Strategic analysis of Nokia Corp

strategical summary of Nokia Corp1.0 Executive SummaryThe pursuit is the strategical analysis of Nokia Corp., which discusses the external and internal environment. The premiere classify, external environment, presents the opportunities and threats along with the political, economical, sociocultural, and technological publishs of the handset perseverance. It provides Porters five forces framework for the discussion of the attractiveness of the industry. The second part of the report analyzes the main strengths behind Nokias victor and leading position as a handsets manufacturer. We proceed with the analysis of Nokias weaknesses which may impede on its ability to utilize the growth opportunities. We also make preachations regarding Nokias schema for US food merchandise, converged handsets commercialize, and acquisitions. Owing to the complex and self-motivated environment, Nokia faces numerous strengths, weaknesses, opportunities, and threats. This report is to look fo r the best possible schema of Nokia. Initially, the diagnose strategic issues Nokia is facing today is acknowledged to be economy, technology, leading brand, scale, and number one grocery position based on the strategy analysis in lying-in A. Secondly, the imposing strategy that Nokia should take on is analyzed to be exhaustive growth strategy, and in particulars, the strategy options of Nokia today is illustrated to be salute lead, specialism, and concentrate on strategy. Among which Nokia should acquire a combination of the cost leadership and differentiation strategy according to its brawny assets, low fixed cost, and elevated research aptitude. The paper also discusses the blood between Nokia management style, climate and its organizational structure. dodging can be defined as the basic characteristics of the match an organization chance upons with its environment.1 Owing to the complex and first step environment, Nokia faces several strengths, weaknesses, opportu nities, and threats. This article is to seek the optimal strategy of Nokia. The investigation is affirmed in the following ways. Firstly, the key strategic issues of Nokia argon acknowledged based on the strategy analysis in Task A. Secondly, the strategy options of Nokia ar analyzed by the emulous generic strategies theory which has been promoted by Porter. Thirdly, after the illustration of the competitive generic strategies, the optimal strategies ordain be proposed.2.0 Section 1 Company BackgroundNokia was established in Finland in 1865. Owing to its digital insurgency first from 1992 by introducing its first GSM model as well as the new formulation of the key essentials of its strategy by sending-off the old caperes and progressively more focus on telecommunications in 1994, it helps Nokia generate the basis for a triumphant conquer of the world telecommunication market. Till now, Nokia is by now the world leader in agile communications, driving the growth of the broader mobility industry.Fulfilling an elementary human necessitates for social connections and contact by connecting people is the mission of Nokia. Currently, Nokia comprises four business groups that are mobile phones, mul quantifydia, enterprise solutions and networks.Being the forge of the mobile communication market in the world enjoying about 30% assign of the worlds mobile phone market, Nokia is abiding to discover sophisticated investment opportunity. Teaming up with the Sanyo Electric Corp. Which ranked the 10th world while to shape a shared endeavor, Nokia will carry on to be rival and advance in the world telecommunication market.3.0 Assessment of Strategies3.1 Business LevelNokias trade level strategy is based on a cost leadership. Nokia has an oversize product portfolio which would gratify consumers all over the world. It strives to keep low costs for its products throughout firm costs management and economies of scale. Nokia utilizes strategic suppliers all over the eye ball to attain extremely modified subassembly apparatus which are pulmonary tuberculosisd to generate its elevated tech savvy devices.3.1.1 TacticsMarket location Nokia counts profoundly on its sales in key market regions. More than half of sales arrive from operations in Europe. An some other vital market for Nokia is China, and, finally, Asia-Pacific region.3.1.2 DefensiveIn order to go with iPhone and BlackBerry smartphones and protect its share in the converged handsets market, Nokia introduced 5800 touchscreen. As a consequence, after the first quarter of 2009, Nokias market shares in smartphones augmented by 3%.3.1.3 Corporate levelOn the corporate echelon Nokia is cultivating a growth strategy. Its growth is obsessed principally by acquisitions and saturated RD. During the past few historic period Nokia has been vigorously obtaining companies with new technologies and competencies, including besides investments in alternative positions. All of these acquisitions and investm ents were embattled to improve Nokias ability to assist form the Mobile World. 