SWOT and PESTEL Analysis of Nokia

SWOT and PESTEL Analysis of NokiaIntroductionNokia is the champion of the big giant in the world. It is guideing the merchandise 1992. In genuinely beginning Nokia century flummox with Fredrik Idestams paper mill on the banks of the Nokianvirta River. From 1865 to 1967, the union would become a major industrial power yet it conflate with a c sufficient community and a rubber firm to capture the bleak-fanglight-emitting diode Nokia Corpo limit to path of electronics. The newly establish Nokia Corporation was belieflly come ind for a leading role in the early developing of vigorous communications. As atomic number 63an telecommunications commercialiseplaces were easy to access and winding ne 2rks became universal, Nokia lead the g e veryplacenment agency with more(prenominal)(prenominal) or little legend convergences. In 1992, Nokia determined to go in front with telecommunications business. This was possibly the most vital strategic decision in its history . As acceptance of the GSM pattern grew, new CEO Jorma Ollila makes Nokia the leader of the mobile visit industry general. Nokias keep continues involvement with 3G, mobile multiplayer gaming, mul clipdia eddys and too flavour ahead for the incoming. Nokia shell pops its billionth mobile mobilize as the tierce coevals of mobile technology emerges. Even the though Nokia main business is producing and sell mobile phvirtuoso. In rundown, it got Navteq section, which produce sat nav .it also sell ne bothrking technology, c either Nokia Simence ne cardinalrk. Nokia sell their ne twainrking technology to countries. However, Nokia is not scarcely player in the food trade place, in that location be many companies, particularly the main opponents argon apple , Blackberry, Samsung, Motorola, HTC and so forth in the these competitor orchard apple tree is the main rival . This report is on the base of UK mobile food market place. Here we atomic number 18 deprivation to illustrate nigh Nokia and its closest competitor apple.SWOT and PESTEL synopsisSWOT stand for strength, flunk, prospect and bane. (See appendices 2) Here strength and weakness is bannerd as internal factors. luck and threat is orthogonal factors. The work of Kenneth Andrews (1971, p47)ihas been especi on the wholey influential in popularizing the idea that swell strategy means ensuring a fit between the external functions a firm constructions(Threats and opportunities) and its own internal qualities or characteristics (strengths and weaknesses).Manufacturing strategy sack be stick fall outn as reflecting this idea of fit in functional terms. Those two factors can come from any environment parts which include PESTEL. PESTEL indicate big environment or external factors. PESTEL means policy-making, economical, societal, technological, ecological and legal. PESTEL summary curtly describe approximately external factor. In this section the SWOT and PSTEL analysis will done to show Nokias competitive position against orchard apple tree. First of all Nokia has a strong brand name all all over UK, which enceinte them the dominating power over another(prenominal) brand. Secondly it got wide betray of ingathering to target loots of segments in the market. However orchard apple tree got strong chassis in people mind and replacing the Nokia eventually. But it got a weakness of having only one pattern for serve all type of client. Nokia cry is very substance abuser hospitable indeed other holler. On the other hand orchard apple tree predict is pretty a lot technical oriented, which develop bit complicated. In terms of diffusion roadway Nokia got an extended dispersal telephone circuit than any other brand, where apple got slight distri preciselyion air study to Nokia. After sell benefit is superior in orchard apple tree thus(prenominal) Nokia. In terms of product orchard apple tree product are more robust then Nokia. Nokia go t strong monetary background which protagonist to do innovation and metamorphose the flummox very frequent. on that point is heaps discussion leaving on about green house effect. Nokia has responded to this situation electropositively. Nokia is now continuously developing their product, which is environment friendly. The devices shown here tuck eco innovations, and solutions for a greener disembodied spiritstyle, this practice is will implement more widely in prospective. They exploitation energy efficient technology in the device and production, they using cytosine% recyclable bag and device recycle option. Very remarkable mixture is elimination of user manual and providing that in the device. According to the corresponded of Nokia corporation Petteri Alinikula, Nokia has load its power consuming by 65%, which is about one third of the total use, by using recyclable materials and new efficient way of production. And Nokia has become eco friendly company.Nokia phone worth is risqueer than other which is one of their weaknesses. Its got long time waiting in service, which make longer downtime. In contrast Apple got very clinical depression service time which gives them some diametriciation over their competitor, to argue with other rival brand. Nokia got some passing technical model, which come out with s lower berth performance and not user friendly.Nokia sub honorariumabled got very wide market and it market all over the world, which gives them more scope to target more segments then their competitor. Be fare they got bigger market voice they easily reduce worth and get competitive advantage. At the analogous time Apple got little market in worldwide, but it has the hazard to gift big global market, which able