Nokia: Its Opportunities and Threats

Nokia is a Finnish multinational communications corporation, and it manufactures mobile electronic devices, mostly mobile telephones. In this article, we will look into the opportunities and threats of this company by analysing its external micro-environmental factors and internal drivers using PEST and SWOT model, and comparison with its competetors such as Sumsung, Motorola, and Apple.

PEST Analysis of NOKIA

PEST analysis stands for "Political, Economic, Social, and Technological analysis". It is a part of the external analysis when conducting a strategic analysis or doing market research, and gives an overview of the different macroenvironmental factors that the company has to take into consideration. It is a useful strategic tool for understanding market growth or decline, business position, potential and direction for operations. Here we try to obtain an overview of the Company Nokia by analysing PEST factors.

1. Political

Finland is small and its people are not many, and it will not and can not get involved in international political disputes. This can be seen that it has a good political environment. Finland keeps on good international relations and other countries in the world, which provide a strong guarantee to globalization of Nokia. In addition, in August 2008, former Prime Minister of Finland, Esko Aho announced that he will be join in Nokia in November 1, 2008, and on January 1, 2009 he became the Nokia Group Executive Committee members and as the head of corporate relations department, which provide a more powerful experience and protection to deal with international politics for Nokia. In addition, Finland is a member state of European Union, Nokia can get many political benefits from EU policy. Due to the creation of Single European Market, there is low barrier for Nokia trade and FDI to other European countries. Besides, the establishment of Euro is also a good thing for Nokia to reduce financial risk. In Chinese market, there is a stable political environment. It is a county with the largest population which joins WTO in 2001, and the government publishes many open-door policies to encourage foreign company to invest in. Totally, current political factor is an opportunity for Nokia.

2. Economic

In 2010, the economy has started to show signs of recovery, which means individual revenue will increase to somewhat. And European economic integration makes it become easier to have well recognition about foreign products more and more. These two factors can provide opportunities for Nokia’s products to achieve globalization. Over the past few years the global economy that greatly increase the level of purchasing power of people, which is the premise for Nokia's massively to occupy market; but in the second half of 2007, the outbreak of the U.S. sub-prime mortgage crisis in the United States in 2008 that made several large international investment banks have fallen to went bankrupt, which cast a shadow to the global economy and gave a negative impact on Nokia.

3. Technological

Because of the invention of single chip and the rapid progress of semiconductor’s technology, there is a fierce competitiveness for Nokia in technological environment. Besides, GPS can be built-in mobile phone, which is amazing. Fortunately, Nokia has developed these technologies successfully. Nokia control the heading position in the communications industry that mostly relies on the high speed development of telecommunications of Finland. Finland's well natural and geographical factors provide inborn technology environment for Nokia and telecommunications industry of Finland. In addition, the core technology of communications and mobile terminal chip is largely concentrated in the hands of a few large enterprises, of course, including Nokia. July 24, 2008 Nokia and Qualcomm announced that they have signed a new agreement. According to this agreement, Nokia in mobile phones and Nokia Siemens Networks infrastructure equipment can use all Qualcomm’s all patents, which provides technical support in the future development of Nokia.

4. Social

With the popularity of mobile phones, mobile phones have not just a simple communication tool, and become partners and work friends in the daily life. More and more the emergence of fashion phones, which make the mobile phone become a fashion element or decorations. Mobile phones have become personal identity and mutual communication. Today, it can be observed through the phone and display each person's life

SWOT analysis of OKIA

SWOT analysis is a strategic planning method used to evaluate the Strengths, Weaknesses/Limitations, Opportunities, and Threats involved in a project or in a business venture. Here we focus especially on Nokia's relative competitive strengths and weaknesses using SWOT analysis.

