BUSINESS ECONOMICS PROJECT

PORTER’S FIVE FORCES MODEL FOR

NOKIA

SUBMITTED BY :-NANDITA SADANI

M.B.A. 2ND SEM

ENROLL NO. :- 48PORTER’S FIVE FORCES

MODELPorter's five forces is a framework for the industry analysis and business strategy development developed by Michael E. Porter of Harvard Business School in 1979. It uses concepts developing, Industrial Organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market. Attractiveness in this context refers to the overall industry profitability. An "unattractive" industry is one where the combination of forces acts to drive down overall profitability. A very unattractive industry would be one approaching "pure competition".Three of Porter's five forces refer to competition from external sources. The remainder is internal threats. It is useful to use Porter's five forces in conjunction with SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats).Porter referred to these forces as the micro environment, to contrast it with the more general term macro environment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally, requires a business unit to re-assess the marketplace given the overall change in industry information. The overall industry attractiveness does not imply that every firm in the industry will return the same profitability. Firms are able to apply their core competencies, business model or network to achieve a profit above the industry average. A clear example of this is the airline industry. As an industry, profitability is low and yet individual companies, by applying unique business models, have been able to make a return in excess of the industry average.

Porter's Five Forces Include:–

Three forces from 'horizontal' competition: threat of substitute products, the threat of established rivals, and the threat of new entrants; and two forces from 'vertical' competition: the bargaining power of suppliers and the bargaining power of customers.

The model of the Five Competitive Forces was developed by Michael E. Porter in his book „ Competitive Strategy: Techniques for Analyzing Industries and Competitors“in 1980. Since that time it has become an important tool for analyzing an organizations industry structure in strategic processes. Porter’s model is based on the insight that a corporate strategy should meet the opportunities and threats in the organizations external environment. Especially, competitive strategy should base on and understanding of industry structures and the way they change. Porter has identified five competitive forces that shape every industry and every market. These forces determine the intensity of competition and hence the profitability and attractiveness of an industry. The objective of corporate strategy should be to modify these competitive forces in a way that improves the position of the organization. Porter’s model supports analysis of the driving forces in an industry. Based on the information derived from the

Five Forces Analysis, management can decide how to influence or to exploit particular characteristics of their industry.

The Porter's 5 Forces tool is a simple but powerful tool for understanding where power lies in a business situation. This is useful, because it helps you understand both the strength of your current competitive position, and the strength of a position you're looking to move into.With a clear understanding of where power lies, you can take fair advantage of a situation of strength, improve a situation of weakness, and avoid taking wrong steps. This makes it an important part of your planning toolkit.Conventionally, the tool is used to identify whether new products, services or businesses have the potential to be profitable. However it can be very illuminating when used to understand the balance of power in other situations too.

How To Use The Tool:-Five Forces Analysis assumes that there are five important forces that determine competitive power in a situation. These are:-

1. Supplier Power:-

The term 'suppliers' comprises all sources for inputs that are needed in order to provide goods or services.Here you assess how easy it is for suppliers to drive up prices. This is driven by the number of suppliers of each key input, the uniqueness of their product or service, their strength and control over you, the cost of switching from one to another, and so on. The fewer the supplier choices you have, and the more you need suppliers' help, the more powerful your suppliers are.

2. Buyers Power:- 

Similarly, the bargaining power of customers determines how much customers can impose pressure on margins and volumes.Here you ask yourself how easy it is for buyers to drive prices down. Again, this is driven by the number of buyers, the importance of each individual buyer to your business, the cost to them of switching from your products and services to those of someone else, and so on. If you deal with few, powerful buyers, they are often able to dictate terms to you.

3. Competitive Rivalry:- 

This force describes the intensity of competition between existing players (companies) in an industry. High competitive pressure results in pressure on prices, margins, and hence, on profitability for every single company in the industry What is important here is the number and capability of your competitors – if you have many competitors, and they offer equally attractive products and services, then you’ll most likely have little power in the situation. If suppliers and buyers don’t get a good deal from you, they’ll go elsewhere. On the other hand, if no-one else can do what you do, then you can often have tremendous strength.

4. Threat of Substitution:- 

A threat from substitutes exists if there are alternative products with lower prices of better performance parameters for the same purpose. They could potentially attract a significant proportion of market volume and hence reduce the potential sales volume for existing players. This category also relates to complementary products.This is affected by the ability of your customers to find a different way of doing what you do – for example, if you supply a unique software product that automates an important process, people may substitute by doing the process manually or by outsourcing it. If substitution is easy and substitution is viable, then this weakens your power.

