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UG2012_009

Marco Matera

Words Count: 3200/3000

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1.Introduction

- Vision and Mission

- Financial Summary

3. New Product

- Nokia Glass

- Production

- Packaging

-Short

Term

- Long

Term

Market 4. New

- F.F.

2. Market

- Swot analysis

- Pestle

- Competitors

5. References

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1.Introduction

Nokia is a Finnish company, specialized in telecommunication and mobile network since the 1865, they

enter in the market in the 1967, and they start leading the Mobile’s Market since the 1992.

More than 1 billion mobiles are purchased every year, sales of multifunction smartphones are growing

much faster than overall sales. Based on market and customer analysis, Nokia, a Finnish factory, forecasts

especially strong demand in rural areas of India and China, because electricity isn’t always available and

local consumers frequently rely on mobiles for communication, internet and more. (Wood, 2010)

Nokia, at the moment, is at 3rd place in the smartphone’s chart with Blackberry. (comScore, 2013)

date

Nokia is a world leader In mobile communications, driving the growth and sustainability of broader mobility

industry. Nokia connects people to each other and the information that matters to them with easy-to-use

and innovative products like mobile phones and other devices and solutions. (Nokia, 2012)

Backed by its experience, innovation, user friendliness and secure solutions, the company has become the

leading supplier of mobile phones, fixed broadband and IP networks. By adding mobility to the internet,

Nokia creates new opportunities for companies and further enriches the daily lives of people. (Scribd, 2010)

Nokia is now operating in over 130 countries and 15 factories over 9 countries. They spend the 20% of net

sales in research and development. Nokia registers on an average 5 patents every day. ( Scribd, 2010)

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1.1 Vision and Mission statement

“Nokia’s mission is simple: Connecting People. Our goal is to build great mobile products that enable billions

of people worldwide to enjoy more of what life has to offer. Our challenge is to achieve this in an

increasingly dynamic and competitive environment. Ideas. Energy. Excitement. Opportunities. In today's

mobile world, it feels like anything is possible - and that's what inspires us to get out of bed every day.”

(Stephen Elop, 2012)

At the moment Nokia is suffering of the entrance in the market of strong competitors, and also if the

company still producing new generation mobiles they are failing in their mission, because of the software

that they are using for their products, the applications that people need for their lifestyle are old in Nokia,

and a lot of those are not produced for Windows Mobile and Symbian because they are not leading

anymore the market and the cost of production for Windows are expensive than Android and iOS.

After the entrance on the mobile’s market of huge factory such as Samsung and Apple, Nokia has a lot of

problems because of the old Symbian that can’t compete with Android and Ios, so after the election of

Stephen Elop as CEO of the company and the joint venture with Microsoft, Nokia starts its production of

new generation smartphones and they planned a new strategy:

- build a new winning mobile ecosystem in partnership with Microsoft

- bring the next billion online in developing growth markets

- invest in next-generation disruptive technologies

- increase our focus on speed, results and accountability (Nokia, 2012)

The objective is to regain the leadership

in smartphones space.

Together, we intend to build a global

ecosystem that surpasses anything

currently in existence. The Nokia-

Microsoft ecosystem will deliver

differentiated and innovative products

with unrivalled scale in terms of product

breadth and brand identity. (Nokia,

2012)

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1.2 Financial overview

Source: Nokia

According to Nokia here we can see that the company in the last 5 years has lost the prestige that

previously got, and that’s because between the 2010 and 2012 the market began really competitive and

the after the development of Android by Google and iOS by Apple the old Symbian fail and in the last three

years Nokia have lost more than € 10million and according to figure 3 they still losing. In fact, as we can see,

since the entrance in the market in 2011 of Samsung and Apple with Galaxy saga and the Iphone 4, Nokia

start loose in Stock Market and the change of the CEO in Nokia bring them at the historical minimum in July

2012.

Source: Yahoo

Finance

(Figure 3)

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This “movement” as proved so volatile because of the introduction on the market at the end of 2011 of the

new N-Saga by Nokia, with who they reach the peak of the selling in July 2011, after that Samsung and

Apple start their run to the leadership and only with some events promoted by Nokia, their product were

sold, like the presentation of Lumia 800 in London in figure 4, make people buy things that they don’t really

want, and because of the small quantity of App in the Ovi store, people “throw” the now old Lumia and

replace it with a Galaxy or an Iphone and again in September 2012 with another events promoted by Nokia,

called “Don’t be afraid of the dark” in figure 5, in which they promote the new Lumia 820 they start sell

again their product and at the moment it seems like they can start a new competition with the Californian,

Apple and the Korean, Samsung.