1. Strengths

The biggest advantage of Nokia is its strong brand reputation, according to official data of the Nokia brand in many countries, there are many loyal customer of Nokia, and its global market share is approaching 40%. According to most consumers’ feedback, Nokia mobile phone won the customer's favourite due to high quality and technology, which is a result from its continual innovations. Because Nokia is willing to invest in research and development, they always lead other competitor in the technology field and dominate in mobile phone market. Its strong finances also make it possible to develop innovations more easily. Moreover, Nokia has strengths in its human resource management. They attach great importance to the difference and balance between leadership and management. Leadership is influence and management is power, these two are not the same. In addition, they created favourable conditions for employees to achieve their personal values and created a unique corporate culture to enhance the cohesion of employees.

Nokia has its own fixed supply and distribution channels, especially in China as well as gain government support. Nokia has a number of mobile phone technology patents, so have some right to speak in the industry chain. On the financial side, Nokia has a lot of cash flow that can provide funds to ensure its own development. Nokia has a better corporate culture, which is widely recognized as Nokia truly achieved technology people-oriented in the industry.

2. Opportunities

Nokia has a great user base, so if Nokia can improve the ARPU value of each user, it is an opportunity for competitors can not match. Internet, especially the development of mobile Internet and the popularity of Internet users is growing, which provides a prerequisite for Nokia Mobile Internet. Telecommunications charges continuality falling, as well as the development of the 3G, which is also an opportunity for terminal operators.
Besides, the speed development of emerging market such as China and India provide huge market opportunities for Nokia to expand and increase market share.
Moreover, European integration is also an opportunity. Because of the creation of European Single Marketing and Euro, Nokia get many benefits for trade and FDI to European countires.

3. Weaknesses

Homogeneity of mobile phone products is serious, which lead to the differentiated products are not like the iPhone, black that have enough attraction for consumers. Because of before Nokia always play the role of mobile phone manufacturers, so Internet, software and services are not its strengths. In addition, the huger scale of group and even wide industry channel seriously hinder the adjustment and changes are achieved by Nokia, which reduce the speed and effect of respond to market.

4. Threats

Nokia's series of acquisition integration and whether it can really absorb them and carry benefit, so there is a certain risk in this theme. Whether in software or hardware, from Nokia the pace of development is accelerating, and product cycles are shortening. But how to always maintain competitive edge, which very difficult issues.

Through the above SWOT analysis, we can see that although Nokia is very strong, but it also has some weaknesses and threats. If the strategic planning can gain attention, then Nokia is likely to be exceeded by competitors such as Apple and LG.

The analysis of competitor of NOKIA

Nokia’s Smart Devices team focuses on the creation of smartphones. Nokia is continuing to deliver on their commitments to Symbian with new models and software updates; Nokia have launched the Nokia N9, the outcome of efforts from their MeeGo program; and they are planning to further strengthen their smartphones portfolio with the launch of Nokia’s first products on the Windows Phone platform. The Smart Device provides lots of strong competitive power for Nokia to lead the development tendency of high technology mobile phone.

For Nokia, competitors basically are Samsung, Motorola, LG, Sony Ericsson, and Apple in mobile phone production and sales field.

1. Samsung

Samsung Group is a South Korean multinational conglomerate corporation headquartered in Samsung Town, Seoul. It comprises numerous subsidiaries and affiliated businesses, most of them united under the Samsung brand, and are the largest South Korean chaebol.

Revenue US$ 220.1 billion (2010; Net income US$ 21.2 billion (2010); Total assets US$ 343.7 billion (2010); Total equity US$ 141.1 billion (2010); Employees 344,000 (2010).

Samsung Electronics is a subsidiary of Samsung Group. Samsung Electronics is a global leader in semiconductor, telecommunication, digital media, digital radio technologies, and digital television. It mainly engaged in production of memory chips, mobile phones and LCD, its operations in 56 countries worldwide 124 region and has a staff of 138,000.

Samsung's key development objectives of the communications services industry with advanced technology to further maintain the position in the industry, and strive to do leader in WIMAX, digital TV, mobile broadcasting technology. Samsung mobile phones are basically located in the high-end, which is because of its market share is small in a few years ago. But with the change in its strategy, the past two years it has begun to enter the low-end market, and developed rapidly, so its market share has surpassed Motorola and located in ranks second in the world.