5. Threat of New Entry:- 

The competition in an industry will be the higher, the easier it is for other companies to enter this industry. In such a situation, new entrants could change major determinants of the market environment (e.g. market shares, prices, customer loyalty) at any time. There is always a latent pressure for reaction and adjustment for existing players in this industry. The threat of new entries will depend on the extent to which there are barriers to entry.Power is also affected by the ability of people to enter your market. If it costs little in time or money to enter your market and compete effectively, if there are few economies of scale in place, or if you have little protection for your key technologies, then new competitors can quickly enter your market and weaken your position. If you have strong and durable barriers to entry, then you can preserve a favorable position and take fair advantage of it.

Porters model is based on the insight that a corporate strategy should meet the opportunities and threats in the organizations external environment. Especially, competitive strategy should

base on and understanding of industry structures and the way they change. Porter has identified five competitive forces that shape every industry and every market. These forces determine the intensity of competition and hence the profitability and attractiveness of an industry. The objective of corporate strategy should be to modify these competitive forces in a way that improves the position of the organization. Porters model supports analysis of the driving forces in an industry. Based on the information derived from the Five Forces Analysis, management can decide how to influence or to exploit particular characteristics of their industry.

HISTORYNokia Corporation is one of the world's largest telecommunications equipment manufacturers. It has since established a leading brand presence in many local markets, and business has expanded considerably in all areas to support customer needs and the growth of the telecommunications industry. Nokia also produces mobile phone infrastructure and other telecommunications equipment for applications such as traditional voice telephony, ISDN, broadband access, professional mobile radio, voice over IP, wireless LAN and a line of satellite receivers. Nokia provides mobile communication equipment for every major market and protocol, including GSM, CDMA, and WCDMA.

Nokia has played a pioneering role in the growth of cellular technology in India, starting with the first-ever cellular call a decade ago, made on a Nokia mobile phone over a Nokia-deployed network.

Nokia started its India operations in 1995, and presently operates out of offices in New Delhi, Mumbai, Kolkata,Jaipur,Lucknow,Chennai, Bangalore, Hyderabad, Pune and Ahmedabad. The Indian operations comprise of the handsets business; R&D facilities in Bangalore, Hyderabad and Mumbai; a manufacturing plant in Chennai and a Design Studio in Bangalore.

Over the years, the company has grown manifold with its manpower strength increasing from 450 people in the year 2004 to over 15000 employees in March 2008 (including Nokia Siemens Networks). Today, India holds the distinction of being the second largest market for the company globally.

Nokia has established itself as the market and brand leader in the mobile devices market in India. The company has built a diverse product portfolio to meet the needs of different consumer segments and therefore offers devices across five categories ie. Entry, Live, Connect, Explore and Achieve. These include products that cater to first time subscribers to advanced business devices and high performance multimedia devices for imaging, music and gaming.

Nokia has been working closely with operators in India to increase the geographical coverage and lower the total cost of ownership for consumers. Today, Nokia has one of the largest distribution network with presence across 1,30,000 outlets. In addition, the company also has Nokia Priority Dealers across the country and Nokia ‘Concept stores’ in Bangalore, Delhi, Jaipur, Hyderabad, Chandigarh, Ludhiana, Chennai, Indore and Mumbai to provide customers a complete mobile experience.

Some Firsts For Nokia In India:-1995 – First mobile phone call made in India on a Nokia phone on a Nokia network

Threat of entryMedium

LOW

Industry Competitors rivalry among Existing Firms

Strong

Threat of Substitute Products

Weak

Bargaining power of Supplier’s

Weak

Bargaining power ofBuyers

Strong

1998 - Saare Jahaan Se Acchha, first Indian ringtone in a Nokia 51102000 - First phone with Hindi menu (Nokia 3210)2002 - First Camera phone (Nokia 7650)2003 - First Made for India phone, Nokia 11002004 - Saral Mobile Sandesh, Hindi SMS on a wide range of Nokia phones2004 - First Wi-fi Phone- Nokia Communicator (N9500)2005 – Local UI in additional local language2006 – Nokia manufacturing plant in Chennai2007 – First vernacular news portal

