2017-11-0279

OVERVIEW
Samsung
As opposed to Nokia, Samsung has spread itself deep into the electronics market. It can
be identified as a business conglomerate. However, for the purposes of this assignment I will
limit my analysis to telecommunication industry only. Samsung was founded in 1938 and today
it dominates the mobile market with a massive share of 20%. Its headquarters is located in Seoul,
South Korea. Samsung employees more than 427,000 people generating revenue of more than
260 billion US dollars. It has a major impact on South Korean economy.
Nokia
Nokia is a telecommunications and computer software company that specializes in
making mobile phones. Its headquarters is located in Finland it operates globally. Until 2007, it
dominated the telecommunication market but then lost to competitors like Samsung. Today,
Nokia has employed more than 93000 people and generates revenue amounting to over 30 billion
Euros.

MISSION STATEMENT
The mission statement for Nokia is widely known to be Connecting People. Although,
there seems to be not much in it but these two words explain a lot about Nokia. In this globalised
world, there is a constant need of people to share, communicate and stay connected. Nokia
fulfills this need of millions of its users which is in accordance of their mission statement.
The mission statement for Samsung is To inspire the world with innovative
technologies, products and designs that enrich peoples lives and contribute to a socially
responsible, sustainable future. Samsungs mission statement is pretty straightforward as it
talks about new designs that will enhance users experience of smart phones keeping an eye on
the threat this will pose to the environment.

COMPARISON
The mission statements of Nokia and Samsung are quite different from each other. Nokia
is not very clear on it mission statement whereas looking at Samsungs mission statement, it
seems that they have a well thought out plan about the direction in which they should proceed.
Nokias Connecting People is the primary aim of all the telecommunication companies so it
needs to be more elaborative in its mission statement. On the other hand, Samsung has put
forward a clear summary of its aims and the reason for its existence. They have not only talked
about the need to innovate in telecommunications but have also kept in mind the need to protect

the environment. Hence, they rightfully portrayed themselves as socially responsible. All this is
missing in Nokia.
For decades, Nokia has effectively followed its mission statement of Connecting
People. Nokia smart phones include all the necessary tools and software one requires to
communicate. Communication has not only been made easier but Nokia has also made it
cheaper. Nokias smart phones are usually not very expensive and yet they provide customers
with mostly everything. Be it video calling through Skype or messaging via Whatsapp, Nokia
has surely explained the true meaning of Connecting People.
Samsung is perhaps the leading smart phone company in the telecommunication industry.
It has surpassed companies like HTC and Blackberry in innovative designs and features that man
once dreamed of. Technological advancement is a key feature of Samsung and they are
continuously researching on how to evolve their smart phones in order to stay at the top.
Samsungs decision of using the Android operating system in their phones helped them to
dominate the smart phone market. This decision was enough to surpass the telecommunication
giants Apple. Feature like S voice, which is a voice command that enables Samsung users to

control their smart phone via speech, are more than a user could ask for. Hence, the statement
products and designs that enrich peoples lives. Moreover, Samsung pays considerable
attention to the environment in which it operates. It has various operations going on like Climate
strategies, Eco-friendly products, and Chemical management etcetera to protect the environment.
Samsung uses several methods to ensure high efficiency and to reduce energy consumptions
wherever they operate. After every two months, the energy management group meets to ensure
that the measures for saving energy consumption are being followed effectively. A table that
shows energy reduction programs and performance in 2012 can be seen above.

In addition, reduction in greenhouse gases (GHG) is also a primary concern for Samsung. They
have taken serious measures to cut down the emission of GHG by 34% in 2011. This was mainly
achieved by the separation of LCD business division. Other measures include installation of
facilities for reducing greenhouse gases emitted from manufacturing sites, energy efficient
facilities etcetera. Thus, this is also in accordance with the part of their mission statement which
states and contribute to a socially responsible, sustainable future.