(figure 4)

(figure 5)

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2. The Market

Political

Nokia have recently moved one of its manufacturing facilities to

India, and because of this it is important that Nokia follow the

rules and regulations that are set in India, so that they can

operate efficiently as possible. According to Maps of India the

types of things they will have to be aware of is the minimum

wage, the maximum hours a week employees can work and

especially the health and safety regulations; this is to avoid any

bad press or revolt from employees that ultimately damage the

reputation of Nokia both short term and long term. As well as

foreign government it is vital that Nokia have a good relationship

with their government in Finland, as any political instability such

as a change in government or coalition may result in new laws

being implemented, which will affect Nokia a lot. (Hub pages,

2011)

Nokia are vital to the Economy in Finland

as it currently occupies a third of the

market on the Helsinki stock exchange.

The organization is so important to the

economy of Finland that the government

had to step in when the business, earlier

last year Nokia planned job cuts in Finland

and with fears of what that would to the

economy the Finnish government stated

they were prepared to help find jobs in

those who are sacked. (Reuters, 2011)

The threat of recession on western

economy has also affected the interest

rates in banks, which means the cost of

borrowing money for business activities

has increased and Nokia will need to be

aware of the changes in interest rate. (Hub

pages, 2011)

The rise of the so-called information society has made

telecommunications increasingly more important to consumers,

both in terms of work and leisure. Users are more aware of

mobile phone handset choice and advancements due to increased

information availability. (Waqas Asif, 2009)

There have been much global advancement in technology such as MMS, Bluetooth, WAP, GSM, GPRS, cameras etc.

The Asian markets are more technologically advanced than the European counterparts, for example in 2002, just 4% of

phones had cameras, whereas in Asia 90% did. (Waqas Asif, 2009)

Also there is the continuous development of other technologies from the competitors that introduced some other

applications and function for the smartphones.

The introduction of age discrimination and

disability discrimination of legislation, an

increase in the minimum wage and greater

requirements for firms to recycle are

examples of relatively recent laws that

affect and organization’s actions. Legal

changes can affect a firm’s costs and

demand. (123helpme.com, 2011)

Nokia have set a target to reduce waste sent to landfill from their

factories by half annually, with a view to reaching close to 100%

waste utilization by the end of 2012. And we’re doing pretty well so

far. Five out of seven Nokia factories have already reached 100%

waste utilization or are within 1% of that target.

In 2011, Nokia caused 45,900 tonnes of waste. Of this, 91% was

reused or recycled, energy was recovered from 5%, and only 4% went

for final disposal in landfill or incineration without energy recovery.

(Nokia, 2012)

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2.1 SWOT Analysis

Strengths:

Nokia, is one of the world’s largest mobile’s company, also if they are not leading the market, Nokia is well

known in the world because of their previous products. It means that, if they develop their software, with a

good advertising they can reach the leadership again, also their products can be re-sale at a good price

because their mobile are “indestructible” this because of the high qualifications of the employees.

Weaknesses:

Nokia has a huge problem: they don’t change their style quickly. (Scribd, 2010)

With the N-Saga they launched on the market a lot of products, the design was different phone by phone,

but the service and the widgets that they offered, doesn’t matter the price of the mobile, were the same.

They really need a change in their mentality, otherwise they will not reach the top again.

Opportunities:

The company has now the opportunity, after leaving the Symbian project, to suit, with the Lumia-Saga, a

huge number of people, and they can provide and create new applications in order to satisfy different kind

of people to change and simplify their lifestyle according with their mission statement.

Also they’ve signed a contract with EE, and they give to Lumia 920 the 4G network.

Threats:

Nokia produce mobiles that can’t reach, until now, the Samsung’s and Apple’s ones but they provide

mobile for different range of people, sometimes really cheap phones, that have nice features, like the more

expensive ones so when people buy mobile for aged customers or for small customers the first phone that

they are looking for is the cheap one, not the more interesting on the market and Nokia can satisfy this

requirements.

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2.1 Main Competitors

Until the end of 2010 there was no competition in the smartphone’s market.

According to the graph (figure 1), we can see that there are 3 companies, and that the Blue company is the

powerful between the three.