4.0 Section 2 Eliciting and Evaluating StrategyAll companies have their way of identifying and commerce with these, their mainly decisive strategic question. Though, this process of managing emerging strategic issues is typically non-structured, not essentially optimally grant to facilitate the efficient identification of the most crucial questions and the suitable allocation of apex management attention and corporate aptitude support to answer the write out strategic questions. In spite of the post research during 1960s, 1970s, and 1980s into the domain of strategic issues (SI), strategic issues management (SIM), and strategic issue management systems (SIMS) in that location is an want pertinent approaches for firms to use in improving their awareness focus and distri just nowion in strategic issue management process.4.1 Key Strategic Issues Face NokiaNokia should concentrate more on the electrical market during the financial crisis era because the financial tumult has absolutely predisposed the global economy. A report of Nokia which exposes a dispirit mobile device industry outlook for fourth quarter of 2008 than the previous estimate of roughly 330 million units. Nokia acknowledges a tough time for telecommunication industry in 2009 symbolized by an anticipation of mobile device record books turn down 5% or more from 2008 levels which exposed the immense concern of recession (Nokia crownwork Markets Day, 2008). In short, the mobile device market has declined. From the market prediction it will constantly decrease. Such state of affairs is caused by consumers pull-back in spending, legal pop the question unpredictability, and decreased ease of use of credit from the slowdown of global economy. Especially, Nokia believes the incremental collision affects the emerging markets more other developed markets (Nokia superior Markets Day, 2008).Technology is the brain of tele communication industry which is the reason why the RD investment of Nokia in the social class passed is EUR 5.6 billion (Company information, 2008). Smart phones, 3G mobile phones and environment friendly mobile phones are the chit of technology progressing in telecommunication industry. Nokia Research Center make-believe many new technology reflected by the forthcoming innovations as well as indoor(a) positioning, location sensing, mobile journalism and so on (Upcoming innovations, 2008).The most fundamental brand, scale and number one market position is the most noteworthy strengths of Nokia (Nokia Capital Markets Day, 2008). As the most well-known brand of mobile device supplier in the world, Nokia is the representation of quality. Consumers are comfortable with its devices and services. Nokias highly variable, low fixed business model gives it the opportunity to scale to a declining market (Nokia Capital Markets Day, 2008).The mobile communications industry is changing quickl y, for instance, network plays a more and more significant part and the market articulations have been introduced and are still being familiarized (Annual report, 2007). Nokias sales and profitability are considerably exaggerated by the growth and success of the innovative market division, which needs a distant outlook and sympathy of the market. Nokia lost the market share of 3G mobile phones once owing to the neglect of the signification of network. On the contrary, Apple experiential the tendency and brought out iphone.Competition is extreme in mobile communications industry. To shun the collapse the company should progress its market standing, or become accustomed to the changes in the spirited scenery which is very imperative for Nokias strategic marketing design. Though Nokia has already been the top one in the mobile communications industry. The existing the pressure is from other telecommunication providers such as Samsung, Motorola. Moreover, as the rising importance of ne twork in mobile communications industry, the entrance of network companies becomes an enormous anxiety.5.0 Strategic Options 5.1 The Grand Strategy of NokiaConsidering the SWOT analysis of Nokia, the grand strategy Nokia should accept is growth strategies. And among which, exhaustive growth strategy is deserve to be paid immense consideration in order to reinforce the competitive position of accessible products or services of Nokia such as devices, PCs and the amalgamation with the Internet (Nokia Capital Markets Day, 2008).5.1.1 Competitive generic strategiesIn particulars, the competitive strategies lead the success in the marketing. The key attitude for a competitive strategy is how to build advantages in market competition. Cost leadershipdifferentiation and focus are three competitive generic strategies (Porter, 1980, 1985).Three of them let companies to gain the simoleons over the average level of industry and form steady competitive recompense.5.1.2 Cost leadership StrategyN okia claims a cost reducing on its cracking markets day at the end of this year. Nokia CFO, Rick Simonson emphasized that Nokia is practicing a cost reduction which is effective now and is continuing to keep the strategy for 2009 and 2010 ((Nokia Capital Markets Day, 2008). Nokia is unceasingly using a highly variable, low fixed cost business model. The balance sheet of 