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Reasons impacting Nokia's strategy position

Question:

Describe the Critical Evaluation of Corporate Strategies of Nokia?

This report will critically evaluate the current strategic management of Nokia and also report will talk about what are the reasons which impact the strategy position of Nokia Corporation. The report will provide background of the company and following the organization’s internal and external environmental analysis. It is found that the Nokia’s smart phone strategy evidence profound change for it and it is responsible for ending an era (Blandford, 2011). To make changes in strategy is became necessary for Nokia while considering its declining market share due to increasing competition in smart phone area from its competitors. It is significant to understand that one company cannot easily manage all the functions like designing of hardware, manufacturing them, operating systems, content services, advertising and so on, while there are lot of competencies competitive ecosystem developing and growing broader. These are few critical things about Nokia Corporation and we will see many more during the report.

One more dimension I would like to state here is Nokia has mismanaged strategic partnership with other companies (Sandstorm and Gundberg, 2012). Environment of smart phone industry involves diverse players set like the companies such as hardware manufacturer, software designers, and apps developers only license their patents, another are carriers, newcomers, established one and so on. In between those only few companies shows their interest in most area others only focus and get success in single or few areas. There is no doubt that this environment is complex one and needs lot of intelligent scan in order to get corporate success. Nokia design ability in the industry is best and also has large pool of patent and one can speculate Nokia and Microsoft’s strategic partnership as plus point but the evidence is against the speculation.

The report will critically analyze the strategies used by Nokia, its position in competitive industry; whether corporate strategy focuses on portfolio market response. Report discusses implications for creativity in strategic thinking and implications needed for leadership in the Nokia Corporation. Global strategic perspective of Nokia is also going to be discussed in the report. Further the recommendation for improving performances has been given.

Crucially, Nokia wanted to control software and hardware both the areas. Nokia adopted ‘go it alone’ attitude which become a driving force behind Nokia’s smart phone software strategy for the last decade and this strategy seems like Nokia wanted to control its own destiny (Troianovski and Grundberg, 2012). An additional platform introduced by Nokia which become a most likely options and it was Windows Phone, this strategy announcement was created a sense of surprise in the industry and all people in the industry including the harshest critics of Nokia expected hopefully the speed of this unprecedented change in smart phone strategy of Nokia. It created a great impact on the new partner Microsoft whose perception about the mobile device manufacturing is like it would become commodity business. This is the example which shows how the things changed in the last decades.

Internal and external environmental analysis of Nokia

In 2011, Nokia’s situation is not untenable, but from there the concern arise about its future situation which proved right and it also evidenced that big strategy change has to make whenever necessary within short time period (Lancaster, 2012).

In past few years Nokia lacks expertise in their hardware parts which is considered as driving force of Nokia and it become bombshell on Nokia. As compare to Apple Nokia employed more experts for its R&D department but it had seen that their strengths are now become their weakness in the dual core technology, inferior hardware parts, also they are slowing in the ecosystem and due to their questionable potential, Nokia put down.

On the basis of several similar characteristics Nokia can segment their market as over demographic features and on behavioral and psychographic features.

Age and Gender: All products of Nokia are designed by considering all age group people, they have customers from adults to younger, overall their product are appealing to most age group and are more unisex. The products with more vibrant colors are famous in youth, they mostly attracts women customers of younger generations (Nokia Online web site, 2012).

Income: It is one of the most effective demographic factors, but Nokia has products for all income group people like their C-series and dual sim phones are designed by considering low income group people, N-series, E-series are appealing for middle to high income group people and Vertu phones are affordable only to very high income group people.

Occupation: Nokia also designed smart phones which suits and appropriate for different occupational groups.

Businessmen: These group people obviously require phones suitable for their profession along with multiple features like 3G technology, faster web access, function through which they can connect to the clients. Nokia’s E-series, N-series and communicators products are designed by considering the needs of these group people (Nokia Online web site, 2010).

Students: These particular class customers are finding feature like gaming, music options, social networking options and N-series and Xpress music models are designed considering this group people and are also popular in this segment.

Education: Even illiterate people can operate Nokia phones due to its user friendly aspects.

Benefits Sought: most of the mobile products of Nokia phones provide people value for their money, satisfy their multiple needs by providing various features (Eisenhardt and Martin, 2000). For example the Xpress Music model of Nokia provides entertaining features due to its walkman options.

Usage: Having multiple usage and suitable for all age segment people with its exciting features.

Perception and personality: Customer considers Nokia as most user friendly brand and reliable as well, they vary models for different personalities but lack in satisfying advance needs.

While evaluating Nokia’s strategy critically it has to be notifying that, Nokia should comply with using ground rule and regulations while operating in different business environment and different markets around the world.  It is important evaluation for Nokia that it has to research the scope and limits in order to prevent the illegal actions, regulations and aid from the Government authorities to prohibit international business before entering to new marketing conditions. National quota goal insert limitation over the imported goods, custom duties and tax charges as well as on patents and the host government has all rights (Lancaster G. 2012). Hence when government changes company faces difficulties in adjusting the facts. To obtain the greatest advantage from market Nokia has to work together with the authorities. Law and copyrights has to be applied on Nokia’s products to restrict them from misuse.

