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Semester: Summer 2012
Assignment
Course Code: MBA 550Course Title: Strategic Management
Submitted to:
M. Nazmul Amin Majumdar (PhD)
Course Instructor MBA 550
Prepared by:
Name ID
Sharif Uddin Ahmed 1110833
Date of Submission: Aug 1st, 2012
Independent University, Bangladesh School of Business, MBA Program
Table of Content
A. INTRODUCTION................................................................................................3
B. SYMPTOMS.........................................................................................................4
C. IDENTIFICATION OF THE PROBLEM........................................................5
The new challenge..................................................................................................6The Information Era...............................................................................................7
D. COMPETITIVE ANALYSIS..............................................................................8
Market Analysis......................................................................................................9
E. ANALYSIS OF ALTERNATIVE/ IMPLEMENTATION............................11
F. RECOMMENDATION.....................................................................................13
G. IMPLEMENTATION........................................................................................14
H. Conclusion...........................................................................................................15
Page 2 of 15
A. Introduction
Nokia is well known and world known company for mobile devices and in
congregating communication and integrate industries. They have branches in 120
countries and sales in 150 countries with 128,445 employees. The operating profit of
this world?s largest mobile manufacturers is 5.0 and 37% of market share according
to Q1 2009. For every market segment and protocol they introduce mobile devices of
different technology like W-CDMA (UMTS), CDMA, and GSM. Nokia Siemens
network make services and solution along with telecommunication network
equipment. They are providing digital map information and internet services through
owned subsidiary. This popular public liability company listed on stock exchanges of
New York, Helsinki, and Frankfurt. Nokia is a very important employer in Finland
and plays very vital role in the financial system of Finland. In fact as a partners and
sub contractors of Nokia Company, very small employers grown high in very short
period. In the year 1999 GDP of Finland increased more than 1.5% by Nokia and in
the year 2004 it was 3.5%. Hence Nokia is ranked as a best Finnish employer and best
Finnish brand. Nokia occupied a fifth place as a valuable global brand in the list of
Interbrand/ Business Week’s best global brands 2008. And it’s a first non US
company ranked in the list. In the year 2007 it is a number one brand in Asia and in
Fortune's World's Most Admired Companies list of 2009 Nokia considered as 42nd
world’s admirable company. According to AMR research Nokia supply chain ranked
sixth in the world and third in network communication.
The fundamental question in the field of strategic management is how organizations
achieve and sustain competitive advantage (Teece, et al, 1997) and therefore attain
above industry-average profit. However, since both the business environment and
individual firms are dynamic systems, continuously in flux, it is a big challenge to
achieve a fit between these two systems (de Wit B and Meyer R., 2004) and therefore
get the competitive advantage. This essay will firstly assess and consider the balance
of marketed and resource-based approaches from the academic point of view. These
two approaches should be viewed as complementary (Prahalad and Hamel, 1990;
Mintzberg et al, 1995; Greenley and Oktemgil, 1996). Following the discussion, the
Page 3 of 15
essay just analyzes Nokia’s strategies and empirically justified the reciprocal and
complementary relationship between these two approaches. On the process of Nokia’s
development, the company achieved success because it could balance these two
approaches well. Once it failed to do so, the company immediately suffered the fall in
2004, lost market share and decreased the revenue. However, the company quickly
recovered because it followed the market trends, and simultaneously its strong
internal strengths neutralized the external threats. Within the dynamic and complex
mobile phone industry, both approaches are necessary if Nokia is to succeed.
B. Symptoms
During the late 1990’s Finland had a great success over their rivals and competitors in
mobile phone industry created by Nokia Corporation. Nokia mobile phones and
appliances were the top product in the market and therefore the corporation was
leading in all the corresponding areas of business through the world. Currently
Finland is being pondering whether it has lost its competitive inventive edge, because
last May an authoritative study of global competitiveness put Finland down from the
top three to #8 competitor in the industry. This happened due partially to the decrease
in Nokia shares and popularity among customers. According to the research when
Nokia had its boom during its growth in 1990’s, the overall strategic business
situation in Finland was increasing and now when the overall digital progress is at a
certain set level the overall business is as it was on its regular basis. Nokia is blamed
to be the reason for that and that they may have mistakes in conducting business.