Samsung's biggest advantage lies in its precipitation with strong technical and capital accumulation. From the early 1990s, the globalization strategy is achieved, which let Samsung now has extensive global experience and advanced management methods.

2. Motorola

Motorola, Inc. was an American multinational telecommunications company based in Schaumburg, Illinois, which was eventually divided into two independent public companies, Motorola Mobility and Motorola Solutions on January 4, 2011, after losing $4.3 billion from 2007 to 2009. Motorola Solutions is generally considered to be the direct successor to Motorola, Inc., as the reorganization was structured with Motorola Mobility being spun off.

Motorola's wireless telephone handset division was a pioneer in cellular telephones. Known as the Personal Communication Sector (PCS) prior to 2004, it pioneered the "flip phone" with the MicroTAC—and, the "clam phone" with the StarTAC -- in the mid-1990s. It had staged an enormously successful resurgence by the mid-2001s with the RAZR; but, lost significant market shares in the second half of that decade. Lately, it has focused on smartphones using Google's open-source Android mobile operating system. The first phone to use the newest version of Google's open source OS, Android 2.0, was released on November 2, 2009 as the Motorola Droid (the GSM version launched a month later, in Europe, as the Motorola Milestone). The handset division, (along with cable set-top boxes and cable modems) has since then been spun off into the independent Motorola Mobility.

Motorola was the first global mobile phone, but the last two years it has seen a decline, not only the first heading throne was carried off by Nokia. And ended the second quarter of 2008, and the second place was also killed by Samsung. Reported indicated the second quarter of 2008, Motorola sales revenue $ 8.1 billion, of which mobile phone sales of $ 3.3 billion, down 22% year on year. Motorola's brand ranking from 69th in 2006, dropped to 77th in 2007, and the brand value of the reduction of 9%. The full description of Motorola's performance has not gotten better. This is the beginning of 2008 Motorola want to sell mobile terminal business reasons.

Motorola as established players and it has strong technology, abundant capital, but Motorola has been transformed from technology to products is not enough timely. Fortunately, now high-level management team of Motorola has aware of this, and make changes. According to company insiders’ news, Motorola have to make the most optimal choice in the organizational systems, management policies, channel management, human resources, as well as some of the products and strategies.

3. Apple

Apple Inc. (NASDAQ: AAPL) formerly Apple Computer, Inc. is an American multinational corporation that designs and sells consumer electronics, computer software, and personal computers. The company's best-known hardware products are the Macintosh line of computers, the iPod, the iPhone and the iPad. Its software includes the Mac OS X operating system; the iTunes media browser; the iLife suite of multimedia and creativity software; the iWork suite of productivity software; Aperture, a professional photography package; Final Cut Studio, a suite of professional audio and film-industry software products; Logic Studio, a suite of music production tools; the Safari web browser; and iOS, a mobile operating system.

As of July 2011, Apple has 357 retail stores in ten countries, and an online store. As of September 2011, it is the largest publicly traded company in the world by market capitalization, and the largest technology company in the world by revenue and profit.[citation needed] As of September 24, 2011, the company had 60,400 permanent full-time employees and 2,900 temporary full-time employees worldwide; its worldwide annual sales totalled $65.23 billion, growing to $108.249 billion in 2011.

According to 2007 statistics, which show that in the smart phone operating systems, symbian ranked first in market share of 65%; Microsoft's market share of 12%; RIM's market share is 11%; Apple's market share of 7%; other market share of 5%.

Apple iPhone has become sales of third-ranked mobile phone brands after Nokia and Blackberry. Windows Mobile has attracted a large number of allies, each year there are numerous third-party software available. In a variety of application software, games, everyone can not leave things. Windows Mobile platform has many excellent games. As software giant Microsoft Windows Mobile handheld version of the operating system and Office desktop PC in the compatibility of office has inherent advantages, and WM has powerful multimedia performance, so office entertainment correct, which let it become the most potential operations systems in the world.

(By Zhou Cong)

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