Nokia is based in Finland and one of the largest communications and information technology companies, and one of the largest vendors of mobile phones was bought by Microsoft for approximately U.S$ 7 billion; it had also recently launched Nokia X Family, some mid-range smartphones on the android platform. The latest figures of Nokia are:
|Revenue||(Decrease) €12.71 billion (2013)|
|Operating Income||(Decrease) €239 million (2013)|
|Net Income||(Decrease) €165 million (2013)|
|Total Assets||(Decrease) €25.19 billion (2013)|
|Total Equity||(Decrease) €6.66 billion (2013)|
Nokia has recently been losing market to its competitors like Apple and Samsung because of the iPhone and Galaxy series, these budget smartphones offer operating systems like Android, IOS etc which are found very useful and entertaining by the users, even though iPhones are expensive and more fit for the upper affluent class, Samsung on the other hand offers budget smartphones that almost everyone can buy, Nokia has not been able to capture this market and thus its sales have been dropping drastically especially in the U.S. Nokia has not been able to develop the new generation touch phones as compared to Apple and Samsung. Nokia had recently launched Nokia Ovi Store to capture the market; it also has the Lumia series which has been its revival in the smartphone section with the drastically diminishing sales.
Analysis of Nokia Phones, its markets, and its competitors
Nokia Phone (internal analysis)
Nokia as compared to Apple and Samsung have failed to develop technology, which can boosts sales, or make the smartphones attractive to the customers. There is no USP (unique selling point) in Nokia products which makes them a popular product. The Apple iPhone is famous for its smooth touch and also its brand value. Samsung is cheap and offers a lot of specifications for customers with a tight budget. Nokia is doing well in South Asia, and is highly regarded as its products are always thought to be durable and great value for money. Nokia has a lot of brand name attached to it; Microsoft’s takeover of Nokia has future added to its brand value. Nokia is offering low cost mobile phones whose per unit price is high compared to other phones but it is selling them for a very low price, Nokia is therefore unable make as much profit on each unit as compared to any other smartphone company. Nokia is offering low cost phones with a high number of features. Another reason for its failure is that in the U.S it has not been able to form any significant partnership with any network company such as Vodafone, Sprint, AT and T etc, this makes Nokia models high priced as they don’t have any offer with them.
Market (external market analysis)
The Smartphone market is large, on average a person changes his/her phone at least once a year, estimating from the population, there are at least 3/4th of the world’s population which operates a mobile, that means on an average 4 billion people using a cell phone, accordingly there are at least 1-2 billion cell phones sold every year. Now, analyzing the market needs, people want more technology and features for less money, at the same time they want quality as well, and at-least 2-3 smartphones get released every week, so about 100-150 new smartphones every year but out of these 100-150 there are only about 10 to 15 which are able to make an impact and which are sought after by users. The Smartphone segment has great scope as the majority of the population is using Smartphones these days. Strong, durable and basic phones are Nokia’s forte but these are only used in the under-developed parts of the world. Nokia will have to look into new technology and better research and development to capture the market again.
Competitors (external competitor analysis)
Major competitors of Nokia are Apple, Samsung, LG, Blackberry and Motorola, out of which Apple and Samsung are the major competition. These companies are doing better than Nokia because they have been able to recognize and use technology for innovative products, from a very early stage they have been able to capture the smartphone market and they have been able to create a good brand image. Nokia is doing well in South Asia and the sales of its Lumia products have shot up in Australia, Nokia has a good brand name, it offers quality products and it also not overly expensive. These are the competitive advantages available with Nokia.
The key strategic issues that need to be taken into account when developing a strategy for Nokia
Key Strategic Issues
- External Environment
- Geographical Boundaries
- Countries and their culture
- Socio-Political scenarios
- Internal Management
- Employee management
- Research and Development
Prioritisation of Issues
Nokia has to recapture its lost market and reinstall its image as the biggest mobile company. For that the pointers are-
- Technology – It has to develop a technology that can break the market, like the iPhone, the product should be such that the whole world craves for it
- Marketing- Nokia has to improve its marketing especially in areas of the U.S; it should form key strategic partnerships with companies like Vodafone, Sprint etc.
- Change in management
Besides the loss in market share and somewhat of a failed marketing strategy, Nokia is consistently given good reviews from employees and has around a 70% approval rating of their current CEO which is quite high. They are renowned for having a stringent vetting process for new employees so prepare yourself well in advance!