Nokia

Mobile Telecommunications

ΑΔΑΜ ΚΟΣΜΑΣ
ΜΑΙΟΣ 2002
 STRATEGY DESIGN

• VISION/STRATEGIC INTENT
• INTERNAL ANALYSIS
• EXTERNAL ANALYSIS
• IMPLEMENTATION
 RELATED
DIVERSIFICATION(1)
• OLD CORPORATE STRATEGY
– GRADUAL CHANGE OF PRODUCTION
LINE TO RELATIVE BRANCHES
• OLD PRODUCTION LINE
– CABLES PAPER WOOD
– CABLE FACTORY DIVERSIFICATION TO
ELECTRONICS
– ‘90s FOCUS IN TELECOM
 RELATED
DIVERSIFICATION(2)
• Old branch were profitable
• Diversification relied on old branches
profits
• Trial and error procedure
– Electronic branch became profitable in ‘80s
– Focus on telecom due to low profits of
electronic branch.
 RELATED
DIVERSIFICATION(3)
• In 90s Nokia withdraws from paper and
cable production
• Inter-organisational co-operations
• Acquisitions(domestic market firstly)
 RELATED
DIVERSIFICATION(4)
• Two strange key factors of success
– public telecom operator
– NMT
• Big and advanced market
• Offered business opportunities
• Head start for competitors
 Nokia
• A leading end-to-end
infrastructure supplier
• World's largest
manufacturer of mobile
phones
• More than 55 000
employees
• Netsales USD 20 billion
1999
• Market capitalization
value over USD 200
billion
7 © NOKIA TABD.PPT /15.9.1999/VS
Nokia Worldwide

Sales offices
R&D
Production, incl.
joint ventures
NOKIA GROUP BRANCHES

• NOKIA MOBILE PHONES

•NOKIA TELECOMMUNICATIONS
•NOKIA VENTURE
 STRATEGIC VISION
• VISION’S DESCRIPTION IS SORT
– “CONNECTING PEOPLE”
 Customer Analysis

• 18-29 years of age

• Mainstream product
• 2 segments; Consumer/Business
 Consumer Segment

• Light Users
• Medium Users
• Heavy Users
 Buying Behavior
• Light/Medium users
– Price
– Low information search
– Package deals
• Heavy users
– Functional & Psychological reasons
– High information search
 Business Segment
• Functional motive
– Battery life, capabilities, etc.
• Buyers; Company or individual employees
– Criteria
• Employees; capabilities, brand
• Company; price, capabilities, provider deals
 Competitors Analysis
• Asian Region
• European Region
• American Region
 Market Analysis
•275 millions of phones sold in 1999
•Nokia’s share - 79 million units
•93% increase from 1998
•50% more than in 1998
 The Market is Changing
Mobile vs. Fixed Subscribers (worldwide)
(worldwide

2500
Mobile
2000 Fixed
Data vs. Voice Traffic (worldwide)
1500
Data

Bits in the operator networks

1000
Voice
500

0
1985 1988 1991 1994 1997 2000 2003 2006

1985 1988 1991 1994 1997 2000 2003 2006

Sources : Nokia, ITU, Dataquest, EMC, Global Mobile

 Internet Connectivity Outlook
Millions
1,400
More handsets connected to the
1,200 Internet than PC's by end of
2003 !
Projected 1 billion
1,000 Mobile Subscribers Projected PC's
Connected to
the internet
800

600

400
Projected
200 WAP
Handsets

0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
From NMT to 3G
 Socio - Cultural
• Unspoken Code of Conduct - Using
phones in public venues.

• Fashion Statement - Phones have

become an accessory
 Political - Legal
• Medical device interference.

• Health problems - memory loss, brain

cancer.

• Dangerous while operating a vehicle

 SWOT Analysis
• Strengths
– Strong Organization
– Great brand name recognition
– One of best innovators in the Industry
– Sets tone for the entire market technologically
• Weaknesses
– Large Organization
– Different market operations
• Control
• Currency risks
 SWOT Analysis
• Opportunities
– New Markets
– Internet
• Threats
– Risk
– Changing Technology
– Increased competition
• Asia
• Europe
• USA
 BCG Matrix
60% -

50% -

45% - Stars Question Marks

         
40% -

35% -                                                                                             
             
30% -

25% -

20% -

15% -
Cash Cows Dogs
10% -

5%-

0
10X 5X 1X 0.5X 0.1X
 Pricing
• 2 segments and systems
• Cellular network providers
– Selling high quantities in bulk
– To price sensitive market
• Individuals needing top line products
– Not price sensitive
– Newest technology
– Newest design
 Product
• 18 new models in 1999

New demand driven

• applications
• services
• devices and
• design
 Promotion
• Consumer segment
– Mass media; TV/papers/magazines
– Co-op advertising
– Internet
– Sports events
• Snowboarding World Cup
• Adventure Sports
– Boat/balloons
 Promotion
• Business Segment
– Sales agents
– Promotion targeted towards consumers
Product-Market Expansion Strategy

• Currently in 130 different markets

• Joint ventures/distributor agreements
• Continue to expand as long as need and
buying power exists.
• Expansion of GSM and 3G network.
– China, UK, Philippines, Norway, Turkey
Europe is still leading the way….
450 000 Forrester Predicts That One in Three
400 000 Europeans Will Access the Net Via Population
350 000 Mobile Phone by 2004
300 000 Mobile
subscribers
250 000
'000

AMSTERDAM, Netherlands--(BUSINESS WIRE) via NewsEdge

200 000 Net-enabled
Corporation --Europe stands on the brink of a revolution in Internet access.
By 2004, one-third of all Europeans -- more than 219 million consumersmobile-- will phone
150 000 regularly use their mobile phones to access Internet services according to a
new Report from Forrester Research B.V. (Nasdaq:FORR). Although theowners sites
100 000 that will host these services are already being built, it remains unclear whether
Regular mobile
mobile operators will provide free and open access to these sites.
50 000 Europeans lead the world in mobile phone use, with more than 117 million Internet users*
people in the EU carrying mobile phones. Many of these phones are already
0 being used for data -- Europeans pass more than 2 billion short message
service (SMS) messages a month to chat and read sports scores. These two
factors, plus the introduction of wireless application protocol (WAP) phones,
will vault Europe into the lead for mobile Internet access. (continues….) dated:
1999-12-16
Source: Forrester Research, Inc., 1999
Differentiation
 Diversification

Information

Entertainment
WAP
Development
Voice
e-mail
Video
e-shopping
and
banking
Concentrate on youth
• Finnish teenagers send on
average 100 messages per
month
• Up to 90%, on average 50%
of the bill is SMS
• Teenager bill '97 was $20
• Teenager bill '98 was $40-$50
WE HAVE ONLY SEEN THE
BEGINNING

Thank
you