BUSINESS ENVIRONMENT

Assignment 1

Student Name- Bhuvnesh Kumawat

Student ID- 2019PBM5579

 INTRODUCTION

What is known today as the Nokia Corporation was established in 1865 as a paper mill on the
banks of the Nokia rapids in Finland. The Nokia Corporation evolved into its current form in
1967 and at the time was involved in many sectors, from
the production of bicycle tires to footwear. In the 1970’s they became more
involved in telecommunications and are now the world’s largest manufacturer of mobile
phones.

A short history of Nokia

At the turn of the 1980s and the 1990s, Nokia Corporation faced a severe crisis and was forced to
make a corporate turnaround. In the process, the company quickly concentrated on mobile phones
and telecom networks and by the mid-1990s, had divested itself of dozens of other lines of
businesses. By the late 1990s, mobile phones clearly produced the majority of both the net sales
and the operating profit of the company. In 1982, Nokia introduced the world’s first car phone for
the Nordic Mobile Telephone (NMT) analogical standard. In 1991, the GSM standard for digital
cellular networks was adopted as the pan-European digital standard – again, Nokia played a key
role in the related technology development and standardisation process (Manninen, 2002). While
mobile communications evolved rapidly throughout the 1990s and the early 2000s, Nokia was
able to establish itself as the clear global market leader in mobile handsets, with sales peaking in
2007 and remaining in that position until the second quarter of 2008.

The success of Nokia in the early 2000s and its technology development was linked to the Symbian
operating system. In June 1998, Nokia, Ericsson, Motorola, and Psion established Symbian Ltd.,
which became the developer of the operating system Symbian OS. The company’s main strategic
focus during the early 2000s was to expand to both the mobile voice market and the multimedia
business. As we will see below, these targets were sometimes conflicting rather than
complementary in terms of technological and organisational choices and strategies. For example, in
2004 alone, Nokia introduced 36 mobile device models in all price ranges and with a wide variety
of functional features. Market penetration was impressive – Nokia sold its billionth phone in
2005, and its peak global market share reached 39% in early 2008.

After the introduction of Apple’s iPhone in 2007, Google’s announcement that it had formed an
Open Handset Alliance to develop standards for mobile devices and, most importantly, Android
OS, the situation in the mobile phone device market quickly began to agitate. For the first time in
its recent history, in the latter half of 2008, Nokia’s global market share in mobile devices declined.
In only two years, Nokia’s operating profits shrank; by 2011, the corporation as a whole was
unprofitable.

In 2008, Nokia’s top management made a decision to acquire the full ownership of Symbian Ltd.,
which was still the world’s leading smartphone software platform. In 2010, Nokia launched an
‘iPhone killer’ – the flagship N8, which was the first product to run on the improved Symbian^3
OS, but with no success in challenging iPhone. Moreover, in February 2010, Nokia and Intel
officially announced joint plans to build a new software platform, MeeGo, which would support
multiple hardware architectures. In the fall of 2010, the former head of the Microsoft Business
Division, Stephen Elop, was appointed as the new CEO of Nokia. The strategic intent of Elop’s
new top management team was to regain product leadership in the smartphone market and to retain
the market leader position in low-end mobile phones. To do so, Elop and Nokia announced a
collaboration between Microsoft and Nokia ‘to form a broad strategic partnership that would use
their complementary strengths and expertise to create a new global mobile ecosystem’.

Contrary to its earlier strategy, Nokia decided to adopt the Windows Phone operating system (OS)
as the primary smartphone platform for Nokia devices for (at least) three years. This decision also
meant the end of the development of Symbian OS, MeeGo, and other OS projects an area in which
literally thousands of software developers and engineers were still working at full steam. In
September 2013, after two years of close cooperation between Nokia and Microsoft, the companies
announced that Microsoft would purchase Nokia’s Devices and Services business. In hindsight,
the Microsoft acquisition was only a cosmetic change to the market battlefield, as the Android
camp and to a lesser extent, iOS/Apple had seized the dominant position.

