Business Environment of Nokia - Case Study Example

GLOBAL WARMING AND ITS EFFECTS ON GOVERNMENT AND BUSINESS PRACTISES In the modern times, information has proved to be an effective tool that unites people and enhances economic activities across the globe. This has prompted a great demand in effective and reliable means of communication. Some companies have realized this increasing demand and created themselves huge advantages by trading in goods and services that appeal to this rising need with each passing day, one of these companies has been Nokia. Nokia is a communications and information technology company that commands a large market share globally. The company has its headquarters in Finland, in one of the cities called Espoo. The company has modeled itself to become a household brand in many countries in the global scene (Basole, R. (2009, p. 150). The company offers different varieties of goods and services to clients worldwide, some of them include, internet service applications, games, music, media as well as different forms of messaging services. In order to increase retain and increased its customer base, the company also offers digital map information free of charge as well as navigation services though a subsidiary that is wholly owned by the company called HERE. Nokia has also been successful in offering different telecommunications network equipment and services in the different countries that it commands a good market share, this is usually through its Nokia Solutions and Networks subsidiary. This company has creates employment opportunities to many people directly and indirectly, it is estimated that as of 2013, the company provided employment opportunities to about 87, 771 people across 120 countries globally. Nokia is registered as a public limited liability company, currently; it is quoted on the stock exchange in Helsinki as well as the New York in the United States of America. Fortune Global has quoted the company as the 274th largest in the world with respect to its revenue reports. This paper explores different aspects of organizational performance that has been essential in making the company successful to date. It examines different ways that the company has used to scan and study its environment, something that seems to have given it a cutting edge in most of the countries that it has set presence. The business environment A business is usually influenced by the environment in which it operates, when the environment is conducive, a business is better placed to create sustainable systems that can give it success all the time. The business environment is comprised of different forces that pull in different influencing normal operations in the business. The complexity of this reality is what business owners should understand, there is the macro-environment, which refers to the world outside the business, one that the business cannot influence or control, instead it has to adapt to its changing forms. On the other hand, there is the microenvironment, which is composed of local events and circumstances that directly influence business practices. Organizational environment at Nokia Company Nokia Company, just like any other national or global organisation is faced with different issues to deal with in its internal and external environment. The internal environment of any company enables it to manipulate different resources in order to come up with strategies that enable it to increase its performance. One of the most functional areas that have given this company success in most of its markets is research and development. Being a multinational organizational, the company knows that in order to break-even in new markets, research and development is the only resource that can enable it breakthrough in new markets. It is estimated that as of 2003, this company had a strong research and development presence in about 16 of the countries that it commands a good market share. In fact the company is recorded to have employed a total of 39,350 people in this functional area. Compared to its workforce, this number represents about 31% of the entire workforce in the company in this area. This is just an indication of the value that the company gives to efforts to improve its functions and management practices. How the company interacts with its business environment Research and development provides important recommendations new ways dealing with different issues affecting the company. The company has been able to create a reliable workforce that has seen it compete effectively. Through this activity, the company understands that the future promises different changes in the mobile and telecommunications industry, to this effect, the company is well prepared to develop products and services necessary to manage these changes in the physical and digital worlds. In order to manage complexities in the external environment, the company has created partnerships and affiliations with other successful and leading institutions in the whole world (Hess & Coe 2006, p. 1210); it has created positive relationships with governments as well as other like-minded organizations in a bid to improve its global image and effectiveness. In fact, Nokia has been known to successfully collaborate with other institutions around the world through what is termed as Open Innovation. Through this collaboration, the company has been able to share resources and build upon each other’s knowledge and skills for mutual advantage. How do customers benefit from all this processes? The value derived from this relationships as well as expert advice is ultimately passed onto their end cures through many of the innovative products and services that are developed. How companies compete domestically and internationally The external business environment is usually characterised by competition among other important factors. Competitions brings important outcomes to buyers since they end up buying products and services with improved quality. Companies will always try to rely on strategies that assure them of competitive advantages in order to remain successful in their environment. Multinational companies like Nokia are usually faced with two kinds of competitive, one is competition on the domestic front an second, there is competition on the international front. In order to compete effectively, most companies rely on effective market research. This way, they are able to understand the nitty grities about important issues in the domestic market (Bhagwati 2004, p. 135). Some of these issues may include culture, which determines the practices the company adopts to enhance its effectiveness. Research is important in provide market trends both in the domestic and international markets, through it, companies are able to understand new inventions and innovations as well as specific customer tastes and preferences