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Contents
INTRODUCTION...........................................................................................................................................
.. 2
KEY
ISSUES.................................................................................................................................
............... 2
PROBLEM
STATEMENT.................................................................................................................................. 2
EXTERNAL
ANALYSIS..................................................................................................................................... 2
PORTERS FIVE FORCES (SEE APPENDIX
1)................................................................................................... 2
INDUSTRY STRUCTURE, ECONOMICS AND
TRENDS..................................................................................... 3
COMPETITOR
ANALYSIS...........................................................................................................................
. 4
KEY SUCCESS
FACTORS............................................................................................................................
.. 4
INTERNAL
ANALYSIS..................................................................................................................................... 5
COMPANYS
STRATEGY.........................................................................................................................
.... 5
FINANCIAL
ANALYSIS...........................................................................................................................
..... 6
OPERATIONS ANALYSIS (SEE TABLE IN APPENDIX
3)................................................................................... 6
MARKETING AND COMPETITIVE
POSITION................................................................................................ 7
EVALUATION OF
ALTERNATIVES.................................................................................................................... 7
A1: STATUS QUO (SINGLE GLOBAL
STRATEGY)........................................................................................... 7
A2: EXIT DEVELOPED
MARKET.................................................................................................................... 7
A3: DIFFERENT BUSINESS STRATEGY IN DEVELOPED AND DEVELOPING
MARKETS....................................... 8
RECOMMENDATION AND
IMLEMENTATION.................................................................................................. 8
APPENDICES................................................................................................................................................
10
APPENDIX 1: PORTERS FIVE
FORCES......................................................................................................... 10
APPENDIX 2: SUPPLY CHAIN
ANALYSIS..................................................................................................... 11
APPENDIX 3: NOKIA OPERATIONS
ANALYSIS............................................................................................ 11
APPENDX 4: FINANCIAL PROJECTION
ANALYSIS....................................................................................... 12
APPENDIX 5: DECISION
GRID................................................................................................................... 13
1
INTRODUCTION
Nokia, one of the leading handset manufacturers, is losing market share in
developing and developed markets whereas total handset market is expected to
grow by $222 bn. by 2013 (appendix 4). Appearance of smartphone market and
rapid adoption of the latest technology by the competitors such as Apple, Samsung
etc. has lit Nokias platform on fire in the developed market and threatened its
dominance in the developing markets. Nokia has been great at turnaround strategy.
Will Nokia be able to turn tables this time?
KEY ISSUES
Nokia faces different key issues in the developed markets and the developing markets:
Issues in Developed Market
Should Nokia quit the developed market?
If they stay in the developed market, what products and services should
be offered?
Issues in Developing Market
What should Nokia do to gain back its market leader position in the
developing markets?
What can Nokia do to improve products and services offered in the
developing markets?
PROBLEM STATEMENT
Nokias CEO, Mr. Olli-Pekka Kallasvuo, is facing an issue whether Nokia should
implement different strategy in the developed and the developing markets or a
single global strategy and what products and services should be offered in the
markets where Nokia decides to stay?
EXTERNAL ANALYSIS
As the industry operates in a different way in both the markets, different Porters five
forces has been conducted for the developed and the developing markets.
PORTERS FIVE FORCES (SEE APPENDIX 1)
2
INDUSTRY STRUCTURE, ECONOMICS AND TRENDS
Below mentioned industry structure and trends can be observed in developing and
developed markets:
Commonality between Both the Markets
A number of computer manufacturer such as Dell, Acer, Apple and Google have
entered the market, thereby, threatening mainstream handset manufacturers dominance.
In the software for handsets, ecosystems developed by specialist firms (and not
handset manufacturer), such as Google, with support for third partly application is
increasingly becoming more popular. Smartphones and third party applications are
becoming more popular as consumers are spending more on smartphones and third
party applications.
Developed Markets:
The trend in the developed market is changing from basic phones & enhanced
phones to smartphones. Projections for 2010 *€“ 13 (case exhibit 11) assert this fact.
Based on projections 2010 *€“ 13, Smartphones will be the key revenue driver in
the developed markets (See appendix 4). Basic and enhanced phones will contribute
very little to the growth.
Cell phone carriers are responsible for marketing, sales and distribution of
handsets. So, strong relationships with cell phone carrier are vital for success of the
product.
Developing Markets:
Marketing, sales and distribution of the handsets is handled by the manufacturer.
Vast distribution network and penetration in the market is vital for success.
Handset market in developing countries is volume driven market (low end
handsets; low ASP) as well as price driven (high end handsets; high ASP) market. So,
the revenue will be driven by both low end and high end handsets (see appendix 4).
Products that are launched first in the developed markets are adopted in the
developing markets in future. A lot of new products are manufactured and launched
only in the developing markets to tap low end phones market. Penetration in the
developing market is through first time sale.
The crux of the situation is that industry in developed and developing markets is changing
in different
way.
3
COMPETITOR ANALYSIS
The external environment for cell phone manufacturers is shifting from basic and
enhanced phones to