Strategic Posture

Mission Statement of NOKIA

Connecting is about helping people to feel close to what matters. Wherever, whenever,
Nokia believes in communicating, sharing, and in the awesome potential in connecting
the 2 billion who do with the 4 billion who don’t.
If we focus on people, and use technology to help people feel close to what matters,
then growth will follow. In a world where everyone can be connected, Nokia takes a
very human approach to technology.1

Unfortunately, Nokia’s mission statement does not clearly define the company’s purpose. By
sifting through their mission statement and based on their tag line, “Connecting People,” we
have determined that Nokia’s purpose is to connect people through the use of technology. A
simplified and more focused mission statement like that could promote a sense of shared
expectation in employees and better communicate what the company is in business to do: create
and sell telecommunications equipment.
Vision Statement of NOKIA

Nokia wants to create a new world; to transform a big planet to a small village. Their vision is to
create, build, and encourage people from all countries to communicate with each other in order to
create a world where everybody is connected.

Humans learn from people around them, but men also seem to forget that beliefs and thoughts
differ from person to person. The way of thinking, experiences, believes are simultaneously related
in a logic approach. Similarly, Nokia wants to create a world of creativity and experience, shared
experiences. mill in Tammerkoski in southern Finland. Frederick Idestam then built another mill by
the Nokiavirta River where he gave the name Nokia to the mill in 1871.

Nokia was founded over 140 years ago in Finland, and since then has become a global organisation
that operates in over 120 countries worldwide. Nokia has also become a market leader in the
mobile telecommunications industry and is most known for their mobile phones and Smartphone’s.
Although recent competition has affected the market share that Nokia has in the telecommunication
industry they still hold a strong 29% (2017) of the market share in a forever changing industry.
 PESTLE Analysis of NOKIA

Nokia, based in Finland, was once the world’s premier manufacturer and marketer of mobile
phones. Unfortunately, it has been unable to adapt to changing market conditions created by the
introduction of smartphones and the rise of aggressive competitors such as Apple
Inc. and Samsung.

Nokia’s problems and struggles are clearly exposed by its financial numbers. The revenues of
Nokia actually represent something of a turnaround for the company. Recent revenue figures
indicate that Nokia is maintaining its market position but not growing.

The troubles affecting Nokia arise from a radical transformation in its business environment. A
brief examination of the Political, Economic, Social/Cultural, Technological, Legal and
Environmental, or PESTLE, conditions affecting Nokia can give us a glimpse of the company’s
potential future.

Political Factors

The impact of political factors on Nokia is hard to ascertain. The company is based in the European
nation of Finland, but the Finnish government has refused to give it a bailout or special favors.
This forced Nokia into an uneasy alliance with Microsoft that has since fallen apart.

Unlike some tech companies, Nokia lacks strong government support because it is based in a small
country. This can both help and hurt the company because it is not associated with a major power,
but it might lack the political clout of American- or Chinese-based rivals.

Political unrest or other changes in China could disrupt production and limit Nokia’s
manufacturing capabilities in that country. This could force it to move production to higher-cost
locations such as the United States.

Economic Factors

Nokia suffered heavily from the European downturn of recent years. Economic turmoil in Europe
has hurt it badly by limiting buying power in its home markets.

Unlike Apple, Nokia has had a hard time tapping into the fast-growing Chinese market. Nokia also
lacks the vast economic resources available to some of its competitors, such as Google, Apple and
Samsung. In particular, Nokia seems to lack the research and development capabilities that have
enabled these companies to develop new devices and tap new markets. One reason why it lacks
those capabilities is that Nokia simply does not have the money to finance extensive research and
developments efforts like its competitors do.
Social/Cultural Factors

The major cultural factor that has hurt Nokia has been the widespread adoption of smartphones and
the growing use of apps. Many of the most popular apps, such as WhatsApp, are designed for more
popular operating systems such as Google’s Android and Apple’s proprietary iOS. Nokia’s
decision to utilize the Microsoft Windows Phone instead of Android limited its appeal to many
customers.

