Table of contents

Introduction

1. History of Nokia Company…………………………..2

Body

2. Strategic Analysis…………………………………………..9

3. External Environment…………………………………….10

4. PESTEL……………………………………………………11

5. Porters Five(5) Forces……………………………………13

6. Industry Life Cycle………………………………………..18

7. SWOT Analysis…………………………………………...19

8. Scenario Planning………………………………………..22

9. Strategic Options…………………………………………26

10. Questionnaire : …………………………………………..27

10.1 Analysis Tools……………………………………..29

10.2 Findings…………………………………………...29

Conclusion

11. Recommendations…………………………………..30

12. References……………………………………………31

13. Bibliography…………………………………………32

Introduction

History of Nokia Company

Over the past 150 years, Nokia has evolved from a riverside paper mill in south-western

Finland to a global telecommunications leader connecting over 1.3 billion people. During that

time, we’ve made rubber boots and car types. We’ve generated electricity. We’ve even

manufactured TVs. Changing with the times, disrupting the status quo – it’s what we’ve always

done. And we fully intend to keep doing it.

The story so farOnce upon a time, by the Nokianvirta river…

In 1865, mining engineer Fredrik Idestam sets up his

first wood pulp mill at the Tammerkoski Rapids in south-

western Finland. A few years later he opens a second mill on

the banks of the Nokianvirta River, which inspires him to name

his company Nokia Ab in 1871. 

How apt that Nokia begins by making paper – one of the most

influential communications technologies in history.

The galoshes revolution

OK, so it’s not exactly a revolution. But in 1898, Eduard Polón

founds Finnish Rubber Works, which later becomes Nokia’s rubber

business, making everything from galoshes to tyres.

Nokia rubber boots become a bona fide design classic, still on sale to

this day – though we no longer make them.

Electronics go boom

In 1912, Arvid Wickström sets up Finnish Cable Works, the foundation of Nokia’s cable

and electronics business.

By the 1960s, Finnish Cable Works – already working closely with Nokia Ab and Finnish

Rubber Works – starts branching out into electronics. In 1962, it makes its first electronic device

in-house: a pulse analyser for use in nuclear power plants.

In 1963, it starts developing radio telephones for the army and

emergency services – Nokia’s first foray into

telecommunications. In time, the company’s MikroMikko becomes the

best known computer brand in Finland. And by 1987, Nokia is the

third largest TV manufacturer in Europe.

Three become one

Having been jointly owned since 1922, Nokia Ab, Finnish Cable

Works and Finnish Rubber Works officially merge in 1967. The

new Nokia Corporation has five businesses: rubber, cable,

forestry, electronics and power generation. But as the 1980s come

into view, it’s an entirely new industry that makes Nokia a

household name around the world.

Big hair, big shoulder pads, big phones

By the late 1970s and early 1980s it seems everything – from Tom Selleck’s moustache

to JR Ewing’s list of enemies – is seriously big. And as the mobile communications revolution

starts to gather momentum, the early handsets continue the trend.

The new Nokia Corporation is ideally placed to take a pioneering role in this new industry,

leading the way with some iconic – and by today’s standards, very large – products.

The mobile era begins

Nokia sets the ball rolling in 1979, creating radio telephone

company Mobira Oy as a joint venture with leading Finnish TV maker Salora.

1981 then sees the launch of the Nordic Mobile Telephone (NMT)

service, the world’s first international cellular network and the

first to allow international roaming.

The NMT standard catches on fast and the mobile phone

industry begins to expand rapidly. In 1982, Nokia introduces

the first car phone – the Mobira Senator – to the network.

That same year, the Nokia DX200, the company’s first

digital telephone switch, goes into operation.

Good enough for Gorbachev

In 1984, Nokia launches the Mobira Talkman portable car phone.

Resembling a military field telephone, it’s a fairly cumbersome

piece of kit – but it’s a start.

Then in 1987, Nokia introduces the Mobira Cityman, the first handheld

mobile phone for NMT networks. Despite weighing in at 800 grams and a price tag

of 24,000 Finnish Marks (around EUR 4,560), it goes on to become a classic. The

Cityman even earns a nickname, the “Gorba”, after Soviet leader Mikhail Gorbachev

is pictured using one to make a call from Helsinki to his communications minister in

Moscow. Over the next decade, millions of consumers worldwide enjoy their very own

Gorbachev moment as the mobile revolution takes hold.

The mobile revolution

In 1987, GSM (Global System for Mobile communications)

is adopted as the European standard for digital mobile

technology. With its high-quality voice calls,

international roaming and support for text messages,

GSM ignites a global mobile revolution.