Nokia lost a lot in the value of its shares during past several years from 60 Euros in
2000 to 10.22 currently, which is a very negative estimate for the company and the
finish industry overall. As the dominant player in its home economy, employing
22,000 workers in Finland and dictating the fortunes of some 6,000 companies acting
as suppliers and subcontractors, Nokia stock once made up more than two-thirds of
the total value of shares traded on the Helsinki stock exchange. Now, that proportion
has fallen to less than 30 percent, though it remains the most traded stock, the
exchange said, according to the research.
Page 4 of 15
Global marketing strategy is forcing organizations to rethink their strategy, redesign
their organizations, seek new partnership, and open their minds as well as their
boundaries. Global strategies differ a lot from other international terms in business
literature. “Export markets,” meant excess production or obsolete inventory in
countries not yet accustomed to standards of the home market. “Offshore production”
meant cheap unskilled labor. “International management“meant a separate division of
an organization (Kanter 1994). Global strategy on the other hand involves all the
company’s markets and operations together, viewed through an integrated framework
(Hamel and Prahalad 1989; Hout et al. 1982; Bartlett and Ghoshal 1992; Solberg
1997).
C. Identification of the problem
Since 1989, Nokia has reorganized its organization from providing everything from
electronics, cables and machinery, paper and chemicals, rubber and floorings to a lean
a focused organization in the telecommunication industry (Lipasti 1989 and Quelch
1989). This organizational change enabled Nokia to focus on its core competence and
be the superior manufacturer in the telecommunication industry. Nokia identified the
opportunity trends in the market development of mobile cellular products at an early
stage of the wireless revolution.
Mobile cellular devices are today an integrated peripheral of our daily surroundings.
In the Nordic countries the mobile devices are almost as natural as personal watches.
The connection between consumer fashion and high technological mobile phone
devices made wireless communication devices more available.
Nokia Telecommunications is a leading supplier to local operators. By providing
superior equipment to different standards, Nokia are delivering large systems for
infrastructure. The Nokia Group is a global winner with its strong market position and
influence in future development in wireless telecommunications.
Page 5 of 15
The new challenge
The telecommunication industry is dramatically changing. As the modernization
increases in the telecommunication and networks are becoming wireless, new areas
are covered by the industry. The fast growing segments of the Internet are probably
the main driving force for the expansion of the wireless industry (Evans et al.
1998:13). Today we explore a high growth in networks applications and the
establishment of Virtual Private Networks (VPN). The next generation mobile cellular
devices are characterized as mobile devices, not mobile phones. This generation
devices will operate as a communication center, integrating Internet technologies and
different network applications for universal collaboration and communities.
To follow the rapid changes in the industry, several leading organizations are
preparing for the new reality. Several joint ventures are established among the world’s
leading manufacturers of mobile cellular devices, telecommunications operators,
database operators and content providers.
Symbian is such a joint venture between main manufacturers Motorola, Nokia,
Eriksson, Philips and Psion. Other technology partners like Oracle, Sybase, JavaSoft,
Lotus, DEC, and NEC among others. Symbian is established to develop a new
standardized platform for the new wireless communication platform. Nokia also
participates in the Bluetooth joint venture, a cooperation mainly withn Eriksson.
The importance for strategic alliances is becoming crucial as the competition
increases. The joining forces we experience today are indications towards alliances in
the fast growing industry. There are many alliances established in the various
industries.
The Information Era
Many of the world’s biggest companies will challenge Nokia in the future.
Organizations like Microsoft, CNN, SUN Microsystems, AT&T, Cisco and 3Com
Page 6 of 15
among others, are all players in the new era of telecommunications and wireless
information exchange (Evans et al. 1998:13; Eugster et al. 1998:92). The key issues
for further success is; 1) the establishment of the core network, where data and voice
networking do not reside on functionality; 2) creating the unique product platform,
not just offer the unique platform, but also bundles with partners to provide and
influence the “killer” applications; 3) delivering the platform, enable solutions based
products I.E e-commerce and management information systems; 4) increasing
organizational skills among employees and partner alliances.