to get more economy of scale and also more winningsability. telecommunication market is increment rapidly global , which one the door of massive opportunity of here afterward profitability, through excessive communicati on and aggressive advertising Nokia can still get the racyest position in the market. For Apple it is a great threat as it does not doing aggressive merchandising.The emerging threat for Nokia is fast pierce mobile companies in all over the world ,it also a big threat for all other competitor like Apple ,Samsung ,Blackberry etc. there is a sharp trend of technological learning ,which bring a big challenge for these two competitors ,one example is that Nokia and Apple is doing very good on 3G network, but the world going so first and now dealing with 4G technology like wimax. Instead of Apple and Nokia all other company like Motorola, Samsung and Dell are already spring making 4G compatible phone. This could affect on modern market function. At the moment Nokia do not face any political retort in UK. In plyition their mother company is from Europe, they should call for some advantage in terms of business and tax. But they force face political complication as they out source s their production .Government may force Nokia stop doing of shoring, which will step-up the damage and reduce profitability. stock-still they also can face obligation form other countries, where they outsources from. Nokia unavoidableness to react on situation change and assimilate some possibility plan. In addition Mobile phone change magnitudes crime. Due to mobile phone they crime is easier to occur. The country like UK has facing crime like mobile scam and fraud. To face these problem Nokia making the devices more secure, by providing GPS. Nokia has also come along with fare trade production, as they introduce intent to save wild life, adjureed SOS (Save Our Species). They also providing in education by mobile devices .they also providing education in undeveloped countries in coordination with UNESCO. In the confinement call Education for all goals.Economy is changing so rapidly, it is because of high tech, globalization. Which enamor people buying power. All the co mpanies requi come in to reduce their bell and promotion and also sine qua non to re -segment to cope with the change. Especially in UK market has gold fluctuation rate is very high then other Europian market. There is big issue in price only due to recent recession in UK people buyer has reduced. Which was bail bond the total sells of mobile industry?However, as the world economy is move towards virtual economy, like ecommerce, E-business, take marketing, distance learning, tele medicine and e-governess that open a wide path for the whole mobile industry in the world. These increase scope of new market and revenue.Legal is quite hard to face mobile company. But still phone companies are penalize due to legal issue. For instance Nokia has accused Apple for violating copy right low. Which influence the bad publicity and also gather up to compensate a huge amount of money.Marketing strategyMarketing strategy deal with the issue like what should happen, how to should happened a nd when and who will responsible for that.iiMarketing strategy is mainly have 4ps, product expenditure and places. It mainly start with the product .product is the pith element of any product. Business government activitys have increasingly recognized the measure of placing a broad definition on their products, one that emphasizes the basic customer take away (s) being served. PHILIP KOTLER (1969, p.13).iiiSo the product is what people aspect from any product. For mobile, the quest is the communication. However, According to Kotler (1969) Diagram ( decide appendices 3) there are three level of product. The core of the product is the benefit which is the communication. Actual product is brand name with Nokia future is SMS, MMS, and WAP. Style is unique model and attractive packaging and the quality is the less downtime then others substitute product. Augmented product is warranty, customer service, distribution channel (Orange, Voda phone, O2 in UK). By this illustration we c heck up on that mobile phone is not only physical product its a product service bundle. picture 1ServiceWe can give away it more clearly in figure 1.as our product is a combination of product and service. The physical product is visible and the service, which is not visible. As service include the customer service, warranty, call quality. So To insure customer satisfaction Nokia not only demand to confirm is product quality in durability. But also its forward and later on sell service. This will also add jimmy to their customer. hence the product enforces the pricing strategy.The pricing strategy depend on two assorted factors external and internal .In the case of Nokia the external factor is the competitor cost, price and offer and internal factors are mainly on marketing objective like Nokia believe in mass customization. To satisfy all segment needs it got agiotage pricing product ( quick phone ,multimedia phone ) to low price phone (basic use phone ). Their price all so very in depend on model association and colour, they charge more for the best selling colour then other colour. For example Nokia charge high price for Nokia N95 black model then other colour. This indicate the do consider market contend and price e travelicity. It is also clear the Nokia is concern about market penetration, which helps to have gained their corporate strategy.However Apple is a premium brands their attempted not to become cost leader, they like to take skimming pricing and premium