Some Achievements For Nokia:-Ranked No 1 Most Trusted Brand Survey by Brand Equity, 2008Ranked the No 1. MNC in India by Businessworld, India’s leading business weekly, 2006Ranked as the No. 1 telecommunications equipment vendor in the country by Voice & Data for five consecutive years –2008, 2007, 2006,2005 and 2004Ranked as the 9th most powerful brand by Millward Brown’s BrandZ 2008Ranked world’s 4th most valuable brand by Interbrand, 2007

PORTER’S FIVE FORCES MODEL FOR NOKIA

Threat Of New Entrants:-

It is very difficult for a new firm to enter into the market because of the following reasons:-

1. High Initial And Fixed Cost Requirement :-

Nokia is a very big company producing different kinds of hand set at a large scale, so in order to enter into a competitive market the new firm requires huge amout of capital. Nokia enjoys a slight advantage here, though it’s an advantage that may be quickly lost.  The other cell phone manufacturers have a lot of experience making cell phones, but not necessarily software.  So, to most effectively compete with the nokia they will need to invest significantly in certain areas. Future competitors looking to enter the cell phone arena are less likely to have that advantage. 

2. Technology Backup:-

In order to enter into the mobile market the new firm is required to have a innovative and cutting edge technological backup.The latest machine, technology and Design in order to satisfy customer with their product.

3. Government And Legal Issues:-

Two factors may work to keep competitors from entering this market: the strength of current players’ patents and the regulatory obligations and approval requirements of the TRAI, which governs communication technologies (radio, television, wire, satellite and cable) in the India.  

4. Economies Of Scale (minimum size requirements for profitable operations):-

Nokia already had pre-existing experience in manufacturing mass-market consumer electronics devices, many of which share components of the other nokia mobile; so Nokia is not adversely affected by this barrier.  New entrants, however, may not have that luxury and the cell phone market is almost defined by its mass-market (which requires mass production and consumption) nature.  

5. Product Differentiation:-

Overall this trait sides favorably for Nokia (right now) because the new models of nokia are significantly different than its nearest competitors.  Nokia also has a certain amount of protection through the strength of its brand identity.  But this product differentiation can be emulated, to a certain degree.  Cell phones, in general, are pretty uniform in functionality and use and thus not overly differentiated between each other. 

6. Access To Distribution Channel:-

Nokia have a good control over the distribution channel , so if a new firm wants to enter into the market it is required to establish a good distribution in order to provide the customers the product without wastage of time . It is not an easy task for a new entrant to catch hold of distribution channel.

7. Cost Disadvantages Independent Of Size:-

Nokia has a number of manufacturing resources and channels available to it and was able to minimize the impact of this trait; though this would be a significant barrier to an aspiring entrant who did not have these qualities.  Nokia has, however, invested heavily in knowledge and experience which will take time for competitors to be able to emulate.   

Ultimately Nokia is going to face the most competition from imitators who can sell a similar or comparable device at a lower price.  Most of these threats are going to come from established players in the cell phone industry (such as LG and Samsung) rather than companies trying to enter the cell phone market anew.  This is not to say, however, that new entrants may not be around the corner.  Software companies such as Google and Microsoft may pose a credible threat at entering the cell phone market and trying to carve a niche out for themselves.  It has been rumored that Google has a team actively investigating such a move and Microsoft currently has a lot of experience creating software specifically for mobile devices.  It remains to be seen, however, if either company will take the initiative to enter into the cell phone device market directly rather than content themselves with creating licensing software for cell phones. 

Not only software companies , even companies like videocon and micromax are trying to enter into the market and can pose threat to the industry .

Competitive Rivalry Within Industry :-1. Samsung2. LG3. HTC 4. Sony Ericsion5. Black Berry6. Apple iphone

We can explain this rivalry by taking an example of the recent model of nokia ; that is nokia 5800 touch screen mobile .

NOKIA 5800 TOUCH SCREEN:-

The Nokia XpressMusic 5800 touch screen phone is also built around the idea of bringing music to the phone user. It comes pre-loaded with about 200 songs and the touch screen is easy to use. The XPressMusic 5800 too uses a QWERTY colour display along with predictive dictionary typing facility. The XPressMusic 5800 has a 3.2 mega pixel camera on its 3.2 inch screen and sports mini-USB connectivity. The Nokia Xpress Music 5800 camera has still/video camera facilities with dual LED flash. It has a Weight of 109 g.  The XPressMusic 5800 touchscreen phone is available in Red, Blue and Black. It has a monstrous video recording time of 3.6 hours. Nokia claims that the music can play back up to 35 hours. The phone can play

