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THE RISE AND FALL OF NOKIA Case Study

BY: AVINASH KATARIA CMS ID: 123-15-0002

1. Pestel Analysis and any identify key factors. Pestel Political

Define These variables decide the degree to which a government may impact the economy or a specific industry.

Reasons Counter (Strategies) Government affects the mobile There should not be phones companies by charging any counter strategies taxes from them and by charging because of the reason for licensing of network. But of less political factor these factors didn’t have much affecting Nokia. impact on Nokia as Nokia is not regulated company but they operate in the regulated industry. So the influence of governmental rules and regulations and the requirements of license to do the business are not required here.

Economical

These components are determinants of an economy's execution that straightforwardly impacts an organization and have resounding long haul impacts.

Limited buying power in home markets. Lack of R&D capabilities and economic resources.

These elements

Mobile phone industry affected Nokia should change

Social

Technological

In the countries where there is low buying power Nokia can introduce the mobile phones with lower prices as they are low cost producer and they can capture the market there. For the lack of R&D capabilities they can outsource this so that they can have latest technology imbedded in their devices. These components Changing in current prevailing Nokia should apply code of conduct trends investigate the social condition of Failures during adoption of globally in its smartphones. the market, and operations. Microsoft windows phones are Nokia should launch a check not as appealing as android. determinants like website to assist stake Customers are focusing on holders to study about social patterns, Apple and Samsung. socioeconomics, the features articles and and populace assist them to gain examination. knowledge about Nokia offerings.

relate to advancements in innovation that may influence the activities of the business and the market positively or horribly

Environmental

These factors include all those that influence or are determined by the neighboring environment.

Legal

These elements have both outside and inside sides. There are sure laws that influence the business condition in a specific nation while there are sure arrangements that organizations keep up for themselves. So they consolidate both of these sides.

by the technological condition. Innovative products, OS and other software and hardware Nokia stuck with its operating system. Partnership with Microsoft brings technological advantages.

itself to be software company not hardware because the era is changing. Nokia should incorporate latest software in their devices so that they can compete with their competitors (Samsung, Apple etc.) Increased attention directed Nokia offers access to towards Corporate social Nokia Store green responsibility. divert in its application Major issues of health and safety Store which are in due to radiations. charge of gathering all The health protection rules and the green disapproved regulations in different of applications in a countries. single introductory Environmental concerns from place. consumers including concerns for the packaging and recycling. Nokia painstakingly attempts to confine and diminish its vitality utilization and make a point to ensure that materials are morally sourced. Like political factor, legal factor Nokia should not be has not much impact on Nokia focused on making counter strategies as this factor is less important than other factors for Nokia.

2. Analyze the changing industry structure in which Company is operating by using Porter’s Five Forces Model. How did Company counter the changes and challenges of the industry competitive forces in which Company is operating by using Porter’s Five Forces Model? Five Forces

Threats of new Entrance

Bargainin g power of suppliers

Bargainin g power of buyers Threat of substitute products

Rivalry

Level of Reasons Threat/Barg aining Power High capital requirements and There are threats Low economies of scale. of new entrants Brand identity is difficult to make who can take the Brand switching cost is high. market share of existing companies and increase the competition in the market. Suppliers can use Low They manufacture materials by their bargaining themselves like semiconductor powers while Low impact of input cost and supplying the raw differentiation. material Impact of Microsoft as a strategic partner and as a supplier. Buyers can use High High price sensitivity their bargaining Increase buyer volume. power while Low product differentiation. purchasing Highly competitive market Buyers can find substitutes easily. Market is highly competitive Threat of High High buyer inclination to substitute. substitute products is the Customers want convenient and up to threat of same dated phones that can be produced by products that the many companies nowadays. other company is offering. Rivalry between High Low product differentiation. Competitors High margin. Brand identity. High diversity of rivals. Industry growth. Competitive position. Who They Are

3. You are also advised to conduct a strength, weaknesses, opportunities and threats (SWOT) analysis for Company and provide strategic suggestions based on analysis. Opportunities:

Threats:

Strength:

Weakness:

Identify Market mobile is growing. They can expand the range of their products and services. 4G. Smartphones are growing at rapid pace. Technology is changing day by day.

Competitors are more adaptive to the industrial changes. Big companies snatched the market share New entrance threat. Highly competitive market. Wide range of network. Strong brand name. GMS. First mover advantage (2G). Experienced personnel/ (Expertise). Higher resell value. Largest distributor. Designs are not updated (old designs). Lack in R&D development. Smart phones’ performance is low. Slow reaction to competition. They are less sensitive to industrial changes. Poor after all services.

Counter (Strategies) They should adopt technological changes and incorporate software in their handsets.

4. How is the Company using its resources and capabilities to get competitive advantage and why is it so successful in it? Answer: Organization is utilizing its assets and abilities to get competitive advantage. The competitive advantage is preference that a firm has over its rivals permitting to create offers of edge or hold a larger number of clients than its rivals. There can be numerous sorts of competitive advantages including the association's cost structure, product offering, distribution network and consumers support. Nokia's competitive advantages by utilizing its assets and capacities are:     

Brand name Nokia is supplier of high end mobile handset. They offer quality products. They are charging affordable prices. Brand value, products and services.