CORE COMPETENCIES

Nokia

Personality of workforce: One of the major core competencies of Nokia is choosing the
right person for the right job. The workforce behind Nokia is made up of young and
talented engineers and researchers from around the world. Nokia pays particular attention
to the personality of its employees in addition to technical skills which is a key factor of
the companys success. The technical skills of a possible employee are not sufficient to
ensure his/her place in Nokias team. Their character and personality are equally
important.
Brand image: Brand name is also considered as Nokias major core competency. Nokia is
generally associated with superior quality products combined with user friendly customer
care.
Research and Development: Another core competency of Nokia is its heavy investment
on R&D. In 2007, Nokia spent 9.5% of its revenues on R&D. Nokia has its research
centers in China, India, and Finland etcetera. Nokia aims to exploit one of the fastest
growing economies like China and India. The research centers in Finland experiment on
user experience, battery power efficiency, security, and user friendly interface.
Large-scale production: Nokia has a large spare capacity which enables it to meet the
growing demand of its smart phones. Nokia has the ability to produce its smart phone on
a large scale which also cuts down its cost and hence, Nokia mobile phones are much
cheaper than those of its rivals. Nokias manufacturing sites for cell phones are situated
in Brazil, China, Finland, India and UK etcetera. Moreover, Nokia has factories located
in China, Finland, Germany and India that mainly focus on network technology.

Samsung

Vertical Integration: The main core competency of Samsung is that it manufactures

chipsets for smart phones on its own. From 1998 to 2003, Samsungs primary focus was
to manufacture chips internally rather than acquiring from different suppliers. Samsung
invested massively in order to build chip factories so that it can compete effectively with
other competitors.
Flexibility: Samsung outwitted its competitors in South Korea, who were unwilling to
expand their production so as to save additional costs, by opening manufacturing sites in
countries like China and India. It benefitted by the low wage rate in these countries.
Samsung went an extra mile by making technological improvements in their smart
phones to keep up with the changing smart phone trend.
Hardware: Samsung kept its primary focus on improving its hardware rather than
producing its own software so as to save itself from piracy related issues. This is a major
factor of Samsungs high tech smart phones. Samsung made a strategic alliance with
Google which gave it the Android operating system for their smart phones. Hence, the
best hardware was combined with the best software to unleash the next generation smart
phones. Since, Samsung did not have to worry about the software; it was able to
introduce features like Air Gesture in its latest smart phone.
Marketing: Samsung invested heavily in advertising once it made a name in electronics
market. It sponsored the 1998 Seoul Olympics which gave it considerable recognition as
an emerging brand. From that time, Samsung took off. Samsung launched interactive
campaigns which emphasized on the superiority of their products, web-based promotions
and thought provoking ideas that usually go viral.
Diversity: There is diversification in Samsungs workforce. Samsung employees people
from different nationalities, bringing in the best talent to innovate new ideas and
technology. All the people, from various backgrounds collectively design Samsung smart
phones which are inevitably accepted around the globe.

BUSINESS MODEL
Samsung
Samsung is also a publicly traded corporation with board of director and shareholders. It
is taxed by the government and enjoys unlimited life and legal protection.
Founded in 1938, Samsung initially started as a fishing exporter but entered the industries
of textiles, food processing and retail. Samsung became a multinational conglomerate when it
introduced itself to the electronics industry in 1960s. In 1980s, it had major success in electronics
market as it developed color televisions, personal computers and tape recorders.

Eventually, Samsung entered the telecommunication industry and focused on quality

rather than Nokias one for all strategy. Samsung introduced next generation smartphones in
the telecommunication market. Touch screen phones with countless innovative features gave
Samsung an edge over its competitors and it surpassed companies like Nokia which still had the
classic button phones in their inventory.
Samsung has led the telecommunication industry in innovation for the past years. With
such devices as Samsung Galaxy S4 and Galaxy Note III, Samsung has brought a revolution in
telecommunication market. Smartphones, phablets and tablets have increased consumer demand
which has generated positive cash flows.
Samsung adopted an effective marketing strategy as it adapted to cultural differences
worldwide, launched various ads and promotion strategies. Samsung also used social media for
advertising which resulted in its smartphones going viral. Samsungs advertising budget is a
massive $401 million which is far greater than that of Nokia and other rivals. Samsung also
teamed up with cooperative companies like AT&T to devise advertising strategies which
increased the sales of their products.