As a key player in developing this new technology, Nokia is able to take full advantage.

A new direction

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.

That same year, new Nokia President and CEO Jorma Ollila makes a crucial

strategic decision: to focus exclusively on manufacturing mobile phones and

telecommunications systems. Nokia’s rubber, cable and consumer

electronics divisions are gradually sold off.

Name that tune

In 1994, Nokia launches the 2100 series, the first phones to feature the

Nokia Tune ringtone. Based on Gran Vals, a classical guitar piece composed by

Francisco Tarrega in the 19th century, it is probably one of the most frequently

played pieces of music in the world. The Nokia 2100 series goes on to sell 20

million phones worldwide. Nokia’s target had been 400,000.

1994 also sees the world’s first satellite call, made using a Nokia GSM handset.

Hear Gran Vals, the inspiration for the Nokia Tune.

Snake bites

In 1997, everybody knows their Snake high score. An instant

classic, the addictive game is launched on the Nokia 6110 and by

2010 its successors are available on an estimated 350 million

mobile phones.

On top of the world

By 1998, Nokia is the world leader in mobile phones. The strategic decision

to focus on telecommunications, plus early investment in GSM, has

paid off. Between 1996 and 2001, Nokia’s turnover increases

almost fivefold from EUR 6.5 billion to EUR 31 billion.

And with the new millennium comes a host of new

possibilities as the internet goes mobile…

Phone calls are so last year…

As the new millennium dawns, everything changes. New technology enables the internet to go

mobile, opening up a world of possibilities for mobile users. No longer are phones just for phone

calls.

Multi-tasking mobiles

In 1999, Nokia launches the Nokia 7110, a phone capable of rudimentary web-

based functions, including email. Then in November 2001 Nokia launches its

first phone with a built-in camera, the Nokia 7650, and in September 2002 its

first video capture phone, the Nokia 3650.

However, it’s when Nokia launches its first 3G phone (third generation), the

Nokia 6650, in 2002 that things really take off. With 3G technology, phones can

now be used to browse the web, download music, watch TV on the move, and

more. Mobiles will never be the same again.

One billion and counting

In 2005, Nokia sells its billionth phone – a

Nokia 1100 – in Nigeria, and global mobile phone

subscriptions pass 2 billion. Two years later, Nokia is

recognised as the 5th most valued brand in the world.

Things have come a long way since Fredrik Idestam

opened his paper mill.

Treading lightly

For years, Nokia has been working to make its business practices and products as

environmentally and socially responsible as possible – from creating

eco friendly handsets and establishing phone recycling schemes

to bringing the benefits of mobility to emerging markets.

This commitment to sustainability is recognised in a

number of prestigious rankings. For example, in 2009 and

2010, the Dow Jones Indexes ranks Nokia as the world’s

most sustainable technology company.

 In contrast, Nokia’s position in the mobile market faces its

toughest challenge to date as competition intensifies in the burgeoning

smartphone segment. Once again, the company’s ability to adapt is put to the test…

A new chapter begins

By 2010, having dominated the mobile world for over a decade, Nokia no longer has

things all its own way. In the all-important Smartphone market, competitors such as the iPhone

and Android-based devices now pose a serious challenge. Clearly, it’s time for a rethink…

The good news is this is nothing new for Nokia. Adapting and transforming the business, finding

innovative ideas and solutions, rolling up our sleeves and getting on with things: it’s in the

company’s DNA.

A fresh face at the helm

In September 2010, Nokia appoints Stephen Elop as

President and CEO. Formerly head of Microsoft’s

business division, following roles at Juniper Networks

and Adobe Systems Inc., Elop has a strong software

background and proven record in change management.

A meeting of minds

In February 2011, Nokia announces it is joining forces with Microsoft to strengthen its

position in the smartphones market. The strategic partnership sees Nokia smartphones adopting

the new Windows 7 operating system, with the Symbian

platform gradually being sidelined. The goal is to

establish a third ecosystem to rival iOS and Android.

“The industry has shifted from a battle of devices to a war

of ecosystems.”

Stephen Elop, President and CEO, Nokia

MethodologyThis research study has based on a self administered questionnaire. The size of random

sample has selected as 30 in which both kind of quantitative and qualitative questions were asked

that were in the form of close and open ended. Different useful suggestions and ideas have been

conducted as well through open ended question in the questionnaire. And basically this has been

developed to understand the brand loyalty in the customers of Nokia and to get the level of

satisfaction among them.

