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Nokia Corporation Strategic Management Essay


Introduction

I have chosen Nokia Corporation as the company to write about in this assignment. Nokia Corporation is based in Keilaniemi, Finland and is, by far, the largest manufacturer of mobile instruments in the world. There are other fields that the company is engaged in, such as multimedia and networking.

Nokia Corporation has been in the telecommunications field since the last 50 odd years. But prior to venturing in the telecommunication field, Nokia had tried its luck in various sectors such as paper mill, rubber boots, car tyres, electricity, televisions etc. Presently, the company has its manufacturing facilities across the globe in various European and Asian countries.

Nokia Corporation’s logo, ‘Connecting People’, is tantamount to its line of business. According to Datamonitor, Nokia “…employs about 129,355 people. The company recorded revenues of €42,446 million ($56,363.6 million) during the financial year ended December 2010 (FY2010), an increase of 3.6% over 2009” (Datamonitor, 2011).

Nokia Corporation can be considered as the pioneer in mobile technology. “On July 1, 1991, Finnish Prime Minister Harri Holkeri makes the world’s first GSM call, using Nokia equipment. And in 1992, Nokia launches its first digital handheld GSM phone, the Nokia 1011” (Nokia).

In order to have a better understanding about the company, it is always better to do a SWOT Analysis.

SWOT Analysis of Nokia Corporation

Strengths of Nokia Corporation

  • Well equipped research and development department.
  • World’s first GSM call was made from a Nokia instrument.
  • Largest manufacturer of mobile phones with manufacturing facilities in not less than 15 countries worldwide.
  • Largest marketing network.
  • Follows the ‘Diverse Workforce Management’ policy.
  • Nokia products are marketed in not less than 160 countries worldwide.
  • Nokia has a strong financial base.
  • Better re-sale value as compared to other brands.

Weaknesses of Nokia Corporation

  • Profits of the company dropped by almost 40% in the year 2010.
  • In spite of global presence, Nokia Corporation does not have specific presence in the United States of America.
  • The same is the case in Japan though the reason is greater competition from local brands such as Panasonic, Sharp etc.
  • In India Nokia has an appreciable presence but the after sales service is not up to the mark.
  • Some of Nokia’s products are not compatible with the available software.
  • Pricewise, Nokia mobiles are costly as compared to Chinese mobiles.

Opportunities of Nokia Corporation

  • Nokia Corporation entered into a joint venture with Germany’s Siemens and as such now there are greater opportunities for the company to expand in the hitherto neglected European markets.
  • Nokia has specific presence in the Asia Pacific region and it is encouraging that this particular market is one of the fastest growing ones.
  • Nokia mobiles are stylish and colourful. This feature is liked by the younger generation.
  • There is tremendous scope for Nokia in developing countries.
  • There is an incessant growth in the telecommunication industry.

Threats of Nokia Corporation

  • Due to the launch of several Chinese brands, Nokia’s monopoly in the mobile market has started to diminish.
  • Other brands like Apple etc. have introduced mobiles with better and more user-friendly software.
  • Due to a variety of choices available in the market, customers have more and better options.

Past, Present and Future Position of Nokia Corporation

Nokia Corporation ruled the mobile market for about 14 years but due to its not paying attention to the emerging competition from brands like Apple and Samsung, there has been a drastic drop in its sales. Initially, Nokia provided its customers with value for their money. Nokia handsets were considered to have the latest technology.

When Apple introduced the Android phones, Nokia did not suffer much because the Android phones were meant for high-end customers whereas Nokia phones were meant for the masses. But unfortunately, the different models launched by Nokia had only some minor changes and since the customers wanted something different, Nokia started losing ground.

During this period, Samsung also launched its Android phone but with a difference and at a lesser price. “All these factors created an opening for Samsung which gave the public exactly what they wanted – variety of prices in the smart phone segment, with touch screens, with android and with fabulous marketing plan” (Bhasin, 2012).

As a result, Samsung took over the number one position in mobile phones and it is expected to be there until Nokia Corporation comes up with some innovative features in its mobile phones. Following is a table depicting the comparison of sale of mobiles using different operating systems:

World smartphone sales to end users by Operating System in 2Q11.

“Looking at the present scenario, Nokia has started to make efforts to enter smart phone market by collaborating with Microsoft and bring its smart phones to the market, with Nokia Lumia 800 being the recent one in the stable” (Raina, 2011).

Market share of Nokia

According to Gartner, “Nokia’s share of the mobile phone market dropped to 25 percent in the first quarter of 2011, the lowest for 14 years, down from 30.6 percent at the same time last year” (as cited in Globaltimes, 2011).

Talking about Nokia’s market position, Gartner further reported that “It is still ranking well ahead of second place Samsung, which holds 16 percent, followed by LG in third with 5.6 percent, Apple in fourth with 3.9 percent and RIM with 3.0 percent” (as cited in Globaltimes, 2011). Alex Webb reported that “Nokia, the world’s biggest mobile phone maker, reported that first-quarter profit fell as it continued to lose market share to competitors” (Webb, 2011).

