TERM PAPER REPORT SUBMITTED TOWARDS THE PARTIAL FULFILLMENT OF POST GRADUATE DEGREE IN INTERNATIONAL BUSINESS Strategies of Nokia to capture the Market and its Downfall Executive Summary Mobile phone market in India is going through major changes. Key players are losing market share while new and young companies, mostly from Asian countries, are coming to the market. At the same time the market is slowly expanding when people are buying more phones than ever. The whole process of buying mobile phones has changed in the last few years.
People no longer carry the same phone year in year out, change is the fast technological development of the phones. But also consumer’s but they change their phone every year, some even twice a year. One reason for these attitudes towards mobile phones has changed. Mobile phones are no longer seen as expensive, hi-tech products, but they have become accessories like jewellery or a piece of clothing. “Nokia is still the largest mobile phone company in the world, but its long-term dominance is now challenged more than ever.
Observers have begun asking whether the cutting edge that has turned Nokia into the No 1 vendor still exists, as Nokia’s market share and revenues have been on the decline. Falling average sales prices (ASPs) and market share have had an impact and forced Nokia to further re-think its strategy towards developed and emerging markets. ” This report gives an overview on what is happening on the mobile phone market today and analyses Nokia’s market position in the growing market. This report includes a brief introduction to Nokia followed by an environmental analysis, SWOT analysis of the company.
Half way through the report you can find information about consumer behavior and segmentation. At the end, this report introduces the main strategies and objectives of Nokia for the competitive market. Finally we try to make a conclusion of the topics discussed and attempt to give some possible answers to the question at hand. Research Methodology * The methodology consist of interaction with Nokia Priority dealers to gain an insight of the company * The study has also considered secondary sources such as books, journals, research papers and websites. * Tools used for the research are:- * PEST Analysis * SWOT Analysis Porter’s 5 Force Model Objectives * To understand the working of the company “NOKIA” * To know the Marketing Strategies of Nokia. * To understands the brand components of Nokia. * To know the reasons for downfall of Nokia. * To recommend strategies for its recovery. * To know the future financial forecast of the company. Company Profile History The roots of Nokia go back to the year 1865 with the establishment of a forest industry enterprise in South-Western Finland by mining engineer Fredrik Idestam. Elsewhere, the year 1898 witnessed the foundation of Finnish Rubber Works Ltd, and in 1912 Finnish Cable Works began operations.
Gradually, the ownership of these two companies and Nokia began to shift into hands of just a few owners. Finally in 1967 the three companies were merged to form Nokia Corporation. At the beginning of the 1980s, Nokia strengthened its position in the telecommunications and consumer electronics markets through the acquisitions of Mobira, Salora, Televa and Luxor of Sweden. In 1987, Nokia acquired the consumer electronics operations and part of the component business of the German Standard Elektrik Lorenz, as well as the French consumer electronics company Oceanic. 1865-1960
From its inception, Nokia was in the communications business as a manufacturer of paper – the original communications medium. Then came technology with the founding of the Finnish Rubber Works at the turn of the 20th century. Rubbers, and associated chemicals, were leading edge technologies at the time. Another major technological change was the expansion of electricity into homes and factories which led to the establishment of the Finnish Cable Works in 1912 and, quite naturally, to the manufacture of cables for the telegraph industry and to support that new fangled device – thetelephone! 960-1980 Design has always been important at Nokia and today’s mobile phones are regarded as a benchmark for others to follow. Take, for example, multi-colored, clip-on fascias which turned mobiles into a fashion item overnight. But Nokia has always thought like that and back in the fashion-conscious 1960’s when one branch of the corporation was a major rubber manufacturer, it hit on the idea of making brightly-colored rubber boots at a time when boots followed the Henry Ford principle – you could have any colour, so long as it was black!
The ’60s, however, were more important as the start of Nokia’s entry into the Telecommunications market. A radio telephone was developed in 1963 followed, in 1965, by data modems – long before such items were even heard of by the general public. 1980-2001 It took a technological breakthrough and changes in the political climate to create the wire-free world people are increasingly demanding today. The technology was the digital standard, GSM, which could carry data in addition to high quality voice. In 1987, the political goal was set to adopt GSM throughout Europe on July 1st 1991.
Finland met the deadline, thanks to Nokia and the operators. Politics and technology have continued to shape the industry. 2001 and into the Future Nokia is harnessing its experience in mobility and networks to generate a startling vision of the future. Meeting rooms, offices and homes will be ‘smart’ enough to recognize their human visitors and give them whatever they want by listening to their requests. Nokia welcomes change and improvement and can embrace new ideas at great speed. Such characteristics will never change but, as to the rest, the story has only just begun! Mission and Vision of the Nokia
Vision “Our customers continue to our First Priority” Nokia’s future success depends on delivering great experiences to our customers by creating products and solutions that work seamlessly and are appealing. Mission “In a world where everyone can be connected, we take very human approach to technology” Connecting is about helping people to feel close to what matters. Wherever, whenever, Nokia believes in communicating, sharing, and in the awesome potential in connecting the 2 billion who do with the 4 billion who don’t. If we focus on people, and use technology to help people eel close to what matters, then growth will follow. In a world where everyone can be connected, Nokia takes a very human approach to technology. Key Members on The board Name | Position held| Olli- Pekka Kallasuvo| President and CEO| Robert Anderson | Vice President, devices, finance, strategy and sourcing| Simon Beresford- Wylie| CEO, Nokia Siemens Network| Esko Aho| Executive Vice President, Corporate Relations and Responsibility| Timo Ihamuotila| Executive Vice President, Sales| Hallstein Moerk| Executive Vice President, Human Resources| Richard A.