Body

Strategic AnalysisNokia has three Strategic Business Units (SBUs): Mobile Phones, Smart Devices and

Location and Commerce. Its Mobile Phone team focuses on bringing a modern and affordable

mobile experience to people around the world (Nokia.com, 2011). The Smart Devices team

focus on the creation of smartphones – this is the SBU responsible for the partnership with

Microsoft and the Windows Phone platform (Nokia.com, 2011).The Location and Commerce

team are responsible for developing a new class of integrated social location products and

services for consumers, Nokia Maps. In addition to the services based aspect the Location and

Commerce SBU provide digital map information, related location based content and services for

mobile navigation devices, automotive navigation systems, governments and business solutions

through Navteq, which was acquired in 2008.

It should be noted that there is another segment of Nokia’s business, a joint venture with

Siemens – the Nokia Siemens Network. A leading provider in mobile and fixed network

infrastructure; however, for our analysis we have found this part of Nokia has its own strategic

plays and decision processes and will not be included in our strategic analysis.

Internal EnvironmentInternal analysis provides a useful method to establish the relationship between Nokia’s

resources and capabilities, and how this is used to create value for the customer. The internal

analysis can also help identify the limitations within Nokia’s operations (Johnson et al, 2011).

PESTEL

~Political

The external political environment has the potential to impact Nokia significantly –

especially due to the fact that Nokia is operating on a global scale and must abide to a whole host

of nation specific platforms in which the political and legal systems could differ substantially.

“To its success, Nokia surveys its scope of limits in order to isolate prohibited actions,

regulations and aid from the government so as to withstand the international trade” (MBA

Knowledge Base, 2011). Within the United States Nokia has to devote funds to lobbying on

matters relating to patent protection, electronic waste exports and trade barriers (Implu.com,

2011) – in 2011, $500,000 has been spent thus far. Other political aspects that impact Nokia

include new and existing laws or regulations, in 2010 Saudi Arabia suspended Blackberry’s

messaging service – a critical core feature and competitive advantage – on the grounds of

“national security” (Times, 2010) – illustrating how easily national laws can quickly impact and

upset core competitive advantages. Labour laws have also impacted Nokia; Nokia China

announced plans to cut the number of employees, to which they were accused of violating

Chinese labour laws (Buzzom.com, 2011). Nokia works closely with national authorities in order

to gain maximum advantage and to not incur any penalties.

~Economic

Economic factors such as growth rates, interest rates, exchange rates and inflation rates

are critically important to Nokia both in the short term and long term. The impact of these factors

can have major implications, including how they operate and make decisions – such as what

should be produced, how it should be produced and what demographic of customer the end

product should be targeted toward. Gross Domestic Product (GDP), for example, dictates what

strategies Nokia should implement and consequently what products should be offered in which

countries. This helped shape Nokia’s “Next Billion” strategy for the emerging markets in which

more basic cheaper phones are offered. The volatility of the Indian rupee is another example in

which it affected Nokia’s topline growth, restricting in their ability to increase price to push the

costs onto the consumer – high inflation within India causes price stability problems

(IndiaTimes, 2011). The financial crisis has impacted Nokia as customers within developed

nations saw their disposable income decrease, delaying new smartphone purchases or opting for

less costly contracts with free phones (Times, 2011).

~Social

Very few industries can rival the mobile phone industry in relation to constantly changing

consumer tastes. Nokia’s products have relatively short product lifecycles; this means Nokia has

to pay close attention to trends and social tastes. Developments in how mobile phones and smart

devices are used have changed over the years, for example, the emergence of camera phones,

touch screens and 3G. Failure to implement features when they first emerge can lead to

significant market share erosion (Unwired View, 2011). Nokia operates in a huge number of

markets mainly due to its strong distribution network – all of these markets have specific tastes,

cultures and expectations; thus, Nokia caters to these differences by providing different models

with both subtle and extensive differences throughout their entire range of products. Other social

aspects such as advances in the workplace impact Nokia and its workforce; increased use of

outsourcing of jobs to other countries, increased demand for work/life balance, and increased

demand for job mobility and flexibility.

~Technological

Within the telecommunications industry, specifically OEMs, the speed of change and adoption

of new technology impacts incumbents significantly – the success of Nokia is based on constant

innovation. Nokia analyses research and development advances by competitors – evident from

their quick adoption of touchscreen technologies and more recently through their research

initiatives into devices such as Tablets that are similar to the iPad. Industry advances, for

example cellular telephony spectrums – 3G and now 4G impact both Nokia’s business unit and

corporate level strategies; examples of the Pareto principle in action.