music in MP3, SpMidi, AAC, AAC+, eAAC+ and WMA formats. Nokia 5800 is a touch screeen mobile launche by nokia. Its one touch takes you to music and up to 35 hours of crystal clear hi-fi on an advanced multi- format player. One touch takes you to the video centre, a greater way to watch in high – resolution widescreen. The Symbian 60-based phone is capable of playing audio and video files in multiple formats and for the music or movie buffs, this is a boon as it comes with a whopping 8GB microsd card (note: Nokia 5800 has built-in 128MB memory) and for those who want more, an optional 16GB card.The feature-packed Nokia 5800 xpressmusic also comes with a 3.2-megapixel camera with Carl Zeiss lens, LED flash and video capability.

While the phone's virtual QWERTY keyboard is ideal for text messaging, email and instant messaging, the wifi, 3G, GPRS, dual-band WCDMA, HSDPA, WLAN (802.11 b/g) and HSCSD support ensures wireless access to the internet.In addition, the phone has a crystal clear 3.2-inch display and a tilt sensor and an in-built A-GPS receiver with voice navigation.

The Nokia XpressMusic 5800 touch phone works on GPRS EDGE networks, and has bluetooth connectivity. It also has a TV out cable, which means you can play your recorded and saved videos on a TV. The XPress Music 5800 also sports a GPS chip, and assorted systems and Nokia Maps. The inclusion of GPS Maps is a wise idea, since many GPS cellphones available in India are handicapped since the user has to buy map software at additional cost to make use of the functionality. The touch phone comes with an instant messaging client, and supports IMAP, POP, SMTP email protocols. However, WiFi is notably absent in the Nokia XpressMusic 5800 All in all, the Nokia XPressMusic 5800 is a pure entertainment phone, with internet and wireless functionalities as frills.

Other features include virtual keypad with stylus input support, Bluetooth 2.0, handwriting recognition software, FM radio, built-in surround sound stereo speakers with eight-band graphic equalizer, Nokia Maps, Mobile Transfer Protocol support, and TV out - video cable included - that allows streaming of multimedia.The model is available in blue, black and red color.Cost is 12000- 15000.

It has a very attractive and innovative desing, cutting edge technology and a world of entertainment on your finger tip. It’s a stylish handset that features a touch screen sensitive wide screen display, and offers easy access to your media library and social networking sites. With its bold colours, intuitive touch based user interface, and vibrant 3.2” wide screen display, this handset seamlessly combines design and functionality.

LG KS360:-

The new LG KS360 is a 2.4-inch touchscreen mobile with Full QWERTY Slider.It is a mid-range mobile with bold colors and quirky controls.LG KS360 is a GSM phone. LG KS360, a Slider mobile comes with a great list of features. It price is optimal and it is a great buy. It is an ideal phone for mid range buyers. It is bound to catch your eye with perky colors. The LG KS360 is targeted at an audience that is text savvy.

The major features of this phone include tri-band GSM/GPRS/EDGE support, large 2.4" TFT display of QVGA resolution, attractive 3D image gallery and office document viewer. Touch screen dialing is another interesting feature in this mid range phone.

The phone is equipped with a 2 megapixel camera, stereo Bluetooth and FM radio. The micro SD memory card slot allows extension of memory up to 4GB. The display screen size is 2.4 inches, TFT type with 256K colors.

The most attractive feature of the LG KS360 is however it's attractive color. The QWERTY keypad makes it all the more enticing to young buyers who are enthusiastic about texting. With added value of free messages and free access to social community websites such as MySpace, Bebo, and FaceBook on Pay-as-you-go basis is bound to make it one of the bestselling devices.

BlackBerry Storm 9500:-

BlackBerry Storm is the first touchscreen phone which Blackberry has launched in India.In terms of the cool quotient, the Storm is neck-and-neck with the touch screen phones, though cheaper. Like every other Blackberry, the Storm offers seamless email integration and wireless access. The Storm is the first serious attempt by Blackberry makers Research in Motion to tap into the entertainment segment.

The BlackBerry Storm touchscreen phone features a 3.25 inch (8.3 cm) TFT-LCD display. Unlike other touch phones, Blackberry Storm features a screen which is physically receptive to touch, providing haptic feedback. The Storm is the first touch phone providing haptic feedback, a technology patented by BlackBerry as SurePress. The touch screen 360 X 480 pixel resolution, and can display 65,536 colors. The scratch-resistant touchscreen has eliminated the need for a stylus. The virtual keyboard is standard QWERTY, and comes with automatic spelling check and dictionary typing.