Simonson| Executive Vice President, Chief Financial Officer| Anssi Vanjoki| Executive Vice President, Markets| Dr. Kai Oistamo| Executive Vice President, Devices| HUMAN RESOURCE ASPECT Mission Statement and Values Mission: • To Bring out the best of abilities and skills of men and women from different cultural backgrounds, lifestyles to Nokia’s success Values: • Diversity: Different people + Different Ideas = Nokia’s success Commitment to diversity: • Heart of Nokia’s ways and values • Equal opportunities to help employees grow • Inclusiveness towards every employee Nokia seeks respect and benefit from differences Nokia ways and values • A flat network organization • Flexibility and speed- helps in decision making • Openness towards people • New ideas- key which they nourish Consumer led company * Consumer involvement in technology and global communication * Social networks are becoming central- communication * People want to be truly connected: NOKIA DOES IT * People want privacy * One of 3 phones is of NOKIA (100 million users) Overall Goal: * Produce high quality and safe products while upholding law and protecting the environment Organizational Culture and Structure Clear Vision, goals and shared management principles are integral part that keeps the company ahead of its rivals * Through brainstorming and formal presentations, company’s vision has been passed on to the lower levels of management * Company’s corporate objectives are conveyed throughout the organization with help of strong internal Public Relations practices * “Nokia Way” has laid down rules to follow, and formed a basis for common nnnbond and shared philosophy of all its employees * Nokia’s organizational structure is fluid, flexible and driven by the mentors in the organization, which is task or project-oriented. It has introduced various innovative measures in its people process that helped achieve a positive employer image, create a platform for growth and development. Organization structure Nokia as an employer * Values are the foundation and people the core * Its workplace has a world of opportunities, engaging work, global culture and competitive rewards * Has a flexible global structure and addresses diverse and changing business and employment environments and specific individual preferences- has an inclusive and diverse work environment * Rewards employees for good performance, competence development, and for overall company success With employees from 120 countries, working at Nokia leads to a world of opportunities. Nokia offers rewards, Professional and personal growth and Work-life balance to its employees It also provides: * Learning solutions and training- variety of training activities through Learning Centers and Learning Market Place Intranet * Internal Job Market- all vacancies are advertised internally (Job rotation and internal job opportunities) * Performance Management- a system called Investing In People (IIP) which is aligned to the company strategy and planning processes Work Life Balance Nokia cares for its employees throughout the cycle of their working life from induction and training, through development and advancement, and on to retirement * Work-Life balance solutions- health benefits and possible local retirement benefits are provided to employees * Well-being of employees is important and also fundamental to the Nokia Way * Recognizes the importance of the balance between work content and personal interests and needs, as well as the impact of that balance on employee well-being Corporate social responsibility Nokia and Environment
Lifecycle Thinking- use approved, tested and sustainable materials and substances in products * Improve energy efficiency of devices, enhancements including chargers * Develop smaller and smarter packaging for products * Involve the people who use devices via eco software and services and Recycling (in 85 countries including India) Nokia’s environmental Footprint Lessons Learned from Nokia * Nokia maintains distinctive advantage over their current and future competition without patent protection * Nokia’s processes are: * Attracting and retaining skilled people. Managing innovation enabled the company to remain innovative and agile, even as its organization grew quite large. * Offers ways in which hard-to-imitate processes and systems can be built that can keep the new firm at least a few steps ahead of its current and future competitors. Branding- The Success of Nokia Brand inventory Nokia Mobile Phones is Synonymous to Brilliance and Efficiency. If there is a brand that should be really credited for its breakthrough technology and major contribution to the advancement in the mobile phones industry then it is certainly the Finnish brand Nokia.
Nokia brand history dividing into four parts which is: Nokia First Century, The move to mobile, Mobile revolution, Nokia now Nokia First Century (1865-1967) The first Nokia century began with Fredrik Idestam’s paper mill on the banks of the Nokianvirta river. Between 1865 and 1967, the company would become a major industrial force; but it took a merger with a cable company and a rubber firm to set the new Nokia Corporation on the path to electronics. Nokia started by making paper – the original communications technology. The history of Nokia goes back to 1865.
That was when Fredrik Idestam built a wood pulp mill on the banks of the Tammerkoski rapids, in southern Finland. A few years later, he built a second mill by the Nokianvirta river – the place that gave Nokia its name. In 1898, Eduard Polon founds Finnish Rubber Works, which will later become Nokia’s rubber business. In 1912, Finnish Cable Works founded Arvid Wickstrom starts Finnish Cable Works, the foundation of Nokia’s cable and electronics businesses. In 1960, Cable Works establishes its first electronics department, selling and operating computers.
