Nokia Brand Management Consultancy - Report Example

NOKIA BRAND MANAGEMENT CONSULTANCY REPORT [Insert al Affiliation] Company and product overview Nokia is a well known global huge mobile phone vendor. The famous Finnish multinational corporation offer telecommunications equipment and services (Ali-Yrkkö, 2000). The company used to be the top supplier of mobile phone in terms of both sales and marketing innovation (Reitzig, 2004). Nevertheless, it failed to sail through the significant shift to smartphones, which is the most profitable currently (Hall & Anderson, 2009). The mobile phone brand is renowned for its reliability and durability in the mobile phone sector. In the past few years, the organization signed an agreement with Microsoft and since then it has released several phones under the umbrella Windows. Microsoft mobile was born as a result of the Microsoft’s acquisition of Nokia’s devices and services (Goasduff & Pettey, 2012). The deal between Nokia and Microsoft required the latter to use the former brand name as a transitional license. The license agreement granted Microsoft Mobile with the right to sell mobiles phones using the Nokia brand name (Day, 2012; Ayu et al., 2012). Microsoft is an entirely Microsoft-owned subsidiary that mainly deals with the design, development, manufacture and distribution of mobile phones, tablets computers, smart phones and other associated accessories. The collaboration with Microsoft has seen Nokia emerging again in the form of window phones (Singh, 2014). Current situation analysis Nokia seems to be returning and reclaiming the market share again thanks to its renewed marketing strategy. The initiation of the pioneer Windows phone is now giving it a comeback in an industry in which it’s influence has been deteriorating (Bouwman et al. 2014). The partnership with Microsoft outlined has provided another chance to innovate its products. The new strategies and its rejuvenated innovation have been very imperative for the company because of the need for it to defend its market position in the mobile phone sector (Kumari, 2013). Nokia has no option but to switch from the war on devices to a battle of operating systems that all the players are presently shifted their focus. In essence, it the major reason behind its partnership with Microsoft. The partnership was necessitated by the common vision of the two companies since they had the desired to offer a new alternative product to consumers (Salminen & Lamminmäki, 2014). Nokia had to change the way it operates so as to become a more agile competitor. Nokia is endeavouring to be a leader in the supply services and devices across the world, which operates on Windows exclusively (Akarte, 2012). It is attempted to collaborate with consumers can be described as a strategic move because its brands are highly consumer-oriented. The organization is exerting more effort to impress clients once again. Nokia is persistently pushing to advertise its Lumia through capitalizing majorly on its design and practical uses of the brand rather than its technical specifications (Fakhrutdinova et al. 2015; Luis, 2012). Strategic analysis In order to come up with a strategic plan for an organization, it is very important to conduct a comprehensive analysis on its internal and external factors. This analysis is helpful in the comprehending of the current situation and conditions an organization is in the mobile phone industry. This report will try to reveal both the internal and external analysis for Nokia, as well as its future analysis of the scenarios and the potential influence on the industry and the company too. Internal analysis This report basically dwells on the micro-environment of the company and entails a detailed discussion on the manner in which Nokia gains its competitive edge. Besides its wonderful brand reputation and wide appeal, Nokia also enjoys a success in merchandising and marketing strategy especially with its windows phone Lumia. The success is attributed to its large scale and distribution network, the user friendliness of the brand and its appealing design as well as the company’s reliability (Singh, 2014). Furthermore, the brand of Nokia is also enhanced by its less traditional approach to marketing. The exceptional features of the Nokia brand like free Nokia Music and the MS office also strengthens it. Moreover, Nokia also derives its internal strengths from its strategic business units that are easy to manage and target due to its varying market. The company has a number of strategic business unit that are separated by four factors, namely, geography, technology, client groups and application (Bouwman et al. 2014). These units supply goods and services for separate ranges of activities. Dividing the company into strategic business units has the merit of setting aside business tactics, which can be separate, autonomous, competitive and implementable (Karjalainen et al., 2014). Nokia’s products can be separated into four units that are mobile phones, smart devices, internet services and application and finally the NAVTEQ (Holzer & Ondrus, 2011). Nokia has some break through resources that are considerably contributing to its competitive advantage. The resource grounded perspective at the internal competencies of a company considers resources as the organization assets which gives the organization competencies for effective utilization of it’s the same. Nokia’s breakthrough resources and capabilities can be seen, in terms of its strategic partnerships, successful acquisitions of management and knowledge transfer and innovation. According to Edwards and Day (2005), these breakthrough capabilities give Nokia immense internal strengths and hence competitive edge. To summarise the Nokia’s internal strengths, the theory that explains competitive advantage in this case the porter five can connote that an organization is ought to make a decision for both cost advantage or differentiation advantage in its process of value addition. The company’s internal analysis reveals that it does not need to use one distinctive particular path, but it should rather attempt to mix the two (Yoon, 2015). Thus, Nokia has to make the hardest choose on which option to pick between cost and differentiation