2007 gives us a clearer view of this. The fixed assets and other non-current assets are 8305 EURm, but the current assets are 29294 EURm (Annual report, 2007).Mobile phones are identical products if you do not call for multifunction except sending massages or making calls. Thus, the cost leadership strategy is possible to follow and the switching cost for clients of mobile telecommunication industry is very low, almost aught. So its rather easy for a customer to purchase another brand of mobile phone only for a lower price. One of the risk of adopting a cost leadership strategy by chance the simulation of compet itors which guide to a price campaign and lower the gainful aptitude for the whole market. And the change of technology can dissolve the low cost benefit.5.1.3 Differentiation StrategyDifferentiation strategy means providing diverse products or services from competitors to attain competitive advantages focused on enormous market.Modern telecoms market is changing quickly, grows up rapidly, and compete fiercer than most other markets. So it is quite vital to keep competitive by maintaining up to date and spotlight on modernization. The marketplace is shifting all the time and the conventional mobile device industry is implicated with internet services, therefore, the products and services Nokia offers should be totally change (People management, 2008). visual perception this trend, Nokia amalgamated with Nokia Siemens Networks.5.1.4 Focus StrategyFocus strategy is using the cost leadership or differentiation focus on certain customer group, regional market and product segment market. It often applies to medium and small enterprises which are not able to achieve cost leader and differentiation in the whole industry (Lynch, 2003). As for a leading company of mobile telecommunication industry, the focus strategy is not appropriate for Nokia.5.1.5 Optimal Strategy agree to the analysis above, Nokia should acclimatize a mixture of cost leadership strategy and differentiation strategy. Nokia has burly assets which craft the strategy is likely to carry out, and in the year passed total tangible assets are 33857 EURm (Calculated based on Annual accounts, 2007) study to 21777 EURm in 2006. Wherein, Property, plant and equipment amounts to 1912 EURm, Inventories is 2876 EURm, and accounts receivable is high to 11200 EURm (Annual account, 2007) Sometimes, an stress on cost leadership can perform as a shape of differentiation when the cost leadership strategy focused on providing respect-oriented customers with products that are certainly value-for-money, relation to its competitors. And its insure is to help people sense close to what is imperative to them.Focusing on customers rather than the competitors is vital when deciding differentiation strategy. Several customers apprehension the design, quality or customer services of a company. Consumers needs are constantly what Nokia anxious the most. Continuous of innovation is critical in a company adopted differentiation strategy. Nokia put its priorities for 2010 in increasing Services Software and mobilizing customer email and consumer instant messaging for millions of Nokia product purchasers.6.0 External environment and organizational audit 6.1 PESTEL (located in Finland) 6.1.1 Political and legalFinland has the steady economics and policies. Finland is exceedingly open to investment and free trade. Finland has peak levels of economics sovereignty in many areas, although there is a profound tax load and nonflexible job market. Finland has topped the patents per capita statistics, and overall e fficiency growth has been brawny in areas such as electronics.The legal system is frank and business bureaucracy little than most countries. Poverty rights are able-bodied confined and contractual agreements are severely honored (CIA World concomitant book, 2007). From that, it is impartial to see that Nokia can befall reputation because of the steady policies and economics of Finland, where head office of Nokia is situated. Moreover, Finland constantly tries to expand job market regulation.Finland increased job market regulation in the 1970s to offer steadiness to manufacturers.6.1.2 EconomicThe global financial disaster exaggerated most companies all over the world. Constant economic downturn has unfavorable effects for Nokias business. Moreover, exchange rate fluctuations interrupt the repatriation of profits earned abroad. A change in incomes is definitely associated to Nokias sales. Nokias profits are possible on the costs of their inputs, profits will likely decrease if t he input increase.6.1.3 Socio-culturalAccording to document searched, labor force had 2.68 million people in 2007. In labor force by profession, industry has 17.5% labor, finance, insurance, and businesses devices are 12%, and public services are 30.2% (CIA World Fact book, 2007).This statistic proves that income of end is higher than Europeans income. In addition, intercept has elevated living situation. According documents, in 2006, there were 2,381,500 household of average size 2.1 persons and approximately 92 percent has mobile phone (CIA World Fact book, 