A company analysis of Nokia

A Finland multinational company, Nokia Corporation (Nokia) is one of the many companies in today’s mobile industry. Nokia aims to provide a range of mobile devices which enable people to enjoy their services and software in areas like entertainment, business purposes and many more.  

In 1865, Nokia was founded by by Fedrik Idestam with the business of cable, rubber and pulp manufacturer. Today, the CEO of Nokia is Olli-Pekka Kallasvuo and the chairman is Jorma Ollila.

Nokia is one of the worlds leading mobile phone provider operating in more than 150 countries around the globe with more than 123,000 employees of which almost 30 percent is employed for Research and Development in 16 countries. As of 2009, the global revenue for Nokia was EUR 41 billion and the operating profit was 1.2 billion.

Its rapid growth in the 1990s coincided with a basal structural change of the Finnish economy and industry which Nokia had played an important role. Despite being a leading multinational company in Finland, Nokia plays an important role in the economic growth of Finland as it has been one of the fastest growing companies in the whole of Europe. 

Get Help With Your Essay

If you need assistance with writing your essay, our professional essay writing service is here to help!

Essay Writing Service

History of Nokia

In 1865 when the demand for paper was strong, engineer Fredrik Idestam established a wood-pulp mill started manufacturing paper in southern Finland near the banks of a river. This made the company’s sales improved tremendously and Nokia expanded even faster.  Nokia had first exported paper to Russia followed by the United Kingdom and lastly, France. Nokia factory then employed a large workforce and a small community grew around it.

Finnish Rubber Works, one of the manufacturer for Rubber goods was impressed with the hydro-electrcity produced by the Nokia wood-pulp. They decided to merge and started selling goods under the brand name, Nokia. After World War II, it acquired a major part of the Finnish Cable Works shares. The Finnish Cable Works had expanded quickly due to the increasing need for telegraph, telephone networks and power transmission. Gradually the ownership of the Rubber Works and the Cable Works companies consolidated. In 1967, Nokia Group was formed when all the 3 companies merged-up. The Electronics Department generated 3 percent of the Group’s net sales and provided work for 460 people.

In the beginning of 1970, the telephone exchanges consisted of electro-mechanical analog switches. Soon Nokia successfully developed the digital switch (Nokia DX 200) thereby replacing the prior electro mechanical analog switch. The Nokia DX 200 was fixed and improved with high-level computer language as well as Intel microprocessors which allowed computer-controlled telephone exchanges to be the best and is the basis for Nokia’s network infrastructure even till today.

In 1981, the introduction of mobile network enabled the Nokia production to invent the Nordic Mobile Telephony(NMT), the world’s very first multinational cellular network. The NMT was later on introduced in many other countries. Soon after, a digital mobile telephony, Global System for Mobile Communication (GSM) was launched and Nokia started the development of GSM phones. Beginning of 1990, there was an economic recession in Finland which made Nokia’s sale of GSM phones increased tremendously. This was the main reason for Nokia to not only be one of the largest but also the most important companies in Finland. Based on resources, Nokia supplied GSM systems to a total of 59 operators in 31 countries in August 1997. Improving successfully; Nokia also became a large television manufacturer and the largest information technology company in the Nordic countries.

Today, Nokia is a world leader in digital technologies, including multimedia terminals, wireless data solutions, telecommunications networks and mobile phones.

SWOT analysis

Strengths

Nokia has a strong brand name which is one of the most important strength as it is then favorable for Nokia to launch its new products and it is reliable for the customers. Its distribution network very wide, globally so that their products are easily available for their target customers.

Nokia has also strong finances which make it possible to make innovations easily.  Nokia products are user-friendly, even an illiterate person from developing or third- world countries can use their products easily. The financial aspect of Nokia is verystrong as it has many profitable businesses.

Nokia has a high variety of products which is attractive for their customers and each set have high re-sell value as compared to other brands which is favorable for Nokia as well as for the customers. The product also being user friendly which also have all the accessories one would want which is why it is in high demand, making it the No.1 selling mobile phones brand in the world.

Nokia has one of the largest networks of distribution and selling as compared to

other mobile phone company in the world. Also, Nokia has a HRD Department employed with the high quality and professional team in the HRD Dept. The product also 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.

Weakness

Although Nokia products are much more costly as compared to others, it has good quality and is reliable which somehow cover this weakness of Nokia but still it is this weakness that the people belonging to the lower class is unable to purchase Nokia products. 

Some of the Nokia products are not user friendly which was why it is not successful in the market.

Nokia’s has only a few sales and service centers therefore it’s after sale service is not impressive. If customers were to face difficulties or problems regarding the product, they will have to wait for a period of time before their questions or doubts get answered.

In conclusion for Nokia’s strengths and weaknesses, there are more strengths compared to weaknesses. The main weaknesses are the price of the product and the very little service centers.

Opportunities

Nokia can expand its market shares by introducing their brand and by catering new target market as well.

Nokia can also improve their sales by attracting more customers in the existing market, by changing the prices, introducing new product range and also by innovating product features of existing products.

Telecommunication market is growing rapidly and more people are being interested towards the industry so it is great opportunity for Nokia to expand market share and to grow as well.

Through excessive advertisement and effective market communication it can build a strong reputation and increase its sales and also create good brand image among the people and their customers.