~Environmental

Changing public attitude towards environmental sustainability as well as product disposal

and recycling have transformed considerably over the past decade. Nokia have been proactive

with regard to environmental responsibility and sustainability, they put forward that it is

“integrated into everything we do. From the devices we build and the suppliers we choose, to our

mobile solutions that enhance people’s education, livelihoods and health”. With regard to

product sustainability and the trend in recycling products, “Each and every Nokia device is

created with the environment in mind. We don’t make one-off eco-friendly devices – all the

handsets and accessories we produce fulfil our strict environmental criteria” (Nokia, 2011).

Nokia also reduced the packaging size of most devices by 70% between 2005 and 2010. Nokia

has set an aspirational target to reduce greenhouse gas emissions caused during the whole mobile

device life cycle over 60% by the year 2020 to the level in 2000 (The Economist, 2010).

~Legal

Nokia has over 132,000 employees in 120 countries (Mashable, 2011) and thus

recognises the importance of issues that relate to employment regulation as well as employee

health and safety. For example, Nokia recently signed an agreement relating to the compensation

packages to be received by the employees of Nokia working at the Jucu plant with the Romanian

trade unions (Business Review, 2011). Product safety and security is another legal issue that is of

utmost importance to Nokia – “All Nokia products are designed and manufactured to be safe for

users… products have been designed to meet relevant safety guidelines for electromagnetic field

emissions…” (Nokia, 2011)

As previously mentioned legal battles over patents and the protection of intellectual

property are intense between the leading manufacturers – with many manufacturers usually

trying to ban the importation of devices they believe infringe upon their patents (Economist,

2011). To illustrate one example, in June of 2011 Nokia claimed victory in a long running patent

battle with Apple – Nokia had put forward that Apple’s iPhone violated at least 7 Nokia patents.

As a result of the ruling Apple has now signed a patent licence agreement with Nokia (Financial

Times, 2011). Nokia currently has one of the strongest intellectual property portfolios within the

wireless industry – holding over 10,000 patents (SEC, 2011).

Porters Five Forces

Porter’s Five Forces analysis is used to assess the attractiveness of different industries and it

can help illustrate the sources of competition in an industry (Johnson, Scholes & Whittington,

2011). The Porter’s Five Forces analysis has been conducted with attention on each of Nokia’s

SBUs; mobile phones, smart devices and, location and commerce.

Porters Five Forces – Mobile Phones

~Threat of Entry of New Competitors – HIGH

Barriers to entry within the basic mobile phone industry are relatively low; hence Nokia

stands to, and currently is subjected to, intense competition on their “next billion” strategy. The

market within emerging markets is dominated by local OEMs and is extremely price competitive

– illustrating that low cost rivals can enter at any time. Nokia’s awareness of this can be seen in

their 20-F filing with the SEC: “In the mobile phones segment a different ecosystem is emerging

involving very low cost components and manufacturing processes. In particular, the availability

of complete mobile solutions chipsets from MediaTek has enabled the very rapid and low cost

production of mobile phones by numerous manufacturers in the Shenzhen region of China which

have gained significant share in emerging markets.” (SEC, 2011) Competitive advantages within

distribution have somewhat cushioned the impact to Nokia; however, customer loyalty within

emerging economies where disposable income is very low – means that cost will be the overall

determinant of the product purchased.

~Threat of Substitute Products or Services – HIGH

Within emerging markets the buyers’ propensity to substitute is relatively high, with the

one overarching factor being price. Switching cost is minimal, especially with regard to the

handset, rather than the network. If the customer has a laptop and internet connection VOIP

services such as Skype could challenge the need for a basic mobile phone.

~The Bargaining Power of Customers – HIGH

The bargaining power of mobile phone customers is high within both developed and

developing markets as switching costs are low, and competition between manufacturers is high.

Brand loyalty is the only real defence that manufacturers can use to prevent switching; Nokia

recently saw its brand value fall $9.9 billion in the BrandFinance Global 500 listings – the largest

decline of any name.

~The Bargaining Power of Suppliers – LOW

Nokia has an extremely complex supply chain that handles 100 billion components, 60

strategic suppliers, and 10 factories worldwide (IBM, 2006). Nokia strives to build partnerships

with its suppliers linking supply chain objectives to corporate objectives; within this supply

chain redundancies are built so that no one supplier is critical to the production process. The

power is further reduced by Nokia’s upstream and downstream vertical integration at its own

factories as well as by its strong brand and bulk purchase agreements. Many factories and

companies exist solely because they are suppliers to Nokia. Nokia constantly ranks amongst the

leaders in supply chain management; historically being a strong innovator (Businessweek, 2005)

supply chain best practices have turned ideas into profitable businesses.