Analyzing the strategies used by Nokia

Economic system is very significant for Nokia as it can control the production of its products and targeted market which uses the end products. Additional to this global supplier demands Nokia’s mobile phones with various aspects of international trade. Nokia also has to aware about the economic condition of the host country like its rate of inflation, currency exchange rate, to improve the venture in order to get personal and financial security with future plans.

In today’s fast life style and ever changing environment mobile phones are becoming easy communication media, it also become partner in day to day work and get the world closer. All level of social class chooses and use different models of mobile phones as per their convenience in order to accomplish their personal and professional needs, instead of any differences in nationality, race etc. Smartphone are becoming fashion trend or decorative piece considering this in to mind Nokia launched more and more fashionable and functional smart phones like Nokia Lumia series of phones.

One can criticize Nokia on its technology factor, as we know Nokia uses Windows operating system and hence its products are more compatible and costly. But within last few years most companies used Android and developed most of the fastest, high featured, fashionable and cost effective products. Hence major customer group diverted towards those mobile companies and it become vary disadvantageous for Nokia (Cassell et al.,  2006). In order to get success of any new Smartphone in targeted market progress in technology is very important to gain competitive advantage. Nokia must concentrate on high level of innovation in the Smartphone sector. Nokia has to grasp all necessities in Smartphone Camera quality, internet, social networking features, e-mail functions and have to introduce features differing from its competitors like Samsung, LG etc  

Due to various factors entering as a mobile phone manufacturer is becoming extremely tough and hence barriers of entrance is high (Porter, 1985).

Patent is required for mobile phone manufacturing along with proprietary knowledge and survey of global market and considering today’s marketing conditions it is observed that leading mobile companies also currently struggling for or engaged in battles of patent issues. It is also confirmed by Nokia’s CEO and analyst of many other industries that it is the age of battle of ecosystem and not just mobile phones. Hence for all the leading companies such as Apple, Samsung and Nokia Smartphone business is like overall ecosystem of mobile which involve software stack, operating system, various apps etc things.

Power of buyer is high considering Nokia, it is adopted strategy of focusing on Smartphone and feature phones segments which span across multiple pricing situations (Gruenwald, 1995). Smartphone category has most margins but there is another fact also which says that every segment have intense competition and mainly because product differentiation is becoming less. Observed continuous growth in consumers volume globally despite of recession and saturation. In coming year expected growth in Asia-Pacific market.

Power of supplier is moderate. Nokia cannot depends on specific suppliers for their hardware components because there are large number of equipment manufacturers are there on which Nokia can switch to. It seems competition among supplier for coping up with demands and fast completion of requirements. Nokia does not rely on specific manufacturer of hardware equipments.

Implications for creativity in strategic thinking

Nokia has low threat of substitution. Smartphone or mobile phone are becoming unbeatable part of people’s everyday life and there are large group of people who cannot imagine their life without mobile phones and it is really hard to replace mobile phones from any substitutes in today’s situation at least. Though they have various options which could be considered as substitutes like digital camera for photography, TV/iPod for listening music, e-mails and VIOP systems etc but when all the things compress in single Smartphone why anyone would wish to substitute it with different products.

High threat of rivalry or competition, due to the intense completion in business environment many Nokia needs to change their business models and strategies. Nokia faces competition from various global Smartphone companies like Samsung, LG and so on and it also results in loss of market share during recent years (Lancaster G. 2012). Brand identity is significant in order to achieve long term success in the targeted market.

Software giant Microsoft were acquired handset division and service of Nokia in past year and from then under the umbrella of Windows Nokia has been launched various phones and keeping all this factors in mind SWOT analysis of Nokia has given below:

  • Nokia’s established its brand name from various decades, it established as customer friendly product. Many of the customers choose Nokia between the rush of various brands due to its image of most reliable, durable and creative mobile phone providers (Kotler, Chandler, Brown, 1994).
  • Highly qualified personnel of Nokia have been teamed up with Microsoft experts as the part of acquisition deal and it give more power to Nokia’s brand.
  • Nokia’s phones have higher resale values as compare to any other mobile phones brands
  • Easy to use and are provided with variety of handy accessories
  • Price portability
  • The company is criticized again and again for its poor after sale services.
  • Nokia took really long time to enter in highly productive and popular Smartphone market and due to it company lose its lots of market share and customer also diverted towards other Smartphone providing company (Saunders, Thornhill and Lewis, 2009)
  • Nokia’s Smartphone and other mobile models are out of reach for middle and lower class customers, which affect their sale.
  • It has made lower profits as compare to its competitors due to decreasing sales. Statistics make it clear that company’s profit share have been fallen by 7% in second quarter of 2014.
  • The deal between Microsoft and Nokia is a win-win solution for both the giants in market. This deal can possess great opportunity if and only if both the companies utilize the resources effectively
  • They have opportunity to bring applications which support Windows operating system and also they can bring new features to them. Increase product range and prices.
  • Smartphone companies are providing tough competition to Nokia and also prohibiting Nokia from maintaining and expanding their market share.
  • Due to low prices of Smartphone by China mobile companies and others can also cause big problem for Nokia (Schmidt and Hollensen, 2006).