With the wide variety in their products, their features and different price ranging for different people, it has an advantage over the competitors around. With the

opportunity like ‘Telecom penetration in India’, Nokia has an opportunity to increase its sales as well as the market shares. As the standard of living in India has increased more people would want to purchase even better products, so Nokia has to target the right customers at right time to gain the most out of the situation.

Threats

As the telecommunication industry is increasing, not only will the opportunities increase but also threats.

Nokia has many threats to face to maintain its position as the market leader in the mobile telecommunications market. The threats like emerging of other mobile companies in the marker like Motorola and Sony Eriksson can increase more competition which may lead to a decrease in sales. These companies have come to the stand of tough competition with Nokia in the field of Mobile Phones.

Some competitors even offer products which may be similar of Nokia at a much low price and as the economy is falling down. This fact can attract more customers towards the products due to the low prices.

Another threat for Nokia is the growth of WLL network because Nokia provides CDMA cell phones so its products can go toward the down fall with the rise of WLL network.

Porter’s five model

An example of Porter’s five Model

Porter’s five Model: Nokia

Threat of new entrants

Patents, Rights

Brand building

Absolute cost Advantage

Strong Distribution chain.

High

Competitive Rivalry

Motorola, Sony-Ericson

Growing mobile industry

Diversity in the industry

intense advertising

High

Relative cost performance

Buyer tendency to substitute

High

Threat of substitute product

Bargaining leverage

Price sensitivity

Substitute

High

Supplier/Firm

Switching cost

Substitute Inputs

Supplier to Firm ratio

Low

Bargaining power of suppliers

Bargaining power of customers

Applying Porter’s Five to Nokia:

The threat of new entry is high: rights and patents for Nokia is that Nokia’s phone model and/or software has similar properties and stuffs as other phone might have.

Competitive rivalry is extremely high. When comparing companies like Nokia, Motorola and Sony-Ericson, if someone raises prices, they’ll be undercut. Intense competition puts strong downward pressure on prices. Companies with more advertising may just win over more customer.

Bargaining power of customers is strong, again implying strong downward pressure on prices. Buyers made not want to buy Nokia’s phone model due to price sensitivity compared to other companies.

There is some threat of substitute product as the performance of the phone does not deserve the desired price that Nokia has stated.

Nokia’s strategies

Here are some strategies Nokia has:

Changes of competitive environment – Traditional competitors which are in the low end are making an effort to increase their volume share. As the mobile telecom, Internet and PC industries converge, the industry ecosystem is expanding, and new entrants like Apple, RIM and Google are creating new mobile solutions.

Change of consumer needs – The importance and volume growth of voice and design driven devices business continues and will resume. Many consumers look forward to innovative mobile solutions. Nokia aims to be a truly consumer driven company and is responding to these divergent consumer needs.

Believing in a world of changing paradigms – Changing of the nature of consumer’s relationships with companies.

Nokia’s business – Nokia services and devices has two major priorities; Products(business emphasized on maintaining and increasing sale advantage) and Solutions(business delivers mobile solutions emphasizing on innovation and unified UX). The delivery of groundbreaking location-aware solutions and advertising prospect is enabled by NAVTEQ’s mapping content. NSN enables Communications Service Providers to make the most of networks efficiency and to bring rich experiences.

Nokia uses the power of we – Nokia uses their scale for good by presenting maintainable products and solution across the whole portfolio, advocating sustainable choices with mobile services and ensuring a world-class global take-back program

Competitive advantage now and in future – leveraging Nokia’s main strengths; leading brand, scale, distribution capability, product portfolio excellence & leading market position in most markets. Developing new strengths; seamless, delightful and effortless user experiences, vibrant partner ecosystem, people and places enriched solutions, direct and endless consumer relationships, regain market standing in all markets

Irresistible solutions and vibrant ecosystems – starting from a consumer needs and wants, radically improve the user experience, co-creating value with developers, operators, and partners by building an open ecosystem.

Direct and endless consumer relationships – Nokia devices strive to initiate all consumers to the rich world of services. Consumer understanding to maximize Nokia’s value to the consumer. Privacy and trust: permission based. 300Million active users by end 2011.

Best devices – three devices areas with different ways to create and capture value; computers, smartphones and phone. Seamless user experience is number one priority.

Smart services – focus on four interconnected services under Ovi brand. Differentiation through context enrich services – people and places.

Recommendations

Though Nokia has many good points and that is has some good strategies, Nokia should come up with something unique to its own companies so that it wouldn’t be so easily rivaled by other companies easily. Like for example maybe come up with its own software that’s only unique to Nokia and not use the same software that Sony-Ericsson uses too. Nokia can also come up with more user-friendly and customer satisfactory phone models.

Find Out How UKEssays.com Can Help You!

Our academic experts are ready and waiting to assist with any writing project you may have. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs.

View our academic writing services

Conclusion

Nokia is a big and successful company that has lasted and evolved from a small company dealing with wires and paper, to a big company that deals with a lot of electronic gadgets that many are using right now. It has improve through the decades and live up till today and still improving. It may be a big company and holds quite a fair bit amount of shares in the world, but there are still rooms for improvement as rivaling companies emerge the industry. Nokia has big aims and flexible strategies for the past, present and future.