This document summarizes Nokia's business over time, from its founding in 1865 producing paper to becoming a leader in mobile phones. It discusses Nokia's strategy in emerging markets, focusing on low-cost, customized phones and distribution. However, Nokia struggled in developed markets, unable to keep up with competitors like Apple and Android on smartphones. The document evaluates Nokia using the international strategy grid and recommends Nokia continue dominating emerging markets with a transnational strategy, while enhancing smartphones in developed markets.
This document summarizes Nokia's business over time, from its founding in 1865 producing paper to becoming a leader in mobile phones. It discusses Nokia's strategy in emerging markets, focusing on low-cost, customized phones and distribution. However, Nokia struggled in developed markets, unable to keep up with competitors like Apple and Android on smartphones. The document evaluates Nokia using the international strategy grid and recommends Nokia continue dominating emerging markets with a transnational strategy, while enhancing smartphones in developed markets.
This document summarizes Nokia's business over time, from its founding in 1865 producing paper to becoming a leader in mobile phones. It discusses Nokia's strategy in emerging markets, focusing on low-cost, customized phones and distribution. However, Nokia struggled in developed markets, unable to keep up with competitors like Apple and Android on smartphones. The document evaluates Nokia using the international strategy grid and recommends Nokia continue dominating emerging markets with a transnational strategy, while enhancing smartphones in developed markets.
Case Summary Founded in 1865 with paper mills Rubber production (boots) Electronic products Mobile phones Monopolistic markets led to inefficient fixed-lines Low average disposable incomes Limited access to computers led to mobile phone growth Bidding models followed by the government Pre-paid model more prevalent because of no credit requirement Concept of reverse bundling in emerging markets Patterns in emerging economies Most efficient supply chain Ovi stores which offered music, location etc. Acquisition of Navteq Corp. for navigation purposes First smartphone introduced by Nokia 3 distinct platforms for different price points 55% revenue from low-end markets Nokias response to change Growth of Nokia North America Europe India China Africa Latin America Markets Markets Apple, Palm, RIM, HTC, Motorola, Sony Ericsson Nokia, LG, Samsung Market Leaders Market Leaders Criteria Developed Markets Emerging Market Disposable Income High Low Mobile Penetration High Low Tie ups with service providers Forward Bundling Reverse Bundling Payment Plans Mostly Post-paid Mostly Pre-paid Buying Pattern Mostly replacement Mostly new handsets Nokias Market Share Low High Developed Markets Emerging Markets Industry Trends Strategy followed for Emerging Markets High market share in basic phones market hence incremental cash flows Low manufacturing cost due to mass production Standardized parts and postponement of customization to the later stage Price sensitive market Focus on low cost & specialized innovations like dust resistant keypad, FM, flashlight etc Loyal customer base to sustain the basic phones market NOKIA in Emerging Market Product tailored to local conditions NOKIA 1616 New Product Service relevant to the market Life tools Nokia Money Focused on making product relevant to the customer Made for India Campaign Hindi Language SMS campaign Van Operations Manufacturing facility at each of the major markets Extensive distribution system Extensive network of customer service centers
Low Priced Phones Redesigned logistics & production process for price reduction Very less price as compared to developed markets Reasons for Nokias loss in the developed markets No specific segment try to offer at all price points Apple catering to needs of high end market Samsung middle to high end Lack of market focus Apple has come with OS to integrate data, audio, music and Internet in one device Android from Google Emergence of new operating systems Unable to tap the market by enhancing their smart phone capabilities Motorola, Samsung, LG & Sony Ericson emerged strong Blackberry with and Apple with iPhone Increasing competition from existing and new players Focus on specific requirements for emerging technology No functional changes in software Failure in understanding requirements I-R Grid Global Standardization Strategy Transnational Strategy International Strategy Localization Strategy Pressures for Local Responsiveness P r e s s u r e
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I-R Grid Pressures for Local Responsiveness P r e s s u r e
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Global Standardization Strategy Transnational Strategy Attempt to minimize local responsiveness Chance for the local consumers to perceive it as a global company Market low-end basic phones to emerging markets
I-R Grid Pressures for Local Responsiveness P r e s s u r e
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Transnational Strategy Localization Strategy Offer localized products worldwide Move from low-end market to high-end market completely because pressure for cost reduction is low I-R Grid Attempt to maximize local responsiveness Chance for the local consumers to perceive it as a domestic company Market low-end basic phones to emerging markets
Emerged markets Cater to the need of high- end market
Emerging markets Meet the need of low-end markets
Choice of Market 0 2000 4000 6000 8000 10000 12000 14000 16000 2004 2005 2006 2007 2008 2009 Operating Profits Nokia should continue to dominate in the emerging markets i.e. follow Transnational strategy Looking at the operating profits, we can see a decline in the operating profits from the year 2007 iPhone was launched in the year 2007 and Samsung also acquired 2 nd position by the same year Year Operating Profits 2004 8374 2005 9237 2006 11130 2007 14554 2008 5362 2009 1331 Choice of Market Projection of sales in different regions Looking at the projection of sales of mobile devices in various regions, one can observe a 45.38% share in Asia-Pacific region Also, almost 9.5% share is in the Latin America region Emerging market seems to be playing field for device manufacturers But the 36% of the sales in emerged economies cant be ignored Pattern of technologies in emerged and emerging economies varies and as a result of which Nokia has to follow different strategy Market Approaches Enhanced and smart phones should be focussed Since it is a replacement market Will help them to understand latest technologies Focus on services & 3 rd party applications Developed markets Basic and enhanced phones should be focussed Price should be reduced based on the reduced supply chain cost Offer enhanced phones at the price of basic phones Developing markets Core Competencies Sales & Marketing Distribution network is one of the sustainable core competencies for Nokia by providing extensive network Direct sale to the end consumers hence higher profit margins Sales should be retained by the company Marketing of product & additional services as a complete package is important Software Development Tie ups with application developers Third party application accessibility Focus on developing more applications providing value added services Manufacturing One of the sustainable core competencies for Nokia Nokia should retain the manufacturing capabilities in order to maintain cost leadership in the emerging markets R&D Focus on market research Focus on making the phones more user- friendly R&D for basic phones & enhanced phones to capture the emerging markets Scope of Activities THANK YOU!