to address. On the International front, companies are usually made to recruit experts that are able to understand market dynamics and management practices in different countries (Fernández & Usero 2009, p. 340). These managers understand expansion and market entry trends in different markets, they are able to help companies implement different entry strategies, break-even and succeed in new markets. People are endowed with different knowledge and skills, it is the duty of company owners to identify such managers who are able to guide the companies into effective expansion strategies with minimal or no losses in the process. Competition and effective price determinations Price determination is an important factor that determines peoples demand for particular goods and services. In a competitive environment that has many firms, companies do not decide on the prices for their products, it is always the equilibrium point through the interaction of demand and supply curves. Source (Jain 2006, p. 28) At Nokia, the company creates a differentiation in its products, based on the different price points in the various segments available. However, the prices that are given to most of the products and services depend on those prices that competitors give for their products (Cricelli, Grimaldi & Ghiron 2008, p. 30). This is to ensure that the company does not end up in losses through overprizing, which can scare customers away and at the same time, if the prices are too low there is a tendency that the company may not reach break even. It is important to understand that in the mobile phone industry, there is no perfect competition; the industry cannot be termed as oligopoly as well even though the industry has few major players. The demand curve from the products and services sold by Nokia Company looks as follows. Source; (Hakkarainen 2010, p. 78) PESTEL factors and how they have influenced management practices at Nokia Company PESTEL factors are an important analysis of a business’ external environment; they enable a company to make important decisions and strategies about effective practice in its external environment. At Nokia, PESTEL factors have been instrumental in the company’s expansion strategies in many parts of the world as follows (Duan, 2007, p. 84); Political Political factors relate to different factors that the government establishes to influence business practices; they include rules and regulations as well as the prevailing political climate. Nokia has recently moved one of its manufacturing facilities to India (Hakkarainen, 2010, p. 100), this means that the company has to be aware of different practices that the government has established including working hours for workers, remuneration conditions, as well as health and safety regulations. This is the same analysis that the company has used when joining new markets in different countries. Economical Nokia has been a great investors and important player in the economy of Finland; such that the government has always stepped in to help the company stabilize in harsh economic times. For instance, when the company planned job cuts for its employees, the company had to step in to pledge support for those that would lose their jobs. The company has become aware of changing exchange rates in different countries. The company was equally affected by the European recession that rocked most institution; however, it has continued to stabilize. Social With Nokia company operating in most western markets, it is imperative that they effectively understand different social factors in these markets. One important factor that needs to be given keen attention to is the issue of culture. They have to ensure that the products and services they create appeal to the culture of the prevailing area, this way they are able to remain relevant in the competitive telecommunications industry. It is important to understand that today, consumers are after most innovative smart phones, this is because, the society judges people according to how fashionable they are. Technology The current information and communication industry is characterised by modern inventions. The company needs to ensure that it relies in important strategies in research and development in order to come up with high technology products that appeal to the changing needs and practices. So far, the company has been on the forefront in the manufacturing of smart phones with different application to assist manage different management practices in business and organizations Environment The company has been making products that appeal to the stipulated rules to enhance environmental management and conservation. With the devastating effects of global warming, governments have been on the forefront setting limits on carbon components in different products, to this effect Nokia has been creating products that are environmental friendly. Legal Nokia operates in an industry where products by competing firms are similar, in order to protect its products, the company usually patents them so that other companies for not copyright them. The company has been able to put trademarks on its products such that clients easily recognize them. This strategy has enabled the company maintain its brand name and sell its innovations. Conclusion In conclusion, the company needs to adopt more successful strategies to enable it reach many more countries. The increased demand for information and technology systems in business and personal duties means that in future, there is great potential for growth. Clients should therefore be prepared to use creative innovations that appeal to their changing needs, tastes and preferences. Bibliography Basole, R. 2009. Visualization of interfirm relations in a converging mobile ecosystem, Journal of Information Technology, vol. 24, No. 2, pp. 144-159. Bhagwati, J. 2004. In Defense of Globalization, Oxford University Press, Oxford, New York. Cricelli, L., Grimaldi, M. & Ghiron, N. 2008. The competition among mobile network operators in the telecommunication supply chain, International Journal of Production Economics, vol. 131, No. 1, pp. 22-29. Duan, C. 2007. Nokias supply chain analysis, Logistics Technology and Application, Vol 12. No. 8, pp. 82-85. Fernández, Z. & Usero, B. 2009. Competitive behavior in the European mobile telecommunications industry: Pioneers vs. followers, Telecommunications Policy, vol. 33, No. 7, pp. 339-347. Hakkarainen, A. 2010. Behind the Screen - Nokias success story in an industry of navel-gazing executives and crazy frogs, Klaava Media, Finland. Hess M. & Coe N. 2006. Making connections: global production networks, standards, and embeddedness in the mobile-telecommunications industry, Environment and Planning A journal, vol. 38. No. 7, pp. 1205-1227. Jain, T.R. 2006. Microeconomics and Basic Mathematics. VK Publications, New Delhi. Read More