler P. (1999). Kotler on Marketing: How to create, win and dominate Markets. London. Free Press. Lancaster G. & Reynolds P. (1999). Introduction to Marketing: A step by step Guide to all the tools of Marketing. Kogan Page. Strydom J. (2004). Introduction to Marketing. 3rd Edition. Cape Town. JUTA & Co Ltd. Manning T. (1991). World Class. Strategies for winning with your customer. CT. JUTA. Read More