One of the most significant trends in the modern world is a high pace of technological development. Our life cannot be imagined without computer, Internet and mobile phone. They have become an integral part of our daily life. Technological industries are considered as the most promising and profitable nowadays. That is why they provoke attention from businesses, investors and society, in general. Of course, there are certain segments in this overall industry. Among the most promising the following ones may be pointed out: IT-industry, communication industry, production of the different technological devices, production of the mobile phone handsets. The main attention of this research papers is going to be paid to the trends in the latter segment.
The main goal of this research paper is to analyze the current conditions and development trends of the industry under consideration in some l area. The following manufacturer has been chosen for this analysis – Nokia. The company was the market’s leader 10 years ago, but it has lost its strong positions since then. We will try to answer the question, why? In order to answer this question, we have to analyze the overall conditions of the industry and features of the company itself. Taking into account these goals, the paper is going to have the following structure: background information about the industry, background information about the company, analysis of the industry’s trends in the region, conclusions.
As it has been already mentioned, the industry under consideration has been experiencing changes, in the recent years. Those changes are not only related to technological growth, but changes in the squad of the leading players, as well. The company, which has been chosen for the analysis, was a leader a few years ago. Nowadays, this company along with Motorola and Sony Ericsson is fighting for life. The current market has new leaders – Apple, Samsung and HTC. We believe that the main competitive advantage that has allowed these companies to outrun previous leaders is technological innovations. These innovations have changed the face of the market. For example, we can mention about iPhone alone. It was a real revolution in this industry. Nokia has not managed to maintain such pace. Our task is to find out why while analyzing the company’s features and industry’s conditions.
First of all, we have to explore the industry in the local regional area. The main attention will be focused on Europe. The following instruments are going to be used: SWOT and PESTEL analysis, Porter’s 5 forces framework, BCG matrix, Ansoff’s growth vector matrix.
Before analyzing conditions of the chosen industry in the region, some attention should be devoted to the overall economic conditions in Europe. Frankly speaking, these conditions are not the best nowadays. Europe is still suffering consequences of the global financial crisis. Some European countries are on the verge of default. For instance, Greece can be mentioned. A lot of experts say that the crisis is not over yet. Moreover, its peak may be only next year since nothing has been changed in the mechanism and principles of the global financial architecture. The reasons behind the global financial crisis are still influential today. Desire of living while using debt financing cannot be eliminated by a decision of some regulative institution only. This process must take some time. Our words about economic difficulties in Europe can be proved by the following words.
The state of economies in Europe continues weakening, with Britain claiming that the second recession cycle within the last couple of years had worsened; according to other reports, business conditions continue deteriorating in other countries, including Germany. These negative trends put pressure upon countries like Italy and Spain, which are striving to avoid the ill paths of Portugal, Greece or Ireland in terms of government financing. There is a lot of excessive pressure upon countries within the euro zone, which calls for financial assistance.
Of course, such negative overall economic situation influences well-being of European citizens. First of all, their financial abilities are affected. Demand for a lot of goods and services is falling. Mobile handsets are among such products. People begin to limit their purchases and try to avoid products that are not important. Respectively, financial conditions of manufacturers of handsets are not optimal. However, financial difficulties cannot be the only reason for the Nokia’s bad performance since this reason also affects all the company’s competitors. That is why we should consider other features of the industry, but, first of all, we must say a few words about the company itself.
Nokia is a famous Finnish company that specializes in production of mobile handsets. In fact, the company was founded in 1865. It has been specializing in the different directions since that time. However, it has become possible, because of production of cell phones. Also, the company is famous as the developer of GSM standard. It has over 130 thousans employees and branches in many countries of the world. It has been a leader of the industry for a long time. Some additional information about the company can be got from the following quote.
Nokia is counted among one of the top world’s producers of cell phones. Initially incorporated in one of the Finnish city that it is named after, the company of Nokia has its business consist of manufacturing and services of mobile devices. The cell phones feature Microsoft’s Windows platform, and NAVTEQ (digital map content and services), as well. Nokia also share operation of the Nokia Siemens Networks, in collaboration with Siemens (Munich); this joint venture holds a position of a leading player in the market of telecom infrastructure and services. Selling products in over 160 countries, Nokia’s top country undoubtedly is China, accounting around about 15% of overall sales.
Therefore, history of the company is quite controversial. In fact, it can be an example of a great business success and tremendous business failure. The question is what the reasons for such failure are. These reasons can be divided into external and internal. Internal reasons should be explored first. Among them, the following ones may be pointed out.
The company was too satisfied with its success. Moreover, it was quite relaxed to underestimate the degree of competition. For example, such companies as HTC, Huawei and ZTE have managed to overcome the company in the developing countries.
Nokia has not managed to develop and propose effective operation system. Android is much better and popular than Symbian. Usage of Android has given a significant competitive advantage to Samsung. Recently, the company has changed the strategy and started to cooperate with Windows. However, this cooperation has not paid off yet.
Nokia has lost a technological game and is not considered as an innovative brand nowadays. It is rather a traditional and even conservative brand. It can be called as a disadvantage since consumers, especially from the developing countries desire to buy the most innovative products. For example, the company missed a moment and did not propose competitive touch screens. It is the most popular product in the chosen segment nowadays.