Competitors of Nokia Company:

 Samsung and Nokia both are largest mobile phones manufacturer around the world and also occupied largest market share. Nokia has second highest market share after Samsung. Both the companies are global multinational companies in the targeted industry. As compare to structure of enterprise organizational structure, business model they have much things in common and both the brands are well known brands in the targeted market.  

Samsung is South Korea’s largest conglomerates having 26 affiliated companies and also other corporate bodies, operated in near about 70 countries along with 500 corporate offices. Samsung provided Smartphone which looks good, having good quality and unique design. They are basically emphasizes on changing the mobile phone appearance with perfect combination of utility function and hence they have achieved belief of large group of loyal customers. Samsung best quality is it easily deal with the challenges from competitors and also retain its own characteristics (Lancaster G. 2012).

Another competitor is LG Group, it is continuously challenging the technology field and also committed towards developing new technologies. Scientific research and development is main focus of LG and strongly backing business development. Motorola is positioning in communication industry as a veteran giant of telecommunications and no one forgets that Motorola has invented first mobile phone. It has been a major industry leader and became one of its most profitable businesses.

Conclusion:

To conclude the report, I would say that from overall analysis, debate and discussion on Nokia, its strategic position and marketing strategies we can recognize that to any extent the company has strength and on other hand also has weaknesses too. But from overall analysis it make simple that company really have to work hard over their strategies to make it again reliable and durable brand. Core competitive strategy of Nokia is sustainable and hence it is not easy for competitor to imitate it. It is not easy for competitor’s to redefine the core business strategies of the organization and implement them to change professional. Nokia and Microsoft both are well positioned and can build a reliable, competitive and viable mobile ecosystem in which both the companies have near-equal equity stake. Nokia’s decision to switch to Windows Phone was primarily driven by its requirement for competitive and sustainable ecosystem, rather considering any underlying technology.

Reference List:

Barney, J. (1996). The resource-based theory of the firm. Organizational Science, 7, 469.

Blandford, R. (2011). Understanding Nokia's smartphone strategy decision. Retrieved January 14, 2015 from https://www.allaboutsymbian.com/features/item/12622_Understanding_Nokias_smartphon.php

Corley, T.A.B. (1990). Emergence of the Theory of Industrial Organization, 1890-1990. Business and Economic History, second series, XIX: 83-92.

Eisenhardt, K. M. & Martin, J. A. (2000). Dynamic Capabilities: What are they?. Strategic Management Journal, 21(10-11): 1105-1121.

Porter, M. E. (1985). Competitive advantage: Creating and sustaining superior performance. New York: Free Press

Sandstorm, G. & Gundberg, S. (2012). Nokia slips to seventh in smartphone market. Retrieved January 14, 2015 from https://online.wsj.com/news/articles/SB10001424127887324556304578118360942919142

Troianovski, A. & Grundberg, S. (2012). Nokia's Bad Call on Smartphones. Retrieved January 14, 2015 from https://online.wsj.com/news/articles/SB10001424052702304388004577531002591315494

Beins, C. 2004, Research Methods: A tour for life, Pearson Education, New York.

Carr, D. 1979, ‘Current Survey of Reference Sources in Education', Reference Services Review, vol. 7, no. 1, pp. 15-23.

Cassell, C., Buehring, A., Symon, G. & Johnson, P. 2006, Qualitative methods in management research: An introduction to the themed issue. Managerial Decision, vol. 44, no. 2, 161-166.

Gruenwald, George 1995, New Product Development: Responding to Market Demand: NTC Publishing.

Hamel, G. and Prahalad, C.K. 1994, Competing for the Future. Boston: Harvard Business School Press.

Kotler P., Chandler C., Brown L., 1994, Marketing in Australia and New Zealand: 3rd Edition, Prentice Hall, Sydney.

Lancaster G. 2012, Marketing Lectures online. Retrieved: January 14, 2015, from https://www.marketingmasters.co.uk/geoff/

Nokia Online web site, 2012. Retrieved: January 14, 2015 from https://www.nokia.com/about-nokia

Nokia Research online, 2010. Retrieved: January 14, 2015 from https://research.nokia.com/aboutus/index.html

Saunders, M., Thornhill, A. & Lewis, P. 2006, Research Methods for Business Students, Pearson Education, Essex.

Saunders, M., Thornhill, A. & Lewis, P. 2009, Research Methods for Business, Pearson Education, Essex.

Schmidt, M. & Hollensen, S. 2006, Marketing Research: An International Approach, Pearson Education Limited, Essex.

Thomas, J.R., 1993, New Product Development. Managing and Forecasting for Strategic Success, John Wiley & Sons Inc., New York.

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