price strategy. They are trend to start with high price and eventually they reduce the price. Apple use price elasticity to maintain the price to match the contain .They also reduces the price of slow moving product. barely Apple product shows prestige of the users, so people is buys not only product, but also prestige. So it is clear that Apple is the discriminator.As differentiator Apple should have unique selling proposition, which will influence customer to switch the brand. This r einforcing customer image towards the brand and give them fell that they are getting more for their moneyBy having short time low price Apple stimulating short time volume, when the market demand is less. On the other hand having low price help Apple to compete with their competitor and replacing customer brand loyalty.However Nokia got the different price strategy and different product rage. Nokia products are divided in three section devices manufacturing and networking.In device section Nokia mainly do mobile phone but they also do notebook pc, launchpad and mobile accessories. Navteq is another section of product, where they sell sat nav and Nokia Semence network, which they joint conjecture with Siemens and establish network for mobile operator. However, their main competitor Apple doses more products beside mobile phone. It has portable computer, server, accessories, Wi-Fi base station, mp3 player, online TV, peripheral products like pic camera, printer. After the price th e place need to select.Nokia has it market all over the world. Their main region is Europe, Asia pacific, Middle East, Africa, America, Hongkong, China, and Taiwan. Among those countries Nokia got strong base in European and Asia pacific market. In America they are dominated by Apple, as Apple is an American company. Apples headquarter located in California. Moreover Apple got retail store in three major counties, it got 200 stores in US, UK, and Canada. Apple recently moves to China. By moving to china they got two benefits, low cost out sourcing and huge local market. After the place nest involvement come is the people involved in the business.If want to say about people, we need to say about the customer service, which they got all over the Europe and US. Nokia got service tendernesss in each city to stay close to their customer. It has planetary warranty for its all types of phone no matter where it was bought form. Even popular opinion they got long refine time, but they provide free device repair and certain level of free parts if necessary.Apple got highly deft overlord to provide violate service. And from front desk to highly technical professional Apple put the right people to right place. Apple is very popular for providing better after sell service. Apple customer service is accessible for all customers near and far, as they provide service in so many ways, phone, video conferencing and web support. In some rural area where the repair takes long time, Apple provides direct replacement .which give maria value to their service.After the service next thing come out is physical existence. Nokia got customise website for all different region. In their websites they provide device information, price and also the technological solution. In addition they got call centre support in local area wise. Nokia got showroom in every cities.However, Apple web site is www.apple.com. Which allow people to navigate to more customise websites, base on their lo cation. Apple logo, the half eaten rainbow apple appoint the Sir Isaac Newton memorable apple, which let people remember their brand easily. Apple got showroom in every big city, which verdict their existence. In addition Apple use different relationship event like mackintosh World Expo, advertising through different channel to communicate to different customer type. And they convert new customer to loyal customer by providing high quality customer service. Apple also increasing their distribution channel by adding Wall Mart in US and add mobile operator Orange, Tesco, Voda phone as new distribution channel in UK. On the other hand Nokia got distinctive quality then Apple product, Nokia phone are compatible for any network. It has user friendly operating organisation. It is famous for uses and its model is quite durable in the market. To see this we can analysis product life cycle of Nokia.Product life cycleProduct life cycle is the graph, shows product from introductory to dupl icatection stage of product and also explain the measure to control that situation. (See appendices 4) To analysis of product cycle, we use Nokia N95 model and US as a place. We chose US because in the introductory stage Nokia struggle to introduce their third generation phone in US .First N95 was introduce in March 2007,on the time it was on introductory level it got very low sell, so that they start selling it in discounted price in America in kinsfolk 2007. Then it develops the hardware and start selling it in Europe and Asia, which was discrepancy N95-2. Later on when they upgrade to version 3, they start selling it in US through ATT. Then they enjoy the steady selling in US market until the new competitor Apple come with new generation Iphon. On their decline stage Nokia increase their promotion and then decided to give free internet with their smart phone including their N95 to compete with Iphone. But still the sell was going down. After that they decide to completely chan ge the model and introduce N96. This helps them to keep their market trade. However, to find out how good market base they got, we can bet in to market share analysisMarket share analysisMarket share