Nokia - Case Analysis

1.0 Introduction

Nokia is one of the most famous mobile company in the world. This case is about the

development and transformation of Nokia and mobile industry, and introduces Nokia

in emerging market.

Then, this report will introduce and analyse the development of Nokia in booming

era, from 1995 to 2010, in terms of competition and competitive advantages. It will

also explain future challenges of Nokia in India, such as local changes and

competitors, and recommend to deal with them.

2.0 Competition Analysis (1995 – 2010)

According to porter’s five forces, there are five factors affect competition in one

industry, including competitors, new entrants, suppliers, buyers and substitutes. In

this case, the main competition is from competitors for Nokia. Then, it will analyse

and evaluate competition mainly through competitor portfolio.

2.1 Competition of rivalry

The competitions between Nokia and competitors can analyse through, like price,

promotion and market share (Figure 1).

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 Market Leader Nokia

Software- Mobile
Hardware APP
OS
1998- 2007- Smartphone 2003-
2007 2010 2007-2010 2010

Apple
Challenger Motorola Samsung Apple Google
store

RIM Micosoft

Follower LG

Figure 1 Business level competitive strategy

2.1.1 Hardware

In 1998, Nokia replaced Motorola to be the market leader, but, Motorola was

still very strong and the market share was only less than Nokia. Because of

the first-mover position, Motorola’s brand reputation and influence were

powerful (Alcacer, Khanna, Furey and Manud 2011). Motorola’s capabilities,

like management and marketing insight, also attacked Nokia’s position.

Motorola also kept innovating to extend market, such as Razr. Nokia faced

large pressure from Motorola.

In 2007, Samsung’s market share had increased beyond Motorola. Until

2010, the market share was 19% and followed by LG. In emerging market,

Samsung and LG were the main competitors for Nokia, and both of them

gathered support from Korean government. Therefore, Samsung and LG had

economic and technical strength to attack Nokia. Furthermore, Samsung

offered products with different price to address different groups. This could

influence the market share of Nokia through competing price, product

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 innovation and marketing.

Apple and RIM are the main competitors in smartphone industry for Nokia.

From 2007 to 2008, Apple tripled and RIM doubled the market share. In

2007, Apple’s market capitation had transcended Nokia. Thus, Nokia had

faced powerful competitor – Apple. Apple aimed at high-end products to

developed countries. But, Nokia focused on low-end phones to emerging

market and ignored developed market. So, it was really hard for Nokia to

develop in developed countries.

2.1.2 Software (OS)

With the developed demand of software and Internet, Google provided

Android and Microsoft offered Windows for phones which competed with

Symbian. They cooperated with phone manufactures, for example, Motorola

and HTC used Android operating system, competed with Nokia.

2.1.3 Mobile Application

Nokia provide OVI store to defend Apple’s IPhone store as a follower. IPhone

stores brought fresh applications and new interactive experience for

customers. Thus, it was obvious that Apple’s R&D capability can compete

with Nokia and attract more customers.

2.2 Others

There were two more competitions Nokia faced. The first one is new entrants,

governments incited new entrants which increased competition to Nokia. This

leaded to enhance bargaining power of buyers for lower price, better quality and

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 more services, which stimulated Nokia to innovate and cut cost.

In conclusion, Nokia faced competition mostly from Motorola, Samsung, LG and

Apple at different place and time. The development of industry, the encouragement of

governments and the demand of customers also forced Nokia.

3.0 Five factors to sustain competitive position (1995-2010)

As market leader, Nokia hold defending and attracting strategy. Based on resource-

based view, there are five factors help Nokia sustain leader position (Figure 2). Then,

it will use value chain framework to analyse each factors. The factors refer to support

or primarily activities that can create value for Nokia, including sustaining position.

Capability:
- Dynamic capability
- Innovation (R&D) capability

Tangible Resources Intangible Resources

Figure 2 Resource-based view

3.1 Dynamic Capability

Whole activities in value chain can create value for Nokia by dynamic capabilities

to capture opportunities. For example, Nokia found rural place in emerging

market as target and produced adapted products to meet customers’ demand. To

adapt changes, Nokia deployed and restructure resources and business

processes. It renewed its strategy daily, weekly or monthly (Doz and Kosonen

2008). So, Nokia had strong strategic sensitivity and dynamic capability which

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were better than competitors to sustain the position.

3.2 Innovation (R&D)

This refers to product and technology development in value chain to improve

performance and cut cost for Nokia sustaining the position. Nokia developed

different services and products with various prices for different countries. R&D

capability supported Nokia create differentiation to compete with competitors.

Nokia also innovated and produced renewable products with recycle materials

and energy efficiency (Bask and Kuula 2010). R&D supported Nokia achieved

more profit than competitor, protected environment, improved brand reputation,

sustained customers, and then sustained leader position.

3.3 Positive brand reputation

Positive reputation sustains the position through adding value to consumers and

itself (Chikezie 2010). Nokia was known as high quality, which refers to inbound

logistics, operation and servicing activities to control quality. High-quality products

led to high customer satisfaction, loyalty and well reputation. Nokia sustained and

attracted consumers to sustain the leader status. Furthermore, high-quality and

recycle products could extend product life-cycle and positively affected

environment (Masalin 2003). Nokia got profit, protected environment and

considered society (TBL). This will help Nokia achieved well reputation to sustain

the position.

3.4 Customer-centric products and services

This factor refers to whole value-chain activities, which means Nokia can provide

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 adapted products and services to meet customers’ requirements. For example,

Nokia offered low-price phone for India where people had low income, and

produced life-tools software to help farmers get agriculture information and

students study. So, Nokia considered customer all the time, not only got profit,

but also provide products to help customers. This could sustain and attract

customers, and also sustain the leader status.

