Nokia Marketing Strategy - Essay Example

?Case Study Analysis/Report-Strategy Table of Contents Case Study Analysis/Report-Strategy Table of Contents 2 Introduction 3 Overview of the Company 3 3 Strategic Issue 4 Academic Foundations 5 Concepts & Theories Regarding Strategic Management of Organisations 5 Impact of External & Internal Environment on Strategy 7 Analysis & Evaluation 9 External Analysis 9 Internal Analysis 15 Conclusion and Recommendations 17 References 19 Bibliography 22 Appendices 23 Introduction Overview of the Company The origin of Nokia, the leading cell phone manufacturer, traces back to 1865 with the commencement of a project relating to forestry business by Fredrick Idestam who was a mining engineer in Finland. Finnish Rubber Works Ltd was set up in 1898 and the Finnish Cable Works commenced its functions in the year 1912. Slowly, the possession of the two companies along with Nokia started to change hands with few other owners. And then at last in the year 1967, these three mentioned companies were brought together which gave rise to the company called Nokia Corporation (Nokia, 2012). The company has its headquarters at Espoo in Finland. Nokia Corporation is involved with the production of mobile gadgets along with appliances related to mobile network. It creates mobile gadgets with the facility of accessing internet on the gadgets. The company also offers services as well as resolutions relevant to its manufactured products throughout the globe. Nokia Corporation is involved with chiefly four kinds of business operations or divisions and they are multimedia, networks, mobile handsets and enterprise solutions. The company was stated to be the biggest producer of mobile handsets in the globe. It has a workforce which engages about 132,000 employees in more than 120 countries (IPM, 2008). Strategic Issue Every company in spite of being big or small needs to adopt a specific strategy which would facilitate the company to carve its niche amongst the other well-known companies of the world. A multinational company like Nokia is required to strongly concentrate on designing an appropriate strategy which would help it to grow and develop. Therefore, it could be well understood that a proper and an appropriate strategy is a fundamental necessity for any kind of an organisation. Strategy helps an organisation to attain competitive advantage which ascertains its success. The business operations of the company along with its manufactured goods were believed to be based on technology. The factor of technology has been considered to be crucial because of the rapid alterations and the constant developments. Therefore, the company in order to stay ahead in the competition required to deal adeptly with the altering technological environment. The issue of increasing competition and sustaining existence in such a tumultuous environment would be addressed in this study (Dittrich, 2005). Academic Foundations Concepts & Theories Regarding Strategic Management of Organisations Organisations have been stated to be an accumulation of individuals who are brought together and organised with the intention of attaining certain objectives. In this context, strategy has been referred as the means adopted by the mentioned accumulation of such individuals for the reason of turning to an effectual economic performer. Strategy could be described as a structure of behaviours with the help of which a particular organisation, by mishap or plan, builds resources. These resources are then employed for the purpose of providing products as well as services in a manner that is comprehended to be worth by the users. The delivery of the products as well as the services are carried out by adhering with the financial and other determined intentions along with the restrictions made obligatory by the chief stakeholders. Appropriate strategies offer an organisation with certain assets that are measured to be exclusive or rather distinguishing. It also provides the organisation the method for adjusting and redesigning its competitive benefits in accordance with the environmental alterations (Haberberg & Rieple, 2008). The chief strategic bases with regard to an organisation have been stated to be its understanding, knowledge as well as technology. Knowledge has been identified to be an essential and vital strategic asset that has a mammoth amount of worth attached to it. From the strategic level viewpoint, it has been considered to be an imperative basis of attaining competitive advantage and value creation. In case of organisations dealing with technology, it is vital for them to strategically manage technology along with innovation as it would facilitate and ensure the existence of the organisation. Sharing of knowledge within an organisation would assist in tactfully managing the technology and understanding it. This in-depth understanding of the technology would further facilitate the organisation to recognise the opportunities of innovations and also in identifying the related limitations at the same time. Identification of these aspects would facilitate the organisation to attain competitive advantage which would ensure its survival and growth (Morden, 2007). Proper implementation of strategies by the organisations helps them in identifying and developing their core competencies. An effective set of strategies would facilitate the organisations to manage and to control their resources in a way which would help the organisation to enhance its efficiency and eventually attain competitive advantage. An organisation is able to develop its competitive edge by putting into application a unique strategy which