The Nature of Competition Facing Nokia Company - Assignment Example

BKY)GLOBAL CORPORATE STRATEGY NOKIA-MICROSOFT STRATEGIC The purpose of this report is to critically analyze and evaluate the strategies adopted by global Smartphone providers using different secondary and primary information taking Nokia Company as the case study to use. Likewise, the paper will further analyze the nature of competition facing Nokia Company from other emerging new mobile operating systems entering the mobile market and determine the impact of the competition has towards Nokia’s Smartphone market share and income. Moreover, the paper will examine the concept of strategic alliances and global competitiveness using Nokia as the case study to determine impacts of the alliances and recommendations necessary for the company to remain on top of the competition by being branded as a giant firm in the production of cell phones globally. The paper will also examine Nokia’s organizational culture, leadership and competitiveness and the impact these has had on their production and sales processes. Lastly, the paper will provide a personal reflection of the learning outcomes achieved from engaging in the assessment by a leaner by highlighting things achieved or added to the knowledge one already had on the subject of Smartphone. Smartphone Industry Competitiveness Question 1: Critically evaluate the nature of the industry competition facing Nokia from new mobile operating systems entering the market e.g. iOS and Android (Refer to Exhibit 2 for competing platforms to Symbian). The cell phone industry has been one of the fastest growing industries in the late 90s and the growth rate has been multiplying over the years. The market structures which the cell phones have been operating has for a long time been referred to as oligopolistic market structure but since had gradually turned into a monopolistic market structure. In the oligopolistic market structure which was there before, very few companies and one of them included Nokia that had globalised to known in practically each corner of the planet. This is because the company was known for selling homogenous or differentiated products. However, the turn in the market and the increase of competition for such firms like Nokia came into place with an easy entry and exist market similar to addressing various features we witness today of a market which is monopolistic in its way(Wit & Meyer, 2010). Competitors like the Telecom industry has seen a rise to different companies like the Siemens, Motorola selling homogenous products and differentiated products but have time have converted their products which were characterized as handheld and bulky phones into light and smaller cell phones both having different features both internally and externally (Wit & Meyer, 2010). A good example is the difference we notice today in the operating systems of many phones and the symbian interface and the windows operating in use today (Johnson, Scholes & Whittington, 2008). Therefore, in light of these changes, competition for Nokia Company which was once considered a global and monopolistic company has increased for every corner of the planet with new competitors like Samsung, Apple, LG, HTC, iOS and Android entering the market with different products hence making the mobile phone market an oligopolistic market with stiff competition. However, with the emergence of the new market, the entry and exist of the telecom industry has been made easy and as most customers are advantaged with the numerous mobile features available in the market and what makes a mobile company today successful is its ability to provide its customers with a unique experience from the other experiences provided by other companies (Thompson, 2001). Question 1b: Using the information in Exhibits 3, 4, 5, 6, and 7, discuss the impact of the global smartphone industry competition on Nokias smartphone market share and income from 2006 to 2010. The global Smartphone industry competition has negatively impacted Nokia’s Smartphone market share and income from 2006 to 2010. This is because Nokia today is not ranked as the world’s largest mobile phone as the position has been taken over by emerging company Samsung electronics. Over the period, Nokia’s sales has been eaten or fallen due to the emergence of such companies like Samsung electronics and the fall in the sales were greatly recorded in the 21% in the first quarter from 27% a year earlier according to data collected from IDC. Nokia’s share was estimated to have peaked40.4% at the end of 2007 therefore showing the negative impact the smart phone competition was having on the company. Moreover, with the period, the negative impact of Nokia’s fall was very eminent in the financial report because in the year 2007, for the first three months at the beginning of the year, the financial statements was recorded to be somewhere between $ 1.1 billion which was from a profit of €344 million the previous year. The revenues of the company were also reported to have reported a decline by 29% and the report in the second quarter, the trend has deepened or worsened. However, the negative decline in the company’s operation and a global mobile phone giant within the period was attributed to internal rivalries experienced by different parties within the company. These rivalries were not healthy for the company because instead of focusing their attention to the research which would eventually have aided them in also making changes in their phones to match the competition which was being posed by other companies, they instead focused on internal affairs and in the process hindering their research efforts as the process of research on phones within the company was fragmented hence could not come with innovative features to bit the competition posed on the market (Lynch, 2002). In addition, the choices of the Smartphone which they produced were wrong. This is because of producing hit devices or software which were