~The Intensity of Competitive Rivalry – HIGH

Within developed markets the intensity of competition in basic mobile phones has

curtailed, with the product line currently in significant decline. Within emerging markets Nokia

is facing strong competition not only from the usual players but also domestic firms who are

both able to provide innovative basic mobile phones for low cost. China was 21% of Nokia’s

sales in 2010 but sharp decreases in revenue in 2011/2012 are expected (Goldman Sachs, 2011).

Porters Five Forces – Smart Devices

~Threat of Entry of New Competitors – MEDIUM

Production of smart devices involves highly advanced research and development

divisions; with strong knowledge of patents and proprietary technology critical. Significant

investment is needed for any potential competitors to achieve economies of scale; it would be

difficult for the new entrant to compete against the incumbents that are already operating on cost

and differentiation strategies. Although, the smartphone market does boast attractive growth

rates – 30% in 2010 (Reuters, 2010) – and high margins; thus, it is not unfeasible that a new

player could enter the market, for example what Apple achieved in 2007.

~Threat of Substitute Products or Services – LOW

There are few substitutes for smartphones; those people who require a basic device will

purchase a mobile phone; those who want a device for applications and other related services

will purchase a smart phone. There may be some pressure from tablet devices; however, these

will lack the basic functionality of phone calls. Netbooks and laptops could potentially be a

substitute. Because the smartphone serves as a consolidation of several technologies – the treat

of it being substituted is weak.

~The Bargaining Power of Customers – HIGH

Buyers have high bargaining power and will pay for what they value the most; thus, they

have a willingness to switch to more innovative products. Customers are also armed with

knowledge about which smartphone platform has the best and most interesting applications,

functionality and other factors such as battery life through extensive reviews and information.

Bargaining power will be predominantly through switching brands rather than substitution of

smartphones overall. Bargaining power is diluted by network providers with the inclusion of

long contracts, meaning customers are tied to a phone for typically between 12-24 months.

~The Bargaining Power of Suppliers – LOW

The bargaining power of suppliers over Nokia is relatively low. Through industry leading

and prudent supply chain management, Nokia have many fail safes in place if one supplier was

to suddenly shut. For the suppliers that do exist – Nokia orders in huge quantity and is such an

important customer that most suppliers would not want to risk damaging the relationship.

~The Intensity of Competitive Rivalry – HIGH

In developed markets competitive rivalry within the smartphone market is intense –

Nokia, industry leader, faces constant competition from manufacturers such as Apple, HTC,

RIM and Samsung.

Porters Five Forces – Location & Commerce

~Threat of Entry of New Competitors – MEDIUM

Barriers to entry within the location and commerce field are high, new entrants face high

capital requirements. Nokia’s acquisition of Navteq in 2007 underwent an antitrust investigation

as the European Commission felt that the acquisition “could stifle competition in the sector

because there was only one other mapmaker with global reach, Tele Atlas” (Financial Times,

2008). “Aerial, satellite and other location based imagery is becoming increasingly available and

competitors are offering location based products and services with the map data to both business

customers and consumers in order to differentiate their offerings. These developments may

encourage new market entrants” (SEC, 2011). Attractive high growth rates and potential

innovation within the industry will continue to potentially attract entrants.

~Threat of Substitute Products or Services – HIGH

We think that the growing field of web-based data providers in the US and Europe

presents a serious threat to Nokia’s Navteq and TomTom’s TeleAtlas businesses. While these

solutions may not work for auto-OEM grade devices, they are in many ways superior for high

growth web-based location based services. This could in turn reduce the demand for Navteq’s

fee based products and services which incorporate the Navteq map database.

~The Bargaining Power of Customers – HIGH

Bargaining power of customers is quite high as new entrants emerge in a fast growing

and rapidly changing marketplace. Historically this bargaining power has been low due to the

duopoly of Tele Atlas and Navteq.

~The Bargaining Power of Suppliers – LOW

Suppliers to Navteq have relatively low bargaining power this is due to the fact that there

are minimal supplier agreements. Navteq is vertically integrated with its own team of 1000

geographical data collectors and analysts; this is their main source of competitive advantage. In

the future they may seek to outsource “street view” contractors in order to compete with

Google’s free offering.