The popular association of Apple with smartphones in some countries—such as the United
States—has cut deeply into Nokia’s market by creating a generation of customers that only buy one
brand. In more recent years, Nokia has had to deal with the popular misconceptions that there are
only two brands of smartphone in the market, Apple and Samsung, and only two operating
systems: iOS and Android. This has kept many customers from even considering Nokia products.

Technological Factors Affecting Nokia

The technological challenges affecting Nokia are at the root of the social factors limiting its
business. The development of open sourced operating systems such as Android and the invention
of apps radically changed the mobile phone market. Mobile phones were transformed from simple
communications devices into handheld computers.

This led to a situation in which customers wanted to perform a wide variety of tasks with phones,
including taking photographs, watching streaming video and performing business functions. The
problem was compounded by Nokia’s decisions to utilize the less popular Windows Phone
operating system and to stick with its own operating system. This limited customers’ choices and
made it difficult to sell Nokia products to younger consumers.

Nokia has not been able to significantly tap the potentially lucrative market for other kinds of
mobile devices such as tablets and wearable technology. This could greatly reduce its competitive
edge in the future.

Legal Factors

Nokia’s legal environment is extremely challenging because it operates within the European Union.
That body’s regulators have been investigating Google’s use of Android for a possible antitrust
case. EU action against Google could lead to radical changes in Nokia’s market, such as Android
being spun off into a separate company.

It is not clear how exactly such action would affect Nokia, but it could create a more level playing
field and increase Nokia’s access to the European market. One possible game changer could be that
popular Google solutions such as Gmail could be taken off of Android, which could limit its
popularity.
Environmental Factors

Like other electronics manufacturers, Nokia is faced with the problem of safely and economically
disposing of its used products in an environmentally-friendly manner. One costly requirement that
it could face in the years ahead is laws making electronics manufacturers responsible for the
disposal or recycling of used devices, a potentially costly expense, particularly if the devices use
lithium batteries.

Another environmental concern that could affect Nokia is increased costs for materials and
components, particularly lithium for batteries. Increased demand for lithium for other uses such as
electric cars could limit its supply and raise costs.

A long-range challenge could be climate change created by global warming, which could disrupt
transoceanic shipping and Nokia’s supply chain. New environmental laws in China designed to
curb greenhouse gases could increase production costs in that country and affect Nokia’s costs.

SWOT ANALYSIS OF NOKIA

SWOT analysis is a vital strategic planning tool that can be used by Nokia Corporation managers
to do a situational analysis of the company . It is a useful technique to analyze the present Strengths
(S), Weakness (W), Opportunities (O) & Threats (T) Nokia Corporation is facing in its current
business environment.

The Nokia Corporation is one of the leading organizatations in its industry. Nokia Corporation
maintains its prominent position in market by carefully analyzing and reviewing the SWOT
analysis. SWOT analysis a highly interactive process and requires effective coordination among
various departments within the organization such as – marketing, finance, operations, management
information systems and strategic planning.

The SWOT Analysis framework helps an organization to identify the internal strategic
factors such as -strengths and weaknesses, & external strategic factors such as - opportunities
and threats.

The Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis \helps the managers of the

Nokia Corporation to develop four types of strategies:

 SO (strengths-opportunities) Strategies

 WO (weaknesses-opportunities) Strategies

 ST (strengths-threats) Strategies

 WT (weaknesses-threats) Strategies
 SWOT Analysis Strategies Objective

The core purpose of SWOT matrix is to identify the strategies that an organization can utilize to
exploit external opportunities, counter threats, and build on & protect Nokia Corporation strengths,
and eradicate its weaknesses.

Step by Step Guide to Nokia’s SWOT Analysis

Strengths of Nokia – Internal Strategic Factors

As one of the leading organizations in its industry, Nokia Corporation has numerous strengths that
help it to thrive in the market place. These strengths not only help it to protect the market share in
existing markets but also help in penetrating new markets.