The Blackberry Storm 9500 touchscreen phone features a 3.2 megapixel camera with flash and autofocus. The device comes with 1GB built-in memory, which can be expanded up to 16 GB with a micro SD card.

The web browser on BlackBerrys, which has always been a massive disappointment for users, has been substantially upgraded in the BlackBerry Storm touchscreen phone. Though BlackBerry Storm users won’t need to download Opera Mini or other similar browsers anymore for a richer surfing experience.

Unlike the Blackberry 8800 series and the Bold series, the Storm does not have WiFi connectivity. The built-in GPS is good, though lack of affordable and available mapping services in India will not help BlackBerry push GPS as its USP. The Storm has the best of both worlds – a good business phone, (like all its ancestors) – and a good entertainment device too. However,

Blackberry’s habit of selling operator-locked phones is not going to help it much in India, where it is available only from Vodafone.

Samsung Omnia i900:-

Samsung Omnia i900 is Samsung’s latest multimedia phone in India, and hopes to grab a share of the growing touchscreen phone market. Omnia, (meaning everything in Latin) the multimedia phone from Samsung, features a 5 megapixel camera with auto focus and flash, which can shoot both stills and videos. Video telephony options are also built into the Samsung Omnia. Unlike the iPhone and the Blackberry which run their own proprietary systems, in comparison, the Samsung Omnia touch phone uses the Windows Mobile platform. This naturally means a lot more applications can run on the Samsung Omina, but like all Windows systems, this can be vulnerable to Windows Mobile specific spyware and Trojans.

The Samsung Omnia i900 provides a full touch based user interface with easy access to applications such as today screen, Launcher, Call log, Camera and Touch player. It weighs 122 g, Like the BlackBerry Storm, the Omnia i900 touchscreen comes with haptical feedback. The Omnia mobile also sports WiFi and Bluetooth, besides GPS on board. The Omnia works on GPRS EDGE networks, and is 3G-ready.

The touchscreen display is standard 3.2 inches. Samsung says the Omnia battery has a standard talk time of 5.8 hours and a standby time of up to 500 hours. Unlike the iPhone 3G, the BlackBerry Storm and the Nokia XpressMusic 5800, the Samsung Omnia i900C comes fitted with an FM radio. The Omnia too comes with a TV output cable. However, despite all these options, we feel the Samsung Omnia touch screen phone is overpriced at Rs 40,000 for a 32 GB model and Rs 38,000 for a 24 GB model. Besides, its rather clunky looks are nowhere close to the BlackBerrys, the iPhones and the XPressMusics. The cool quotient of the iPhone 3G, the BlackBerry Storm and the Nokia 5800 touchphones is somehow missing here.

HTC Touch Diamond:-

A late entrant into India’s mobile phone space, HTC has tried to make good the delay with a smart HTC Touch Diamond. The HTC Touch Diamond sports a 2.8 inch LCD screen and a 3.2 megapixel camera. Note that the screen size is smaller than those of its touch screen competitors. The HTC Touch Diamond comes with Bluetooth and GPS, must-haves in all smartphones. The phone looks quite sharp and chiseled.  The HTC Diamond also features what it calls a TouchFLO 3D, which means you can flip the files and icons with 3D feel, like you flip through a sheaf of papers. The Diamond has a mini-USB and audio output built into one. The company claims a battery life of 330 minutes of talk time and over 280 hours of stand by time. The Diamond touch screen phone has an internal memory of 4 GB, which we think is not quite enough these days. The HTC Touch Diamond also sports an FM radio. The HTC Touch, like the Samsung Omnia, uses the Windows Mobile 6.0 operating system.

Sony Ericsson Xperia X1:-

Compared to the other smartphones in its league, Sony Ericsson has not been able to make a mark so far in the touch screen market. The Sony Ericsson Xperia X1 touch screen phone weighs a heavy 158 grams, which makes it about 50% heavier than similar smart phones. It features a 3.2 megapixel camera, which can click digital stills and videos. A flash is also available. The Xperia X1 touch screen phone runs Windows Mobile operating system, with the Internet Explorer browser and the Windows Media Player. For good measure, the Xperia X1

also has the free Internet browser Opera Mini loaded. It has Bluetooth, GPS and GPRS EDGE connectivity, and comes with FM radio. The touch screen has predictive text input options. The navigation options include the optical joystick navigation and a navigation key. Google Maps is also loaded to complement the GPS system. The Xperia X1’s large size means it houses a powerful battery too – The Sony Experia touchscreen phone claims a talk time of 10 hours and a standby time up to 640 hours.