~The Intensity of Competitive Rivalry – MEDIUM

Competitive rivalry has increased in recent years with a host of new players joining the

historic duopoly of Tele Atlas and Navteq. Firms within the sector are seeing cannibalisation of

personal navigation devices to smartphones. The leading companies within the sector include;

Tele Atlas, Navteq, Garmin, Google and community generated Open Street Map. Recently

governmental and quasi-governmental agencies are producing more map data with improved

coverage and content – available at low costs, if not free of charge (SEC, 2011). An example of

competitive rivalry would be Navteq’s competition with Google – Google utilises an advertising

based model in which the provision of the maps and data is freely provided with adverts shown

alongside as well as integrated within.

A strategic group analysis can be seen in Figure 2.8, this will assist in positioning Nokia

relative to its competitors as well as idendifying strategic gaps to exploit. The analysis highlights

that there are clear distinctions within the competitive rivalry of the smartphone market. Some

players such as those in Group 1 are national firms focused on narrow product ranges, players in

Group 4 have a narrow product scope, perhaps one or two products but a large geographical

scope.

Industry Life Cycle

The industry life cycle determines what stage Nokia’s SBUs are in, and it should be noted

that the power of the five forces typically varies with the stages of the industry life cycle – as

highlighted by Johnson et al. (2011).

It can be seen from the figures above that the various industries that Nokia compete within,

both in emerging markets and developed markets, differ significantly. It can be seen that

traditional mobile phones (3) have started to decline in developed markets as high income

consumers demand feature rich smartphones (1). Contrast this with lower income emerging

market consumers in which they strive to have a basic mobile phone which is currently in the

growth stage (2). The figures above highlight the poignancy in using the industry life cycle to

analyse across geographies which possess different characteristics – it aids in the understanding

of current strategies as well as in formulating new ones.

SWOT Analysis

Following the comprehensive analysis of the internal and external factors impacting

Nokia, a summary can be seen in Table 3.1, a SWOT analysis that highlights the current

strengths, weaknesses opportunities and threats that are likely to impact on strategy

development. This has been used as a basis against which to generate strategic options and assess

future courses of action.

A scoring mechanism (plus 5 to minus 5) has been used in Table 3.2 as a means of assessing the

interrelationship between the environmental impacts and the strengths and weaknesses of Nokia. A

positive denotes that the strength of the company would help it take advantage of, or counteract, a

problem arising from an environmental change or that a weakness would be offset by that change. A

negative score denotes that the strength would be reduced or that a weakness would prevent the

organisation from overcoming problems associated with that change. The most important points, in our

judgement, were extracted from the SWOT. It can be seen throughout the table that the scoring resulting

from potential opportunities that can be acted upon as a result of strengths far outweigh the threats.

In the second table, Table 3.3, we have analysed opportunities and threats in the eyes of

competitors, both in emerging markets (ZTE, Alcatel) and developed markets (Apple, RIM,

Samsung and Motorola) – these were chosen from our strategic group analysis in Figure 2.8. As

one would expect the greatest threat to Nokia’s potential opportunities come from those

manufacturers that have the opportunity to develop phones for the Windows Phone platform –

Samsung and Motorola. From the grouping analysis we can also deduct that they have similar

manufacturing capabilities.

A short term strategy that Nokia are rolling out in early 2012 is the launch of their “Asha”

range of smartphones aimed at the upper tier of low income countries (India Today, 2011) – this

build upon a number of the strengths and opportunities that can be seen in Table 3.1 with

evidence available in Figure 2.10. This strategy is a natural progression and caters for the up and

coming middle class of the emerging markets, maintains brand visibility and builds up consumer

loyalty.

Furthermore, another short/medium strategy that has higher risk is the announcement of a

Nokia tablet, competing against industry incumbent Apple’s iPad. This draws upon a number of

Nokia’s strengths; for example, supply chain management (S6) and R&D capabilities (S1) it is

also a new market for Nokia; and is reliant upon a strong software offering from Microsoft –

with the software being the main distinguishing factor amongst consumers. This strategy will

also open Nokia up to increased compensation as other phone manufacturers that use the

Microsoft Windows Platform, such as Samsung join in the tablet competition.

Scenario Planning

Within this section we look at both the most important and uncertain factors facing Nokia

within its business units; this aids in the development of possible long term “2020” scenarios

which focus on the external environment. The development of these scenarios facilitate robust

strategic decision making; we have used scenario planning rather than strategic planning due to

the limited range of uncertainties that strategic planning subjects the user too. It should be noted

that scenario planning is perception based, there is no mathematical or scientific proof; however,

it does arm us with a plausible range of scenarios based upon disciplined imagination.