becomes extremely difficult for the competitors to emulate. However, it also needs to be taken into concern in this regard that no competitive advantage can exist permanently and so, it is important for organisations to constantly redesign its strategies (Hitt & et. al., 2010). Strategic change has been frequently measured as a requirement for organisations to exist in an unstable environment (Hamel & Prahlad, 1994). Severe international competitiveness and fast technological alterations have been mentioned to be the chief intentions for organisations to adjust their respective corporate strategies (Sadowski & et. al., 2003). Strategic change facilitates the exploration of fresh competencies along with the exploitation of the present knowledge base with regard to an organisation. With reference to technology, exploitation has been usually described to be the modification and the expansion of the present form of technologies. Whereas, explorations has been referred to as the testing of the fresh substitutes accompanied with the discovery of a fresh aspect in the field of technology (Chesbrough, 2003; March, 1991). Impact of External & Internal Environment on Strategy An organisation witnesses a continuously altering external environment and so, is required to make certain that its internal resources as well as competencies are in abundance for the reason of meeting up to the requirements demanded by the external situation. Organisations not only desire to exist in the market but also wish to develop and flourish in the surrounding competitive scenario. Therefore, it becomes extremely noteworthy for organisations to carry out a thorough investigation of their respective internal as well as external environment. The external environment of an organisation entails the usual situation along with the existing degree of competitiveness. The usual or rather the macro-environment entails aspects which might not pose an instant consequence on the organisation but certainly possesses the ability to alter the industry where the organisation operates. These macro-environment aspects could even give rise to fresh industries as well (Lussier & Achua, 2009). An organisation operates in an industry where there is an existence of other competitors. It is thus, significant for organisations to attain a competitive edge in comparison to the other competitors which would help the organisation flourish. Alterations encountered by the competitive environment with regard to an organisation, for instance, a boost in the quantity of competitors, would pose quite an instant effect on the particular organisation. Therefore, it is highly recommended for organisations to carry out an investigation of the external environment with the application of certain tools. On the other hand, the internal environment with regard to an organisation refers to the environment of the organisation itself. It entails the objectives, the competencies, the values, the internal structure and the resources. The values that the particular organisation symbolises would direct its assortment and application of strategic objectives and the way it would handle and cope up with the crises (Lussier & Achua, 2009). Strategic management facilitates an organisation to synchronise its resources along with the competencies in accordance with the requirements with regard to the external environment. Investigation of the internal as well as the external environment would help an organisation to suitably devise and apply strategies which would shape and ascertain the growth and the success of the organisation. Inappropriate investigation of the environment would create a gap for the organisations owing to which the effectiveness of the strategies could not be properly ascertained. The organisation would also fail to comprehend the ways by which the chief success aspects of the industry could be met. The chief success aspects refer to those constituents in a particular industry which hold on to the faithfulness of the customers and facilitate the organisations to contend effectively (Henry, 2008). Environmental analysis both internal as well as external would help the organisation to understand the needs of the customers which is considered to be a vital aspect for the success of an organisation. Identification of the requirements of the customers and the root of competition would assist an organisation to determine the chief contributors towards success. Strategic or situation analysis permits an organisation to assess the soundness of its position for the reason of taking complete advantage of the prospects existing in the external environment. A proper situation analysis would help an organisation to develop or design effectual strategies that would prove advantageous for its operations and ensure growth and success for the organisation (Henry, 2008). Analysis & Evaluation External Analysis The external analysis of Nokia would help to identify the opportunities along with the threats prevailing in the environment. The external analysis of the company would be carried out with the help of PESTEL analysis, Porter’s Five Force analysis and the kinds of markets (Smith, 2008). Political It is considered important for a company to obtain resources from the government, for instance, economic policy and technology policy. The company, Nokia got hold of its resources with the help of the Finnish government policies which facilitated the company to progress with its products. The Finnish government made possible the effectual operations with regard to its economy by guiding its resources with the objective of preventing market collapses (Cheng & et al., 2005). Economic