advantages, hence not able to create a sustainable competitive edge. Conclusively, one can argue that the company have outstanding breakthrough resources and capabilities that earn it enormous potential for a competitive advantage (Smith, 2013). Nevertheless, Nokia core strategy needs to concentrate more on its cost advantage or differentiation advantage. External strengths Industry growth The life cycle of the industry shows that the joint mobile devices, i.e. both standard and smartphone are presently still in the growth stage (Peng, et al. 2014). Nonetheless, the growth has improved courtesy of the technical innovation of the smartphones. The marvellous growth is as a result of the lower costs of production, enhanced handset design and performance as well as expands international mobile email services intensification. Additionally, it has also been enhanced by the emergence of the 3G and 4G network technologies, intensified antagonism among the key industry players and the upgrading of operating systems such as Windows (Kenney & Pon, 2011). The industry would have reached the maturity stage with the absence of smartphones as indicated below. The smartphones market segment was internationally projected to be worth US $55.401 billion in 2009 and the growth was estimated to be by 300 percent, which amounted to US $150.30 billion by 2014. In the recent past, the whole worldwide mobile phone market, smartphone and standard mobile segments included was projected to have a value of US $314.40 bn by 2015 (Singh, 2014). Smartphones segment are projected to go way above in performance the standard phones in yearly revenue in the next few years. Research also shows that 54 percent of the mobile phones to be traded next year will be smartphones. This trend is slowly being realized given that between 2011 and 2015, more than 3 billion smartphones have be sold worldwide. The implication for this is that, eight out of ten people will own mobile phone devices next year across the globe. The porter forces tools of analysis can identify this industry competitiveness level. This tool can be used to establish the strategies necessary to maintain the competitive advantages. The forces include the new entrants’ threats, substitution threat, the buyers’ power and power of suppliers. For this, mobile phone industry they are described below. New entrants’ threat is relatively medium. New entrants are barred from entering this due to the cost and technology levels (Bayraktar et al. 2012). Nevertheless, the organization with vast experience such as Apple iPhone, which also in the same field as Nokia have the ability to transfer knowledge and hence not deterred by the huge cost required operating efficiently. The presence of such companies implies there is a high possibility for new players to enter, and hence the general threat can be said to be medium. There are several imitators of the smartphones (Radjou & Prabhu, 2012). The presence of imitators means that the threat to substitute is high. This threat is also attributed to the shorter products life cycle. Mobile computing innovation also manufactures products with same benefits to users like those of mobile phones. In addition, this industry faces a massive threat from the buyers’ power, which is quite high. The costs of switching may be medium or somehow high but because of the high differentiation the buyers have a significant say. Although, price elasticity may be high because of the modification in customer behaviour and the preferences, as well as the lowered purchasing power of the consumers, makes buyers a threat. The power of the suppliers in the mobile phone industry can be described to be medium and somehow high. The costs of switching are low because of the many manufacturers of its components. The variations in quality make the costs of switching medium (Goggin, 2012). The operators of the network possess then the power of oligopoly and can opt to work with manufacturers making their influence high. Since suppliers are influenced by the demand of the consumer, their power becomes medium. What’s more is that the competitive rivalry is very high. This competition is heightened by the high level of differentiation and recognized competitors like Samsung, Apple and among others (Kenney & Pon, 2011). The mobile phone industry has been showing a strong consistency in terms of growth. The general market growth in shipment on a yearly basis stands at 16 percent. In addition, the growth of smartphone market segment has showed a shipment of 73 percent more devices in the concurrent quarter of last year. Nokia has gone down in market share domination by a 7.5 percent and 19 percent in the smartphone market, where bottle-neck competition is experienced. The industry has multitudes of competitors and hence one will expect competition to be high. To name a few some of these competitors include Samsung, Apple, HTC, HUAWEI, ZTE, BlackBerry, and Motorola among others (Feijoo et al. 2012). It is prudent to mention that Microsoft and Symbian are the only companies that have made less shipment on a yearly basis in connection with the smartphone segments. Future analysis Nothing is certain in today’s fast changing environment and many organizations have incurred losses owing to the haziness of the future. The unpredictability of the future and the market in general as seen Nokia losing its market share in the industry. Presently, the company is faced with several external challenges for instance change in the behaviour of the consumer and innovation in technology. This trend means that Nokia’s present resources and capabilities no longer meet the standards to enables it to sustain its competitiveness in the near future. Therefore, it is of paramount importance for the company to point out the major threats and opportunities available in the days to come and match them with the present challenges in order to make an informed decision (Kenney & Pon, 2011). The consideration of these key factors will make Nokia bolster its resources and capability usage and make out the important resources that call for development to earn a sustainable competitive advantage. Organization vision, mission, and goals Nokia has well-known simple that goes, Nokia connecting