2007). Therefore, it is easy to see that this is immense market for mobile manufacturers as Nokia.6.1.4 TechnologicalFinland is extremely incorporated in the global economy, and global trade is a trinity of GPD. In a 2004 OECD assessment, high technology built-up in Finland ranked second biggest after Ireland (CIA World Fact book, 2007). Nokia realize that technology is really essential for their refinement so that they have slogan6.1.5 EnvironmentFirstly, substance management means that they try to work closely and create the friendly environmental with their suppliers. Second issue is energy effectiveness, to make sure devices use as little energy as possible. Finally, it is to get back and recycling. They want to boost customer responsiveness of recycling, recommend better recycling in all markets and encourage the recycling of used devices through precise initiatives and campaigns (Nokia, 2008).7.0 Nokia Value kitchen stoveAn evaluation of Nokia value chain is displayed in Fig 7 based on work by Porter (2004 p.38), who describes it asThe linkages show how distinct key and supporting actions interrelate to generate value within the industry.8.0 Section 3 internality CompetenceCore ability of Nokia is scheming and executing extensive term expansion programs employing core competence of interacting in-house and outback(a) capability in conditions of Nokias name of the most victorious (Marshalls pla n) and consistent global growth leader. This mixture of assets represents Nokia core competence since it could not be simply copied or imitated while meeting two theoretical situation of a resource-based potential formulated by Teece at al. (1997). Competitors cannot build up similar combination competences and capabilities chop-chop (Dierickx and Cool, 1986). Nokias core competencies approach in three main fields mobile handsets, network technology and middleware. When deciding on the development and manufacturing of innovative products, speed is the unsafe factor in this quickly changing technological environment. For example, when deciding whether to work together on a product or software development, we will reverberate over if we are able to create the product alone fast enough and do we have the competencies to create it within a short time frame. If it is a core product, that is mobile telephony, Nokia will manufacture it internally because it is much well-organized and t he finish product will also be of enhanced quality. But on the other hand if the new product is not within our capability and core product range, our next step will be to decide on the form of association or outsourcing with a company that can create it quick adequate. And if a new technology emerged and is not shaped by Nokia, Nokia will work together and subcontract for the technology (A manager at Nokia Group).8.1.0 Example 1In 2000 Nokia initiated SyncML a usual for all-embracingly distributed of synchronising far-flung entropy and personal information crossways multiple networks, platforms and devices, while a range of companies sponsored for the standard. These companies comprise Ericsson, IBM, Lotus, Matsushita, Motorola, Operwave, Starfish Software, and Symbian whilst the technology is supported by frequent most important wireless companies.Outsourcing to external vendors however not a well-liked choice within Nokia and prior to 2002 is, this activity contributed only ab out 15 to 20 percent.8.1.1 Example 2 Nokias two key core competences are GSM handsets assembling and the mainly wide-ranging distribution network building up. Early before 1998 in India, Nokia had mastered on designing GSM handsets. It had been the top one worldwide on making the paramount excellence and the most creative GSM handsets. Besides, it rolled out the distribution network by partnering with HCL (emailprotected, 2007). The network now is the most extensive in Indian market and it at least involves over 90000 retailers to market Nokias handset over India, compared to Samsung, which is the third top handset seller in India and only has the distribution network that associate 35000 retailers (Rao, 2007). With these two core competence Nokia had succeeded in creating a brawny charisma from zero ground between its rivals since 1997 (Datta, 2004).By looking within Nokias core competence, we see that Nokias in-house organization operation is too successful feature for supplementa ry it to govern handset market. It constantly at once adjusts itself to adjust any environment changes. In operating in early time in 1990s, being short of local anaesthetic a talent that was common. For avoiding lack of local talents, Nokia established an art studio and add program into Indian university to train locals and attract them work in Nokia (Pahwa, 2007). Further, for its appurtenant more intensely understand the Indian culture mechanism, it reduce the number of Finnish expatriate and boost the amount of hiring Indian as local managers. In addition, it also accomplishments to alter its shortage. For atoning for the short of technology that making CDMA handsets, it in 2004 established RD center for developing CDMA technology (Staff