In 1962, First in-house electrical device, The Cable Works electronics department produces its first in-house electrical device – a pulse analyzer for nuclear power plants. In 1967, Nokia Ab, Finnish Rubber Works and Finnish Cable works formally merge to create Nokia Corporation. The move to mobile (1968-1991) The newly formed Nokia Corporation was ideally positioned for a pioneering role in the early evolution of mobile communications. As European telecommunications markets were deregulated and mobile networks became global, Nokia led the way with some iconic products.
In 1979, Radio telephone company Mobira Oy begins life as a joint venture between Nokia and leading Finnish television maker Salora. In 1981, The mobile era begins, Nordic Mobile Telephone (NMT), the first international mobile phone network, is built. In 1982, Nokia makes its first digital telephone switch, The Nokia DX200, the company’s first digital telephone switch, goes into operation. In 1984, Nokia launches the Mobira Talkman portable phone. In 1987, Mobira Cityman – birth of a classic, Nokia launches the Mobira Cityman, the first handheldNMT phone.
In 1991, GSM – a new mobile standard opens up, Nokia equipment is used to make the world’s first GSM call. Mobile revolution (1992-1999) In 1992, Nokia decided to focus on its telecommunications business. This was probably the most important strategic decision in its history. As adoption of the GSM standard grew, new CEO Jorma Ollila put Nokia at the head of the mobile telephone industry’s global boom – and made it the world leader before the end of the decade. Nokia launches its first GSM handset, the Nokia 1011. In 1994, Nokia Tune is launched.
Nokia launches the 2100, the first phone to feature the Nokia Tune. In the same year the world’s first satellite call is made, using a Nokia GSM handset. In 1997, Snake – a classic mobile game, the Nokia 6110 is the first phone to feature Nokia’s Snake game. In 1998, Nokia becomes the world leader in mobile phones. In 1999, The Internet goes mobile. Nokia launches the world’s first WAP handset, the Nokia 7110. Nokia now (2000-present) Nokia’s story continues with 3G, mobile multiplayer gaming, multimedia devices and a look to the future.
In 2002, Nokia launches its first 3G phone, the Nokia 6650. In 2003, Nokia launches the N-Gage, mobile gaming goes multiplayer with the N-Gage. In 2005, The Nokia Nseries is born, Nokia introduces the next generation of multimedia devices, the Nokia Nseries. The billionth Nokia phone is sold. Nokia sells its billionth phone – a Nokia 1100 – in Nigeria. Global mobile phone subscriptions pass 2 billion. In 2007 Nokia recognized as 5th most valued brand in the world. Nokia Siemens Networks commences operations. Nokia launches Ovi, its new internet services brand.
Product-related attributes Nokia core business practices and philosophies are providing their customers with stylish, usable, robust, experiential and relevant devices with Nokia’s signature and world famous quality and ease of use. Nokia mobile phones provide to customer functional and emotional benefits: Functional benefits -GPS -PC integration -Media player -MP3 player-Camera -Bluetooth and Infra red -Call recording -Internet Emotional benefits -Style -Satisfaction -Image -Brand -Professionals -Expression -Look -Innovation and technology demanding people.
Brand portfolio Nokia includes ten different series of mobile phones, each with a subset of different models which define the whole product range in series- Nokia 1xxx (basic) series are ultrabasic series, the 1xxx series is basic mobile phones. Nokia 2xxx (basic) series are like the 1xxx series, the 2xxx series are entry-level phones. However, the 2xxx series generally contain more advanced features than the 1xxx series; many new 2xxx series phones have color screens and some have cameras and Bluetooth.
Nokia 3xxx (Expression) series are mostly mid-range phones targeted to the youth market. Some of the models in this series are targeted to young male users. Nokia 5xxx (Active) is similar in features to the 3xxx series, but often contain more features towards active individuals. Many of the 5xxx series phones feature a rugged construction or contain extra features for music playback. Nokia 6xxx (Classic Business Series) series is Nokia’s largest family of phones. It consists mostly of mid-range to high-end phones containing a high amount of features.
The 6xxx series is notable for their conservative, unisex designs, which make them popular among business users. Nokia 7xxx (Fashion and Experimental) Most phones in this series are targeted towards fashion users, particularly towards women. Nokia 8xxx (Premium) series is characterized by ergonomics and attractiveness. The internals of the phone are basic; however the physical handset itself offers a level of functionality which appeals to users who focus on ergonomics. Nokia Eseries is Enterprise series Nokia Nseries is Mobile Computer series Nokia Xseries is Multimedia series Brand equity drivers
Nokia has succeeded where other big brand names have failed, mostly by putting together the human technology and dominating in the emotional high ground. Nokia doing very well in terms of research and development, manufacture and sales in many countries throughout the world. Nokia Research Center was founded in 1986, is industrial unit which helps Nokia develop its innovative products, this unit consisting of about 800 researchers, engineers and scientists. In December 2008, Nokia had R;D in 16 countries and employed approximately 31% of total workforce. Nokia also distinguishes itself through its pricing strategy.