 Strong dealer community – It has built a culture among distributor & dealers where the dealers
not only promote company’s products but also invest in training the sales team to explain to the
customer how he/she can extract the maximum benefits out of the products.
 Highly skilled workforce through successful training and learning programs.Nokia
Corporation is investing huge resources in training and development of its employees resulting in a
workforce that is not only highly skilled but also motivated to achieve more.
 Successful track record of integrating complimentary firms through mergers & acquisition. It
has successfully integrated number of technology companies in the past few years to streamline its
operations and to build a reliable supply chain.
 High level of customer satisfaction – the company with its dedicated customer relationship
management department has able to achieve a high level of customer satisfaction among present
customers and good brand equity among the potential customers.
 Strong Brand Portfolio – Over the years Nokia Corporation has invested in building a strong
brand portfolio. The SWOT analysis of Nokia Corporation just underlines this fact. This brand
portfolio can be extremely useful if the organization wants to expand into new product categories.
 Strong distribution network – Over the years Nokia Corporation has built a reliable distribution
network that can reach majority of its potential market.
 Good Returns on Capital Expenditure – Nokia Corporation is relatively successful at execution
of new projects and generated good returns on capital expenditure by building new revenue
streams.
 Superb Performance in New Markets – Nokia Corporation has built expertise at entering new
markets and making success of them. The expansion has helped the organization to build new
revenue stream and diversify the economic cycle risk in the markets it operates in.
 Weakness of Nokia – Internal Strategic Factors

Weakness are the areas where Nokia Corporation can improve upon. Strategy is about making
choices and weakness are the areas where a firm can improve using SWOT analysis and build on
its competitive advantage and strategic positioning.

 Not very good at product demand forecasting leading to higher rate of missed opportunities
compare to its competitors. One of the reason why the days inventory is high compare to its
competitors is that Nokia Corporation is not very good at demand forecasting thus end up keeping
higher inventory both in-house and in channel.
 Need more investment in new technologies. Given the scale of expansion and different
geographies the company is planning to expand into, Nokia Corporation needs to put more money
in technology to integrate the processes across the board. Right now the investment in technologies
is not at par with the vision of the company.
 The marketing of the products left a lot to be desired. Even though the product is a success in
terms of sale but its positioning and unique selling proposition is not clearly defined which can lead
to the attacks in this segment from the competitors.
 The profitability ratio and Net Contribution % of Nokia Corporation are below the industry
average.
 Organization structure is only compatible with present business model thus limiting
expansion in adjacent product segments.
 Days inventory is high compare to the competitors – making the company raise more capital to
invest in the channel. This can impact the long term growth of Nokia Corporation
 Financial planning is not done properly and efficiently. The current asset ratio and liquid asset
ratios suggest that the company can use the cash more efficiently than what it is doing at present.

Opportunities for Nokia– External Strategic Factors

 Organization’s core competencies can be a success in similar other products field. A

comparative example could be - GE healthcare research helped it in developing better Oil drilling
machines.
 The new technology provides an opportunity to Nokia Corporation to practices differentiated
pricing strategy in the new market. It will enable the firm to maintain its loyal customers with great
service and lure new customers through other value oriented propositions.
 New trends in the consumer behavior can open up new market for the Nokia Corporation . It
provides a great opportunity for the organization to build new revenue streams and diversify into
new product categories too.
 The new taxation policy can significantly impact the way of doing business and can open new
opportunity for established players such as Nokia Corporation to increase its profitability.
 Economic uptick and increase in customer spending, after years of recession and slow growth
rate in the industry, is an opportunity for Nokia Corporation to capture new customers and increase
its market share.
 Opening up of new markets because of government agreement – the adoption of new
technology standard and government free trade agreement has provided Nokia Corporation an
opportunity to enter a new emerging market.
 The market development will lead to dilution of competitor’s advantage and enable Nokia
Corporation to increase its competitiveness compare to the other competitors.
 Lower inflation rate – The low inflation rate bring more stability in the market, enable credit at
lower interest rate to the customers of Nokia Corporation.