Scenarios for 2020

Derived from the Most Important & Uncertain Factors

Chinese Economy Stagnates

China faces a “big speed bump” (Chanos, 2011) – the popping of the real estate bubble has

just begun (CNBC, 2011) and the nation is likely to experience the types of problems the US has

encountered over the past five years. Recent growth figures which highlighted a slowdown in

growth which further supports this hypothesis. This will have numerous impacts upon Nokia’s

current strategies.

Market Development within the Enterprise Market

The enterprise market of smartphones has huge potential, with 29 million units shipped in

2011 and forecast to grow to 54 million by 2016. The current market leader RIM (predominantly

through their Blackberry offering – which accounts for 40% of business smartphone shipments)

has been on a downward spiral and seen this dominance wane (The Economist, 2011). Since the

start of 2011 RIM has missed earnings once, lowered earnings guidance twice and seen its stock

fall some 40% (Trefis, 2011). The spiral has been caused by service disruptions, lack of new

features, security threats. This will provide a favourable environment in which Nokia/Microsoft

can capitalise; either through product development, M&A or a mixture of both.

Increasing Corporate Social Responsibility (CSR)

CSR as put forward by BusinessLink (2011) is “about understanding your business’ impact

on the wider world and considering how you can use this impact in a positive way. CSR can also

be good for your bottom line.” In recent years the importance of CSR has grown significantly

mainly driven by demands of shareholders, customers and governments for more socially

responsible business.

Emerging Market Transition from Low Cost Production to Consumption and Growth

Firms, such as Nokia, currently reliant upon China for low cost production could potentially

have to look beyond China for sourcing as low cost advantage diminishes (WSJ, 2011). China’s

labour costs have increased substantially over the past few years, couple this with an aging

workforce and it is evident why China is losing its foothold as the world’s lowest cost

manufacturer of consumer goods. This will obviously have an impact for Nokia, which currently

has a number of factories in China.

The VRIO analysis in the tables above lets us consider on what bases organisational

capabilities might be the foundation for sustainable competitive advantage and superior

economic performance (Johnson et al, 2011). From the analyses in the various scenarios we can

conclude that Nokia’s smartphone and mobile phone SBU exhibit most potential for growth and

form the foundation from which our strategic recommendation should stem from. Further

developing the analysis above, we have put forward a forward looking SWOT analysis that will

allow us to better formulate long term strategic options for Nokia.

Strategic OptionsThere are a plethora of strategic options available to Nokia, as a company with significant

resource – it is difficult for them not to cast their net too far from positive expectations in

entering a market – which is always backed by the strength of the Nokia brand. However

competitors, for example Apple, show that it is through focused efforts on a narrow range of

products that competitive advantage is built.

11.0 Questionnaire

Topic

Brand loyalty

Company

Nokia mobile phone Corporation

1. Your profession?

a. Student 

b. Employed 

2. What cell phone you are using?

a. Nokia 

b. Samsung 

c. Motto 

d. Sony Ericson

e. Others

 

3. Have you ever used Nokia in case you are using another cell phone?

a. Yes 

b. No

 

4.  What makes you to prefer Nokia?

a. Quality

b. Affordable price

c. Stylish

d. Durability

5. If you have to guide someone to buy a cell phone what that would be?

a. Nokia 

b. Samsung 

c. Moto 

d. Sony Ericson 

e. Others

6. Would you yet prefer Nokia even its price raises?

a. Yes 

b. No

7. Would you prefer it in the coming days?

a. Yes 

b. No 

c. May be

8. Nokia deserves the priority in the market that it has?

a. Agree 

b. Disagree 

c. Strongly agree

d. Strongly disagree

e. Uncertain

9. What grade you would like to give to Nokia?

a. A 

b. B 

c. C 

d. D 

Any suggestion you think Nokia should work on?

_________________________________________________________  ___________________________________

______________________  _________________________________________________________  ____________

_________________________________

Analysis toolsAnalysis was made only on the basis of simple computation and percentage of each

questions answer. All options of a question were treated in the form of percentage. A descriptive

simple calculation is used.

FindingsIt has been taken out from the analysis of questionnaire that 72.41% are using Nokia cell

phones, 13.79% Samsung, 10.34 Sony Ericson and 10.34 are using Moto which means that most

of them are using Nokia because of high level of satisfaction in the customers. From all

respondents only 86.2% of them have used Nokia while rest of them haven’t used before but

using now. Customers are brand loyal toward Nokia cell phone because of its Durability very

much because 58.62% of respondents prefer Nokia due to its durability, 44.82% for good

quality and 3.44% for affordable price.

