Investigation on Whether Nokia Should Quit the UK - Essay Example

? AN INVESTIGATION ON WHETHER NOKIA SHOULD QUIT THE U.K SMARTPHONE Background Nokia Company in the current years has been experiencing a decline in the smartphone market share. In the U.K, it trails behind its greatest rivals, Apple and Samsung who are overtaking its market annually. This is evident in the records of declining market share of Nokia in U.K. with the ever increasing number of smartphones purchased by individuals. Nokia is in a puzzle why it lags behind and continues losing in the smartphone business. It still does even after it partnered with Microsoft in providing smartphones with Microsoft windows operating systems. The main research objective is find out whether it would be viable to minimize expansion of the Nokia brand in the U.K market. Nokia as evident from the analysis has been experiencing a decline it its market share in the named market. Competition has stifled with other companies providing equal or better quality mobile handsets. Handsets are now a requirement for a majority of people. Statistics has shown a decline in number of handsets purchased and an ever increasing number of smartphones acquired. It is a technologically changing world that can be attributed to this trend. People want the best, and since it is affordable, they can get it. Nokia holds a high popularity of mobile phone manufacturing companies in the world. It had the biggest market share of mobile users, but this is changing. This research focuses on finding out changes in the performance of Nokia and if it is a viable idea for to withdraw itself from the U.K market. In trying to answer this, several factors have to be investigated on the reasons that have led to this aftermath in the Nokia Company. 1.2: Research objectives. The research problems highlight the areas of importance in this study. They seek to encompass the most crucial factors involved in this project. They revolve around the Nokia Mobile statistics. They are, to determine the factors behind the decline of Nokia smartphone market share, changing trends in the mobile market, to identify measures to be taken against this issue and know if it is wise to leave the U.K market or not. 1.3: Research questions What are the reasons for declining market share in U.K, how can it be controlled and what are the appropriate ways to control it. 1.4: Statement of problem Factors influencing Nokia mobile market share the U.K and factors influencing changes in the mobile market in U.K 2.0: LITERATURE REVIEW In recent times, with the advancement of technology, operating systems became one of the major determinants of a company’s performance in the market. With the need for faster and efficient mobile systems, there has been competition on who provides the best operating system customers prefer in the U.K. Apple has the most popular OS scooping a share of 42%, Blackberry with 36% and android with a share of 12%. It is surprising because Nokia, known for its popularity and with the changing trends and stiff competition, stands to make its way to the top or quit the smartphone market for better standing mobile companies. This research focuses on finding out what appropriate measure to take, whether quit or continue in the race of attracting customers to use their smartphones. In trying to investigate this, it has to identify the gap existing the company and the competitors. Strategies used in pricing, promotion, quality provision and the 4ps of marketing have a large part in determining the performance of a company’s products. For example, while price may not be a substantial factor to consider because of affordability in the current market of smartphones it is still pertinent to know that is the crucial factor customers consider for any product. They may want to operate in the market with the highest margins. This can only be realistic in a monopolistic market where they are the sole suppliers of a product. That is why the Nokia Company have to identify what strategy to use to maintain their share, increase it or exit the market. They should carry out a competition analysis to know what their competitors are doing that they are not doing regarding price, promotion, product, place and the people. The fact that Nokia has been losing on in the market means there have underlying problems that had not been dealt with. It is not the first time they are experiencing problems in their company. In 1995 and 1996, they faced a shortage of chips for their mobiles. This affected their performance with an increase in production costs and a fall in profits. In the beginning of the 21st century, it had the advantage of the market for its provision of digital mobile phones with 3G technology. 3.0: DATA METHODOLOGY 3.1: Research design: Descriptive design is most preferable because it gives every member of the population an opportunity to take part in the data collection. For example, simple random method can be used whereby respondents get to chosen randomly with no bias. 3.2: Data collection method Primary data collection methods- interviews, questionnaires can be used to get data directly fro the respondents Secondary data collection methods_ internet, books and past research. 3.3: Population- the target population is U.K mobile users. 4.0: Secondary data analysis For a long time, Nokia has had the largest market share of mobile handsets in the U.K. its prominence in the Market has existed for a long time. It is well known by the majority of people in the U.K and has always had the largest market share for a long time. let Us study its changes in shares over the years. The figure below indicates its standings in the year 2005 In the year 2005, Nokia had the highest share of mobile users in the U.K with a percentage of 40.70%, followed by no other definite company at 36.20%, Motorolla followed by a distant margin by having a share of 9.70%. Over the years, Nokia has gradually lost its market size at a noticeable rate. Let’s study the following table showing its ratings in 2006 Figure 1.1 shows that Nokia still owns biggest part of market share, however it slightly declined (1.2%) from last year. It however shows a significant increase in the rivals percentage of market share with Samsung recording the highest increase of its mobile users in the U.K with a 5.35% TGI database of mobile phone (2007. 01-2007.12) Figure 1.2 Figure1.2 illustrates that compare to other manufacturer, Nokia still leading UK market share. It is important also to note that the rival companies were also gaining in gradually taking up customers falling out from using Nokia. It’s evident that Nokia is losing out on retaining customers over the years. Other manufacturers also are losing customers to the well- known companies like Samsung and Motorolla. TGI database of mobile phone (2008. 01-2008.12) Figure 1.3 .In 2008 there were further decrease in the Nokia popularity in U.K Competition had been gradually setting in and people began using the other manufacture’s products hence causing a decline in Nokia’s share of customers. These statistics have been collected over time and it is a fact that cannot be disputed that Nokia has been losing the ground. The most important goal of dominating the market was being diminished. The table below indicates what had been really going on in the market. Sony Ericsson and Samsung are gradually filling the gap against their biggest rival. They are gaining popularity steadily and in a sure way against Nokia. Figure 1.3 shows compare to last year the market share of Nokia was stable. TGI database of mobile phone (2011. 01-2011.12) Figure 1.4. By 2011, Samsung had acquired the biggest leap, with an estimation of 21% of the share and a difference of 11% against Nokia. Nokia was slowly but surely losing out to Samsung and others. The other manufacturers were providing superior products that were more reliable and efficient than Nokia’s. Although Nokia still has a high percentage of the market, it has been losing its customers at the rate of 1.45% per year. Samsung and Sony Ericson who are stronger than Nokia pose a threat to Nokia. They are doing their best in providing the best quality products at exceptional prices for residents in the U.K. Figure 2.1 Figure 2.1 shows the decline of Nokia market share from 2005 to 2011. It is gradual but it sure is happening. With this it means they are losing on their economies of scale. Reputation and sales growth is also declining. Conclusion. Competition will seem greater for a declining company (Charles), Than when it performs well. Nokia Company, however, has options it can use to deal with deterioration apart from exiting the market. It has faced the opposition of improved and preferred operating systems that are better than its Microsoft operating system. The Android and iOS are more flexible and remarkably competent as investigated. People are also more aware of these Operating systems and pick them over what Nokia uses. It is clear they have left behind while other manufacturers come up with high tech systems for phones. They lag behind in establishing a sound practice that will attract and maintain their customers. Competition is strong, and if they continue being happy and not doing much about it, they face the threat of phasing out of the market in this sheer dynamic period. Recommendation. As earlier mentioned, Nokia can consider various strategies that will help it survive in the market. Exiting will be a rather unexpected step. It can choose to harvest from where it is strong, e.g. mobile handsets. These are its cash cows which will ensure regular flow of income to the company. It can also use the divestment strategy whereby it can sell off to other companies. Leadership strategy will enable it become the dominant player in the industry. It can use niche strategy whereby it will focus on a certain segment of the population and provide the requirements of that a target population. 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