General Environment Factors Affecting Nokia and its Competitors
In essence, there are many factors that generally affect Nokia and its competitors. In order to analyze these factors in this paper, The PESTEL tool of analysis which entails the discussion of Political, Economic, Social, Technological, Environmental and Legal Factors, will be used.
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Political Factors: Since Nokia is a multinational company, its products should be able to accommodate various political ideologies like liberalism, conservatism, democracy and independence, all at the same time. This represents most of the key dogmas that should be chiefly assessed by competing companies like Samsung and Apple if their products and services are to reach their target markets. Consequently, Nokia and its competitors should tailor their products and services in a way that they embrace the existing political ideologies (Perrey & Riesenbeck, 2009).
Economic Factors: A strong economy usually creates a viable environment for the growth of companies since they are able to sell their products and services. For example, a recent report by Euromonitor (2012) shows that, after the 2008-2009 electronics sales plunge due to the 2008 global economic crisis; the years 2010 and 2011 recorded vigorous economic up-surge due to the betterment of UAE’s economy.
It, therefore, follows that if Nokia and its numerous competitors are to do well, the companies must prevail over the challenges and limitations that come their way while they intermittently strive to strengthen the economies in their target environments.
Social Factors: Most of the products and services offered by Nokia and its competitors such as mobile phones and computers are for social purposes. For this reason, the social environment in a place highly dictates the success of the products and services. For example, most people in the western world are renowned for loving plush and trendy items like phones for social purposes such as networking and communicating with others.
These good social aspects prospect an amiable environment for companies like Nokia, unlike social environments like Africa where such items are not highly regarded (Cherrayil, 2012). Moreover, the use of social forums such as Twitter and Facebook in social marketing explicates the irreplaceable role of social factors on Nokia as well as its competitors.
Technological Factors: Advancements in the world of technology are believed to be crucial in the modern age based on the potential to simplify and fasten various activities. For this reason, the provision of products and services with immense technological advantages greatly dictates the success of failure of Nokia and its competitors. This, probably, is the reason Nokia and its competitors like Samsung usually strive to provide products with better technologies (Euromonitor, 2012).
Environmental Factors: In terms of geographical conditions and climates, there the sale of products and services by companies like Nokia is usually not adversely affected. However, over the recent times, there have been increasing concerns on the protection of environment through environment-friendly products. Based on such concerns, Nokia and its competitors have to ensure that their products and services are eco-friendly. Other environmental factors like weather patterns affecting network receptions and travel patterns should also be considered by Nokia and its competitors.
Legal Factors: If Nokia is to successfully market its products and services as required, it has to abide by the legal sanctions in its target environments. For instance, it should make sure legally punishable mistakes such as discrimination, negligence of duty and ethical decadence are avoided by its employees. In addition, Nokia and its competitors must ascertain that customer complaints are dealt with appropriately so that the companies do not have to contend with being constantly sued for legal malpractices.
Rejoinder: Effect of These Forces on the Rest of the World
As exemplified by the above discussions, most of these forces are faced similarly across the world. Differences only emerge due to the different styles of management by these companies and their target environments.
Notably, all the factors discussed play crucial roles in the success or failures of these companies. However, since Nokia—just like most business enterprises across the world—tend to primarily focus on getting profits; economic factors are usually considered by most macroeconomists as the most important environmental element (Boone, 2001).
Forces Driving Industry Competition and How They Compare Globally
In analyzing the key competitor forces that drive industry competition for Nokia and how these forces compare globally, Porters Five Forces’ business model will be used. An explanation of these forces is given below.
New Competitor’s Entry: In the technological industry, new competitors are bound to be a challenge. For a long time, Nokia was the leading mobile phone company in the world. However, the replacement of Nokia by Samsung at the top-spot means that Nokia has to make provisions to avoid being overtaken by new competitors while they struggle to retain their once-held top global position.
Substitute Product or Service: Substitute products or services are usually used by companies when their primary choices fail to work. At the moment, most of Nokia’s products are doing well in their respective markets so there is no dire need for substitutes. Nonetheless, their current products and services should be bettered to survive the dynamics of their global market.
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Increase in Bargaining Power of Buyers: Nokia is known for having good prices for its buyers thus making price-wars with buyers have a less impact on the company. However, the recent dominance of Samsung calls for urgent measures to be taken by Nokia if it is to outwit such competition and retain its buyers who are slowly, but surely, being grabbed by its competitors.
Increase in Bargaining Power of Suppliers: When there are few suppliers, the price of commodities go high thus making it difficult for companies like Nokia to get sufficient supply of the required products and services. In turn, this affects their profit margins. A constant, reliable and sufficient supplier is, therefore, required if Nokia and its competitors are to survive the challenges posed by insufficient supply systems.
Intensity of Competitive Rivalry: As glimpsed by the discussions above, Nokia has several competitors. This competition can sometimes turn into a fiery rivalry leading to enmity—which is not good for business. So, whereas positive competition is encouraged, Nokia and its competitors have to find a way of overstepping their boundaries in their bid to achieve supremacy in their target markets (Porter, 1985).
Key Factors in The Immediate Environment
From the discussion above, it is eminently evident that there are several environmental challenges faced by companies like Nokia. In order to overcome these challenges, it has been revealed that all the concerned parties should consider a myriad of factors. For this reason, customers, competitors, suppliers, creditors, labor unions, governments, trade associations, interest groups, local communities, and shareholders have to be relevantly considered if the challenges are to be limited.
Boone, M. E. (2001). Managing interactively: executing business strategy, improving communication and creating a knowledge-sharing culture. New York: McGraw Hill Professional.
Cherrayil, N. K. (2012). Mideast, Africa sales will hit $1.2b. Retrieved from http://www.pressdisplay.com/pressdisplay/viewer.aspx
Euromonitor. (2012). Consumer electronics in the United Arab Emirates. Retrieved from http://www.euromonitor.com/consumer-electronics-in-the-united-arab-emirates/report
Perrey, J., & Riesenbeck, H. (2009). Power brands: measuring and managing brand success. New York: Wiley.
Porter, M. (1985). Competitive advantage. New York: Free Press.