Porter’s five force analysis is a major determinant of a successful business venture, and these forces act on the market economy to produce a profitable organization when properly implemented (Porter, 1998). Nokia suppliers have made use of this analysis to gain ground in the competitive market economy. The firm has over 120,000 competent employees and in order to coordinate such large numbers of task force to supply the phones to over 150 countries, requires a well-structured organization with a strict management system.
By talking of the bargaining power of suppliers, we are simply implying, the ability or potential to determine market prices of commodities in the economy (Michael, 1999). In the year 1998, Nokia was rated as the largest mobile phone manufacturers of all times, and they had the command of the telecommunication market and enjoyed the monopoly of controlling prices for more than a decade. The firm has enjoyed lucrative global market shares from its huge sales across the globe.
With time, the market became extremely competitive with the emergence of brand new mobile phone suppliers with advanced technologies like Apple, iPhones, iPads, Samsung galaxy phones and other Android operating systems that were more appealing and very efficient with diverse applications. These new suppliers brought stiff competition and resulted in a drastic fall in Nokia’s shares and profit margins in the market.
At this point, no single supplier had the power to determine market prices and hence the consumers benefited from such competitions. There are cases where suppliers merge together to form cartels to boost their bargaining power and have control of the market (Michael, 1999). Nokia Company has had several cartels and merges. In 1999, Nokia merged with Siemens in order to better their communication and network services.
They later worked with Qt software, OZ organization, which was an email and messaging service provider and Navteg Company based in Chicago and dealt with the geographic information systems. They produced digital mappings and on-line navigation systems. Navteg manufactured on-line maps and navigation routes for Nokia mobile phone subscribers. At the moment, Nokia is working to form an alliance with Microsoft and start manufacturing phones with Windows operating system.
This will enable them to keep up with the ever-changing technology and remain relevant in the market. If they manage to integrate the Microsoft’s Windows 7 phones, they will be able to contend with the smart phones and Android operating systems that have currently flooded the market.
In conclusion, in case where the supplier faces stiff competition from other suppliers, he or she ought to be more creative and innovative by offering special and unique services that are not offered anywhere else in the market to remain relevant to the economy and match up with other top suppliers (Ireland, 2001). They also have to strengthen their distribution channels and upgrade their systems.
References
Ireland, H. (2001). Understanding Business Strategy. New York; McGraw-Hill.
Michael, S. (1999). Competition and Crisis in Mortgage Securitization. Toronto: Oxford University Press.
Porter, M.E. (1998). Competitive Strategy. New York: Free Press.
Porter, M.E. (2008). The Five Competitive Forces That Shape Strategy. Harvard Business Review, 86(1): 78-93.