Nokia launch a product at a premium price, and in half a year decreasing it gradually by 30% total. Nokia product range allow to customers choose not only by technology features, but also by price. Prices starts at about 20 Euros for the basic 1xxx series and can reach 900 Euros for multimedia series or 60000 Euros for V ertu. Nokia sell products through different distribution channels such as Concept Stores, Shop-in- Shops and through the internet web site, also possible to buy Nokia through not official retailers but in this circumstances price would be higher and without guarantee.
Nokia has several competitors in huge mobile phone industry. Competitors such Samsung, Sony Ericsson, Motorola, Apple and future probably one of main competitors, Google with its Nexus One. iPhone is one of main competitors with its innovative approach and totally different vision of how mobile phones need to look like. iPhone has iTunes, useful tool for downloading software and music, basically iPhone is integration of mobile phone and iPod, popular mp3 player which transmit its popularity to iPhone.
Brand exploratory Customer knowledge Nokia has used it Research and development techniques along with innovation to become the most recognized and powerful mobile phone producer. Typical consumer brand associations for Nokia might be ‘innovative’, ’high quality’, ’worldwide’, ’user-friendly’, ’popular’, ‘comfortable’ and ‘inspiring’ displays Nokia mental map. Sources of brand equity Nokia has big brand equity, below mentioned main: Sports: ‘Nokia had been the long term title sponsor for the FIS Snowboard World Cup.
International Ski Federation (FIS) and Nokia have signed a three-year sponsorship agreement, which gave high visibility to Nokia in the 78 events around Europe, USA, Canada and Japan in the 1998-1999 season’. Nokia continue to sponsor Extreme winter games, customers can see Nokia logos on sides of road for snowborders and Ski. Concerts: Nokia is sponsoring national and international music festivals, in contrast to any others by very unusual place to perform it every time. By using high technology, Nokia is going maximum away from common and turn to modern and innovative.
It gives such an atmosphere that everybody will remember. Experiential marketing: In 2005, in big outlets in Russia buyers had the opportunity to run some tests with the phone’s Mp3 player and record their own track. The best composer got a main prize-audio system. ‘As one of the major supporters of the MobileMuster, Nokia urgers it customers to recycle any old phones they have this month and the industry will plant a new tree for each phone handed in. The MobileMuster is the official recycling program of the mobile phone industry. Nokia contribute MobileMuster by 30 cents for each handset it sells in Australia. Piracy Counterfeited Nokia mobile phones, especially very popular models such as Nokia N95, are damaging the company’s brand equity and present a huge risk to Nokia. Counterfeited Nokia mobile phones are coming from China and other Asians countries, this phones are cheap by 10 times but the main problem for Nokia brand Equity is counterfeited phones looks the same but by features there nothing except just phones, it damaging Nokia’s one of main equity, technology features.
In fact, Nokia dedicated sources to fighting illegal use of brand, including data about official retailers and official shops, to Nokia web site. Strategies of Nokia Porter’s 5 Force/Market Trends It uses concepts developed in Industrial Organization (IO) economics to derive five forces which determine the competitive intensity and therefore attractiveness of a market. It consists of fallowing factors. Power of New Entrants: In any market arrival of a new product is not always welcomed.
In mobiles world it’s not different a mobile phone or an online service is launched by Nokia it has as 50 percent chance of success. It’s like the launch of Nokia’s N95 Smartphone which was much appreciated by buyers then the launch of N96 Smartphone. Power of Buyers: Due to recent down fall in the economy, the demand of consumers buying new mobiles has come to a halt. Due to which companies everywhere are thinking of strategies to increase the demand of their products. Threat of Substitute: There are substitute for everything out in the world.
So goes for the mobile, and the services provided by Nokia but the problem lies in consumers switching to the substitute. The main reason is that most people don’t like to change to something new because they might find it hard to use or switch over. Power of Suppliers: If the suppliers change the price then company in this case Nokia has a direct impact on the pricing of their products. If there are more suppliers then it is easy to change from one to another if the first one is not able to provide the services a company needs.
Competitive Rivalry: Business is good where there are competitors because it gives more chance to improve and go ahead of your rivals. Nokia keep their product catalogs up-to-date and keep looking for better technologies to update its mobile and services. P. E. S. T Analysis: PEST identifies the political, economic, social, technological, environmental, and legal factors that of which directly affect a company. In this case Nokia. Political – As markets are deregulated, both operators and manufacturers are free to act independently of government intervention.
In Countries like India and China where Partial regulations exist, government intervention does take place. Economic – With incomes rising, people have more disposable income, which enables consumers to be more selective with their choice of mobile phone, looking to other factors rather than fulfilling the most basic of user needs (text messaging and phone calls) and price being such a key factor. Social – The rise of the so-called information society has made telecommunications increasingly more important to consumers, both in terms of work and leisure.