Apple iPhone:-

The Apple iPhone provides its user with the ultimate mobile device which includes high quality features and stunning design concept. The iPhone is a mobile phone, a highly useable widescreen iPod with touch screen controls and a Internet communications device, all rolled into one portable device making it an outstanding smartphone. The casing is small and lightweight which measures 115mm x 61mm x 11.6mm and weighs 135 grams. The casing comes is a selection of popular colors which include a sleek black gloss look finish and a sophisticated glossy white color.  The phone comes with a huge multi touch colour screen which acts as a brilliant display as well as the users input method which allows the user to control all the phones functions using the multi touch screen. The screen measures 3.5 Inches and provides a screen resolution of 320 x 480 pixels on a brilliantly colored screen.  The iPhone comes with a new Mac OS X based user interface which is based on the large multi touch color display. The iPhone is available in 8 Gbyte memory version. The smartphone comes with a fitted battery which provides the user with up to 16 hours worth of music playback and approximately 5 hours of talk time which includes call time, video time and Internet browsing time. 

 The Apple iPhone comes with a picture address book which allows the user to see a picture of their contact as well as the contacts name. The user will enjoy and quick and easy input method when typing messages as the iPhone will display a touch QWERTY keyboard on the 3.5 Inch screen which is a predictive keyboard and automatically corrects typing errors. The email service works just like the users PC, Mac or laptop email client but the iPhone email service is a mobile email service which is easy and quick to use. The email client supports POP3 and IMAP based email service which include Microsoft Exchange, AOL Mail, Apple Mac Mail, Google Email and ISP email services. The user can enjoy a real email experience on the Apple iPhone which can include graphics, images and photo attachments. The visual voicemail feature works like an email service which allows the user to select and listen to their voicemail messages in any order they desire, just like email service. The user can select the voice mail which is of most important and use the touch screen call back control to call their contact back from the voicemail screen. 

 The built in music player comes with touch screen music controls which allow the user to play, pause, rewind and fast forward their choice of music. The user can view their album covers on the screen and the iPhone comes with a touch screen search facility which allows the user to search by song, album, artist or play list. The multi touch screen controls and easy to create music play lists make the music player fun and simple to use. 

 The beautiful Apple iPhone comes with a built in camera and video feature which allows the user to capture still photographic images and moving video footage easily with their portable device. The smartphone comes with a selection of camera and video settings which will ensure the user gets the perfect effect and finish to every photograph or video captured. The advanced photo management application provides the user with everything they need to gain the perfect finish to each and every photo. The user can record and play video footage in all popular video formats. The Apple iPhone comes with easy to use touch screen video controls which include

play, pause, chapter fast forward, chapter rewind and volume controls which are all displayed on the intelligent multi touch screen. The smartphone allows the user to watch their favorite TV shows and movies which makes the iPhone the perfect companion when the user has some leisure time. 

 The user can enjoy a real mobile Internet experience on their phone which allows the user to view all Internet sites the way they were designed to be viewed. The user can access the Safari Internet browser which comes with a zoom facility which is activated by the user simply tapping the multi touch screen. The Safari Internet browser comes with a built in Google and Yahoo, Internet search functions. The user can search the Internet on their mobile phone where ever they are, but using either Edge or WiFi. The user can connect to compatible devices using Bluetooth wireless technology, WiFi and USB connectivity.. The iPhone automatically knows when the user lifts the phone to their ear to use and will switch off the display to save the battery and prevent any touch controls being selected in error. The Apple iPhones comes with a Google map application which allows the user to view maps and satellite images on their phone. The maps application can provide the user with directions, and traffic information when the user is on the move. The widgets application provides the user with helpful real time information on stock reports and provides Worldwide weather reports.

Bargaining Power Of Suppliers:-At Nokia, they source products and services, including components, software, packaging, manufacturing equipment and office equipment, from thousands of suppliers all around the world.

In their mobile phone business an average 350 components are needed to make one device. Last year, Nokia purchased approximately 100 billion components.