(Figure 1)

In the 2010 Nokia was the Blue company, Apple the Red company and Samsung the Green one, all that

Nokia need to do is improve their skills, because Google growth, with the new Android system was huge

and Apple’s iOS was improved faster, so Nokia choose a new CEO and they found the perfect figure in

Stephen Elop, developer of Microsoft.

Unfortunately the result was not good, with the new CEO Nokia shares fall down and their products were

sell less. The Symbian software was old for the new smartphone’s market and S.Elop decide to use

Windows for the mobile, and create the first Windows Phone.

Again the result was bad, they haven’t reach the goal that they expect (figure 2) and, according to Tomi

Ahonen, Elop did the two big management’s mistakes ever had, the economists call the two mistakes the

Ratner Effect and the Osborn Effect, that combined generate the Elop Effect. (Tomi Ahonen, 2013)

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(Figure 2)

Now Nokia planned a re-born for the 2013 with the Lumia’s Project and they hope to reach the peak again

and lead the next smartphone’s age again.

(figure 6)

Source: Asymco

In figure 6 we can see that Samsung reach Nokia in the last year in total selling, and this battle will go on.

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SAMSUNG SWOT ANALYSIS:

Strengths:

Samsung at the moment is leading the smartphone’s market and their production still growing.

Until now it seems that nobody can stop them, not only because of their mobiles but also because

they produce a lot in other fields.

Weaknesses:

All the other company got their own software, and Samsung doesn’t have the power and the

engineers, at the moment to create their own software that can compete with iOS, Windows and

with android too.

Also sometimes their mobiles stop working because of the High Quality of the images and the small

ram capacity of the phone, and they have to check and solve this issue because the price of their

product are really high.

Opportunities:

Samsung used in the right way the technology that they got, in fact they create linked product with

who people can share directly what they have on their mobiles or cameras, on their smart

television or laptop. Now they have the opportunity to lead not only the mobile’s market, but the

global technology industry.

Threats:

The most important threat for Samsung is the low competition in Asian market, most of all the

Chinese one. They sell a lot of products in China and the price is affordable in order to satisfy not

only a small range of people but to control the market.

Source: ZDNet

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3. Nokia Glasses new product idea

Source: Google

After the release of the new patent for Google Glasses in order to open a new competition for the new

technologies’ market, Nokia can produce their own Tech Glasses, more stylish and with its own Artificial

Intelligence. With this new product people can improve their lifestyle, thanks to the new glasses they can

search on the web directly with their voice all that they need.

The glasses will have 2 speakers, 2 Tech Lens, a micro-camera in the middle of the glasses and last but not

least the Windows 8 software improved for the glasses.

Nokia can produce different kind of glasses:

- for motorbike, that can guide you during your journey, but with sound only after 30 km/h

- for sportspeople, that can install a training program and watch it during their work out

- moreover for common people and workers that can use the glasses instead of the heavy and big Personal

Computer or they can also link their mobile via Bluetooth with glasses and share the contacts and the

music.

The new Tech Glasses will give the possibility to share their activity on social network such as Facebook or

Twitter etc. and with vocal guide for moms and dads who love reading but don’t have time during the day

with this new glasses they can hear the voice of the Glasses that read their book for them, linked with their

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eBook store and also show some images that can relax your brain during the

work-break or after the small children go sleep.

Nokia has a green project so the glasses will not use electricity to charge the battery, but they will use the

sun light and the small lithium batteries inside the glasses will charge completely in less than 30 minutes

and people can use it for 4 hours, and in stand-by the battery duration will be 12 hours.

The production will start from April 2013 and the selling from January 2014, the costs for the production

will be high, we hire a lot of scientists to develop this new lithium battery and some others for the design

and the creation. Thanks to their co-operation, lens and micro-camera will be produce by Carl Zeiss.

Source: Slashgear.com

Nokia will put the product on the market with a brilliant packaging. The pack will be black, with silver letters

upon it, it will be small, and also there will be a box for the glasses.

For the presentation of the product and the launch, Nokia will organize 3 different flash mob in the most

important square of London, New York and Tokyo at same time, the New Year’s evening of 2014.

Also they will organize a party in that places after the flash mob, and there were famous Disc Jockey for the

parties, in London the resident Deadmau5, in New York the resident Chris Malinchak and in Tokyo the

resident Steve Aoki.

Only the launch of the product will cost to Nokia £1,000,000,00 but the prevision is that the company will

earn from the selling of 500,000,000 pieces about £249,500,000,000.00 and the gross profit will be about

£224,488,568,000.00.