Users are more aware of mobile phone handset choice and advancements due to increased information availability. Technological – There have been much global advancement in technology such as MMS, Bluetooth, WAP, GSM, GPRS, cameras etc. The Asian markets are more technologically advanced than their European counterparts, for example in 2002, just 4% of phones had cameras, whereas in Asia 90% did. SWOT Analysis Strengths * Nokia has largest network of distribution and selling as compared to other mobile phone company in the world. The financial aspect is very strong in case of Nokia as it has many more profitable businesses. * The product being user friendly and have all the accessories one want. * Nokia with wide range of products for all classes. * The re-sell value of Nokia phones are high compared to other company’s product. Weakness * Some of the products are not user friendly. * Some of the weakness includes the price of the product offered by the company. * Nokia does not like to adopt change very quickly. * The service canters in third world countries are very few. Opportunity Nokia is also thinking of moving from mobile manufacture to personal computer manufacture. * As the standard of living in third world countries has increased the purchasing power of the people has increased as well * Nokia has to target right customer at right time to gain the most out of the situation. Threats * The threats like emerging of other mobile companies in the market. * The new mobile operating systems from Google and Microsoft. * The biggest threat is not adopting new technology and putting in good use. Strategies of Nokia to Capture Market
Wherever, whenever, we believer in communicating, sharing and in the awesome potential of connecting the 2 billion who do, with the 4 billon who don’t. At Nokia, customers remain our top priority. Customer focus and consumer understanding must always drive our day-to-day business behavior. Nokia’s priority is to be the most preferred partner to operators, retailers and enterprises. Nokia will continue to be a growth company, and we will expand to new markets and businesses. World leading productivity is critical for our future success.
Our brand goal is for Nokia to become the brand most loved by our customers. In line with these priorities, Nokia’s business portfolio strategy focuses on five areas, with each having long-term objectives: – Create winning devices – Embrace consumer Internet service – Deliver enterprise solutions – Build scale in networks – Expand professional services There are three strategic assets that Nokia will invest in and prioritize: – Brand and design – Customer engagement and fulfillment – Technology and architecture Finance
Financial Statement of Nokia in Year 2010. * Revenue- EUR 42446m * Operating income- EUR 2070m * Total assets- EUR 39582m * Total equity- EUR 16510m * Employees- 120,827 in 120 countries. | 2010 EURm| 2009 EURm| Change %| Net sales| 42 446| 40 984| 4| Operating profit| 2 070| 1 197| 73| Profit before taxes| 1 786| 962| 85| Profit attributable to equity holders of the parent| 1 850| 891| 108| Research ; development expenses| 5 863| 5 909| 1| | 2010 %| 2009 %| | Net debt to equity (gearing)| -43| -25| | Date| Acquisition Target| Nokia Unit|
April 29, 2011| Wireless network infrastructure assets of Motorola Solutions| Nokia Siemens Networks| September 1, 2010| Motally Inc. | Mobile Solutions| April 9, 2010| Novarra, Inc. | Services| April 9, 2010| MetaCarta Inc. | Services| September 28, 2009| Dopplr| Services| September 11, 2009| Plum| Services| August 5, 2009| cellity| Services| February 9, 2009| bit-side GmbH| Services| December 2, 2008| Symbian| Nokia Corporation| November 4, 2008| OZ Communications| Services ; Software| July 15, 2008| PLAZES| Services ; Software|
July 10, 2008| NAVTEQ| Nokia Corporation| June 17, 2008| Trolltech| Devices| During the past few years Nokia has been actively acquiring companies with interesting new technologies and competencies, including also investments in minority positions. All of these acquisitions and investments were targeted to enhance Nokia’s ability to help create the Mobile World. It should be noted that certain statements herein which are not historical facts are forward-looking statements, including, without limitation, those regarding: the expected plans and benefits of our strategic partnership with Microsoft to combine complementary assets and expertise to form a global mobile ecosystem and to adopt Windows Phone as our primary smartphone platform; * the timing and expected benefits of our new strategy, including expected operational and financial benefits and targets as well as changes in leadership and operational structure; * the timing of the deliveries of our products and services; * our ability to innovate, develop, execute and commercialize new technologies, products and services; * expectations regarding market developments and structural changes; * expectations and targets regarding our industry volumes, market share, prices, net sales and margins of products and services; * expectations and targets regarding our operational priorities and results of operations; * expectations and targets regarding collaboration and partnering arrangements; * the outcome of pending and threatened litigation; expectations regarding the successful completion of acquisitions or restructurings on a timely basis and our ability to achieve the financial and operational targets set in connection with any such acquisition or restructuring; and * statements preceded by “believe,” “expect,” “anticipate,” “foresee,” “target,” “estimate,” “designed,” “plans,” “will” or similar expressions. These statements are based on management’s best assumptions and beliefs in light of the information currently available to it. Because they involve risks and uncertainties, actual results may differ materially from the results that we currently expect. Factors that could cause these differences include, but are not limited to: * our ability to succeed in creating a competitive smartphone platform for high-quality differentiated winning smartphones or in creating new sources of revenue through our partnership with Microsoft; * the expected timing of the planned transition to Windows Phone as our primary martphone platform and the introduction of mobile products based on that platform; * our ability to maintain the viability of our current Symbian smartphone platform during the transition to Windows Phone as our primary smartphone platform; * our ability to realize a return on our investment in MeeGo and next generation devices, platforms and user experiences; * our ability to build a