Despite these high volumes and the ever-changing sourcing needs in this dynamic industry, we do have far fewer component suppliers in our mobile phone manufacturing than our competitors. For example, Nokia’s top ten suppliers account for around 60% of our total purchases, while our largest 100 suppliers account for 95%. The longevity and high monetary value of these key relationships help us form deeper strategic partnerships, allowing us to develop and strengthen our ethical and environmental practices together.

Fortunately for Nokia the mobiles are more than the sum of its parts.  Arguably, the parts themselves are not that interesting as they are readily available from a number of sources and alternatives exist for most of the parts. What gives the nokia its appeal is really the software that brings all these parts together and allows the user to interact with the phone in a compelling way.  Nokia have a list of rules and regulations to be followed by each of its suppliers.  So, in this sense, nokia is not beholden to the whims of powerful suppliers.

Suppliers are not having a strong bargaining power because the company purchases the raw material from many different suppliers so it is not affected at a by the supplier, because it purchases raw material from many different supplier so even is one supplier supplies less raw material , the company manager can purchase the remaing from the other.

Bargaining Power Of Customers:-

Mobile phones are one of the products which do not have a good number of loyal customers. Like other electronic gadget, mobile users are also not loyal towards one brand they frequently try to change the mobile in order to experience the new model launched by the other company. Some people go with the brand but when we see a big picture there are less number of loyal customers who try to purchase the model made by only one company. Some customers who are loyal they also sometimes get carried away by the influence of other ie; friends or relatives. Very rarely we find customers who are loyal towards one mobile company. They often try to get the latest model in the market just to show their status and money. Inspite of the above mentioned reasons nokia enjoys customers who are loyal and who prefer and purchase only nokia mobles because of the whole sole reason of the brand name “Nokia” which enjoys a good image and goodwill in the market .It is know one of the best mobile manufactures.

Inspite of having the customers who are loyal towards nokia there are chances of customers shifting from one company to another because, if nokia is not producing products that are satisfying customers than even the loyal customers can shift to other mobile producing company because of the new and smart edge technological product produced by the other manufacture , which satisfys the customers. In the mobile business there is a cut throat secenario. Eevryone is trying to copy the style and new updates of the other manufacturer. Even the first mover advantage is there for a limited time.

Customer have full bargaining power because if nokia is not providing the customer the things demanded at desired price the customers will tend to move toward other mobile manufacturer who is providing the same featured mobile at a cheaper cost. Customers are not brand loyal when it comes to electronic gadget and mobile phone. They just go with the technology, features offered and price.

In order to retain its customer, nokia need to follow few things:-

1. Continious research and development should be done.2. Innovation in terms of technology, produce enhanced and attractive handsets.3. Continious market research in order to know about the customer choice.4. Pricing of the product should be done in appropriate manner, considering the customers.5. Contstantly enhance the quality of the product by providing the customers with more quality

certified product.6. The customer service and nokia priority dealer showroom should be opened in each and

every main location of each and every city where they sell the product.7. In order to maintain the brand image; nokia should provide customers with a quality product

at cheap and affordable cost.

Threat Of Substitute Products:-As such there are no subsitute of mobile phone till date. We cannot consider pagers, telephone and wireless phone as its subsitute because these have N number of limitation when compared with mobile phone. They only fulfil the messaging and talking need of the customer, wheras mobile phones consider the gaming, music, songs, messaging, internet surfing needs of the customers. Mobile phones are like the whole world for customers, it includes emailing, messaging, surfing, listening to songs and radio, gaming. It’s like a complete package ie; all in

one. It has the features of computer, camera, video recorder, radio, game, CD and DVD players. The customers’ insipte of being on the road can enjoy the features of electronic products that they cannot carry with them everywhere and which are limited to their homes.

SWOT ANALYSIS OF NOKIA

StrengthsNokia has largest network of distribution and selling as compared to other mobile phone company in the world. It is backed with the high quality and professional team in the HRD Dept. The financial aspect is very strong in case of Nokia as it has many more profitable business. The product being user friendly and have all the accessories one want that is why is in great demand making it No-1 selling mobile phones in the world. Wide range of products for all class. The re-sell value of Nokia phones are high compared to other company’s product.The strengths are listed below:-

Experience – 142 year of history Strong financial support for R & D (1.4 billion USD) Largest network of selling & distribution Strong customer relation Wide range of products for all class High Resale value compared to other competitors Durability Long battery life User friendly Global Expansion