unique from those being produced by their competitors, the binge of spending which was a result of internal rivalries experience within the company led the company to abandon two of their operating systems and a pile of patent which heavily consumed the company’s finances. In short, Nokia did not spend its companies capitals towards a conducting extensive research on the software and features to introduce on their mobile phone therefore leading to a lag in their research strategies and results leading to decline and in the sales of the mobile phones as they could not match the smart phones which were being produced by their competitors in the market (Johnson, Scholes & Whittington, 2008). Strategic Alliances and Global Competitiveness Question 2: Using relevant literature, carry out a critical assessment of the terms strategic alliances (SAs) and mergers and acquisitions (M&As) in the context of Nokias ambition to sustain its competitive advantage in the global smartphone market. Nokia has applied the terms of strategic alliances (SAs) and mergers and acquisitions to sustain its competitive advantage in the global Smartphone market as a way of leveraging their capabilities in manner that the customers deliver value form their different mobile phones currently produced in the market. In size, the new Nokia Siemens network is considered as the largest infrastructure provider therefore being a huge telecoms networks customer base. This has given them an advantage in the global Smartphone market as they have been able to display deep engineering competence and factories currently through the use of complex and expensive telecoms networking gears (Stahl, 2013). Moreover, strategic alliances has been crucial in providing Nokia with the needed production capabilities hence allowing it to obtain a fair competition on the Smartphone market as through their production capabilities, the company has been able to vertically integrate and posses some of its own production and facilities which can found in different parts of the world. A good example is that the Nokia’s Beijing facility is being considered as the world’s biggest handset factory whereas the company’s premium facilities are based in a place known as Finland where such products like N9 are being produced. Mergers and acquisitions have also been useful or beneficial towards granting Nokia economies of scale and cost leadership on low cost mobiles and in the process giving them an advantage over the global Smartphone market which has been characterized by different companies producing different types and features of mobile phones. Likewise, through economies of scale and cost leadership, Nokia has remained the only mobile company or brand which produces the greatest numbers of mobile cell phones with low costs in the world therefore capturing a large audience of customers who are considered to be below the poverty lines. In addition, through strategic alliances, mergers and acquisitions, Nokia has been able to maintain their brand value and in the process has strived to remain the number one brand in the sector of consumer electronics for different customers across the world. Likewise, the company has also been able to maintain a worldwide distribution network across the world as it has an estimated number of six hundred and fifty thousand retail stores across the world beating the majority of its competitors who do not have the much number of retail stores they have globally. Strategic alliances has also enabled Nokia company to be able create and maintain carrier relationships with different agencies and companies across the world. In the past decade, Nokia has been known to develop some important relationship with other companies such as different world leading-carriers which has been able to transport their products and materials from different corners of the world to their respective places hence adding to the company’s advantage in the Smartphone phone competition posed by other companies producing cell phones with different features across the world. In addition, through their relationship with different world-carriers , Nokia has been able to access different and all sales channels unlike its competitors hence giving them a strategic advantage over their competitors in terms of such sectors as marketing and sales of mobile phones a across different regions of the planet (Yuan, 2005). Lastly, strategic alliances , mergers and acquisitions has also greatly assisted Nokia company in building a patent portfolio hence branding it as one of the biggest companies with a patent portfolio. This has allowed the company to conduct various innovation processes and strategies on their products hence protecting them from the competition existing in the mobile space as their intellectual properties have been safely guarded from such parties like competitors or corporate espionage (Lencioni, 2012). Question 2b: Using information from the case study, discuss how Nokias alliance with Microsoft in February 2011 helped in stopping the decline in Nokias share of the global smartphone market. In your opinion was the shake up at Nokia beneficial to the companys employees? And why? Nokia’s alliance with Microsoft in february2012 helped in stopping the decline on it share in the global Smartphone market because through it, the company was able to come up with an ecosystem symbian system which was much enhanced than the previous one which was being used by the company. The previous symbian which the company was using could not match those in use by other competitors like Apple or Google. Microsoft developers who entered into an alliance with Nokia has since then increased applications on Nokia’s symbian platform hence making it survive amidst the competition posted by Android. Likewise, the alliance between the two companies also enabled Nokia to build on its wireless technology thus coping with the large amount of data required by users of the mobile cell phones to accomplish