Nokia shifted focus from operating in a single market and in all products category to international markets and is only concentrating on the market for mobile handsets. Incomes of people were increasing which meant increase in the amount of disposable income. The company took advantage of this situation by launching various handsets with multiple functions in the market (Cheng & et al., 2005). Social During the period of 1990, an alteration took place in the demand for technological products. The demand shifted from microcomputers to mobile handsets. The company took advantage of this rising demand. The company kept on making innovation in their products according to the preferences of the international market. This constant innovation contributed to a great extent towards their success (Cheng & et. al., 2005). Technological Nokia changed their focus of business functions from manufacturing monitors, television sets and computers to manufacturing mobile handsets. The company was successful in incorporating the latest technologies in their products (Cheng & et. al., 2005). Environmental Nokia aims at pursuing environmental policies like environmental designs along with adoption of recycling applications (Cheng & et. al., 2005). Legal Nokia ensures that its practices are in compliance with the legal guidelines and industry specifications. The company abides by the strict legal guidelines with regard to the science-based rule regarding the implementation of the regulations on emission by International Commission on Non-Ionising Radiation (Cheng & et. al., 2005). Porter’s Five Forces Analysis The analysis of five market forces was structured by Michael Porter in the year 1980 which is still considered to be important for organisations to develop and to gain an understanding of the industry along with the market (Boone & Kurtz, 2011). Threat of New Entrants Increased degree of competition in a particular industry makes it simple and uncomplicated for other organisations to gain an access to the market. The obstacles of entering the market would be high in the mobile phone sector owing to the altering technology. Recently, there have been numerous organisations entering the mobile phone market which makes the threat of new entrants high in this particular industry. Therefore, it implies that Nokia would have to face increased degree of competition in comparison to the previous times (Cheng & et. al., 2005). Threat of Substitutes Nokia has been successful in establishing its brand image and reputation all across the globe, which has eliminated the chance of a direct substitute of the company in the industry of mobile handsets. But with the budding mobile companies, for instance, Sony and Motorola, there prevails a chance that they might make their products available in the market for lesser prices compared to Nokia. Therefore, the threat of substitutes for the company was measured to be high (Cheng & et. al., 2005). Bargaining Power of Suppliers The bargaining power of the suppliers has been learnt to be low as the company Nokia is considered to be the leading company in manufacturing mobile handsets. It’s established brand image in the international market places the company in quite a strong place in the industry as well as in the market (Cheng & et. al., 2005). Bargaining Power of Customers The bargaining power of the customers has been observed to be high. This is because of the availability of the numerous substitutes offered by its competitors. Presently, customers have been purchasing mobile handsets from the service providers instead of directly buying it from the company itself. Therefore, this could make Nokia come across the strong bargaining power of the customers (Cheng & et. al., 2005). Competitive Rivalry Competitive rivalry in the industry has been found to be high owing to the presence of the numerous competitors like Sony, LG, Samsung, and Motorola. The industry of mobile handsets or phones is witnessing a speedy development and growth. This has heightened the degree of competition in the market along with intense advertising by the various companies. Therefore, it is quite evident that the competitive rivalry in the industry is quite high and so, Nokia needs to constantly enhance their product and make use of advanced technologies in their products in order to lead in this intense competition (Cheng & et. al., 2005). Types of Markets There exists various kinds of markets based on which a particular company formulates its strategies that are to be pursued and measured prior to launching of the products (Asif, 2009; Tornroos, 2002). Monopoly Nokia has been successfully dictating over the manufacturing market of mobile handsets with its high to low ended range of products. The international strategy of Nokia was decided to be its policy to lead with the help of technology and constant innovation which would hold the interests of the customers on the products (Asif, 2009; Tornroos, 2002). Duopoly It has been referred to that state of a market where the market is dictated over by two main companies. With reference to this market, Nokia was contending with the technology of HUAWEI in manufacturing dongles with the latest 3G technology (Asif, 2009; Tornroos, 2002). Oligopoly Oligopoly refers to the kind of market which has the presence of few numbers of organisations that dictates the products as well as the prices in the market. In the case of Nokia, its plan of manufacturing mobile handsets with Samsung and Sony Ericsson by making use of its operating system Symbian S60 was considered to be a strategy for such a market. This strategy helped in getting rid of the operating