Company Analysis (Nokia)
Executive Summary
The current paper relates the strategic analysis of Nokia Company. The main objective of the paper is to assess the current internal and international strategy. The company description contains information related its product, headquarters, and revenue volume. The international strategy of Nokia is assessed with the help of SWOT analysis. The new marketing strategy based on the new meaning of the brand and emotional component is outlined. The description of logistics system contains the main logistics approaches and the current changes in logistics policy. Human resource policy was the main success factor for the Company in the past. The outcomes of the research are summarized.
Company Description
Nokia is a global leading communications company operating in the mobile phone industry. At the present time, Nokia shows its presence all over the world. The headquarters of Nokia is in Epso, Finland. According to Nokia Annual Report (2013), in 2013 the sales of the Company made up €3.48 billion, the revenues totaled €1.48 billion. Nokia manufactures and designs communication devices. Also, Nokia provides equipment, solutions, internet services, and services for communications networks. The Company offers imaging, television, navigation, music, video, and games services to the customers as well (Nokia OYJ, 2012). According to BBC (2011), the workforce of Nokia is 74,000 of people, but the Company cut 17,000 in 2011 to reduce its labor costs aiming to stay competitive in the market of mobile phones. Unfortunately, Nokia is losing its market share being forced to cede its leading position to its rivals such as Sony-Ericsson and Motorola. Recently observed decline in operations was caused by the internal factors such as the wrong strategy that did not respond to the changes in the telecommunications industry such as consumer preferences and changes in market conjuncture (Emerald Group Publishing Ltd, 2002).
Serious challenges from the side of Apple Corporation that launched iPhones several years ago forced Nokia to make a decision related cooperation with Microsoft Corporation. In 2011, Nokia entered a strategic partnership with Microsoft Corporation to establish an ecosystem to rival Android and iOS. This strategic alliance is supposed to help strengthen Nokia’s position in the smartphone market (Nokia Corporation, 2012a).
Company’s International Strategy
In order to assess the current international strategy explored by Nokia, SWOT analysis was conducted. The summary of SWOT analysis can be seen from the Table 1.
At the present time, Nokia explores differentiation strategy being focused on segmentation. Differentiation strategy suggests using skilled team involved in R&D activities, good reputation of the company in the innovation area, and product quality. The Company’s efforts are aligned to raising customers’ awareness of the new products and loyal attitude towards the Company. Global strategy of Nokia is based on the principle of limited customization (Nokia Corporation, 2012c). R&D activity is conducted on the territory of Finland where the headquarters of the Company is. The Company owns a number of patents that could become a driving force for the development of its innovative potential. Nokia emphasizes the development of own innovative potential because buying innovative technologies is expensive. The main competitor of Nokia is Apple with its iPhone. Other big competitors are Samsung, Motorola, and Sony Ericsson.
Marketing Strategy
Bruell (2013) argued that the current Nokia’s strategic goal is to bring new meaning, emotions, and relevance to the brand. Recently, the Company is losing its positions in the global market because of fierce competition from the side of Apple and Samsung. In 2013, its market share shrank by 5% despite the Company remains the market leader. The new global marketing strategy targets U.S., Europe, China, and India markets. The main partner for creative work helping Nokia promote its products is WPP’s JWT creative agency. Nokia is planning to continue working with WPP’s JWT creative agency and Dentsu’s Carat media agency. Also, the Company is going to expand the network of shops as part of the new marketing strategy (Bruell, 2013).
Nokia will not be focused on raising awareness of its products – the approach used in 2011 during the campaign for new Nokia Lumia. At the present time, the Company will focus on demonstrating capabilities and expanding the retail network. Previously, Nokia relied on the strategic alliance with Microsoft. This trend continues in 2013-2014. Also, CMO of Nokia announced that the Company is going to boost its marketing budget to win the lost market share (Bruell, 2013).
