Strategic Management - Nokia - Case Study Example

Case Research Study Analysis and Report: Nokia Introduction Nokia is a leader in the telecommunications and electronics industry. The company is engaged in the manufacture of mobile devices, supply of internet and communication services. This company has three segments, Nokia Siemens Networks, Devices and Services, and NAVTEQ (Akademische, 2008). The Nokia and Siemens Networks segment is responsible for delivering fixed and mobile infrastructure, provision of professional services to service providers and operators, and networks and communications platforms. The Device and Service segment develops services including mobile applications and content. The NAVTEQ segment is mainly concerned with provision of digital map data, related location based services, and content for internet centered mapping applications and automotive navigation systems. Nokia is today considered as the largest manufacturer of mobile phones in the world. Its device market share globally is approximately 31 per cent as per the 2010 fourth quarter calculations, which is similar to the converged mobile device market share (Kazmi, 2007). It offers mobile devices for almost all major market protocols and segments, such as CDMA, W-CDMA and GSM (Christian, et al. 2003). Its internet services include games, maps, music, applications, messaging and media, often offered through the Ovi platform. This report provides an analysis of Nokia detailing the external analysis of the company, the general environment analysis, the industry environment, competitive environment and the core competency analysis. Internal analysis Nokia is rated as the largest manufacturer of mobile phones and as well as a leader in the telecommunication industry. The company is renowned globally for its quality and reliable products and holds a good reputation, which boosts its brand name. Its vision is “Voice goes mobile…...if it can go mobile…...it will” and its mission is connecting people (Abhi, 2010). This analysis will provide a detailed study of the company’s internal environment to give a better understanding of the company. Strengths One of the most significant strengths of this company is its strong brand, which makes it easier for the company to sell its newly introduced products. Nokia is well known for producing quality and innovative products, a feature that makes the company market its products (Arend, 2008). The company has also established a global distribution network, which makes its products available to all the targeted customers. It is clear that the company holds a bigger market share and therefore able to attain higher sales (Dan, 2010). The profits the company makes are channeled to creation of more innovative products that are more competitive. The company offers a wide range of products to its customers and can therefore spread its sales (Kazmi, 2007). It is also noted that Nokia mobile sets possess a high re-sell value compared to other brands in the market. It is also apparent that Nokia products are easier to use which makes the company’s products more preferred especially in the developing countries where literacy levels are low. Weaknesses Nokia’s products are considered more expensive, and therefore target the high-income earners alone. Electronic products, especially mobile phones, have negative environmental impacts both during the manufacturing process and during their disposal. However, attempts have been made to reduce these impacts since Nokia currently produces mobile phones, which do not contain polyvinyl chloride and volunteers to recycle old phones, but full greener production has not been achieved because the take back programme has not been circulated to all countries. According to the 2008 statistics, the recycling rate was only 3-5 per cent. More over, despite the fact, that the company has attained a wider coverage in terms of global appearance, it has not managed to establish enough sales and service centers to capture more customers (Nokia Corporation, 2008). Most of the service centers are located in urban places that are not accessible to all people. Opportunities The company’s brand name is its main strength and can therefore use it to come up with other innovations and target new markets, in an initiative to expand its market share. The company can also cut on the costs of its products in order to attract more customers. Furthermore, it can also introduce innovations that incorporate the existing applications in order to maintain its existing customer base (Akademische, 2008). Threats Nokia faces stiff competitions from other service providers in the telecommunication industry. This is worsened by the fact that most of its competitors offer cheaper prices compared to Nokia, therefore end up attracting more customers. In additions, the development of WLL network poses a bigger threat to the Nokia’s CDMA network (Karime, 2009). General environment There are specific external factors that any company should be aware of when designing or introducing a marketing strategy. Analysis of the general environment of an industry focuses on generic elements such as economic, technological, social cultural, political, global, and demographic (Abhi, 2010). Political factors: political factors for instance, the G3 technology checks that Nokia company has to take into account, need to be taken into consideration as most companies aim at making profits, thus they may mislead their clients about the quality, price, and the availability of such products. Companies may also try to cut expenditure by using low quality raw materials (for instance, weaker materials for batteries and cases), and poor disposal methods causing pollution (Jay, 2006). These are illegal measures and for this, the governments have introduced laws into the business environment to make sure that these practices do not take place a company has to follow them in order to be successful. Economic: the government has ensured a stable macroeconomic environment for the industry. This general stability, stable currencies, low interest rates, and international competitiveness form a basis for the growth of the Nokia industry. However, the company can be affected adequately by a depressed economy, making it to change its marketing strategies which may at times be unfavorable to its success (David et al., 2009). Environmental: some businesses may engage in environmental unfriendly practices in order to maximize their profits without considering the welfare of the people. In our case, Nokia has managed to be environmentally friendly and the company does not engage in unethical practices that the consumers have huge offence to. Nokia has been very careful concerning this issue making its brand very popular and successful globally. Technological: in the communications industry, technology is the most significant factor to be considered. Companies like Nokia should take into account and keep up to date with the emerging new technological advances (Tapio, 2003). This will ensure that, Nokia remains competitive in the market at the same time