Threats Nokia Facing - External Strategic Factors

 The company can face lawsuits in various markets given - different laws and continuous
fluctuations regarding product standards in those markets.
 Increasing trend toward isolationism in the American economy can lead to similar reaction
from other government thus negatively impacting the international sales.
 Changing consumer buying behavior from online channel could be a threat to the existing
physical infrastructure driven supply chain model.
 The demand of the highly profitable products is seasonal in nature and any unlikely event
during the peak season may impact the profitability of the company in short to medium term.
 Rising pay level especially movements such as $15 an hour and increasing prices in the China
can lead to serious pressure on profitability of Nokia Corporation
 New technologies developed by the competitor or market disruptor could be a serious threat to
the industry in medium to long term future.
 Imitation of the counterfeit and low quality product is also a threat to Nokia Corporation’s
product especially in the emerging markets and low income markets.
 Liability laws in different countries are different and Nokia Corporation may be exposed to
various liability claims given change in policies in those markets.

Limitations of SWOT Analysis for Nokia

Although the SWOT analysis is widely used as a strategic planning tool, the analysis does have its
share of limitations.

 Certain capabilities or factors of an organization can be both a strength and weakness at the same
time. This is one of the major limitations of SWOT analysis . For example changing
environmental regulations can be both a threat to company it can also be an opportunity in a sense
that it will enable the company to be on a level playing field or at advantage to competitors if it
able to develop the products faster than the competitors.
 SWOT does not show how to achieve a competitive advantage, so it must not be an end in itself.
 The matrix is only a starting point for a discussion on how proposed strategies could be
implemented. It provided an evaluation window but not an implementation plan based on strategic
competitiveness of Nokia Corporation
 SWOT is a static assessment - analysis of status quo with few prospective changes. As
circumstances, capabilities, threats, and strategies change, the dynamics of a competitive
environment may not be revealed in a single matrix.
 SWOT analysis may lead the firm to overemphasize a single internal or external factor in
formulating strategies. There are interrelationships among the key internal and external factors that
SWOT does not reveal that may be important in devising strategies.

Porter's Five Forces Model

Nokia was founded over 140 years ago in Finland, and since then has become a global organisation
that operates in over 120 countries worldwide. Nokia has also become a market leader in the
mobile telecommunications industry and is most known for their mobile phones and Smartphone’s.
Although recent competition has affected the market share that Nokia has in the telecommunication
industry they still hold a strong 29% (2011) of the market share in a forever changing industry.

The micro environment includes the internal factors that are affected by the customers, staff,
shareholders and competitors. The best model for evaluating the micro environment of Nokia is
Porter’s Five Forces as this takes into consideration the competitors, customers, suppliers and new
entrants.
Threat of new entrants:

 The mobile phone industry is already a well established market and the threat of a new entrant
is quite low, as the technology needed to rival the devices already available is quite advance if
they want to differentiate from them
 The barriers to entry in the mobile phone industry is high because any new entrants will need
high investments in R&D, technology and marketing in order to compete with the established
organisations.

 New entrants want to take market share from the larger organisations but Nokia hold 29% of
the market share in the industry, the highest market share in the industry.

The threat of new entrants into the mobile phone industry is very unlikely as the start up cost of
entering into the market at a high level needs a lot of investments and time to be considered a
respectable competitor of the already established organisations. Nokia currently hold a 29% of the
entire mobile phone market worldwide and for a new competitor to obtain some of their market
will take either a very long term plan or something that is truly innovative and unseen before. This
is because realistically the new entrant will need very high investment for R&D and marketing, and
would not be able to publish positive result for a long time as they try to build a customer base and
a name for itself in an established market.

In conclusion the threat of new entrants is very low and not a factor which Nokia will have to
worry about in the near future.

Power of suppliers:

 Although Nokia rely on its suppliers to supply equipment for their advanced mobile phones
there are actually a number of large equipment makers, which Nokia could switch to.

 The software suppliers for their Smartphones are now Microsoft, who will have a very high
bargaining power.

 As the leading mobile phone company in the industry they are in a very strong position when
bargaining with their suppliers.

