External and Internal Marketing Environment Analysis of Nokia - Essay Example

? External and Internal marketing environment analysis of Nokia Insert (s) External and Internal marketing environment analysis of Nokia Introduction With a total of 122,000 employees working in more than 120 countries and annual revenue of over €38 billion, the company is currently rated as the worlds second largest phone make. The company has however suffered a significant decline in its market share over the past few years and this is particularly attributed to growing consumer interest in smartphones and other emerging mobile products manufactured by the other vendors in the market such as Apple. Nokia is the World’s chief mobile communication company, backed by its expertise innovativeness, user friendliness and protected solutions. It’s a well known company having its massive offices worldwide. The giant company whose head quarters are in Finland has spread in various continents with a very large market share globally (Steinbock, 2001, p.375). With its simple organization mission of connecting people, the company’s primary goal is to develop excellent mobile products that will enable billions of people across the world to connect with each other through mobile communication. Currently one of the main challenges facing the company is the increasing competitive and dynamic market. Nokia has however remained as one of the leading mobile manufactures and other information and technology related software and games in east and central Europe. According to Steinbock (2010, p.304), although the giant multinational boasts of a significant global market share as well as a huge customer base in countries like United Kingdom, China, Finland, Basil, Mexico and Republic of Korea, there are still immense opportunities for growth and advancement particularly in the developing countries. Generally Companies often relate with two types of environment, Microenvironment (Internal marketing environment) and Macro environment (External marketing environment). The microenvironment comprises the company’s marketing, customers and competitors and other the related forces which affect demand for a company’s goods. These forces include economics, demographics, technology, politics and culture. On the other hand, micro-environment of a company is usually made up of the company’s customers, suppliers, competitors as well as the intermediaries. For example, the success of Nokia in terms of its growth and market leadership is largely attributed to the company’s effective management of the dynamics underlying the interactions between external and internal market factors. This is particularly evidenced by Nokia’s strategic position which has been primarily focused on keeping up with technology as well as the production of market oriented services. This paper critically analyzes Nokia’s marketing environment particularly the macro and micro-environmental factors affecting its marketing operations as well as a SWOT analysis of the company. Macro economic factors Macro-environment affecting Nokia Company include; technology, demographics, social, political and economic factors. Legal constraints (such as the G3 technology constraints that Nokia have to put into consideration) must be taken into account because many businesses aim to make a profit hence they are tempted to mislead their customers about prices, quality and the availability of the products. They may also cut expenditure by using lesser quality materials in their products (such as weaker materials for Nokia cases and batteries). When it comes to environmental, social and ethical factors Nokia have managed to be quite environmentally friendly and have not done anything that the consuming public may have taken huge to, they have been careful about this and this is one of the reasons they are such a popular brand of mobile phones. According to Lindholm(2003, p.301), Nokia’s marketing environment has grown immensely within the last decade. Moving into the Mobile World Nokia has remained committed to strong growth, profitability and responsible in market leadership. The company has gathered lots of customers from all over the world making it the leading Mobile phone company. As comparing the immense market and demand the main competitors for the Nokia Company are considered to be Ericson, Motorola, Sony, Samsung and Siemens. There are a number of economic factors which have influenced consumer purchasing power. This has consequently forced the Nokia Company to watch trends in the economy to prevent losses in profit and stay top of the market. With regard to political factors, Legal constraints such as the G3 technology that Nokia have to consider must be taken into account. Nokia has been trying to reduce expenditure by using lesser quality materials in their products that is weaker materials for Nokia cases and batteries. Disposal of waste material leading to damage of environment is also one of the constraints from the government faced by the company as heavy penalty follows incase of environmental pollution. Most of the legal factors are primarily related to the legal environment of the particular countries under which Nokia Company operates. For example, in most European countries such as U.K and Finland, significant changes in the laws have been witnessed and some of these changes have significantly affected Nokia’s organizational behavior. For example, the laws regarding the minimum wage requirements have not only affected the company’s costs but also its product quality. The demographic environment is affected by changes in the different age groups in the population. As the population grow older their taste changes leading to a decline in the purchase of some products. Also the ethnic mix is another factor as people from different ethnic groups demand different Nokia products. The level of education also affects the demographic environment as change in education has an impact on the wealth of the nation so as the tastes. On the other hand, the cultural or social environment is also another important macroeconomic factor. Nokia pulled out to be quite environmentally friendly and have not been involved in anything that the consuming public has taken great offence to, they have been very keen about this and this is one of the reasons they are such a popular brand of mobile phones. Lastly when it comes to technological factors in the communications market technology, it perhaps the most important factor that companies like Nokia have to take into consideration. They have to keep up to date with all the newest technological advances (like camera and motion capture phones) if they are going to capture the biggest market share and stay ahead of their already existing competitors in the market for example Apple and Samsung. Technology is one of the most important factors that Nokia Company has taken into consideration. The company has to keep up with all the latest technological advances such as camera and motion capture phones. This has helped them capture the biggest market and also they have managed to stay ahead of their biggest competitors Sony and Siemens. This is particularly because the contemporary mobile phone industry is undergoing drastic changes and new technologies are emerging everyday and manufactures will have to develop new strategies in order to remain in the market. Internal marketing environment analysis of Nokia The micro economic factor generally refers to the marketer’s internal environment consisting of majorly its own management structure. With regard to its corporate management, the management and control of Nokia is largely divided among its shareholders during general meetings. According to Merriden (2001, p.198), the operations of the giant company are primarily managed within the framework which is normally set by the Finnish companies Act. It is however worth noting that Nokia’s industry success is largely behavioral as opposed to structural. For example, the current market dominance by Nokia