increasing the market share. Demographic: Nokia brands are very attractive especially to the young generation due to their features and the applications. However, due to the increased change in technologies, their competitors such as Sony are improving their brands thus attracting these young people. This presents opportunities for Nokia to be conscious of new technologies thus keeping up to date. Social cultural: this encapsulates tastes, demand, and varies in fashion and disposable income. The target generation of the Nokia Company is a major threat, as we know the youth’s changes their tastes and preferences most often (Christian et al., 2003). Additionally, this group of people depends on their little savings to buy such a brand. As a result, the company needs to frequently change its promotional and pricing strategies. Current marketing strategies Currently, Nokia is using marketing mix as their marketing strategy. This includes the 4ps, price, place, product and promotions. Until recently, this strategy has worked out very well as the market they are targeting has resulted to be more and more saturated (Arend, 2008). Price: Nokia prices are mostly competitor based. The company introduces a new brand at a high price, which reduces after an introductory period. The company tries to keep its prices much lower than those of its closest competitor. Its prevailing in the market is due to the quality of its brands as customers do not mind paying the additional cash. Promotion: in order to appeal to diverse markets, the Nokia Company promotes its new mobile devices and technologies using one campaign which pays attention to a singular technology rather than individual handsets. Products: Nokia products are quite attractive especially to the youthful generation. This is because, they tend to incorporate the newest technology, and in addition, they are sleek and stylish. Other phone accessories include in-car chargers; carry cases which also yield the company adequate profits (Mridul, 2007). Place: with Nokia products having gone global and with many retail outlets, the company is has been able to market its brands entirely (Sak & John, 2008). These products especially after the introductory period are sold in electrical stores and suppliers rather than dedicated phone dealership. This is meant to encourage the youthful generation to purchase them. The industry environment Industry environment focuses on the analysis of porter’s five forces which include supplier power, buyer power, potential entrants, substitute products and rivalry among competitors Ankita et al., 2009). These are of great concern to the Nokia industry as it wants to retain its competitive nature and remain the market leader. Supplier power: the company is considered to be an international supplier of quality Nokia brands. As a soft ware and hard ware provider, Nokia experiences low bargaining power. This is as a result of the numerous mobile operating system providers and hardware suppliers, thus reducing the bargaining power of the providers. Buyer power: The Nokia Company ensures that, the prices of its products are affordable especially to the target market. In order to make this practical, the company offers increased choice of products with limited differentiation. This maintains the buying capability as individuals may purchase depending with their finances. Buyers also have essential information while the demand of the product is elastic. Potential entrants: due to the huge capital requirements, low product differentiation, and government and legal barriers, entry to the mobile industry is very minimal and this is an advantage to the Nokia Company. Rivalry among competitors: rivalry has been intense in the communication industry. Though differentiation in terms of features is declining many suppliers are continuing to differentiate their products in relation to service offered and applications. Substitute products: the power of substitute products is moderate and in reality, it depends on the effects o f the products being substituted. Competitive environment The telecommunication industry is expanding and this has seen the introduction of many mobile devices and communication services providers make entries into the market. Nokia faces stiff competition from hot brand names like Google and Apple and dealers in mobile devices such as Motorola and Ericsson (Repo & Melender, 2005). In this report however, we analyze Sony, which is Nokia’s biggest competitor. Sony designs, produces and markets electronic products and has a well-established brand name. Sony’s product decisions are often based functionality, its brand name, repairs and support, quality, safety, styling, packaging, accessories and services, thus, the company can manipulate these product attributes to suit the needs of its target market (Suzuki, 2006). This company also offers a variety of products thus attracting a larger customer base. Despite the fact that Sony products are also rated to be too expensive for a lower class customer, compared to what Nokia offers, the products Sony offers are less expensive. Moreover, Sony has established more selling and service centers in urban areas to target customers who are able and willing to purchase its products. However, it has also opened retailing stores in the rural areas. It applies the zero level channel, one level channel, and the two level channel to distribute its products to customers. These strategies present some threats to Nokia considering the fact that Sony is rated as the biggest competitor of Nokia (Daveri & Silva, 2004). For instance, the fact that Sony offers cheaper prices for its products gives it a competitive advantage over Nokia. The Sony brand name is also well established, and the fact that ventures in a variety of products poses a bigger threat to Nokia. It is also important to note that Sony considers innovation as a significant part of its business strategies, which is one of Nokia’s business strategies. Conclusion This paper has focused on the marketing strategy of Nokia Company. Nokia is the market leader in Mobile industry, and its products have gone global. In order to remain competitive in the market, the company has adopted various marketing strategies, analyzed the external and internal environment, the porters five forces which assist in establishing new strategies to face the major threats posed by its competitors ("Nokia –Towards Telecommunications"2000). This has assisted the company to regain its market share. References "Nokia – Towards Telecommunications". (2000). Nokia Corporation. Retrieved from; http://www.nokia.com/NOKIA_COM_1/About_Nokia/Sidebars_new_concept/Broschures/TowardsTelecomms.pdf. accessed; 16 March 2011. Abhi, S. (2010). Pest analysis of Nokia. Retrieved from; http://www.managementparadise.com/forums/principles-management-p-o-m/208703-pest-analysis-nokia.html. accessed; 16 March 2011. Akademische, S, (2008). Nokia Case Study: How Can Nokia Maintain Its Market Position in the Mature European Market? New York: GRIN Verlag. Ankita, T. 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