Target Market of Nokia

Initially, Nokia did not pay much attention to the European and the US markets but as mentioned earlier in the paper, it entered into a joint venture with Germany’s Siemens and as such now there are greater opportunities for the company to expand in the hitherto neglected European markets. But the main area that Nokia is paying attention is the Asia-Pacific region, to be more specific, India and China. Both these are developing countries and as such there is a lot of potential in these markets.

Marketing Strategy and Strategic Marketing Plan of Nokia

“Nokia has unveiled a ‘youthful’ and ‘revitalised’ marketing strategy, using the internal strap line ‘live adventure everywhere’ for the launch of its debut windows phone devices as it looks to reclaim its position at the top of the smart phone market” (O’Reilly, 2011). The following are the main points of Nokia’s marketing strategy (Source: www.authorstream.com).

  • Focused on handset manufacture only
  • Enhance product portfolio
  • Increase distribution channels
  • Adjust preferences for specific markets
  • Customer satisfaction
  • Focused on replacement
  • Increase commitment to emerging market
  • Improve collaboration on designs
  • Ensure accountability and quality
  • Aggressive pricing (Source: www.authorstream.com)

Nokia’s strategy is to “Create irresistible solutions through vibrant ecosystems with our partners, user experience at the heart of all we execute, intensify pulse on consumer needs, bringing the best devices to all markets, smart context aware services with people & places” (Nokia, 2009).

Analysis of Samsung and Apple

“Midway through the fourth quarter earnings season, it’s becoming apparent that while Apple (NASDAQ:AAPL) had a record breaking quarter with 37 million iPhone sales and Samsung did nearly as well, most other handset makers are struggling or facing stagnation” (Goldstein, 2012).

Goldstein further suggests that “Analysts point to the unique attributes that have buoyed Apple and Samsung, including their access to components, scale, brand recognition and overall product execution” (Goldstein, 2012).

One of the major advantages that these two companies have is that all the components are manufactured indigenously. Both the companies have invested huge amounts in their research and development programmes. Another advantage that these two companies have is the instant delivery of products in the markets. Apple’s iPhone and Samsung’s Galaxy range have created a brand name of their own.

Key competitive factors between Nokia, Apple and Samsung

For comparison purpose, we shall consider the latest models of each company i.e. Nokia’s Lumia 800, Apple’s iPhone 4S and Samsung’s Galaxy S2.

Factor Nokia Lumia 800 Apple iPhone 4S Samsung Galaxy S2 Winner
Design Basic design of Nokia N9. The material used is polycarbonate that makes the body light weight. Almost similar to that of iPhone 4 but there have been major improvements in the downloading speed. Designed sleekly with only one button (the home key). Samsung Galaxy S2
Screen 3.7 inches, clear black OLED screen, Gorilla glass 4.3 inches, AMOLED plus technology 3.5 inches, retina display, Samsung Galaxy S2 and Apple iPhone 4S
Camera 8 MP 8 MP 8.1 MP Samsung Galaxy S2
Processor Qualcomm MSM8255 Dual core A5 1.2 GHz dual core AARM Cortex A9 iPhone 4S
Battery 1450 mAh. 265 hours standby with 2G and 335 hours standby with 3G Li-Ion Li-Ion 1650. 710 hours standby with 2G and 601 hours standby with 3G Samsung Galaxy S2 and iPhone 4S
Price (without contract) $699 $749 $600 Samsung Galaxy S2

Conclusion

The chart clearly shows that Samsung Galaxy 2S is the clear winner based on most of the factors. If Nokia wants to retain its top most position, it has to work hard on various aspects such as pricing, innovation, customer satisfaction, after-sales service etc. The management of Nokia Corporation has to evolve a long term business strategy and implement it religiously. It’s beyond doubts that Nokia is a giant company and can sustain the competition in a healthy manner.

The brand Nokia has been the favourite of consumers since long and an emotional bond has been created. It’s only that new and innovative products have entered the mobile market that people have diverted their attention. But if Nokia maintains the innovation that it has shown in Lumia 800, the time is not far when Nokia will retain the top-most position. The only thing required is positive approach and value for money to the end-users.

References

Bhasin, H. (2012). Nokia loses its top position after 14 years to Samsung. Web.

Datamonitor. (2011). Nokia Corporation – SWOT Analysis. Web.

Globaltimes. (2011). Nokia’s share of market slips down to 25%: Gartner. Web.

Goldstein, P. (2012). . Web.

Nokia. (2009). Nokia’s vision of the future. Web.

Nokia. The Nokia Story. Web.

O’Reilly, L. (2011). Nokia reveals youthful global marketing strategy. Web.

Raina, R. (23012). . Web.

Webb, A. (2011). Nokia profit declines as market share falls. Web.

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