Most of the respondents are purely satisfied with Nokia because 82.75% has expressed

that they would guide someone to purchase a Nokia cell phone and remaining suggested for

other phones so majority of the users are getting and have got the desired level of output from

Nokia cell phones.68.96% answered yes when they were asked whether they would prefer Nokia

if its prices goes high that is the pure sign of their brand loyality.79.31% would prefer Nokia

even in the coming days because they are getting the desired responses from the Nokia cell

phones. Nokia really deserve the priority in the market that it has now because just58.62% are

agree with that statement,27% strongly agree,10% is agree and5% strongly disagree with that

statement. Nokia is much popular among the people Specially customers so 72% of the

respondents are willing to reward A grade to the Nokia corporation, 24%with grade B and

4% with grade c that shows majority of them are just satisfied. Some of the useful ideas and

suggestions have been conducted as well in which majority of them reveals to lower come the

prices because it appears expensive to them and it just targeting the rich families only so high

quality product should also be appeared with lower rates to satisfy them. Some of respondents

complaints to improve the quality of image and other functions to compete efficiently.

Respondents group also reveals that its weight is bit heavy than other cell phones so Nokia

should emphasize on the lightness of the product as well. To launch the double sim facility in the

handsets as well because nowadays people are using several Sims so this facility in the Nokia

handsets would attract them as well.

~Conclusion

Recommendations

Continue with Product Differentiation. Nokia should avoid commoditization that arises in

mature markets such as North America. Nokia therefore should offer next generation of handsets

that work on the concept of convergence with MP3, camera and computing facilities all built in

to attract “cool” and “hip” teenagers and young adults. For professional users, Nokia should

provide the ability to remotely access their data and files through the handset.

Mass customize for your operator (TELUS, Rogers etc). Service providers also want

customers to see the names of their respective companies and not only those of the handset

makers. Nokia can tie up an operator in a long-term contract and use co-branding. Operators can

be lured to use the Nokia brand to attract customers.

Nokia should continue selling to the end user through distribution channel. Nokia should

continue with direct-to-consumer advertising, including sponsorships and product placements.

(The way Intel has done for “branding the ingredient” and branding to the end-user).

Leverage Nokia brand in future diversification in other related business such as

networking and Internet services. Customers are expected to have positive associations.

Future lies in the replacement market (European and American markets are fast

approaching saturation by 2006, the only viable source of growth for the mobile handset industry

is the replacement market)

Come out with flip open design to cater to the demand of this design of phones, which is

huge according to our findings.

References

1. Bellis, Mary. (2002), History of Cellular/mobile phone. Retrieved Nov 13, 2004 from

http://inventors.about.com/library/weekly/aa070899.htm

2. “Profit, Loss and Value Added: The Mobile Phone Industry – Activity”. Biz/ed. (2004).

Retrieved Nov13, 2004 from

http://www.bized.ac.uk/educators/1619/business/marketing/activity/profitloss.htm

3. “Nokia defines goals and actions for leadership in dynamic mobile communications market”.

Phonecontent.com. (November 2004) Retrieved Nov 20, 2004 from

http://www.phonecontent.com/bm/news/nokia/548.shtml

4. “Connecting people”. TheManagerMetor.com. (2001). Retrieved Nov 10, 2004 from

http://www.themanagementor.com/kuniverse/kmailers_universe/mktg_kmailers/0702_6.htm

5. “Gartner Says Worldwide Mobile Phone Industry Experienced an 18 Percent Increase in Unit

Sales in First Quarter of 2003”. Gartner.com (2003). Retrieved Nov 10, 2004 from

http://www3.gartner.com/5_about/press_releases/pr2june2003b.jsp

6. Authors: Rundle-Thiele S.; Mackay M.M.

Assessing theperformance of brand loyalty measures.

Source:

Journal of Services Marketing, Volume 15, Number 7, 2001 , pp.529-546(18)

Publisher:

Emerald collection Publishing Limited

7. Nokia Website. (2004). www.nokia.com. Retrieved May 3, 2012

8. “A Tale of Two Mobile Telephone Makers”. 8 Cahners Business Information, May 2000.

Haas School of Business, U.C. Berkeley

9. “Nokia expects to meet estimates “. CNET. September 12, 2011

Bibliography

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