competitive and profitable global ecosystem of sufficient scale, attractiveness and value to all participants and to bring winning smartphones to the market in a timely manner; * our ability to produce mobile phones in a timely and cost efficient manner with differentiated hardware, localized services and applications; * our ability to increase our speed of innovation, product development and execution to bring new competitive smartphones and mobile phones to the market in a timely manner; * our ability to retain, motivate, develop and recruit appropriately skilled employees; * our ability to implement our strategies, particularly our new mobile product strategy; * the intensity of competition in the various markets where we do business and our ability to maintain or improve our market position or respond successfully to changes in the competitive environment; * our ability to maintain and leverage our traditional strengths in the mobile product market if we are unable to retain the loyalty of our mobile operator and distributor customers and consumers as a result of the implementation of our new strategy or other factors; * our success in collaboration and partnering arrangements with third parties, including Microsoft; * the success, financial condition and performance of our suppliers, collaboration partners and customers; * our ability to source sufficient quantities of fully functional quality components, subassemblies and software on a timely basis without interruption and on favorable terms, including the disruption of production and/or deliveries from any of our suppliers as a result of adverse conditions in the geographic areas where they are located; * our ability to manage efficiently our manufacturing, service creation, delivery and logistics without interruption; * our ability to ensure the timely delivery of sufficient volumes of products that meet our and our customers’ and consumers’ requirements and manage our inventory and timely adapt our supply to meet changing demands for our products; * any actual or even alleged defects or other quality, safety and security ssues in our products; * any actual or alleged loss, improper disclosure or leakage of any personal or consumer data collected or made available to us or stored in or through our products; * our ability to successfully manage costs, including our ability to achieve targeted costs reductions and to effectively and timely execute related restructuring measures, including personnel reductions; * our ability to effectively and smoothly implement the new operational structure for our businesses; * the development of the mobile and fixed communications industry and general economic conditions globally and regionally; * exchange rate fluctuations, including, in particular, fluctuations between the euro, which is our reporting currency, and the US dollar, the Japanese yen and the Chinese yuan, as well as certain other currencies; * our ability to protect the technologies, which we or others develop or that we license, from claims that we have infringed third parties’ intellectual property rights, as well as our unrestricted use on commercially acceptable terms of certain technologies in our products and services; * our ability to protect numerous Nokia, NAVTEQ and Nokia Siemens Networks patented, standardized or proprietary technologies from third-party infringement or actions to invalidate the intellectual property rights of these technologies; * the impact of changes in government policies, trade policies, laws or regulations and economic or political turmoil in countries where our assets are located and we do business; * any disruption to information technology systems and networks that our operations rely on; * unfavorable outcome of litigations; allegations of possible health risks from electromagnetic fields generated by base stations and mobile products and lawsuits related to them, regardless of merit; * our ability to achieve targeted costs reductions and increase profitability in Nokia Siemens Networks and to effectively and timely execute related restructuring measures; * Nokia Siemens Networks’ ability to maintain or improve its market position or respond successfully to changes in the competitive environment; * Nokia Siemens Networks’ liquidity and its ability to meet its working capital requirements; * whether Nokia Siemens Networks is able to successfully integrate the acquired assets of Motorola Solutions ‘s networks business, etain existing customers of the acquired business, cross-sell Nokia Siemens Networks’ products and services to customers of the acquired business and otherwise realize the expected synergies and benefits of the acquisition; * Nokia Siemens Networks’ ability to timely introduce new products, services, upgrades and technologies; * Nokia Siemens Networks’ success in the telecommunications infrastructure services market and Nokia Siemens Networks’ ability to effectively and profitably adapt its business and operations in a timely manner to the increasingly diverse service needs of its customers; * developments under large, multi-year contracts or in relation to major customers in the networks infrastructure and related services business; * the management of our customer financing exposure, particularly in the networks nfrastructure and related services business; * whether ongoing or any additional governmental investigations into alleged violations of law by some former employees of Siemens AG may involve and affect the carrier-related assets and employees transferred by Siemens AG to Nokia Siemens Networks; * any impairment of Nokia Siemens Networks customer relationships resulting from ongoing or any additional governmental investigations involving the Siemens carrier-related operations transferred to Nokia Siemens Networks; as well as the risk factors specified on pages 12-39 of Nokia’s annual report Form 20-F for the year ended December 31, 2010 under Item 3D. “Risk Factors. ” Other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in the forward-looking statements.
Nokia does not undertake any obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required. Sales & Distribution Management Nokia Telecommunication: Redesign of International Logistics * Nokia faces the challenges of implementing the global network model: global R&D and production networks for global learning and control combined with local sales and customer service for a local market presence. * As late as 1991, more than a quarter of Nokia’s turnover still came from sales in Finland. However, after the strategic change of 1992, Nokia saw a huge increase in sales to North America, South America and Asia.