5. What was the Company’s first strategy plan and was it different from the current. Answer: Company’s first strategy was growing by acquisition. They were more focused on mergers and acquisition. But after facing huge losses by applying different strategies over the period of time then during the period of 2006 to 2010 their strategy was to chase the smartphone revolution. 6. Describe Company Business strategy: Answer: Nokia’s business strategy is to strengthen their position as a number one communications systems. Their strategic intent, as the trustworthy whole, is to create personalized communication technology that allows individuals to form their own mobile world. Nokia is presently making innovative technology and accessibility to web applications, devices and services. 7. Who are Company’s competitors? 1) 2) 3) 4) 5) 6) 7)

Motorola Samsung HTC LG Siemens Alcatel Ericsson

8. How does competitive rivalry, competitive behavior, and competitive dynamics effect Company? Answer: Competitive competition, competitive behavior and competitive dynamics affects the company in a way that there's very low product differentiation. Apple and other competitors bring innovative products and android OS that was an enormous threat to

Nokia. There's additionally high market share of its competitors as a result of bringing innovative products. They snatched the market share of Nokia. The brand identity of their competitors was so strong that they enjoy high sales despite having high prices of products than Nokia’s product prices. There is high diversity of rivals. Mobile market was growing and competitors were increasing rapidly however Nokia didn't maintain their position.

9. What is the purpose of Company’s value chain? Answer: A value chain is an arrangement of exercises that an association does to make an incentive for its clients. At the end of the day the manner by which esteem chain exercises are performed decides expenses and influences benefits, so this device can enable you to comprehend the wellsprings of significant worth for your association. By dealing with the underlying quality chain factors, including inbound coordination, tasks and outbound coordination, affiliates can enhance reaction times and limit costs for clients. The advertising and deals and administration parts of the esteem affix are particularly essential to enhancing client connections. Nokia should see its value chain at every step because then they will be able to identify their core competencies and capabilities which are the basis of competitive advantage for them. 10. Identify type’s value chain activities of Company’s? Value chain activities: There are 2 types of activities  

Primary activities Secondary activities

Primary activities are connected straightforwardly to the physical creation, deal, upkeep and support of an item or administration. They comprise of the accompanying:

Inbound logistics – These are every one of the procedures identified with accepting, putting away, and circulating sources of info inside. Nokia inbound coordination is identified with getting the contributions for the generation of cell phones. They are providers of themselves. They fabricated the material that helped them to create cell phones.

Operations– These are the change exercises that change contributions to yields that are sold to clients. Nokia changes contributions to the items and administrations like cell phones.

Outbound Logistics – These exercises convey your item or administration to your client. These are things like accumulation, stockpiling, and conveyance frameworks. Nokia offers items and administrations straightforwardly to the buyers.

Marketing and Sales – These are the procedures you use to convince customers to buy from you rather than your rivals. The advantages you offer, and how well you convey them, are wellsprings of significant worth here. Nokia showcase their cell phones through notices via webbased networking media and TV. There are likewise announcements accessible all over and the image of hands that shows interfacing individuals is extremely well known for Brand name.

Service – These are the exercises identified with keeping up the estimation of your item or administration to your clients, once it's been obtained. Nokia gives after deal administrations to their purchasers. Support Activities These exercises bolster the essential capacities above. For instance, obtainment bolsters tasks with specific exercises, yet it likewise underpins advertising and deals with different exercises. These activities includes the following:    

Procurement (purchasing) Human resource management Technological development Infrastructure

11. What are four specific criteria of sustainable competitive advantage Company’s? – Capabilities that are:  Valuable: Help the organization counterbalance threats or exploit opportunities.  Rare capabilities: That not controlled by many others.  Costly to imitate: these are capabilities that other firms cannot easily develop like organizational culture and brand name, interpersonal relationships, trust, competence  Non substitutable: those capabilities that do not have strategic counterparts. 12. Assess the main strategic actions taken by each Nokia CEO. (a) What actions created enduring sources of competing advantage? CEO Kairamo (1977-1988s):  The second CEO of Nokia is Kari Kairamo.  Nokia made lots of international mergers, acquisitions and added patents to its portfolio. CEO Vuorilehto (1988-1992):   

Vuorilehto executed Kairamo’s vision for company. Modernized management and restructured firm into six business division. GSM network roll-out had begun in Europe and demand for Infrastructure (opportunity for Nokia)

CEO Jorma Ollila (1992-2006):  



CEO Jorma Ollila implemented “The Nokia Way”, highlighting Nokia’s core values of customer satisfaction, respect for individuals, achievement. Its continuous divestment of its non-core units like consumer electronics and home appliances made Nokia grow to become a mobile communications company producing mobile phones. By late 1992, Nokia had become the biggest producer of mobile phones in Europe, and the second largest producer in the world behind Motorola.