3.5 Supply chain advantage

Nokia ran the most complex and efficient supply chain at almost every countries.

So, Nokia could bring the best service for customers, fast and convenient. People

were willing to buy products which can bring good user experience (Muskus

2010). Furthermore, suppliers were important stakeholders for Nokia. ‘Nokia

required its suppliers have an environmental management system (EMS)’ (Bask

and Kuula 2010), which could emphasized competitive advantages of Nokia to

reducing environmental impact and sustaining its position.

4.0 Four future challenges in India

Challenges are from different stakeholders, like customers, competitors, government

and employees, through considering internal, macro and industry environment.

4.1 The threat of competitors

There will be more and more companies enter into emerging markets, like India.

According to Ammisetti (2010), Nokia’s market share in India had dropped from

56.2% in 2008 to 49.3% in 2010. Although Nokia was still the leader in India, but

status started down. Furthermore, Samsung and LG, the main competitors in

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India, still followed Nokia and improved.

4.2 Success trap

Nokia was successful in Indian handset market and standing large market share

for a long time. According to Wang, Senaratne and Rafiq (2014), ‘successful firms

have been warned against the tendency to fall into a success trap’. Nokia may

fall into traps, such as confirming -evidence and recall-ability trap. Decision-

making bases past successful experience and capability, and ignores adapting

changes. Therefore, Nokia may face the challenge from past success

experience.

4.3 Social situation and changes

Social changes is one challenge Nokia may face. In India, Nokia focused on rural

market and ignored urban market. However, more and more people are moving

from village to city and local income has increased (Ammisetti 2010). So, the

demand of medium-end and high-end products will increase. Nokia should

expand both product and market.

Furthermore, India is the collective country (Ammisetti 2010). Indian concerns

social benefits. How to cater the public and whole society is another challenge.

4.4 Policy changes - Global warming influences

According to Chikezie (2010), global warming has affected every industries or

brands, including Nokia. Indian government will bring higher taxes, and increases

export and import cost to control environment and limit materials’ entrance

(Chikezie 2010). This will negatively impact supply chain and price advantage of

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 Nokia.

5.0 Recommendations

When facing challenges, Nokia should consider competitors, overall environment

of India and the internal conditions. There are some recommendations for each

challenges.

5.1 The threat of competitors

To defend competitors, Nokia must be customer oriented and continuously

innovate to create differentiations. It has also sped up new adapted products

development, such as dual-sim card phones and social networking apps. If Nokia

wants to sustain customers, it can engage meaningful social responsibility

activities to create better reputation than competitors and improve performance

(Chikezie 2010).

5.2 Success trap

Nokia should keep dynamic capability and extend it. My recommendation is

employing new staffs working in India, who can bring new ideas and knowledge.

The point of view from new and old employees will avoid Nokia always notices

past success and not to change.

5.3 Social situation and changes

Nokia must keep market insight and industry trends. It should learn from changes

(Masalin 2003), such as producing high-end phones and devoting to innovating

user-friendly software for Indian to expend market. As India is a collective

country, it should consider group profit (Ammisetti 2010). For instance, Nokia can

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 organise charity activities to help poor people through marketing method, such as

selling one mobile phone and donating 10 dollars. This can help Nokia benefit

local people and improves performance.

5.4 Policy changes

Nokia should build good relationship with Indian government which can support

future development such as lower taxes. So, Nokia can follow the environmental

and social regulations and assume responsibility. When making decisions, Nokia

has to consider government’s and customers’ requirements, local policies and its

profits, such as producing goods through energy-efficiency or renewable energy

and resources.

6.0 Conclusion

Although Nokia faced many competitions from 1995 to 2010, it still sustained as

market leader. However, Nokia will encounter many future challenges. Thus, Nokia

should hold current competitive advantages, and adapt industry, society and

customer changes. Nowadays, customers and stakeholders are more awareness of

environmental and social issues when purchasing and manufacturing products. So,

Nokia needs to consider environmental and social responsibility in the future and

carry out them.

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 Reference

Alcacer, J., Khanna, T., Furey, M. and Mabud, R. 2011, ‘Emerging Nokia?’, Harvard

Business School, Boston, viewed 22 May 2016, 9-710-429.

Ammisetti, A. 2010, ‘the Troubled King of the Indian Handset Market’, the Indian

Journal of Management, vol. 5, no. 1, pp. 14-20.

Bask, A. and Kuula, M. 2010, ‘Measuring Supply Chain Level Environmental

Sustainability’, IJBIT, vol. 3, no. 3, pp. 16-24.

Chikezie, F. 2010, ‘Triumph of a Global Corporate Brand’, ISM journal of International

Business, vol. 1, no. 3, pp. 1-21.

Doz, Y. and Kosonen, M. 2008, ‘The Dynamics of Strategic Agility: Nokia’s Roller-

coaster Experience’, California Management Review, vol. 50, no. 3, PP. 95-118.

Muskus, J. 2010, ‘Everybody wants Nokia’s Mpas Division’, Courtesy Medtronic

Technology, pp. 31-32.

Masalin, L. 2003, ‘Nokia Leads Change through Continuous Learning’, Academy of

Management Learning and Education, vol. 2, no. 1, pp. 68-72.

Wang, C. L., Senaratne, C. and Rafiq, M. 2014, ‘Success Traps, Dynamic

Capabilities and Firm Performance’, British Journal of Management, vol. 26, no. 1,

pp. 26-44.

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