Also their accountants think that there will be 2 peaks of selling: in the 1st quarter after the presentation

and in the 4th quarter for Christmas.

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3.1 Ansoff ’s Matrix strategy

Market penetration

Product development

Diversification

Market development

Existing market

Exis

tin

g p

rod

uct

New Product

New

Mar

ket

Long Run

For long run term, Nokia will invest in completely

new markets, with this new product.

It’s well known that it is a high risk investment but

Nokia will concentrate the energy on the Korean

market, in order to pass Samsung also in the Asian

market and they will start produce by using green

energy, in Africa, and they will open this new market

and, if possible move from India to Central Africa, to

save energy for the production as much as possible.

Short Run

In the short run term, Nokia will introduce a new

product in existing markets, principally in the

American and in the Asian, in order to sell all the

pieces that they want produce for the first year.

They will also introduce it in Europe but in a small

quantity because of the crisis that still affecting the

central Europe.

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NOKIA GLASSES ASSUMPTIONS

Fixed Costs: monthly

Units produced

Price per Unit

Rent £3500

500,000,000.00

£499.00

Electricity £1500 Wages £20000 Machineries £30000

Variable Cost:

Designer wage £3500 Advertising £2500 Promoter £1000 Materials £20 p.unit

Presentation £1000000 Research £16000 Packaging £30 p unit

Total Sales : £249,500,000,000.00

Total Costs: £25,011,432,000.00

Gross Profit : £224,488,568,000.00

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3.2 The 4 P’s

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4. References

About us - Nokia. 2013. About us - Nokia. [ONLINE] Available at: http://www.nokia.com/global/about-

nokia. [Accessed 30th March 2013]

Company Analysis of NOKIA. 2013. Company Analysis of NOKIA. [ONLINE] Available at:

http://www.scribd.com/doc/31768467/Company-Analysis-of-NOKIA. [Accessed 30th March 2013]

Insurance Policy for Mobile Phones. 2013. Insurance Policy for Mobile Phones. [ONLINE] Available at:

http://business.mapsofindia.com/insurance/policies/for-mobile-phones.html. [Accessed 30th March 2013]

PESTLE Analysis of Nokia. 2013. PESTLE Analysis of Nokia. [ONLINE] Available at:

http://tfliu90.hubpages.com/hub/PESTLE-Analysis-of-Nokia. [Accessed 31st March 2013]

Green & ethical operations - Nokia. 2013. Green & ethical operations - Nokia. [ONLINE] Available at:

http://www.nokia.com/global/about-nokia/people-and-planet/operations/operations/. [Accessed 31st

March 2013]

Nokia Case Study :: Business Analysis Strategy. 2013. Nokia Case Study :: Business Analysis Strategy.

[ONLINE] Available at: http://www.123helpme.com/nokia-case-study-view.asp?id=166625. [31st March

2013]

Communities Dominate Brands: Second picture in the Nokia Destruction Saga - Greatest individual

Management Mistake Ever Made - Nokia vs Competition in one picture. 2013. Communities Dominate

Brands: Second picture in the Nokia Destruction Saga - Greatest individual Management Mistake Ever Made

- Nokia vs Competition in one picture. [ONLINE] Available at: http://communities-

dominate.blogs.com/brands/2013/01/second-picture-in-the-nokia-destruction-saga-greatest-individual-

management-mistake-ever-made-nokia-.html. [Accessed 31st March 2013]

Financials - Nokia. 2013. Financials - Nokia. [ONLINE] Available at: http://www.nokia.com/global/about-

nokia/investors/financials/financials/. [Accessed 1st April 2013]

comScore Reports November 2012 U.S. Mobile Subscriber Market Share - comScore, Inc. 2013. comScore

Reports November 2012 U.S. Mobile Subscriber Market Share - comScore, Inc. [ONLINE] Available at:

http://www.comscore.com/Insights/Press_Releases/2013/1/comScore_Reports_November_2012_U.S._M

obile_Subscriber_Market_Share [Accessed 1st April 2013]

Smartphone winners (Apple) pulling away from losers (Nokia) - Jul. 29, 2011. 2013. Smartphone winners

(Apple) pulling away from losers (Nokia) - Jul. 29, 2011. [ONLINE] Available at:

http://money.cnn.com/2011/07/29/technology/smartphone_market/index.htm. [Accessed 1st April 2013]