some of their task. The two companies have also been able to combine their operating systems and through that produce a powerful operating system and ecosystem which have been largely used for such purposes like business by various customers purchasing the newly created cell phones. Lastly, the partnership between Nokia and Microsoft also pointed to the fact that their competitor Apple was becoming controlling in the market and their partnership has seek to change this as their production of Smartphone which are excellently designed in the market, Nokia with its products and newly formed partnership has been able to attract large number of different developers hence beating the competition existing in the Smartphone market. As a result of this, the technological capabilities of Nokia has been increased enabling the company to be considered as one of the innovative companies in the world increasing their shares and profits from falling further after their February 2011 share decline (Lencioni, 2012). In my opinion, the shakeup at Nokia during the February 2011 was extremely important to the company’s employees because through it they realized that they were loosing in concentrating in internal quarrels so much. This enabled them to shift their attention from the quarrels and concentrate on other productive ways which would see the company grow through such things like widening their research scope on the kinds and types of technology to use or invent to enable them remain a giant producer of the cell phones globally. Moreover, the shakeup was also important to the employees if the company because they also realized how important they needed the company and the company also needed them. Nokia as a company had employed hundreds of thousands of employees and the shakeup experienced at the company pointed to a fall in the company therefore loss of jobs to the different employees who were employed under different sectors and departments by the company. This drove them to give their best and value towards the company to prevent the company from falling or closing hence reviving the company back to its original status of a giant global cell phone producer in the world (Lindholm, Keinonen & Kiljander, 2003). Organizational Culture, Leadership and Competitiveness Question 3: Using your understanding of organisational structure, culture, disruptive innovation and relevant management and leadership concepts, critique the above statement and evaluate the ability of Nokias CEO and senior management team to make current and future strategic alliances work more successfully. ‘We poured gasoline on our own burning platform. I believe we have lacked accountability and leadership to align and direct the company through these disruptive times We havent been delivering innovation fast enough. Were not collaborating internally. Nokia our platform is burning. Stephen Elop, CEO of Nokia Corporation (De Wit and Meyer, 2014, page 719).” As from the above stamen, we see that Nokia CEO and senior management have realized the mistakes and short bringing towards the company therefore, they are in a better state make current and future strategic alliances work more strategically. From the above statement we can see that by accepting and identifying their own mistakes, Nokia’s management has realized their management capabilities therefore, they are able to develop new strategies which are as stated by the CEO after uttering the statements were based on three pillars, Smartphone, the next billion and future disruptions (Daidj, 2015). Through the production of Smartphone, Nokia will be able to compete fairly in the edge of the Smartphone competition present in the market. The company has corrected its platform form burning by entering into beneficial alliances with such companies as Microsoft, which has enabled them to use Microsoft’s windows phone as its main Smartphone operating system in the market. The result of this is that the Nokia through its management has been able to compete with emerging giants like Samsung through the newly created Smartphone in the market therefore making Smartphone battles a war of ecosystems rather than the use of devices. Lack of accountability and leadership within Nokia Company through the difficult times has prevented the company from achieving a lot especially through the harsh times passed by the company especially due to the stiff competition posed in the market by other competitors. The CEO and senior management engaging in internal quarrels did not provide adequate room for expansion and innovation processes to happen within the firm as resources were channeled to other sectors which were of less importance when considered to the research and development which would have been essential to towards the discovery of new technologies to be used in the development of cell phones like Smartphone crucial in the competition of substitutes provided by other companies. However, by recognizing their mistakes and moving away from the internal conflicts they had been experiencing in the company, the company’s CEO and senior management are now able to move the company’s newly innovated cell phones to the next billion mark by ensuring that their products are used by a larger fraction of the world’s fraction through the use of extensive product portfolio and a wide market presence worldwide. Therefore, the senior management and CEO of the company are better placed as they will be able to supply the billions of cell phones to the population of the world. On the issue of disruptive innovation, Nokia’s CEO and senior management has rendered that the process of innovation within the company’s cell phone products is a process that can not be considered as completed as the process of innovation is a continuous process that requires the discovery of new technologies and resources. Therefore, accepting that the innovation process practiced within the company is forward step taken by the company’s CEO and senior management to