people. The company objective is created great mobile brands that helps billions of users across the world and help them enjoy the gift of life. The challenge that the company faces in to accomplish this objective is the ever changing and competitive environment. Company’s core strategy Nokia mission statement illustrates that the company has not heeded the need for it top followed the recommended course of attaining a sustainable competitive edge. The company is presently directing its effort on cost and differentiation. Furthermore, the bottle-neck competition and the external factors are exerting and will continue to mount competitiveness for the company (De Chernatony, 2010). These aspects work together to push Nokia into the bad situation in terms of losing competitiveness. To save its declining impact in the market and industry Nokia needs to come up with a sustainable competitive advantage. The external analysis for Nokia reveals that the competition in the industry is extremely high this thus implies that enhancing performance through increasing profitability is not desirable. According to De Chernatony (2005), efficiency in cost can be attained by cutting on costs through differentiating because this has the consequential outcome of lowering costs per unit. When that is accomplished, Nokia domination of the market share will be realized once more. Hence, it is advisable for Nokia to opt for the route of improved volume in the short term and attempt to accomplish efficiency in cost via products differentiation in the long run. By choosing this strategy, Nokia can enhance its performance. Implementation framework Nokia should enhance its production capacity and knowledge by having a more qualified marketing team that can effectively serve the targeted market. While the OBBC’s lectures and practitioners consider repositioning Nokia’s brand, it should start by composing a qualified marketing team and recommending to Nokia’s management the kind of people that should be included in the team to foster its productivity and efficiency. Given the mounting pressure of costs, competition from the better-placed competitors, high price end, and other constraints, Nokia needs to do something unique and long-term oriented to outdo competitors, and this can be achieved with the help of OBBC’s practitioners. OBBC, in repositioning the brand, must also urge Nokia to increase its expenditure on research and development (R&D) and innovation. OBBC can also undertake to do the R & D on behalf of Nokia. It should compile a team that will undertake market and field research to ascertain the exact nature of the competitiveness of Nokia’s brand as well as consumers tastes, needs, and preferences of UK consumers. The company needs to direct its efforts and attention to manufacturing products that are most innovative and advanced technologically gain a competitive advantage. OBBC should encourage the company to focus on the constant development for the Symbian for the inexpensive devices (De Chernatony, 2010). It should also develop in the areas such as battery life, CPU power, radio technology, user-friendly OS, quality of display and cloud computing (Kenney & Pon, 2011). The other strategy that needs to be considered by OBBC is to have its brand managers incorporated into Nokia’s management as well as production, sales and purchasing team. OBBC should compose a team of approximately 10 people and send them to various departments within Nokia. The team will act as an informant and will be providing crucial advice to OBBC regarding the repositioning efforts, fiascos, triumphs, and required modifications (Dedrick, Kraemer & Linden, 2011). This will also ensure that OBBC continues building the strong strategic collaboration Nokia has had with Microsoft. Collaboration with the Microsoft in a deal that allowed Nokia to manufacture windows phones with a Nokia trademark improved Nokia’s market performance and this should be considered in repositioning Nokia’s brand. OBBC should also improve Nokia’s capacity by creating new ‘testing’ products that can be used in the initial phases of repositioning. Attaining this will require that OBBC seeks services of professional brand managers who will bring in the required expertize, knowledge, and experience. According to Butler (2011), enhanced capacity will facilitate Nokia to use the prospects at its disposal even more than it has ever done. Apart from just enhancing the process, tools like “kaizen” could be utilized to streamline the supply chain (Edwards, 2005). An improvement in its supply chain will facilitate its cutting of purchasing prices for services and raw materials because it will be more vertically incorporated than its rivals. Conclusion Nokia has been working together with Microsoft in a strategic collaboration to create smartphones (Brown, 2014). The first products from the partnership included the Lumia 800 and Lumia 710, and then the Windows Phone as an operating system. From the partnership, it clear that the company had adopted the strategy for creating and expanding the strategic partnership to enhanced its competitive advantages. The company has also formed collaboration with Warner Brothers to facilitate the placement of its product and to create more brand awareness. Nokia brands have a reputation for long battery life, but with the introduction Nokia-Windows phones, a problem of battery drainage came about (Husso, 2011). The solution to the problem lies in software updates. Other suggestion identified keys areas that need improvement. Furthermore, other areas that require development for the product has been identified, and this means that additional research and innovation is necessary. Thus, it can be concluded that the most appropriate recommendation for Nokia and that is also in line with its strategic objectives is to increase its expenditure on R&D and innovation. Moreover, the other strategies like cost and differentiation have not helped the company in terms of competitiveness. In fact, cost leadership and product differentiation have affected Nokia performance in the negative sense because it only has the impact on increasing sales and add less in competitive advantage. 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