WeaknessNokia has many strengths and some weakness. Some of the weakness includes the price of the product offered by the company. Some of the products are not user friendly. Not concern about the lower class of the society people. Not targeting promotion toward them. The price of the product is the main issue. The service centers in India are very few and scare. So after sales service is not good.the weakness are listed below:-

Low voice quality Less stylish in low priced products Heavy sets Market skimming prices of high sets Unlike I phone apple, Nokia N97 is complex, tough and not user friendly

OpportunitiesNokia has ample of opportunity to expand its business. With the wide range in products, features and different price range for different people, it has an advantage over the competitors around. With the opportunity like ‘Telecom penetration in India’ being at the peak time, Nokia

has an opportunity to increase its sales as well as the market share. As the standard of living in India has increased the purchasing power of the people as increased as well, so Nokia has to target right customer at right time to gain the most out of the situation. The oppurtunities are listed below:-

New growth markets Other hand held devices Well designed and styled sets Increase their presence in 3G & edge market Improvise on quality of camera Mini notebooks

Threats

Nokia has many threats to tackle to maintain its position as market leader. The threats like emerging of other mobile companies in the market. The companies like Motorola, Sony Eriksson, Cingular (U.S) etc. these companies have come to the stand of tough competition with Nokia in the field of Mobile Phones. Threats can be like providing cheap phones, new features, new style and type, good after sales service etc. So, Nokia has to keep in mind the growing competition around. Nokia has to make strategies to tackle problems in the present and the near future. The growing demand of WLL network can cause drop in sales for Nokia, as Nokia provides many less CDMA phones to the customer. The threats are listed below:-

China mobiles – It has made exact copy of Nokia N96 Cheap & wide range models from Motorola Sales may decline due to global economic downturn I phone apple – A fierce competitor for Nokia N97

ADVANTAGES OF PORTER’S FIVE FORCES MODEL FOR

ORGANISATIONTo formulate effective strategies, managers in an organization need to beaware of realities in the business environment. Strategy formulation thus beginswith a scanning of the external as well as internal environment. Analysis ofexternal environment helps to identify the possible threats and opportunitieswhile analysis of internal environment helps to identify strengths, weaknessesand the key people within the organisation.

Importance Of Environmental Scanning:-

Five Forces Analysis can provide valuable information for three aspects of corporate planning:

Statical Analysis:-

The Five Forces Analysis allows determining the attractiveness of an industry. It provides insights on profitability. Thus, it supports decisions about entry to or exit from and industry or a market segment. Moreover, the model can be used to compare the impact of competitive forces on the own organization with their impact on competitors. Competitors may have different options to react to changes in competitive forces from their different resources and competences. This may influence the structure of the whole industry.

Dynamical Analysis:-

In combination with a PEST-Analysis, which reveals drivers for change in an industry, Five Forces Analysis can reveal insights about the potential future attractiveness of the industry. Expected political, economical, sociodemographical and technological changes can influence the five competitive forces and thus have impact on industry structures. Useful tools to determine potential changes of competitive forces are scenarios.

The Environmental Survey Is Necessary To:-Learn about events and trends in the environment and project the futureposition in each factor of environment.To identify the favorable and unfavorable factors in the environment from thestandpoint of the firm.To figure out opportunities and threats hidden in environmental trends andevents.To assess the scope of various opportunities and shortlist ones which havethe potential of becoming promising businessTo formulate strategy in line with opportunities.

Analysis of Options:-

With the knowledge about intensity and power of competitive forces, organizations can develop options to influence them in a way that improves their own competitive position. The result could be a new strategic direction, e.g. a new positioning, differentiation for competitive products of strategic partnerships.

Thus, Porters model of Five Competitive Forces allows a systematic and structured analysis of market structure and competitive situation. The model can be applied to particular companies, market segments, industries or regions. Therefore, it is necessary to determine the scope of the market to be analyzed in a first step. Following, all relevant forces for this market are identified and analyzed. Hence, it is not necessary to analyze all elements of all competitive forces with the same depth. The Five Forces Model is based on microeconomics. It takes into account supply and demand, complementary products and substitutes, the relationship between volume of production and cost of production, and market structures like monopoly, oligopoly or perfectcompetition.

After the analysis of current and potential future state of the five competitive forces, managers can search for options to influence these forces in their organization’s interest. Although industry-specific business models will limit options, the own strategy can change the impact of competitive forces on the organization. The objective is to reduce the power of competitive forces.