Nokia
Nokia is a multinational corporation with shareholders. Being a corporation, Nokia
enjoys unlimited life as it can be passed on to different owners in the future. A corporation like
Nokia also enjoys legal protection which is absent in other types of businesses.
Nokia was initially launched in 1865 and was originally a manufacturer of wood pulp. In
1966, with the help of government Nokia entered the electronics market. In 1987, the business
model for Nokia was based on organic growth. At that time, it generated revenues by selling
variety of goods like paper, rubber and electronics. The division that handled the mobile phones
mainly manufactured two types of phones, one for business use and the other for use by
government authorities. From 1985 to 1995, there was a transition from rubber, paper and cable
industry to electronics with special focus on telecommunication devices.
Eventually, Nokia shifted from being a conglomerate to a leader in the
telecommunication industry. It focused more on catering to the needs of every kind of mobile
user. Nokia manufactured cheap mobiles like Nokia 1112 for use by an average customer as
opposed to Nokia N series which were created for use by well-off people. As a result, Nokia kept
a huge inventory which resulted in negative cash flows for the company. As the technology
progressed, Nokia failed to keep up with changing trends and as a result suffered heavy losses.
The consumers taste shifted and a large number of unwanted and old fashioned phones formed a
large part of Nokias inventory. This was the single biggest reason of the downfall of Nokia. This

phenomenon is known as Innovators Dilemma i.e. when new technologies cause big firms like
Nokia to fail.

Nokia lagged behind in the technology race while its competitors went right past it. It has
gone back into the past due to the advent of new technology and innovative ideas. Nokia spent a
lot of money in suing its competitors like Apple and Qualcomm, but to no avail. Nokia was
determined to protect what they thought was their innovation. This resulted in an increase in their
costs and added to the loss.
In addition, Nokia did not invest much in social media which is a cheap way of
marketing. Again, it lagged behind its competitors who were dominant on social media. Their
main marketing strategy focused on sports and movies which was expensive unlike social media.
However, one positive thing might be the strategic alliance of Nokia with Microsoft. This was
done by Nokia in hope of generating profits in the smartphone business. This partnership did
manage to stop the decreasing stock price of Nokia shares.
Nokias recent smartphone LUMIA 920 has caught peoples attention. Nokia has
effectively collaborated with worldwide universities and cooperative companies in designing its
hardware. Initially, Nokia developed its own operating system known as Symbian OS. However,
after establishing a partnership with Microsoft, Nokia was relieved of the responsibility of
running its own software. Microsoft gave Nokia the Windows OS and it is yet to see how this
marriage of two struggling business models turns out in the future. An honest advice to Nokia
now would be that it should focus mainly on improving its hardware and run its smartphones on
OS provided by Microsoft.

DID THE BUSINESS STRATEGIES WORK OUT?

Nokia
Nokia dominated the telecommunication industry for a decade which created
considerable brand image and loyalty. Their strategy was going well for them for many years. As
a result, they manufactured phones in bulk so as to reduce costs. However, the universe had
something else in mind and a massive shift in technology resulted in huge losses for the
telecommunication giant. Despite brand image and advertising, the demand for Nokias phones
fell considerably as consumers moved towards technologically advanced smartphones. The
reluctance of Nokia to change and innovate killed it. In retaliation, Nokia formed an alliance
with Microsoft to protect its deteriorating image as a telecommunication giant. Currently,
despite the strategic alliance with Microsoft, Nokia has a lot to improve on its hardware before it
can be a threat to the companies like Samsung which has stolen its number one spot.
Samsung
Samsung has proved itself to be impeccable in strategy making. Their devised strategies
have ensured that they stand on the leading spot in the telecommunication market. Firstly, they
primarily focused on hardware integration. Their alliance with Google meant that all their
resources were used in improving their hardware. This resulted in a revolution in the mobile
market. Their innovation and design attracted considerable consumer demand. Samsung has won
many awards for the design of its smartphones. Samsungs environmental concern is evident by
different recycling program that have been highly successful. This gives it a competitive edge
against its rivals in the eyes of its consumers. The large share of Samsung in telecommunication
market also gives it bargaining power which results in a reduction in costs. This keeps the prices
of their smart phones competitive. Moreover, their low production costs, due to manufacturing
sites in low cost countries, combined with their ability to market the brand means that Samsung
has a competitive advantage against all its competitors.

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