Nokia in Singapore - Essay Example

“In a world where customer preferences are volatile, the identity of customers is changing and the technologies for serving customer requirements are continually evolving. Hence, a definition of a business in terms of what it is capable of doing may offer a more durable basis for strategy than a definition based upon the needs which the business seeks to satisfy” (Grant, 1991). A strategic corporate appraisal is an exercise to identify the strengths and weaknesses of the business entity so that the business is better equipped to exploit the opportunities and overcome the threats. The following is a Strategic corporate analysis of Nokia for its Singapore operations:

1. Senior Mgt Skills, Values, and Attitudes

• Commitment towards environmental protection. Nokia got ISO 14001 certification for its Singapore office for its provision of sales, marketing, and support services for mobile phones, network infrastructure, Internet security, and home communications businesses in the Asia Pacific region.
• Appliance value proposition – based on performance, reliability, ease – of deployment, management, and support rather than providing applications
• Maintenance of hardware stability which results in RAM, disk drives, network cards, etc stable and long-lived for three to five years.

1. Corporate culture

• Increase in advertisement spending than Motorola and increased the market share
• Global branding - creating of an advertisement campaign for southeast Asia as a whole
• Stronger and uniform identity in the market projecting global image which creates a better brand equity compared to the competitors.
• Stronger product differences from the competitors

1. Corporate public (stakeholders)

• Customers – more updated models, with clamshell models and candy bar models marketed as fashion accessories
• Operators – customized cell phones For the operators, Nokia will customize handsets, whether in terms of co-branding campaigns, in their looks, or uploading an operator's software or user interface into the phones at the factory
• Partnerships with consultancies such as Blue to promote online marketing programs.
• Partnerships with leading vendors ensure that applications are “rock solid” with rigorous testing of hardware, operating system, and applications

1. Corporate resources (Strengths/ capabilities)

• Extensive network with the dealers and operators which provides a very strong and effective supply chain. The alliances with the suppliers, relationship with customers through the online surveys, and cooperation with service providers to manufacture custom-made phones are all some of the key factors that make Nokia the market leader.
• Global market positioning as a very technically strong product. Hence, Nokia has more sales in its entry level models.

• Extensive research and development of new models to focus on the expectations of the customer. For example, Nokia has introduced its clamshell models to satisfy the changing customer preferences
• Customer care and support centres across the world to provide customer solutions
• Continuous growth in market share and net sales. Though the net sales stagnated a bit in 2007, Nokia has managed to increase its net sales by introducing more sophisticated models.

1. Past performance*

• Increase in sales globally by 40% in the year 2007 which has helped to consolidate the position of Nokia as the undisputed market leader
• Debt-to-equity (gearing) ratio is -61% up to December 31st, 2007 compared to -68% as of December 31st, 2006
• Market share for is 40% (fourth quarter 2007), 39% in the third quarter 2007 and 36% in the fourth quarter 2006
• Growth in net sales from € 7.1 billion to €7.4 billion in the fourth quarter 2006 and 2007 respectively
• Fourth quarter 2007 net sales increased 120% to EUR 670 million, compared with EUR 305 million in the fourth quarter 2006. Net sales were driven primarily by strong volume growth in Enterprise Solutions device business, especially from the Nokia E65, Nokia E90 and Nokia E51, compared to the fourth quarter 2006.
• Operating margin of 15.9%, up sequentially from 14.6% in Q3 2007
• Nokia operating cash flow of EUR 2.7 billion.
• Nokia device volumes of 133.5 million units, up 20% sequentially and up 27% year on year.
• Shipped well over 11 million Nokia N series devices and over 2 million Nokia E series devices during the fourth quarter 2007.
• Mobile Phones operating profit grew 48% to EUR 1.9 billion, compared with EUR 1.3 billion in the fourth quarter 2006, with an operating margin of 25.0% (17.8%) due to newer and more profitable devices shipping in volumes, especially in the mid-range.
• Fourth quarter 2007 net sales were EUR 4.6 billion in Nokia – Siemens network. net sales were up 25% compared to the third quarter of 2007, primarily reflecting seasonally strong end of year expenditures by operators in the fourth quarter 2007 and a favorable outcome from the assessment of certain acquired contracts.