Given the stability of the Internet standard, this consolidation is likely to continue,
meaning that ultimately there will be fewer seats at the table for today’s organizations
and a higher demand in personal sectors. At the same time, networked applications
will drive the growth. Finally, the battle for the edge will be reached by stable focus
on the superior solutions and customer relationship.
D. Competitive Analysis
Nokia suffers huge competition from the Mobile Manufactures like Sony Ericsson,
Motorola, Siemens, Panasonic, Sagem, NEG and Toplux. These manufacturers are
having the technology in their hand and providing the mobile at the cheapest prices.
However the customer care of Nokia is extremely providing the incomparable service
to their customer base. Nokia is also getting fresh new competition from the Google
and Apple. These companies are branded companies in 3G technologies available in
the market. Smart Phone is the latest buzz in the mobile industry that spreads around
for quite some time.
Nokia launches the new touch screen mobile phone 5800 Xpress Music. This is the
first touch screen model released by Nokia. Nokia VP Jo Harlow said that, By adding
the benefits of touch-screen technology to S60, the world's leading Smartphone
interface, Nokia is taking the familiar and giving it a human touch, However there is
not considerable threat to Nokia, as the market share of Apple iPhone 3G is somewhat
Page 7 of 15
small. Nokia’s 5800 are based on the S60 Platform and it is operated using the
operating system called Symbion.
Nokia is the big player in the Mobile industry for the past 10 years, but they are not
eager to experiment things. Other competitors like LG, Samsung released the touch
screen as soon as their entered into the mobile industry market 1. Nokia have to
concentrate on making the mobile based on the open platform. And the other thing
they have to cope up with market expectations.
Many customers of Nokia expecting Nokia to release mobile phones that works like
PDA. Many other Mobile Manufacturers like BlackBerry released the Computer like
Mobile Phone. Nokia should take some effective measures to introduce some new
models that are expected by the Nokia’s evergreen customers. They need to
concentrate more on the marketing strategies to boost the sale of the new model Nokia
Phones. They need to focus on the principles of marketing to reach out for potential
customers.
The gap between the Motorola and Nokia is very big. Motorola have 17.3% and it is
far less than the Nokia. Motorola has to think big to come near to the Nokia’s
Achievement. The competition between the Samsung and Siemens is very tough and
they are the potential competitors to Nokia in some factors. Samsung and Siemens
providing the clean and clear voice with good network support.
Market Analysis
Marketing Strategy is very important for every company. Especially for product
oriented companies Marketing is a key thing that needs to have more focus. Nokia’s
marketing strategy is based on the customer needs. That is why Nokia is successfully
running a customer oriented marketing plan. Customer Satisfaction is very important
for every business. For the past few years customer feedback of Nokia is extremely
high. It is seen that the potential new customers are buying the Nokia and switching to
Page 8 of 15
Nokia from other Mobile Manufacturers like Samsung, Motorola, Sony Ericsson and
LG. The switching is more to Nokia when compared to other mobiles.
Customer Perception of Nokia is increased for the past few years. Nokia customers
are getting the product for the money; the quality of the product is extremely high
when compared to other mobiles in the market. The Nokia Products are fashionable
and looks great for the money the customer spent on it. The reliability of the Product
is considerable increased for the past few reports. Nokia’s predictability is low when
comes to customer needs and expectations. Nokia released the touch screen phone so
late. While other competitors are releasing the touch screen product once in every
week, but Nokia remains silent on this issue. Nokia’s market prediction needs to be
improved and they have to implement the expectations of the customer in quick time.
Customer prediction plays the important role in keeping the current share of the Nokia
in the Global Mobile market intact. The marketing strategy of Nokia brings good
profit to the company.
The technology boom that is going on in the world does not touch the overall growth
of industries in Finland anymore according to the research and the future projections
admit that the situation is caused mainly by inadequate business strategies of the
Nokia. Recently it has become not so popular for younger people to strive to work for
Nokia. But according to Ms. Suominen who is one of the executives of the
corporation “Nokia is a Finnish company, but also a global company, and it is
certainly more global than it was two years ago”.