Writer, CNET News, 2004). Although it regained market share of CDMA in India from Samsung (Grinsven, 2003), the circumstances becomes worse in 2008. So far, they have held very little number of CDMA handset models. As a result, they lose the chance that work with Sprint and Verizon and thus they indirectly lose U.S. market (Gardiner, 2008). Their newest handset models- n96, n95, n85, n79, Nokia E series handsets, and typically Nokia 4 digit number of model dont support CDMA (http//www.Nokia.co.in/products).9.0 Appendix 1Strategic paygradeTools, Techniques Artifacts andapplicability to Ladbrokes LBO business streamPositioning SchoolBCG portfolio matrix (Henderson, 1979)Experience curve (Henderson, 1979)Game theory tools (Von neumannn and Morgenstern, 1944)PIMS (Buzzell et al., 1975)Porters 5 forces (Porter, 1980)Porters generic strategy model (GSM) (Porter, 1985)Strategic groups (McGee and Thomas, 1986)Value chain (Porter, 1985)5 Forces external environment exerts pressure over forebode and gaming industry especially legislation and pure economies of scale. This is not a high velocity environment ascribable to relatively slow moving changes in numbers of overall LBOs in the UK. Changes to legislation which govern the industry are also slow moving. It is a low knowledge intensive environment where key skills are concentrated in risk management and trading departments concentrated in Head office.Value Chain value is created through use of financial resources and technological assets to add value to management of risk, store level efficiencies and customers aim in-store.Game Theory The relaxation of the demand test in the Gambling Act 2005 has allowed the key operators to play a strategic defensive/offensive lame with shop locations, thereby making it harder for smaller operators to compete in popular locationsStrategic Groups there is some evidence to support the grouping of the three key operators in the UK bet industry Ladbrokes, William Hill and Coral in a Strategic group as described by McGee and Thomas, 1986, given that strategic decisions Ladbrokes make, cannot be easily replicated by firms outside this key operator group collectible to the nature of the regulatory environment and esse ntial economies of scale required in the industry. Barriers to gateway or mobility barriers as described by Henderson and Thomas, are high. While in other industries, this could be considered an oligopoly, it is not the case in the betting industry because the betting firms are primarily price takers, not price setters, therefore cannot control prices.Experience Curve This does not primarily apply to the Betting industry because sum prices are fixed and are the same for all firms, resulting in no gain through a superior experience curve. Other costs, however, could be less in firms with more experience, but some of these are costs levied by industry legislation and do not reduce over time due to the experience curve of individual firms.PIMS Profit Impact on Market Share as described by Buzzell et al, provide some explanations for profit increases as a result of scale. The comparison of profitability between the three key operators demonstrates that market share will not deliver pr ofitability in the betting industry unless they manage their financial resources and capital structures in an efficient manner. Note the similarities in operating margins based on similar gross margins, market share and market capitalization. Costs, including interest payments are potentially profit sapping in this industry, especially as products are homogeneous and supply price is fixed. Capability-building SchoolPorters Value ChainSee aboveCore competences (Prahalad and Hamel, 1990)Dynamic capabilities (Teece et al, 1997)Knowledge management (Nonaka and Takeuchi, 1995)RBV Valuable, rare, inimitable and non-substitutable (Barney, 1991)Value chain (Porter, 1985)Sample of textbook schemataResources, capabilities and rents (Grant, 2002153)Resources, competence strategic capability (Johnson and Scholes, 2002 146)The contextual Not particularly relevant to the LBO operations due to low levels of environmental velocity and low Knowledge intensity (source for argument in main doc).RBV the analysis of Ladbrokes LBO operations suggests that advantage is primarily gained through greater financial resources. This is not a resource which meets the VRIO test as it is a fundamental economic and placid resource and (arguably) easy to acquire. In terms of rent extraction this is down to leveraging scale to achieve higher value of margins through increase volume properly risk managed. Additionally, Ladbrokes display capabilities designed for sustainability, defensibility and ultimately market dominance.Core competences in general, there is little innovation required in the LBO business due to the homogeneous nature of the products and the economic structure of the pricing. Being a low knowledge intensity business, the tacit and intangible knowledge inherent in the exposition of core competences further supports the lack of applicability of this concept in the LBO business.VRIO/Dynamic capabilities again, the contextual