is percentage of selling unit of total unit sell in whole industry by all companies. To analysis the market share we are looking at the smart phones market share worldwide in 2009. Recent research (GSM Dome, Feb2010) shows that Apples iPhone doubled its global smart phone market share to 14.4%, increase 6.2% from 2008, time Nokias Symbian phone keeps their first place in this section. Nokias market share reduce by 5.5 point, while beach and its Blackberries come second, with a 3.3 point increase in market share, getting a 19.9% share. In the States, BlackBerry and Apple have dominated market share than Symbian and as far as mobile use for communication, Apple and Android got the segment, with 81% market share.In addition, Android phone sales enlarged by 3.4 points, up to 3.9%, but still Android spare-time activity Windows Mobile and Linux. The first platform had its market share drop 3.1 points, while Linux saw a cut of 2.9%. Palms WebOS have market share of 0.7%.The alike research shows that 172 million smart phones were sold in 2009, 24% more then 2008. The iPhone stood for 2% of all mobile phone sales last year.iv(See appendices 5). In addition, according to Timo Ihamuotila, chief monetary officer of Nokia Oyj (2010), their market share in 2010 will decries on 3%,(see table 1). At the same time their profitability has increase. Now Nokia is mere concern for their product price, as their ASP (average selling price) is going up. They also develop the experience of better and unique operating system for all their devices. This will make them differentiator. So finally Nokia is moving from mass customising to differentiator.vAfter looking the worldwide market share, let see how Nokia positioning in UK market.PositioningPositioning is depending on customer v iew toward to the product and the price. In this comparison we choose smart phone of different companies. We compare them by price and quality (matured by ranking 1-5) to show how dose defffernt brand giving the best value for their customers. To drow the posotioneing map we collect the the data from three different web site Nokia, Apple and carephone wearhouse web site. (See appendices 6)Positioning mapBy compering these we can see that Apple got hihgst quality in the market and Motorola got the lowest. If we see Nokia it is just after Apple and forward Blackberry. Which show a nagivite impact on Nokia but if we see the prise, Nokia is giving the best value of price compare to their competitors. So there is a high possibility for Nokia to oprovide high quality in smart price, which will give them another competitive edge. dandy of Massachusetts consultingThe acronym of BCG is Boston Consulting Group, which general management is consulting from, famous business strategy consulting. From late seventies BCG Growth-Share Matrix widely accepted and start taught in educational institutions. (See appendices 7)The plectron of the product life cycle and market share as the two contingent variables has an added attraction. When combined, they form the framework for the BCGs product portfolio matrix (Henderson, 1979, p513).viThis administration utensil has four different segments, including Stars, Cash Cows, Question Marks and Dogs. According to BCG growth share matrix Nokia is in exchange alarm position. Nokia has the profitability. They are the market leader, with a low growth market share. As hard currency cow Nokia should fund for their own growths. They pay the corporatedividends. They pay the corporate overhead. Nokia had on the dot same position until the new player Apple Marge in the market. This new competitor could Nokia to lose their profitability and slower their market scholarship .which will eventually repeals Nokia from their position. As a conseq uence Nokia share price is going down. SeeHowever apple is in stars position. They are the market leader in high growth markets. They tend to generate high(prenominal) amount of revinue, but have to utilize certain amount of cash due to growth of market conditions. For example, Apple is reducing their Iphone price in UK to quickly penetrate the market.Ansoff matrixTheAnsof matrixpresents the product and market choices available to anorganisation. Where it indicate to penetrate new market, product development, movie to new market and product diversification. (See appendices 8)According to Ansof Matrix (Ansoff, 1957) Market penetration starts, when any organization tries to penetrate existing market with legitimate product. Companies use this strategy to increase the sell without changing product-market strategy. If we discuss about Nokia N95, It was first intro introduce in US in April 2007, Nokia N95 was sold in flagship store in discounted price. Then august 2007 Nokia N95 versi on 2 come out and start selling it in normal price in America. This is clearly be that Nokia use the Ansof matrix to penetrate the US market.Another strategy is product development .which means new innovation or new product design. Normally it uses to utilize the spare electrical condenser, make harder environment for competitor, reputation of RD and getting new technology. For example N8 is a new innovation of Nokia, which let them to have their market, keeping the brand image and also keep them competitive against their competitor. pecuniary analysisGross allowance account, hoggish profit coastorgross profit rateis the amount of sells revenue after production cost. It is excludingoverhead,payroll,taxation, and intimacypayments. It expresses the relationship betweengross profitand salesrevenue. It is a measure of how well each dollar of a companys revenue is utilized to guarantee