Finally, the company is worse in the positioning of its products, than its main competitors. Its marketing strategy is less aggressive as compared to competitors’. This opinion can be proved by the following words.
“Where Samsung shines brighter than Nokia, and many other manufacturers, is execution. Samsung mirrored Apple’s gameplan by dazzling consumers with a high-end flagship line in its Galaxy S Android phones”.
Therefore, we can say that Nokia has made a lot of mistakes. It has led to the situation, when this company is not among the leaders of the market nowadays. However, there were also a lot of external factors that affected the process. The next task is to analyze such factors, using the different instruments. First of all, we are going to conduct PESTEL analysis of the industry in the local area.
In fact, political and legal factors are supportive for businesses in the region, indeed. It is Europe, which has always been liberal and democratic. Businesses usually get support from governments, since they create new working places and contribute to a country’s GDP. Also, there is no practice to intervene in performance of a company, in Europe. Companies are truly free in choosing the most appropriate and beneficial strategies. That is why we can say that political and legal factors were not among the reasons that affected the company’s performance.
Economic conditions in Europe have been already mentioned a bit. The current conditions are not supportive for business. Europe is experiencing economic decline and debt crisis. There are even talks about possible elimination of Euro. However, these are only the current circumstances. We believe that Europe is going to have a good future. In general terms, European market is very promising for any business. It accounts for hundred million people, who are among the most solvent in the world. Usually, these people live in the developed countries of the region. However, there are also developing countries in the region. Their potential is also very high. Frankly speaking, it cannot be even evaluated nowadays. In any case, there is a great potential. Thus, we cannot say that the local market is fully saturated.
The region is supportive in a social context, in general terms because the current conditions are not good either. There are a lot of social conflicts in the different countries, caused by the economic difficulties. We believe that these difficulties are also permanent. Europe is characterized as humanitarian society, which supports rights of a human, including personal and social freedom.
Finally, we should say a few words about technological and environmental factors. Environmental factors of the region can be considered in the different ways, but we can say that they have no tremendous influence on the business under consideration. Also, the region has all the opportunities for technological development. Once again, the company cannot complaint about these factors.
In conclusion for this part of the research paper, we would like to say the following. Europe is experiencing tough times nowadays since it is facing economic and social difficulties. These difficulties are mainly associated with the consequences of the global financial crisis. We believe that they are permanent. In general terms, the region may be considered as promising and supportive. That is why the company should place its focus on development in this region. However, it has also its advantages and disadvantages, threats and opportunities. These factors can be analyzed via SWOT analysis.
Strengths of Europe are the following: solvent market, socially stable environment, political stability, high degree of technological development, upcoming developing countries, support of governments, etc.
Weaknesses of the region are the following: negative economic consequences of the global financial crisis, undefined future of local currency, the current social tension and conflicts, high degree of saturation of the market, high degree of competition in the industry under consideration, etc.
The region’s opportunities are the following: promising developing countries on the East of Europe, potential stable pace of economic growth of Europe in the nearest future, governmental support of business in order to overcome the crisis, etc.
Finally, the threats in Europe are the following: still existing economic difficulties and social problems, potential breakdown of European Union, changes in the global economic balance toward the United States of America and other regions.
Therefore, we have defined the main features of the industry, its weaknesses and opportunities. We can conclude that the region is stable and promising, despite the current existing problems. The company just has to develop the most appropriate business strategy for the local region. This strategy can be defined via such instruments as BCG matrix and Ansoff’s matrix. First of all, we have to define the term BCG matrix. In our opinion, one of the most appropriate definitions of this term gives the following features.
The BCG matrix serves a tool for planning that was developed by Bruce Henderson (Boston Consulting Group), in the 1970’s. This model bases on products classification (and also company’s business units) into four categories, which is based on various combinations of market share and market growth in relation to the biggest competitor.
Simply speaking it is a management tool that defines possible ways of development of a company, choosing between high pace of growth and high market share. The current state of the company may be called as dogs. It is characterized with low pace of growth and low market share. We believe, if taking into account the company’s history and potential, it should be among the business stars. The question is what should be done to reach this difficult goal. The next marketing instrument is going to help us to answer this hard question.
Ansoff’s matrix is one of the strategic planning tools, which serves to link a company’s marketing strategy to its overall strategic objectives. Ansoff’s matrix offers four alternatives in terms of growth strategies, which are presented in a form of a table, or matrix. The growth strategies encounter: (1)Market penetration that is aided by means of pushing existing company’s products in accordance with their present market segmentation. (2) Market development, which is done by means of exploring new markets for the current products. (3) Product development, which is carried out by means of new products development for the already existing markets. (4) Diversification which assumes development of new products for potential markets.
This management instrument proposes for ways of development for the company: market development, market penetration, product development and diversification. We believe that the most optimal strategy will be product development. Innovations are the key to successes in the modern business development. Apple Inc. has proved this opinion by changing Nokia on the position of the leader of the industry. Its iPhone was that innovation, which has changed the face of the market. Nokia should implement something similar. We are not going to concentrate on some technological details since it is a subject of other paper. The company should develop and propose revolutionary product. We would also like to add that it should not be only a cell phone. Probably, the company should pay some attention to the market of tablets and other similar products. The company can try to develop some new standard of connection, yet again. In the end, the company should conduct some rebranding in order to regain the past positions, it should be a task of honour for the company, mission of the current existence.