Nokia are in the position where they can bargain and negotiate with any mobile phone hardware
maker because there is a high number of equipment suppliers that are readily available to them
should their current suppliers attempt to bargain for more money with them. Nokia’s main
argument would be the fact that they are a global organisation that has the highest market share in
the industry, so the suppliers would not want to lose such an illustrious organisation. On the other
hand, Nokia have recently created an alliance with Microsoft for their software which would be
considered a major coup for Nokia more than Microsoft. As a result, Microsoft will have a lot of
power when negotiating a price and share because the deal is more beneficial to Nokia than
Microsoft.
In conclusion, there is a moderate threat from the powers of suppliers because although the
hardware suppliers have a very low power, Microsoft’s power over the software is very high
because they’re very few other organisations who have the expertise and skills to rival Microsoft.

Power of suppliers:

 Although Nokia rely on its suppliers to supply equipment for their advanced mobile phones
there are actually a number of large equipment makers, which Nokia could switch to.

 The software suppliers for their Smartphones are now Microsoft, who will have a very high
bargaining power.

 As the leading mobile phone company in the industry they are in a very strong position when
bargaining with their suppliers.

Nokia are in the position where they can bargain and negotiate with any mobile phone hardware
maker because there is a high number of equipment suppliers that are readily available to them
should their current suppliers attempt to bargain for more money with them. Nokia’s main
argument would be the fact that they are a global organisation that has the highest market share in
the industry, so the suppliers would not want to lose such an illustrious organisation. On the other
hand, Nokia have recently created an alliance with Microsoft for their software which would be
considered a major coup for Nokia more than Microsoft. As a result, Microsoft will have a lot of
power when negotiating a price and share because the deal is more beneficial to Nokia than
Microsoft.

In conclusion, there is a moderate threat from the powers of suppliers because although the
hardware suppliers have a very low power, Microsoft’s power over the software is very high
because they’re very few other organisations who have the expertise and skills to rival Microsoft.

Threats of substitute’s products:

 Mobile phones are an everyday essential in people’s lives today and people would find it hard
to replace, as customers would not be able to be in constant contact when away from the
house.

 On the other hand, it could be said that customers would be able to contact people through
others types of media such as social networking websites, email and home telephones.
Although staying in constant contact would be hard in customers’ day to day life.

 However, smart phones are capable of a lot of functions so there are many substitutes if the
substitute focuses on one of the functions, e.g. digital camera can take better photos then smart
phones, notebooks can surf the web just as effectively and PDAs can plan a day the same way
a smart phone can.

Mobile phones have become an everyday necessity in peoples’ lives because of the important
functions that they can do and are all available in just one handset. No other product has the ability
to make phone calls, send messages, surf the web and many more in one device. The idea of being
in constant communication with someone at anytime and anywhere makes the mobile phone a very
important device to people. On the other hand, a mobile phone can be dissected into the key
function where there are substitutes for the functions, such as the camera function on a mobile
phone can be substituted for a digital camera which can do a better job than the camera in a mobile
phone.

In conclusion, the threat of a substitute product is very low due to the fact a mobile phone is no
longer just for making calls but for all the other function as well are expected on all mobile phones.
So, the only real substitute is to buy all the functions of a mobile phone in the individual products
which would not be plausible to carry all around on a person at the same time. Without mobile
phones consumers would find it very difficult to replace, as it can offer so much to the consumers
all in one device, no matter what the needs of the consumer are. Consumers rely on mobile phones
a lot and would not be able to find a substitute that has all the function of a mobile phone.

Competitive rivalry:

 Nokia rivals have moved to smart phones and androids while Nokia have only just recently
released their first smart phones leaving them trailing their rivals such as Apple and HTC.

 There is also very little differentiation between the competitors which means any new smart
phones in the market, like Nokia Lumia, will find it difficult to tempt existing iphone and
HTC customers to switch.

 Intense competition from large companies such as; Apple, HTC, Blackberry, Sony Ericcson
and LG, ect.

Nokia operate in an industry where the competition is extremely fierce with high investment in
R&B and marketing to compete with some of the biggest organisations in the world. This year
Nokia’s market share has dropped to 29% and it is forecast to continue to fall because of the rising
popularity of the Apple Iphone. After Nokia’s slow move into the Smartphone market it has left
them trailing their rivals, and has just released their Lumia range which will find it difficult to
compete and win over consumers from their Iphones.