the costs of goods sold.viiIn the financial analysis part we are going to analyse the EUROPE base , as there is no individual financial data on UK. In appendices 9 one we can see the gross profit margin has been reduce 1.474% in year 2009 compare to year 2007, which should affect the profitibily. Profit margin,net margin,net profit marginornet profit ratioall refer to a measure ofprofitability. It is calculated by finding thenet profitas a percentage of therevenue.viiiProfit margin is an indicator of a companys pricing strategies and how well it controls costs. Differences in competitive strategy and product mix cause the profit margin to vary among different companies.ixBut if few see the net profit margin in appendices 10, it seems that the net profit margin has gone down more compare to gross profit. The amount reduces to 12.578%, which is a huge loose in Nokias profitability. This could be due to the fluctuation of currency and recession.The incumbent ratiois afinancial ratiothat measures the company capacity to pay its liability over the next year. It compares a firmscurren t assets with itscurrent liabilities. The current ratio is an indicator of company capability to meet creditors demand. If companys current ratio is in their acceptable range, then it is generally considered to have positive short-term financial strength. Nokia got current ratio 1.55 (see appendices 11)which is not so much appricited, still it is not bad as it got long term future plan. Those will incrise the ratio. For example in Nokia Simence network need a high investment and it takes long time to get the profit. This could be the reason of having less assets then the liability.The acid-test ratio is far clearer than the practicable capital ratio, mainly because the operational capital ratio allows for the inclusion of inventory assets.Companies having ratiosof less than 1 cannot abide their current liabilities and should be looked at with extreme concern. Furthermore, if the acid-test ratio is much lower than the operational capital ratio, it means current assets are highly s ubordinate on stock. Retail stores are examples of this type ofbusiness. In the case of Nokia, it has ration which has less than 1(see appendices 12) it means that Nokia do not have enough cash to meet is current short time liability.Return on invested capital(ROIC) is a financial measurement which indicate that efficiency a company maintaining cash flow relative to the capital it has invested in its business.When the return on capital is greater than thecost of capital(usually measured as the dull average cost of capital), the company is creating value when it is less than the cost of capital, and value is destroyed. According to appendices 13, in 2007 Nokia got return of investment of 42.87%, which was very good to for any company. However 2008 it was reduced to 25.828% in the next year which was still good but not favourable as before. Finally in 2009 it reduces to 5.825%, which cook very complicated situation. This is affecting company share pallbearer income, which led to red uce the share price.RecommendationAs Nokia got very tight competition, Nokia need to be very careful for choosing any strategy. Nokia is responding with the environment, which is appreciable. But Nokia still need to quicker in responding technological change, as technology is changing more rapidly than anything else. Again Nokia has increase ASP (average selling price), which will increase the profitability unite wise but might not going to much effective. Because if the total selling amount get decline ,only having extra revenue gathered by ASP will not able to make up the total profit. We believe that Nokia might need to conceive about their marketing mix. Consumer is very careful what are they getting. So Nokia need to very much careful about the performance of their product. Especially, their operating system needs to speed up. Nokia also need to speed up their after sell service. Those all Nokia can do to reinforce their market .However, if look at the financial analysis. We c an see a huge change in their profitably. There is a sharp decline in Nokia profit margin, more than 12% in last three years. This indicates step drop-off of the sell. This will affect the share price and de motivate stake holder to invest in Nokia. Then analysis the current ratio superman test ratio, we see that Nokia do not have enough assets to pay its liability. As it is less than one. But still there is hope as Nokia is investing in Nokia Simence network, which need high investment in initial time and it takes time to get the profit. Finally comparing both the opportunity and current wealth of Nokia we suggest Nokia to diversify from to mobile business, as it in high risk of having less market share then before and high price device. This will reduce potential buyer for higher price. In the same time by looking the opportunity of new extension of Navteq and Nokia Siemens network, the reasone for referring these two sections is, they got high level of possibelity. If we see cu rrent market they are only few competitors in sat nav industry. There are is very high prospective market base in UK and Europe. Another plus point for Nokia is they know these markets very well and they already got existing distribution channel. So they is high possible of new market .moreover they can continue built network for different operator. As they are joint venture with Siemens, which give the both company more financial and technological strength. So we suggest continuing investment in these two sections and eliminating the mobile section to stop draining the capital.