CEO Kallasvuo (2006-2010):   

Nokia and Siemens (Joint Venture) combined their network infrastructure operations in response to low price competition from Asia. Nokia joint venture with Sanyo Japanese consumer electronic producer, to manufactured CDMA phones for US. Nokia phones have own OS software, developed by the joint venture between Nokia, Ericsson, Motorola, Siemens and others.

CEO Stephen Elop (2010-2013): Android market share jumped to double digit 23% while, Nokia focusing on selling marginally profitable low-end phones in Asia.  Recognized Nokia on “Burning oil platform”.  CEO urged the company to embrace its own radical change in behavior before it was too late. Mergers and acquisitions: Nokia gained the Swedish buyer hardware organization Luxor AB, in this way developing its fares of remote telecom organizing terminals from four Nordic nations in 1982 to more than 20 nations all through Europe, the UK, North America and Asia by 1986. 

Institutionalization of advanced remote system in Europe from the foundation of the 2G arrange additionally enabled Nokia to all the more effortlessly venture into deregulated European markets. Nokia's great execution proceeded with a progression of mergers and acquisitions that supported incomes. Economies of Scale  In 1991, Nokia was pioneer in GSM infrastructure  GSM provided manufacturers in Nokia with economies of scale  In 1992 Nokia had projected that in 1999, the mobile phone market in units would be around 40 million around the world, however surprisingly in 1999 the market exceeded



250 million units Nokia continued to produce its handsets internally.

(b) What actions (or lack of actions) contributed to Nokia’s fast decline?  Nokia oppose the progressions of the market. They were screwed over thanks to their old working framework and in the interim their rivals develop with something entirely unexpected that is android framework. Yet, they didn't react accurately to their rivals' activities/moves  For nations like Pakistan and India, the ease telephones were the best and quick offering ones.  Nokia ought to have brought out top of the line telephones offering premium highlights and incredible unwavering quality however they adhered to the minimal effort telephone show.  Nokia overestimated the quality of its image, and trusted that regardless of whether it was late to the cell phone amusement it is ready to make up for lost time rapidly. Long after the iPhone's discharge, truth be told, Nokia kept on demanding that its better equipment plans would prevail upon clients. The cutting edge time has trained individuals to expect consistent development; when organizations fall behind, customers rush to rebuff them. Late and lacking: for Nokia, it was a lethal blend  It's more precise to state that Nokia was, at its heart, an equipment organization as opposed to a product organization and at last, the organization significantly thought little of the significance of programming, including the applications that keep running on cell phones, to the experience of utilizing a telephone. Nokia's improvement procedure was for quite some time commanded by equipment engineers; programming specialists were minimized. (Administrators at Unmistakable difference, a glaring difference, saw equipment and programming as similarly imperative parts of an entire; they urged representatives to work in multidisciplinary groups to outline items.)  It wasn't only that Nokia neglected to perceive the expanding significance of programming, however. It additionally thought little of how critical the change to cell phones would be. In that sense, Nokia's disappointment come about at any rate to some degree from an institutional hesitance to change into another time. 13. What decisions would you have made differently and when? 1988: The high acquisition activity left the company cash poor which in turn resulted in fall of 23% in net income. I would have made a case sufficiency audit and feasibility test of cash before these high acquisitions. 1991: As the fall of Soviet Union, sales of Nokia fell. In this case I would have researched for new distribution network or worked on the existing network to stabilize the sales of company 1992: Jorma Ollila’s era was the worst era for the company. He had no expertise to be the CEO of a technological giant like NOKIA. His background and experience was in banking. And in those times NOKIA needed person who had a deep understanding of technological landscape. I would have found a relevant and needed person.

2009: would have adopted Android. 14. What were the external factors that enabled Nokia to establish market leadership in the mobile phone business? Technological Factor: The achievement of Nokia depends on consistent development on human innovation. By improving correspondence and investigating better approaches to trade data, interfacing individuals, Nokia enable clients to get more out of life. Economical Factor: It is riches that Nokia considers the economy establishment and position of host country, for instance, the rate of cash exchange, extension to help the theory to accomplish budgetary, humorous and singular security with practical courses of action. Social Factor: Nokia works in a various number of culture and all levels of social class just in light of the fact that diverse models are as often as possible discharged to fulfill all people in spite of their distinction in race, nationality, religion, wage level or convictions among each other.

15. How did each CEO react to these external factors? Answer: CEO Kairoamo react to adopt the purchase strategy because of the dynamic market from 2G towards the GSM for mobile CEO Vuorilehto executed the vision and reorganized the firms into six individual divisions: telecom networking, mobile phones, Nokia data, cables and machinery, basic industries and customer electronics. CEO Ollila transformed the company into the mobile telecommunication company, he adopted back to basics approach in a slow growth situation. He centered the company into four business areas mobile telephones, consumer electronic, networks and cables. CEO Kallasvuo reacted towards market dynamics by chasing the smartphone revolution. CEO Elpo reacted towards the market by confronting the burning platform through the strategic alliance with the Microsoft.

16. Did Nokia have any influence on these external factors? Answer: Technological Factor:



The i...