In conclusion, competitive rivalry is very high and Nokia must be aware of the threat that
competitors have on their business especially with the growing popularity of the Apple iphone and
RIM blackberry. The competitive rivalry is the biggest threat to Nokia because in the Smartphone
market they are considerably behind and to increase their market share will take a lot of work in a
market where some of the biggest names in business operate in such as Apple and Sony.
 5Cs Analysis of NOKIA

5C marketing framework is a tool to analyze the situational forces that form the business
environment. The analysis emphasizes micro and macro environmental factors that exert a strong
influence on the organizations' business operations. Marketing managers can conduct the 5C
analysis to timely identify the strengths and weaknesses in the internal environment, and possible
risks and opportunities present in the external environment.

1. Company
Some examples of the company related factors are given below:
 Research and development :
Nokia Corporation spends heavily on the research and development activities to preserve its
leadership position in various product segments. Heavy investment in building the IT network,
marketing, product design and process optimization supports the distribution and promotion
strategies.
 Culture:
Nokia Corporation has a strong culture of process and product innovation. Top management
supports the innovative and creative ideas, and employees are encouraged to participate in the
problem solving process. The organizational culture supports the vision, mission and values.
 Scale of production:
Nokia Corporation has a large scale of production, which enables the company to achieve the
benefits of economies of scale. Large scale production enhances the competitive strength of the
company and enables the company to produce better quality products at reduced costs.

2.Customers
Customer analysis mainly covers the following points:
 Market segments

 Nokia Corporation targets both high end and low-end market segments.
 The organization's decision to choose broader and multiple segments have expanded the
scope of opportunities.
 The targeted segments are expected to have a steady market growth rate in future.
 The primary customer segment of the Nokia Corporation is the family with children, which
requires Nokia Corporation to do social, emotional and functional jobs to keep this market
segment happy and satisfied. The functional job includes performing core operations, the
social job includes providing augmented services to promote family and social gatherings,
and emotional job includes showing concern and commitment to take care of customers.

 Frequency and quantity of purchases

 The quantity and frequency of purchase in the targeted market are high, and both are
favorable growth indicators for the organization.
 Nokia Corporation can adapt its marketing strategies according to changes in frequency and
quantity by offering more discounts and family deals.
  Brand loyalty

 Nokia Corporation operates in the low-involvement product category.

 Usually, developing brand loyalty in low-involvement markets is challenging compared to
high-involvement markets as a lot of alternative options are available and psychological
switching costs are also low.
 Nokia Corporation’ customers are price sensitive. Their price sensitivity, changing tastes
and preferences and high health consciousness requires Nokia Corporation to invest in
customer research activities and closely monitor their attitude and consumption behavior.

 Customer needs

 It is important to identify the critical customer desired features and incorporate them into
marketing and advertising strategies.
 Customers changing attitudes towards healthy alternatives and prioritizing the quality over
price also have important consequences for the organization.

3.Competitors
Porter five forces is a useful tool to conduct competitor analysis:
 Bargaining power of buyers

 Strong bargaining power of buyers puts downward pressure on pricing and induces Nokia
Corporation to offer the high quality product at discounted pricing.
 Strong bargaining power makes it easier for Nokia Corporation’ customers to switch to
other alternatives.
 There are three major reasons for strong buyer bargaining power:
o High substitute availability.
o A wide number of alternatives.
o Low economic and psychological switching costs.

 Bargaining power of suppliers

 Weak bargaining power of supplier makes it comparatively less important strategic issue
for Nokia Corporation as suppliers cannot dictate the prices and have to accept the Nokia
Corporation’ terms and conditions.
 Three factors result in moderate to weak supplier power:
o A large number of suppliers
o High overall supply
o Suppliers’ weak control over their distribution network

 Competitive rivalry

 Currently, the rivalry among competitors is high, which makes it difficult for Nokia
Corporation to achieve its market growth objectives.
 The product differentiation is low and setting the differentiation basis has become
increasingly challenging.
 Intense competitive rivalry is a major reason for Nokia Corporation’ declining profitability.
  Threat of substitutes

 The technological advancement has raised the threat of substitutes for Nokia Corporation.
 Changing trends towards healthy products also raises the consequences of this threat for
Nokia Corporation.
 Overall, the threat of substitutes is strong for the following reasons:
o High performance/cost ratio of substitute products.
o High availability of substitute products.
o Low switching cost.

