Nokia: History of Rise, Strength, Weaknesses, Objectives

Introduction

Nokia, one of the most widely recognized and on average universally liked companies ever to grace the face of this earth. When anybody says the name Nokia we may think of a phone but we might also think of something bit more abstract. And deeper than that it may remind us of brighter times of fond memories. Most of ours, very first phone was Nokia and this may be the case of many.

Nokia was the company that could do no wrong, until of course, they eventually did so. What's the story behind this company? And how could a company so successful so influential and so pioneering slip between the cracks to become a shoal of what it once was, before eventually evaporating into the shadow of Microsoft.

The Rise

Nokia's history dates back to 1865 when a mining engineer Frederic Ida stem set up his first wood pot mill in southern Finland. A few years later he opened a second mill on the banks of the Nokian virtual river. This river inspired him to name his company Nokia. Soon, Nokia expanded into other industries such as rubber, cables, tires, TVs, boots and more. So, it's safe to say that the early Nokia was a completely different company to the one that we know.

During 1960’s, the period of cold war had influenced the entire european countries along with the few american countries. So,the Finnish government wanted military research into radio telephone communications to help their country realize the full potential of reliable military communication. Nokia got the contract from their expertise developed in communication which later developed into a civilian radio car telephone network that spanned the whole country by the start of the 1970s.

Jorma Ollila, a former Citibank banker came to take over Nokia as CEO in 1992. He decided to shut off all the company's extra proceeds and focus directly on Mobile's assuring in Nokia's golden period which would shape the company's future for the next decade and a half. Nokia turned its attention to emerging markets that include India,China,Russia and many more countries.Nokia divided its strategy four division Multimedia Phones, Mobile Phones,Enterprise solutions and Networks.With this Nokia ruled 40% market share of GSM handsets and 5%-7% of CDMA handsets. Indeed Nokia ruled the industry for over a decade that led them to think that they could do no wrong.

The Fall

All of a sudden in 2007, Steve Jobs(co-founder of Apple Inc) launched the iphone and started the touch smartphone revolution. Seeing this revolutionary idea, Nokia also joined the race but they failed to realize that people were interested in apps and good interface rather than hardware alone. Where 60% of the phones sold in the world were sold by Nokia, the sales dropped down to 10% just within two years. And in 2013, they fired over 25000 employees and shut down most of their production facilities. Until finally they were acquired by microsoft later that year. The company that had evaluations over $50 billion got sold for just $7 billion.

Current Situation

Environment: PESTLE

PESTEL analysis is a simple and effective tool used in situation analysis to identify the key external (macro environment level) forces that might affect an organization. These forces can create both opportunities and threats for an organization. To help analyze these factors we can categorize them using the PESTLE model. This classification distinguishes between following factors:

Political Environment

The impact of political factors on Nokia is hard to determine. 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.

Economic Environment

Nokia suffered heavily from the European downturn of recent years. Economic disturbance 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.

Social/Cultural Environment

The major cultural factor that has hurt Nokia has been the global adoption of smartphones and the growing use of apps. 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.

Technological Environment

The technological challenges affecting Nokia are at the root of the social factors limiting its business. 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. Nokia has not been able to significantly tap the potentially profitable market for other kinds of mobile devices such as tablets and wearable technology.

Legal Environment

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.

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.

Industry

Nokia is trying its best to recover from a very much tragedy loss of it market share in the industry.It was the biggest downfall ever to be experienced by a tech company. Through a licensing agreement HMD Global Oy, branded as HMD, a Finnish mobile phone company is now producing the nokia phones.Nokia phones officially got a rebirth in early 2017.Since then it has mass produced android phones which includes Nokia 2, Nokia 3, Nokia 5, Nokia 6, Nokia 7, and Nokia 8 so far. According to nokiamob.net Nokia was able to gain 1.1% market share of mobile phones worldwide as of 2018 Q1.

Nokia,at the moment is investing a lot of time and money on its research and development on consumer electronics especially mobile phones.It has not been an easy task to own 1.1% market share of the smartphone industry as it is competing with major tech giant like Apple, Samsung, Huawei, Lenovo and Xiaomi who are on step ahead of the game.Even though the sales statistics of Nokia aren't that great it has always managed to break the headlines. Nokia gained 24.8 Billion dollars in revenue as of 2018 with the help of over 100,000 employees working world wide.

Nokia is trying to go low on the smartphone industry, investing on middle range smartphones that does the job. that is fashionable and desirable, from a brand they trust. This is where HMD can make its new business a success. The Nokia 6 has set the tone, now it’s time for a handset that is even more accessible. Nokia is currently valued at about 8.4 billion dollars.Its major competitors are valued at Apple-926 billion,Samsung 325.9 billion,Xiaomi 100 billion.It’s a long way for Nokia to reach the position it once was but with the new smartphones it won’t be long a long time to see nokia on top of the charts.

Organization

Objectives of Nokia:

• Connecting the world - Drive innovative ideas and the future of technology to influence digital age and revolutionize how people live, work and communicate.
• Customer - To maintain customer confidence with the continuity to provide quality service specifically designed to meet the needs.
• Market - To be recognized as a market innovator in the mobile phone industry to continuing to improve business practice.

Since the objective must be simple, realistic and specific, but in the case of Nokia, one of the objective, “connect the world” is bit more unrealistic. Other than that it is clearly stated and attainable, since it was one of the most loved Company in history.

Strength:

• Product Quality - High quality product has been one of the major strengths of Nokia which can be considered as the key element in satisfying customers needs.
• Wide range of product - Nokia has a broad range of product, providing to needs of all classes of people and wide range of prices.
• Reliability - Nokia’s products are dependable and the best part is that, it’s durable as required by majority of population.

Weakness:

• Took a very long time to mark its name in the highly productive and booming smartphone market. As a result the company lost a significant amount of its once huge market share.
• Some of Nokia’s products are expensive for middle and lower class consumers, which often has an adverse effect.
• There are steep fall in the company’s growth with its Windows Lumia’s range of smartphones because of persistent competition from Android and iOS.

Managerial Philosophy:

Basically, there are five business units that directly report to Nokia’s President and Chief Executive Officer, Mr. Rajeev Suri. These Business Departments are:

• Mobile Networks
• Fixed Networks
• Application & Analytics
• IP/Optical Networks
• Nokia Technologies

Each of business section is operated by a group of presidents who reports to the CEO. Each business group has strategic, operational, and financial task for its portfolio. However, the primary decision-making crew for the firm is the Nokia group Leadership Team.

Market Program

The objectives of the management program is to Appropriately identify, collect and use primary and secondary data that is relevant to the marketing strategy of Nokia, The entire management is structured to meet these objectives.Nokia plans on further acceleration of 5G with strong momentum building by year-end.

The prices for Nokia products ranges from about Rs. 1500 to Rs. 55000 which means that there is something for everyone, regardless of the budget. Nokia sets are primarily manufactured in order to suite all classes of individuals and their tastes. Nokia has invested a ton to ensure, their products reach their target market through advertisement. They use all available platforms to make sure that potential customers are informed anywhere in the world whenever any development or any new update concerning their phones arises. In order to improve promotion, they need to change do more research in order to create demand in people eyes and to target the potential audience.

Nokia has two major strategies for pricing of their products. There are basically two ways they price their products:

• Nokia charges high prices at the launch of their product. After a while they slowly reduce the prices when competitors enter the market. This is also called Market skimming technique.
• And the other, the price is placed between a specific range more or less at the same price as their competitors.