Semester: Summer 2012

Assignment Course Code: MBA 550 Course Title: Strategic Management

Submitted to: M. Nazmul Amin Majumdar (PhD) Course Instructor MBA 550 Prepared by: Name Sharif Uddin Ahmed ID 1110833

Date of Submission: Aug 1st, 2012 Independent University, Bangladesh School of Business, MBA Program

Table of Content

INTRODUCTION..........................................................................................................................................2 SYMPTOMS .................................................................................................................................................4 IDENTIFICATION OF THE PROBLEM..................................................................................................5 The new challenge............................................................................................................................5 The Information Era.........................................................................................................................6 COMPETITIVE ANALYSIS.......................................................................................................................7 Market Analysis................................................................................................................................8 ANALYSIS OF ALTERNATIVE/ IMPLEMENTATION ....................................................................10 RECOMMENDATION...............................................................................................................................12 IMPLEMENTATION ................................................................................................................................13 CONCLUSION.............................................................................................................................................14

Introduction

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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 Weeks best global brands 2008. And its 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 worlds 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 essay just analyzes Nokias strategies and empirically justified the reciprocal and complementary relationship between these two approaches. On the process of Nokias development, the Page 3 of 14

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. Symptoms During the late 1990s 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 1990s, 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.

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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 managementmeant a separate division of an organization (Kanter 1994). Global strategy on the other hand involves all the companys markets and operations together, viewed through an integrated framework (Hamel and Prahalad 1989; Hout et al. 1982; Bartlett and Ghoshal 1992; Solberg 1997). 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. The new challenge

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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 worlds 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 worlds biggest companies will challenge Nokia in the future. Organizations like Microsoft, CNN, SUN Microsystems, AT&T, Cisco and 3Com 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 Page 6 of 14

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 todays 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. 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 small. Nokias 5800 are based on the S60 Platform and it is operated using the operating system called Symbion.

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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 Nokias 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 Nokias 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. Nokias 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 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 Page 8 of 14

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. Nokias 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. Nokias 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 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.

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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 1990s 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 companys previous standing and move the Finland economy to the new stage of Analysis of alternative/ implementation Nokia requires an approach that recognizes that todays 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, RIMs BlackBerry has achieved steady growth into its current 18.2 percent global Smartphone market share, 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 Page 10 of 14

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 Elops 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 RIMs market share will plummet from 19.9 percent in 2009 to 11.7 percent in 2014. Looking into the future, it appears Googles 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. 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. Androids market share growth demonstrates that consumers do appreciate these features and are opting to buy Android because of them. Page 11 of 14

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 Nokias 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.

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 Page 12 of 14

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 todays customers are expecting a combination of great handset, an operating environment that is great to use and all within the context of the Internet.

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. 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

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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. 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 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 companys previous standing and move the Finland economy to the new stage of development.

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