Logistics Approach
Currently, Nokia is operating in more than 150 countries requiring well-organized logistics system. The Company serves more than 150 mobile network customers with more than 400 million subscribers. European Union plays the central role in the global material flows of Nokia. In addition, Nokia supplies products to Latin America, several Asian countries, and Russia. Approximately 50% of manufacturing volumes of Nokia are coming from EU internal market (Luukkala, 2006).
Nokia performs 40,000 shipments per month that results in 2,000 daily shipments. The absolute majority of shipments is performed with the help of trucks – 37,200 shipments per months, 2,730 shipments are performed with the help of airlines and 83 shipments are performed by maritime transport (Luukkala, 2006).
Production facilities of Nokia are located all over the world aiming to stay closer to the suppliers. Currently, Nokia has factories in Finland, Hungary, Mexico, Salo, Reynosa, and Komarom. These facilities are mainly focused on smartphone customization as smartphones are considered an upcoming trend in the mobile phones manufacturing industry. Locating manufacturing facilities closer to the regions where the products are supposed to be purchased by the customers helps introduce innovations more quickly and stay competitive in the market. Also, fierce competition forces Nokia to cut labor costs switching production from developed European countries to the developing Asian countries and countries of Latin America (Montano, 2012).
Human Resource Management
Nokia’s human resources policy played a significant role in gaining 40% market share in the global market. The number of personnel hired worldwide is shown in Appendix A. The number of people working for Nokia in Canada is the second smallest number meaning that presence of Nokia in the Canadian market is insufficient (Appendix A). Nokia presented a distinctive management and leadership approach to human resource management called Nokia Way. The Company promotes high ethical standards and leading human resource technologies to provide its employees comfortable working environment. The attitude to employees helps raise the rate of commitment and involvement, encourages open discussion of the problems, and helps create inspiration (Nokia Corporation, 2012b). The human resources practices are consistent with ethical standards accepted in Canada. Thus, there are no inconsistencies in main human resource policy of Nokia that could hamper effective utilization of human resources.
Nokia has a single SAP HR system that covers 60,000 employees in 73 countries. This system differs from other HR systems typical for multinational corporations. However, this system is heavily customized making upgrades expensive. In 2013, Nokia introduced a portal where the employees can update their HR data independently. This innovation allowed HR managers to focus on strategic areas of business rather than paper work. Also, the proportion of time spent on administrative tasks is supposed to be reduced from 60% to 20% that would help use working time more effectively. However, this portal was not fully rolled out (Goodwin, 2014).
Summary
In whole, Nokia’s international strategy is favorable for developing international business because managers of the Company understand the opportunities offered by globalization. The current strategy of the Company targets new markets expansion and cost reduction. Nokia’s business in Canada shows little presence. There is an opportunity for expansion, but opportunities offered by globalization are limited by fierce competition in the mobile devices industry. The Company can derive benefits from brand loyalty and positive mobile phone characteristics of devices manufactured by Nokia. The Company can emphasize on the availability of mobile devices and their affordability. The changes in the marketing strategy will help Nokia find its market in Canada because the tendency to purchase mobile devices through the network of retail stores is consistent with the perception of Canadian customers. Also, Nokia can locate the production facilities and R&D department in Canada to expand its niche in the North America. However, quite different approach will be needed to promote Nokia’s products in Canada.
Conclusion
Nokia succeeded to develop positive brand image and brand loyalty. However, the Company is currently losing its positions because of fierce competition from Japanese and Chinese manufacturers of mobile devices. The Company can revive its leadership positions by forming strategic partnerships, offering other media devices to the customers, and expansion to emerging markets. The old marketing strategy is outdated and Nokia needs fresh ideas related promotion of its products. The new marketing strategy supposed to attract customers’ attention will be centered across bringing the new meaning to the products and more relevance to the brand. Nokia has well-developed logistics system mainly based on truck transportation. At the present time, Nokia’s policy is to build factories near customers to save on transportation expenses. Nokia’s human resource policy contributed to the success of the Company – it enjoys high ethical standards and offers comfortable working environment to its employees. The company employed the unified HR system for the employees all over the world. This policy makes positive impact on the operational activity of the Company.
Appendix A Personnel Hired by Market Areas
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