 Threat of new entrants

 Nokia Corporation faces moderate new entrant threat, which means new entrants do not
have a significant influence on Nokia Corporation’ market share.
 High level marketing know-how with huge expenditure on marketing activities is required
to enter the industry.
 Nokia Corporation faces a moderate threat of new entrants for the following reasons:
o High brand development cost weakens the threat.
o Low switching cost increases the threat.
o High capital cost weakens the threat.

4.Collaborators

 An in-depth collaborator analysis requires Nokia Corporation to conduct a detailed value

chain analysis and carefully consider the bargaining power of suppliers to explore the
collaboration opportunities.
 Collaborators include the downstream and upstream value chain partners, business allies,
community leaders, government and others. To choose the appropriate collaborator
partners, Nokia Corporation needs to evaluate different value chain factors, like- value
chain flexibility, efficiency, agility, revenue sharing among value chain partners and
strengths and weaknesses of possible collaborators. The detailed collaborator analysis can
allow Nokia Corporation to enhance and its supply chain efficiency and increase control
over it through vertical integration.
 When operating at the international stage, multinational organizations like Nokia
Corporation must understand the local preferences of their customers and make all
decisions (ranging from production to marketing) accordingly.
 An agile and flexible supply chain can make collaboration easier for Nokia Corporation.
 Nokia Corporation has partnered with various collaborators that allowed the company to
develop new product lines and enhance the product development and distribution process.
 It is important for Nokia Corporation to understand the behaviors, relationships, choices,
purpose and context of collaborators to make the right decision. Some important points that
must be integrated into the collaborator analysis are:
o What is the business environment in which potential collaborators operate and what
strategies they are using to play in the market?
o What are their key strategic priorities and choices?
o What are their internal and external communication mechanisms?
o What are their key strengths and weaknesses, and what opportunities and threats
external environment imposed on them?
 5.Context
Nokia Corporation must understand the external environmental context in which it is operating to
make the right business decisions and forecast the future. One important tool to understand
business context is the PEST analysis.
 Political Context
Understanding the political context requires Nokia Corporation to identify possible political issues
such as labor or tax laws, changing trade regulations or legislative problems.

 The present governance system requires Nokia Corporation to study the changing
government policies closely
 Presence in multiple markets increases the risk of political instability.
 The geo political risks have increased for Nokia Corporation due to recent developments in
the global political scenario.

 Social Context
Understanding the social context requires Nokia Corporation to analyze the major trends in culture,
education and demographic patterns.

 A general rise in the health consciousness of customers imposes a risk to the Nokia
Corporation.
 Population growth and rising low-end market segments offer opportunities to Nokia
Corporation
 The attitude towards migration in markets where Nokia Corporation is present requires the
company to consider its impact on changing demographics carefully.

 Economic Context
Understanding the economic context requires Nokia Corporation to identify major economic issues
like growth in important economic indicators, changes in the labor costs and business cycle stages.

 Inflation exerts a strong impact on the pricing structure of Nokia Corporation.

 Presence in multiple markets requires marketing managers of Nokia Corporation to adapt
their strategies according to consumer behavior, which is different during recession and
boom.
 The downward market pressure and changes in customers’ purchasing power should also be
considered to make effective marketing strategies.

 Technological Context
Understanding the technological context requires Nokia Corporation to understand recent
technological developments and their impact on the organization’s cost structure and other business
operations.

 The entrance of new market players and their investment in research and development
requires Nokia Corporation to protect their intellectual property rights.
 The technological advancement has shortened the product life cycles, requiring Nokia
Corporation to enhance its value chain efficiency.