strategic management homework

Nokia is a Finland based company having a global presence. In 2010, it was operating successfully in 160 countries. Till the first quarter of 2010, it was the World’s largest mobile phone maker with a market share of 35%. The company started losing its market share in the high –end mobile phone market. The Alarm bells rang not in 2010 but much before that but the company officials had a short sight and they could not see the signals. The CEO, Stephen Elop who is the first CEO is not having Finland background. He has the task of stabilizing the market position of Nokia and provide a leadership to the Nokia Team in a period of change. He has the task of creating an environment so as to capture the opportunity available in the market.

Nokia has three business segments

1) Devices & services

2) NAVTEQ – digital mapping and navigation service

3) Nokia Siemens Network

Before 2000, Nokia had achieved a growth in the market as it catered to the increasing demand of China, India and Brazil for its low end models. The Company overlooked the smart phone segment. It did develop expensive high end handsets based on 3G technology but it is could not compete with the android and now Google based phones. The major sale was of the lower end models in the China and India. It failed to catch the fantasy of youngsters. The youth was attracted to the trendier models launched by Motorola, Samsung and Sony Ericson. The company was not guided by visionary and they felt the customers will be happy with their low cost models. The company has to see the changes in the customer demand. Consumers are willing to pay higher price for the smart phones due tom the convenience attached to them.

Nokia did make an attempt towards product development branding by launching N series and E series range. These multimedia phone and business oriented phones did attract some market but Apple, Google and RIM took the company’s share in the smart phone segment. Nokia had to postpone the launch of its touch screen model as the operating system they were to use did not work successfully.

At present, the USA market is the largest consumer of the mobile market and the emphasis on the high end smart phones. Nokia has a limited presence and minimum brand recognition in the American market. The major reason is that it failed to build long-term partnerships with any of the major wireless carriers in US. In US market the mobile company and service provider enter into agreement and provide a combo to the customer. As a result of this, Nokia mobiles were a lot costlier in comparison to others that were available at subsidy.

Nokia diverted its focus from manufacturing mobile devices to building phones and mobile applications but the services failed to pick up. The Major issues that Nokia has to face

1) Decrease in Brand Value

2) Increased competition in Smart Phone segment

3) Profit margin of Nokia has decreased whereas the competitor’s margin has increased

Nokia should actively adopt measures for building brand awareness in the US and also the Global mobile market. It should use the internet as a medium to advertise. As most Americans are accessible on the net, it used this medium for creating awareness about its products, their features and other services. These days’ social media is big market for advertisers. Nokia should also exploit this media. It can go in for sponsorship of major sports events in America. The Company should use sport persons who are favorite for the season for brand endorsements.

For meeting the increased competition, the company should increase its R & D activities so that it should come with a higher version of the smart phones. It has lost the previous battle but now it should prepare well. The initial phase did not see Nokia has a competitor in the smart phone segment. They should now target the high end customers and know their future needs. They should conduct a satisfaction survey among the users and find the faults in the existing phones and come with a better product.

If the company wants to capture American market it should develop partnership with a leading service provider and work as the market functions.

When the products become acceptable, they should target higher margins. The company is having negative operating margin in NAVTEQ & Nokia Siemens Networks. It should focus on the segment that is having profit and should shut down the segments that are into heavy losses.

Nokia could not capture the smart phone market in America but still the other countries like India that are behind America in the launch and success of the smart phone models can be targeted. It takes a long approval process in getting a new product to the market and there is lack of leadership in the Company.

Elop who has these challenges along with the biggest drawback that he is not Finnish. He should identify the managers who have good leadership skills and develop cross functional teams who can guide the various segments of the company. Elop is well aware with the American market and can use his knowledge of the market to develop long term growth strategies.