Nokia is considered to be the founder of cellular communication and thus its products
are always the etalon for other manufacturers in their production process. Once you
have a Nokia cell phone in use you will never switch it to some other manufacturer if,
of course you have sufficient funds to afford a new model.
Nokia should probably use that position in its marketing strategy in order to increase
the amount of end users and thus the amount of profit. Another suggestion that is
necessary to mention in this report is that Nokia should be more quickly responsive to
Page 9 of 15
changes in the market of cell phones. For example if some new features are presented
by the rivals in their models Nokia should come up with even better ideas in order to
always be on the edge of mobile phone technology.
So to conclude the research it is necessary to say that although the current Nokia
market position is somewhat lower than it should be, there is still a great chance to
return to the level of the end of the 1990’s because the uniqueness of the products
itself. It is just necessary to improve marketing tools in order for the products of
Nokia to become more available and on the cutting edge of technology to the
customers. One of the possible ways to do it is probably to return to the roots of the
mobile phone development and see what actions were successful back than that made
a company so great and try to implement them, of course with adjustments necessary
for the current market conditions, in their marketing process. This will return the
company’s previous standing and move the Finland economy to the new stage of
E. Analysis of alternative/ implementation
Nokia requires an approach that recognizes that today’s customers are expecting a
combination of great handset, an operating environment that is great to use and all
within the context of the Internet.
Nokia is now changing its focus from hardware to software in order to better compete
with the features offered by BlackBerry and the apps offered by iPhone and Android.
Following the announcement of the new CEO, Nokia shares increased 6 percent in
Helsinki.
Although Nokia currently has a 34.2 percent global market share for all mobile
phones, its market share in smart phones has been rapidly declining. Symbian, the
Nokia operating system for smart phones, has a 41.2 percent market share as of Q2
2010, down from 51 percent just one year before. Meanwhile, RIM’s BlackBerry has
achieved steady growth into its current 18.2 percent global Smartphone market share,
Page 10 of 15
and Apple has achieved a 14.2 percent market share with its iPhone. Now, the number
one threat to the market is Android, the Google Smartphone operating system.
In Q2 2009, Android had a tiny market share of just 1.8 per cent. However, by Q2
2010, Android Smartphone held a global market share of 17.2 percent, eclipsing the
growth in sales of any other competitor. And now, a new report from Gartner says
that by 2014, Android phones will represent nearly 30 percent of the entire global
market. Nokia is not immediately doomed, since its foothold with loyal customers has
Symbian predicted to retain 30.2 percent market share in 2014. Nonetheless, this
represents a declining business and is therefore a huge threat to Nokia.
Microsoft is hardly a player at all in the Smartphone market, meaning it stands on the
sidelines of a very lucrative industry. As Nokia struggles to get back into the game, an
ex-Microsoft manager as CEO may not be the best thing for the company. After all,
why was he not in charge of Smartphones at Microsoft if that is his strength? Of
course, there is still the significant potential for Elop’s take-charge approach to uplift
Nokia, and possible future cooperation with Microsoft may be beneficial to both
companies.
Research in Motion is severely threatened. Once hands-down the global leader in
Smartphones, the advent of the iPhone and mobile apps has demonstrated that there
are many other equally capable e-mail devices that offer attractive features that
BlackBerry lacks. The Gartner report claims RIM’s market share will plummet from
19.9 percent in 2009 to 11.7 percent in 2014.
Looking into the future, it appears Google’s Android is flooding the market.
According to CEO Eric Schmidt, over 200,000 Android-powered phones are sold
every day. And since Google offers the software to Smartphone manufacturers free of
charge in order to promote use of its search engine and other services like Google
Maps, there is a very strong incentive for companies like HTC Corp and Samsung to
produce Android phones, as it represents an easy way to add desirable features to their
products.
Page 11 of 15
Since Android is a software platform and not a package of hardware and software like
iPhone or BlackBerry, there is much more potential for a high-quality, diverse
selection of Smartphone. Furthermore, since it is open-source, the potential to create
apps is much greater than for any major existing Smartphone OS. Android’s market
share growth demonstrates that consumers do appreciate these features and are opting
to buy Android because of them.