system used by Windows and also the freshly introduced operating system called Android by Google (Asif, 2009; Tornroos, 2002). Perfect Competition Perfect competition refers to that state of a market where the companies operate at a similar level. Nokia despite being the leading producer still faces hard competition from Sony Ericsson, LG, Samsung and Motorola (Asif, 2009; Tornroos, 2002). Internal Analysis The internal analysis of the environment would give an understanding of the elements existing in an organisation and helps in offering advantages as well as disadvantages. The internal analysis would be carried out with the help of SWOT analysis. This analysis would help the company identify the strengths along with the weaknesses and also the opportunities as well as the threats (Smith, 2008). SWOT Analysis Strengths Nokia has been stated to possess the biggest distribution as well as selling network in comparison to the other mobile companies. The financial position has been measured to be quite sound for the company as it is engaged with several other profitable businesses. The company has a broad variety of products for individuals of every class. The products are also considered to be user friendly which is an added point of advantage for the company. The re-sell worth of the products or rather the mobile phones of the company have been learnt to be high in comparison to the products of its competitors. The brand name and the superior quality of the products act as the company’s major strengths (Cheng & et. al., 2005). Weaknesses Few of the products of the company fail to qualify in the user friendly category. The other weakness of the company could be considered as the prices charged for the products. The prices have been stated to be high in comparison to the other products offered by the competitors. The company is quite reluctant in adapting to alterations. Few of the products of the company were stated to deliver quite poor performance (Cheng & et. al., 2005). Opportunities Nokia has been gaining huge opportunities in the third world nations. This is because of the fact that the living standard along with the buying power of those nations has been on the rise which has offered the company with a fresh market. The prospects of the company have been increasing owing to the growing telecommunication partnerships. The company has been also increasing its prospects with the help of spreading out with the help of partnerships (Cheng & et al., 2005). Threats The amount of competitors has been increasing which is becoming a major threat for the company. The competitors have been offering products at a lower price which could pose a threat to the market share of the company. The fresh operating systems of mobile by Microsoft and Google are becoming a concern for the company. The company’s inability towards taking up the application of fresh technologies has moved the company from its ace position and has been stated to become a grave threat in the coming days (Cheng & et. al., 2005). Conclusion and Recommendations From the above discussion, it has been evident that for a business or a company to be successful, it needs to be controlled and managed in an appropriate manner. This would facilitate the company to make utmost use of its opportunities and also tactfully deal with its competitors and the threats which might have an adverse influence on the business performance. It becomes necessary for organisations to analyse its internal as well as external environment so that it could formulate effective strategies which would ensure the survival and the growth of the organisation. Designing and implementing appropriate strategies facilitate an organisation to attain competitive advantage which contributes greatly towards the success of that particular organisation. In case of Nokia, after carrying out the internal and external analysis, it could be suggested that the company needs to take away its previous outdated models of mobile phones from the market as the requirements of the customers keeps on altering. The company has been manufacturing mobile phones that have been considered to be user friendly and explored those fields which were thought to enhance the customer satisfaction by the company. However, the company can indulge in making innovations that would be worth and would further place the company ahead in the competition. The company also needs to choose proper partners for the purpose of expanding. The company should also avail the prospects by branching out as a provider of internet which would facilitate the company to get a strong hold over the communications industry. References Asif, W., 2009. Nokia. Strategic Management of Nokia. Boone, L. E. & Kurtz, D. L., 2011. Contemporary Marketing. Cengage Learning. Cheng, I. & et. al., 2005. Nokia. Salterquest. Chesbrough, H. R., 2003. Open Innovation. Harvard Business School Press. Dittrich, K., 2005. Nokia’s Strategic Change by Means of Alliance Networks: A Case of Adopting the Open Innovation Paradigm? Open Innovation, pp. 1-13. 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Collaborative Strategies in the Event of Technological Discontinuities: The Case of Nokia in the Mobile Telecommunications Industry. Small Business Economics, 12(2), pp. 173-186. Smith, A., 2008. Introduction to Sport Marketing. Routledge. Tornroos, J. A., 2002. Nokia Mobile Phones & the Chinese Market-Managing Culturally Based Strategic Nets. Abo Akademi University. Bibliography Johnson, G. & et. al., 2009. Fundamentals of Strategy with MyStrategyLab. Pearson Education. Appendices PESTEL Analysis SWOT Analysis Porters Five Forces Analysis Read More