The exploding worldwide technology of mobile telephones, beyond been Nokia’s most optimistic prediction, caused a logistics crisis in mid 1990s. * This prompted Nokia to overhaul its entire logistics operations. It launches an international logistic project to provide integrated solution delivery and after sales service. * By 1998, Nokia’s focus on telecommunication and its early investment in GSM technologies had made a company world’s largest mobile phone manufacturer. Between 1996 and 2001, Nokia’s turnover increased almost fief old from 6. 5 billion euros to 31 billion euros. Logistics continues to be one of Nokia’s major advantages over its rivals, along with greater economies of scale.
The Supply Chain Process Of Nokia * With an extremely complex supply chain that handles 100 billion components, 60 Strategic suppliers and 10 factories worldwide, Nokia had to be extremely focused in their transformation efforts. New product introductions and variations are also intense- 1 phone can represent 170 handset variation and 250 sales packages variants. To support this complexity, the operations philosophy has been: think globally, act locally, i. e. balancing localized decision-making with global planning. * Metals from Democratic Republic of Congo. * Tantalum from Brazil, Canada, Russia, China and a no of other countries in Central Africa. * Other Materials
More recently the company has been working with suppliers of other minerals, such as Cobalt and Tin, to improve transparency of the supply chain and understand how standards can be promoted. * Channels: Nokia>Distributer>>Whole seller>>>Retailer>>>>Customer Present Scenario AMR research ranks Nokia’s global supply chain No. 6 in the World Nokia makes money at the low end because of its supper efficient supply chain and manufacturing systems. It also keeps cost and complexity under control by sharing components among devices and designing phone that have fewer parts than competing models. Such practices pushed Nokia to the No. spot this year in Boston Consultancy AMR research annual survey of top supply chain operators, ahead of logistics champions such as Toyota & Wall-Mart. (Motorola was a respectable No12 in the ranking, which was based in a part on a pole of supply chain executives. ) Analysts say been low cost Chinese producers such as Huawei technologies cant match the efficiency of Nokia which operates its own factories in Vietnam, India, and other low-wage countries. DIS -CONNECTING NOKIA Nokia’s dream run at the top of the charts has come to an end. after being voted India’s most trusted brand three years in a row, the Finnish cellphone manufacturer slips to no. 5 this year.
While being in the top 5 is still something that most brands would give an arm and leg for it nevertheless marks one of the sharpest declines from the top in the history of survey. there was signs that all was not well, even though Nokia scored its hat-trick in 2010 and seemed to be the only brand capable of equalling Colgate’s record of being no. 1 four years running. Reports from voice and data( magazine that tracks telecom industry) indicated that its share in the Indian market had fallen from 64% in 2008-09 to 52. 2% in 2009-10. More significantly , in September last year Nokia still did not have a single offering in dual-SIM phone, reckoned to be the key technological advance driving the low end of the market. And so it comes as no surprise that Nokia’s decline has been the sharpest in the lower SEC.
According to an analyst, the market is growing at 20% to 25% and most of dis comes from non smart phone devices. It used to be an area Nokia dominated with innovative products like the “Made for India” model. But more recently, the mandate of innovation was taken over by competition – both from homegrown brands like Micromax, Spice and Karbonn and more nimble-footed global rivals like Samsung. The portfolio from these brands featured phones with enormous battery life, QWERY keypads, model powered in part by solar energy, dual memory cards that allow for easy transfer of data and phones that could hold multiple SIMs. In an interview managing director of Nokia said, “An year and a half is a significant time lag(on dual SIM).
But I don’t think it is something that has weakened the brand. The consumer wants to see these features on Nokia. He considers other brands only if there is no Nokia product that meets his needs , which means we have to move in quickly and be a fast follower”. However for the longest time, there was no Nokia product to meet many of these needs. its first model with these features was only launched in July 2011. Says a spokesman for Nokia, “clearly our lack of dual SIM phone has impacted us with the lower SECs. And now that we have the range, we will see the trust coming back. We have always taken great pride in the consumer trust in Nokia and will rebuild and restart the journey”.
It might be a case of too little, too late though. Nokia’s tardiness has given brands that were not as well known and lacked its decade plus expertise in mobile telephony, the opportunity to shore up even on such pillars of trust as distribution and after-sales service. According to the analyst, “New players gained confidence not just via multiple devices at cheaper price points but with quality phones and high levels of services which separated them from unbranded China devices. Consumers started putting faith in new brands”. Nokia continues to be the favourite brand with the topmost SEC and the chief wage earners which indicates that its high end models have not suffered as much.
But even this is shaky. Its been losing ground globally beacuse its Symbian devices fail to meet the experiential benchmarks set by iphone and android powered devices. Nokia on the other hand claims to have tripled the high end smartphone segment with the launch of N8 in India. Nokia’s decline is a function of it becoming too much of a generalist brand. With Blackberry chasing the business users, Samsung offering feature rich innovative phones and the iphone still being the coolest gadget on the block, there’s very little room left to manoeuvre. Its a classic case of brand caught in middle. They created the category and have been dominant for quite some time.