Company is largely attributed to its organizational upstream innovation, strategic coalitions, open standards, skillful suppliers as well as its well utilized preemptive strategies. Nokia s dynamic suppliers have effectively managed to maintain their position in the global market through a number of strategies such as pricing as well as ensuring customer satisfaction. On the other hand, the marketing channel mostly used by Nokia Company is the suppliers who give information about the products in the market while marketing them. The markets in which the firm may be selling its products (these may be consumer, producer, reseller, government or international markets).Micro-environment can always be dealt with internally by the company’s management in one way or other way whenever they arise. Nokia's SWOT analysis One of the major strengths of Nokia as a company has been the fact that it currently has the largest distribution network and selling compared to the rival companies in the mobile phone industry. This has particularly made the company to acquire a significant market share for its products and withstand the growing competition. On the other hand, Nokia’s products are highly rated as the most user-friendly since they are normally designed with the consumer needs in mind. Nokia produces a wide range of products with inbuilt accessories designed for a particular target market. Despite the company’s increased sales and market share the company has had to revise its strategy several times to out do their major competitors. Another major strength of Nokia Company has been its high level of branding. The company has penetrated new markets more especially outside Europe. With diversification of their products and services that include provision internet and internet related accessories to reach new customers who require different services that are not offered by the competitors. All these have been geared towards customer loyalty and customer retention. Nokia has also diversified its work force in addition to usage of advanced technology compared to their competitors. Although the company specializes in cell phones they have also diversified their products to Multimedia, Enterprise Solutions and Networks. Nokia achieved excellent profitability in the first quarter of 2003 where mobile phone volume grew faster than the market. Customer and Market Operations and Technology Platforms are the two major horizontal groups that support the Nokia business groups. One of the weaknesses Nokia has been attributed to High prices for their products compared to their competitors from China. Nokia has not established a strong position in the United States and Japan. In some countries in Europe Nokia have few service centers that are not appealing to customers. As young generations come they need stylish phones and this has offered Nokia an opportunity to increase its sales. Despite some of the challenges currently facial Nokia Company, there are still numerous opportunities for growth for the multinational corporate giant. For example, through strategic acquisition of new markets and shares has provided Nokia with an Opportunity to expand. The availability of markets outside Europe is also another contributing factor. The major threat to the business has risen from the Global market challenges associated with inflation resulting to cut down on spending. On the other hand, Nokia is also increasingly facing the threat of substitute products both for its mobile devices as well as for the services offered by the company. This is primarily because people often find it difficult to embrace changes and use emerging products for the fear that they may find it difficult to switch over or use such products. On the other hand, competition from Cheap Chinese phones and other companies has also an impact on the growth Nokia. Emergence of fake phones and products in the market also threaten the market share of Nokia. Lastly, new mobile operating systems particularly those from Microsoft and Google are also presenting a significant threat to the growth of the giant multinational company. Strategic recommendations Although the Nokia company is the largest in the world and has the very efficient features and facilities, it is increasingly facing stiff competition from its up coming rivals and therefore the company should consider decreasing its product prices so as to make them accessible to all users and thus increasing its market and becoming the cause of increasing profits. Its spare parts should also be readily available in the market; they should also consider warrant replacement in case of defection. For example many analysts concur that Nokia may successfully have a market growth and yet still maintain its weak competitive position particularly with regard to its competitors such as Apple and Samsung mobile companies. In this regard, Nokia urgently need a critical evaluation of its strategic approaches to the market in order to help it adopt a grand strategy that will not only ensure its success in the market but also help it achieve a competitive edge over its up coming rivals. On the other hand, as an established brand, Nokia requires new strategies and information on their competitors so that they can still remain profitable. Through visionary leadership, the relevant strategies to counter such competition can be established and the level of success well calculated to minimize on loses and increase profits. Additionally the company should invest more in research and technology to ensure that they maintain a competitive edge over the emerging competitors. For example, Nokia handset products have been criticized for their low memory capacities and consequently it will be prudent to see the company increase their memory capacity so as to save their entertainment material. More importantly, Nokia Company has captured a great market worldwide and continues to be on top of the competitive market. Over the past few years, Nokia has reinvented its strategies in several occasions that it is increasingly becoming difficult to forecast the company’s future competencies and structures. Although Nokia still regards itself as one of the best m manufactures in the mobile phone industry and therefore can produce any mobile product without the need for any collaboration, collaboration is increasingly becoming one of the most crucial elements in the mobile the industry. Owing to the current technological environment, no single corporate organization can be able to define the mobile phone market alone. Consequently, I would recommend that the company should not go it alone but should rather collaborate with the local manufactures and researchers in order to boost the local productions and increase its local production. Additionally it is important to note that collaboration with the local manufactures will also allow Nokia to penetrate some of the emerging global markets. Conclusion In conclusion, although Nokia has remained as one of the leading manufacture of mobile handset devices and other information and technology products, the company faces a number of significant challenges particularly with regard to the entry of new competitors and the consequent increasing competitive as well as dynamic market in the mobile phone industry. Consequently the company should invest more in research, diversify its products, and revise its pricing strategies to maintain its market share and access emerging markets particularly in the developing countries. References Merriden T.M. 2001. Business The Nokia Way: Secrets of the World's Fastest Moving Company. New York: John Wiley & Sons. Lindholm, C.K. 2003.Mobile Usability: How Nokia Changed the Face of the Mobile Phone. Chicago: McGraw-Hill Companies. Steinbock D. 2001.The Nokia Revolution: The Story of an Extraordinary Company That Transformed an Industry. New York: AMACOM Books. pp.375. Steinbock, D. 2010. Winning Across Global Markets: How Nokia Creates Strategic Advantage in a Fast-Changing World. New York: John Wiley & Sons. Read More