ensure that the future and current operations of the company proceed successfully without interference by ensuring that the company stays on its course of supporting revolutionary research and development work through the large laboratories which have been created by very sole purpose of innovation (Johnson, Scholes & Whittington, 2008). Likewise, in applying the new strategy proposed by the CEO of the company, the to act on his earlier statement above, the company has been able to lay its focus on its corporate activities in various different sectors which had initially faced a lot of diametrical opposition. The first sector they have succeeded in solving through the use of the strategy raised by the CEO and proposed by other senior management is that they have succeeded in developing high end Smartphone through a strategy known as differentiation and the low end mobile through the cost focus strategy. The successful development of the two strategies in the sectors have largely been supported by the Nokia brand which has grown to develop large customer loyalty across the world therefore it is a known fact that in the future and current operations of the company, current and future strategic management of the company with other companies or organizations will be successful because of the positive impacts that they have pointed to yield from such alliances like their alliance with Microsoft (Cameron, 2011). Moreover, their use of the two strategies can not be adequately successful when its is being used only by under their brand name as they will be not be able to make further growth hence will immensely depend on other brand names by other companies to achieve a competitive advantage in the market by their products (Nadler, 1992). On the contrary, the statement made by the company’s CEO “Burning platform memo” was however a mistake as it negatively impacted the sales the company was realizing through the sale of its cell phone products. The statement degenerated the company hence instilling doubt as with regards to the quality and value of cell phones which were being distributed by the company in different markets. When an important management member of a company makes a comment which is either way derogative to the quality of products being produced or the value of the product, then customers are bound to question various features present in the products with regards to value. However, from the drop in sales which were recorded due to the statement, the CEO and senior management have learnt better the associated consequences of uttering such statements hence in the future will be able to make appropriate decisions which will be for the well being of the company like strategic alliances or statements which will draw more customers to the different brands of cell phone produced by the company and in the process increase the profits and shares collected by the company (Collis, 2013). Reflection Question 4: Reflect on the impact of this assessment on your understanding of the Global Smartphone industry competition, highlighting the key role of strategic alliances and corporate leadership in sustaining growth through innovation. The assessment has been extremely useful in my understanding of global Smartphone industry competition because initially I did recognize Nokia as giant in the global cell phone market. I have been using different brands of cell phones produced by other competing companies because of the different features and innovation which initially I had missed from the Nokia brand. However, after conducting the assessment, I have realized that I am now able to obtain similar features with a reduced price through the Nokia brand as it has downed on me that cell phone products produced by the company are much more price friendly as compared to other brands. Likewise, I have understood how stiff the Smartphone market is and the different companies producing different Smartphone in the market for consumers. In addition, through the assessment I have learned the importance of key strategic alliances between different companies and their impact on the sales of different products they offer. Initially, I used to believe that the various products offered by a company were solely the works and labor of the company in question and forgot to think for once that the products might be as result of a strategic alliance of the company with others. Likewise, the technological and innovation ideas between two companies are much greater than those from one company because the professionals or team of innovators share ideas and in the process a quality product with more as compared to initial ones is produced hence enabling healthy competition of the products with others which have assumed monopolistic position in the market. Lastly, through the assessment, I have also learned on the importance of corporate leadership in sustaining growth within companies through the process of innovation. Corporate leadership is extremely important because like in Nokia’s case, the corporate leadership in the company was disengaged as they were involved in internal quarrels hence could not make accurate decisions that was for the well good of the company. Therefore, I have learned on the importance of having a well coordinated corporate leadership where all the senior management members and the CEO understands each other perfectly and share ideas as it only through this that the company can move forward in terms of growth by offering products and services which gives different customers a unique experience from those being offered by other companies involved. Therefore, the top corporate official has a task of ensuring that such things like internal quarrels are adequately solved and both parties involved in the quarrel are satisfied with the manner in which the decision has been made to motivate them to continue delivering quality and value for the welfare of the company involved. 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