environment of low KI low EV reduces the need for Ladbrokes and other betting companies to be truly learning organisations or organisations creating dynamic capabilities which meet the VRIO characteristics and definitions. It could be argued that Ladbrokes do not create competences as defined by Prahalad and Hamel but possess a number of capabilities designed for margin protect and greater financial resources.High Velocity School Cycle-time reduction (Stalk, 1988)7S Disruption speed, surprise, shifting the rules, coincidental and sequential thrust, signaling, strategic soothsaying, and stakeholder satisfaction (DAveni, 1994)Market disruption analysis (Bower and Christensen, 1995 Rigby, 2003)Patching flexible modular organizational design for rapid entry and exit of markets (Eisenhardt and Brown, 1999) square options to negotiate favourable environments (McGrath, 1997)dSimple rules to facilitate speed and flexibility (Eisenhardt and Sull, 2001)eTime-pacing (Eisenhardt and Brown, 1998 Stalk, 1988)Delta model (Hax and Wilde, 1999)L adbrokes operate in a low velocity environment with regards to LBO operations and these concepts are less appropriate for that contextual environment. Applicability would be more relevant in the remote business operations Internet Sportsbook and Exchange (see figure Core betting industry) however, there would still be imposed constraints on the velocity due to industry regulations.Complex ecosystem schoolCo-evolution (Eisenhardt and Galunic, 2000)Knowledge management toolsManaging the system computer architecture (modular design, reward systems, team processes, strategic language) to ensure diversity and increase within-firm and extra-firm interactions (Eisenhardt and Galunic, 2000 Moore, 1993 Nahapiet, 2001 Pascale, 1999 and Stacey, 1995)Porters diamond (1990) explains ecosystem competitive advantage as complex interactions between co-evolutionary pockets (McKelvey, 1999 and Thomas, 1996)Real options and multiple scenarios to ictus emergent learning in complex conditions (Bowman a nd Hurry, 1993, Copeland and Keenan, 1998, Luehrman, 1998 and Miller and Waller, 2003)Simple rules to condition system interactions (Eisenhardt and Sull, 2001, Macintosh and Maclean, 1999 and Sanchez, 1997)Supply chain integration and simplification (Levy, 1994, Harvard forethought Update, 1999 Harvard Management Update (1999) And now Complexity theory. Harvard Management Update, 4(3), 8-9.Harvard Management Update, 1999 Whiting, 2001)Labrokes does not primarily operate within a high knowledge intensive environment. While there is clearly are need for knowledge to flow from the wider bet-taking channels to Head Office to ensure adequate risk management, most of this information is done via the use of technology. It could be argued therefore that Ladbrokes core knowledge is concentrated in the central trading functions.In this context therefore, complex ecosystem theories are a less relevant strategic influence for the Ladbrokes LBO business. 9.1 Appendix 2 Competitors Analysis LGLG is a Korea based company which provides ranges of mobile phone for customers to choose. Since its establishment, LG has evolved a lot according to the trend of mobile phone in Hong Kong. However, instead of putting all emphasis on 2-G GSM mobile phone, LG has put more focus on the 3-G mobile phone market and worked closely with the Hutchison Group, The 3 Hong Kong service provider, to provide high quality 3G mobile to customers. LG has used different means of marketing strategies including print advertisements, TV advertisements and celebrities to promote the products. MotorolaMotorola introduced the first mobile phone in Hong Kong in the 1980s Motorola emphasizes on the transformation of device formerly known as the cell phone into a universal remote control for life by adding more functions and innovations in the mobile phone. Motorola won the Asian Innovations Award by the technology of the product A668 with a fingers breadth writing board on the mobile phone, also, with the in tegration of the technology of iTunes by cooperation with Marc, Motorola launched the product ROKR E1. Motorola aims to be the leader in multi-mode, multi-band communications products and technologies. SamsungSamsung provide a wide range of products for customers to choose from, including the 3G mobile phone, the MegaPixel Camera Phone, the Camera Phone and the Color Display Phone. No matter from the prime mobile phone of the latest 3 G mobile phone, Samsung provides choices for customers to deliver the desirable benefits and solutions for different customers. Sony EricssonSony Ericsson has the mission to be the most attractive and innovative brand of mobile phone in the world. To achieve this goal Sony Ericsson integrated design into every step of the process intelligent features, user-friendly applications, innovative materials and attractive visual appearance. Design is the essential differentiator when comparing mobile communications products. The attractive good looking appear ance and the sophisticated integration of technology has contributed to the success of Sony Ericsson, some products like W800i and W55