F. Recommendation
As we are moving into the next millennium, the world has become a global
playground. People, markets, governments and organizations are continuously
communicating across borders and exchanging information. The liberalization and
technological invention is the main driving forces in the wireless telecommunication.
Nokia needs to take into consideration implementation of the following
recommendation to maintain the global leadership position in mobile market.
Nokia should consider the importance of introducing the mobiles having
different variations from the previous releases.
Nokia have to concentrate on making the mobile based on the open platform.
And the other thing they have to cope up with market expectations.
Globalization requires new relationships both across companies and in
companies. To compete effectively in the global economy, Nokia must
strengthen their unity as well as become more adept as external learning
Many other Mobile Manufacturers like BlackBerry released the Computer like
Mobile Phone. Nokia should take some effective measures to introduce some
new models that are expected by the Nokia’s evergreen customers.
Page 12 of 15
They need to concentrate more on the marketing strategies to boost the sale of
the new model Nokia Phones. They need to focus on the principles of
marketing to reach out for potential customers.
Samsung and Siemens is very tough and they are the potential competitors to
Nokia in some factors. Samsung and Siemens providing the clean and clear
voice with good network support. Nokia needs to think of it.
Nokia should be more quickly responsive to changes in the market of cell
phones. For example if some new features are presented by the rivals in their
models Nokia should come up with even better ideas in order to always be on
the edge of mobile phone technology.
Nokia requires an approach that recognizes that today’s customers are
expecting a combination of great handset, an operating environment that is
great to use and all within the context of the Internet.
G. Implementation
Countries can be grouped into regions for administrative convenience. This grouping
sometimes makes a difference. One American company worked on an Asian strategy,
without acknowledge the vast differences existed between Hong Kong and Malaysia
or Indonesia and India (Kanter 1994). Similar assumptions where made in Europe and
companies gained efficiency by creating “Eurobrands”, but they still have to deal with
many jurisdictions and local distributors.
Globalization requires new relationships both across companies and in companies. To
compete effectively in the global economy, organizations must strengthen their unity
as well as become more adept as external learning. Business managers emphasize the
importance of considering all markets together when determining the opportunities for
sharing or maintain difference. Global competitiveness often requires greater internal
cooperation.
Page 13 of 15
Global strategy brings new skill for companies and their managers. In “Managing
across Borders” the authors have shown that world-wide product managers, world-
wide functional managers and regional geographic managers must each maintain
focus on their dimension of the business while coordinating closely with the others.
The balancing acts required for effective execution of global strategies represent one
more force for organizational change. Less bureaucracy and more communication will
characterize the global competitor of the future. Vertical control and a hierarchy
command will be replaced by more horizontal, peer-oriented relationship building
across borders and boundaries.
Global marketing strategy is about thinking in an integrated way about all aspects of
the business - its suppliers, production, markets and competition. The true meaning of
global is holistic - not international.
H. Conclusion
Nokia is very conscious about the business mobility market and with the support of its
reliable partners, is able to extend its mobile business solution worldwide.
Mobilization is very easy and cost effective with the IT involvement. Nokia
completely relies on phased approach, developing a particular area of mobility after
another. Hence organization can easily take advantage of mobilization and attain
benefits of workforce like high employee flexibility and increased productivity within
very short time period. The balanced various approaches of Nokia made it as a leader
in the market. By aligning the internal strengths and external opportunities, balancing
the emergent and planned strategies Nokia retrieved the market share. Hence the
Phased approach is basic reason for the long development of Nokia in mobile phone
industry.
It is just necessary to improve marketing tools in order for the products of Nokia to
become more available and on the cutting edge of technology to the customers. One
of the possible ways to do it is probably to return to the roots of the mobile phone
Page 14 of 15
development and see what actions were successful back than that made a company so
great and try to implement them, of course with adjustments necessary for the current
market conditions, in their marketing process. This will return the company’s
previous standing and move the Finland economy to the new stage of development.
Page 15 of 15