This could have been used to shore up emotional connect and build a strong bond beyond the product. Very early on, they had a television commercial with a mother looking at photos of her son and encouraging the son to call her, which brought alive their promise of “Connecting People” in a human way and raised the physical product to an emotional plane. That kind of brand building effort should have been persisted with. On the positive side, Nokia claims to have made some inroads into the app space in India. Ovi music may have been withdrawn from several markets globally- reports indicate due to competition from Itunes- but the India story is different. Nokia source claims Ovi store is the no. app store in the country with over 8 million downloads a week and the Nokia music store is India’s largest online music seller with a catalogue of over 6 million songs; India is among top 3 countries in terms of music downloads with approximate 2 million downloads a month. What sort of an impact this has on the elusive attribute of trust is unclear for the moment. The rise of brands like Airtel and Vodafone this year show that the Indian consumers appetite for mobile telephony remains undiminished- at least this ear though, the focus has shifted to the services and not the devices that are connecting people. Key Challenges Faced by Nokia Competitors * Apple * Blackberry * Samsung * HTC * Micro Max * Sony Ericsson Issues & Challenges Finnish-based Nokia was once the leader in the mobile world, with a 40 per cent share in the mobile device market up to the second quarter of 2008.
But its fortunes have dropped, hitting 31 per cent of the market in the fourth quarter of 2010. Intense heat from competitors Stephen Elop (Chief Executive) said there were “multiple points of scorching heat” fuelling the “blazing fire around us”. “For example, there is intense heat coming from our competitors, more rapidly than we ever expected. ” He said Apple and Android quickly took over the market, and criticised Nokia for being slow to respond to changes in trends. “The first iPhone shipped in 2007, and we still don’t have a product that is close to their experience. ” “Android came on the scene just over two years ago, they took our leadership position in smartphone volumes. Unbelievable. According to the leaked memo, Nokia has stopped developing its first smartphone using a MeeGo operating system, which was seen as key to the firm’s battle in the high-end smartphone market. “We thought MeeGo would be a platform for winning high-end smartphones. However, at this rate, by the end of 2011, we might have only one MeeGo product in the market,” Elop wrote. Nokia issues a new market warning. Nokia issued a market warning for the second time in less than a month, cutting its outlook for global handset sales, as the world’s largest handset maker braces for a slowdown in the coming year. The Finnish giant now expects global handset sales to drop below the 330 million units for the fourth quarter it estimated on Nov. 4, and also said its estimate of 1. 24 billion units for 2008 would have to be revised down. Those numbers were cuts from previous estimates. The company also said it expects growth to slow in 2009, with the market contracting 5 percent from its 2008 levels. “2009 will be challenging for our industry, however we have a strong, enviable base to build on and I believe we will continue to strengthen our position on many fronts,” Nokia CEO Olli-Pekka Kallasvuo said in a statement. The news comes amid a week of profit warnings from other handset makers, including Research In Motion and Palm, as the handset market faces declining demand in the midst of a global economic slowdown.
The research firm Gartner also released statistics about the smartphone market, which saw its weakest year-on-year growth since the firm started tracking the industry, and Nokia saw its share of the smartphone market fall to 42. 4 percent, down from the 48. 7 percent share it had a year earlier. Nokia’s No. 1 market position threatened by price-cutting competitors The cell phone giant Nokia shocked the European and US financial markets with the announcement that its Q3 market share would reduce significantly. The company blamed this downturn on several factors including a decision not to compete on price with its major competitors and the slower-than-expected ramp-up of a mid-range device.
The UK division of Nokia accused Samsung and Sony Ericsson of aggressively cutting their prices simply to gain market share. The company’s MD, Simon Ainslie, said that this level of pricing couldn’t sustain a business, and pointed to a similar attempt several years ago by Motorola that ended in failure. Samsung and Sony Ericsson have both targeted Nokia’s prepay heartland with low-cost and mid-range handsets, and have gained share as a result, bringing them within three to five per cent of Nokia’s No. 1 market position. Some operators, notably Orange, have reduced the number of Nokia handsets on offer, while O2 recently turned down the chance to resell the new N96 smartphone. Despite this gloomy picture Nokia remains upbeat.
The company maintains it is still targeting an increase in its device market share in 2008, and still expecting industry mobile device volumes to grow 10 percent or more from the approximately 1. 14 billion units it estimated for 2007. Recommendations The Nokia brand audit reveals a very strong brand with much equity. But, there are some opportunities that Nokia can use. Compete with Apple Nokia need to come with some fresh device to market for improving on Nokia innovation to compete Apple iPhone. iPhone is something fresh for customers, so Nokia need to fight back to iPhone. Sell more software Nokia need to start selling more software, games, videos, movies etc. through Nokia web site. It is a great opportunity to reach more customer loyalty and increase revenues. Provide more service to customers
Nokia need to make extra service for each customer that buy Nokia, for example free access to Nokia software for a year. This can help to fight counterfeited products. Make joint venture with fashion brand Nokia can make joint venture with fashion brand such as Gucci or Dolce ; Gabanna to create fashion mobile phone. As Samsung did with Giorgio Armani. Nanotech mobile phones Nokia already did some steps in nanotechnology phones with Nokia morph, but it just concept, so Nokia need to make more attention on this idea and bring it to real world. BIBLIOGRAPHY www. Nokia. com www. wikipedia. com Marketing Management by Phillips Kotler Times of India Economic Times