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Table of Contents
1.1
Introduction...........................................................................................................................3
1.2
1.3
Situation Analysis.................................................................................................................4
1.3.1 Strengths..............................................................................................................................4
1.3.2 Weaknesses..........................................................................................................................5
1.3.3 Opportunities.......................................................................................................................5
1.3.4 Threats.................................................................................................................................6
1.4 What happened to Nokia?..........................................................................................................6
1.5 What went wrong?.....................................................................................................................7
1.6 What Nokia could have done differently?.................................................................................7
1.7 Solution......................................................................................................................................9
1.8 Action plan to implement the solution.......................................................................................9
1.9 Recommendations....................................................................................................................10
References......................................................................................................................................11
1.1 Introduction
The purpose of this report is to highlight what exactly happened to Nokia, what factors
contributed to its failure, what could Nokia have done to identify the problems before it got too
late and how could Nokia have prevented or mitigated the effects of the problems it was facing
before it was acquired by Microsoft.
1.3.2 Weaknesses
1.3.3 Opportunities
Popularity of Androids
Apple products as models
New features and applications
Wider range of products
Better marketing strategies
1.3.4 Threats
Nokia was a leading Smartphone brad. However, in 2007, Iphone was introduced by Apple Inc
which had a full touchscreen and application-based operating system which changed the
definition of Smartphone (Chang, 2012; Marian, 2013). But Nokia failed to respond to the
changing trends and consumer demands that came with the introduction of iPhone as the
consumers had started expecting similar or better features and performance from Nokia. Soon,
the Symbian software became outdated because there were so many new Smartphones available
with better features and enhanced performance. The Smartphone market exploded with new and
innovative Smartphones as consumers were increasingly opting for phones which were minicomputers, instead of Nokias feature phones which had slow WAP browsers. Nokia finally sold
itself out of the mobile industry and to Microsoft as it abandoned the technologies that could
have helped it in retaining its dominant market share and did not stray from its winning
strategies. For 7.1 billion dollars, it gave itself to Microsoft (Steinbock, 2013; Chang, 2012;
Marian, 2013).
The company failed due to its slow response towards trends of redefining smart phones
with touch screen and use of software. The company felt that there is no wider scope of touch
screen in the near future; however, its expectations were overwritten by the customers. In year
2002, Symbian 60 series was launched by Nokia which had a good market response initially,
however, due to lack of UI (user interface) and applications, it collapsed (Kenney & Pon, 2011,
pp. 239). Nokia failed to create something unique after facing significant competition from
Android and iOS. There were four major reasons behind the failure of the company (Steinbock,
2013; Chang, 2012; Marian, 2013).
1.
First was its wrong deal with windows and failure of Symbian OS. The
ultimate collapse of the company was led by its issue related to OS in comparison to
other competing devices.
2.
The second biggest reason of collapse was its lack of focus on innovation
and eventually the company became laggard in the smart phone market.
3.
Third, in the lower segments of phones, the company failed to notice the
stiff competition and consequently lost market share on both ends.
4.
Fourth and last, it failed to implement the right umbrella branding strategy
Nokia could have used its foresight and conducted a proper competitive analysis
beforehand to identify the current trends in the market, to see what the competitors have
achieved and what the differentiating factors in their products are. Iphone gave a whole new
definition of a Smartphone and showed the world what a Smart should be. Nokia could have
responded to Apples iPhone quickly by joining hands with Microsoft earlier than 2011 to
introduce Windows Phone. Now the response to their new Windows phone is slow (Steinbock,
2013; Chang, 2012; Marian, 2013).
In contrast, Samsung quickly responded to the iPhone and entered the Smartphone
market. While Samsung had to work its way up to the Smartphone industry, Nokia had a
comparatively more effective Smartphone platform which it would rather not give up (Chang,
2012). Samsung was faster than Nokia and had multiple platforms, such as Android, Windows
and Bada. Android turned out to be the most successful and generated substantial revenues. This
is because Samsung decided to use Android at the right time as the platform had already matured
(Steinbock, 2013; Chang, 2012; Marian, 2013).
On the other hand, Nokia had a hard time letting go of Symbian and focused all its energy
on improving Symbian until it finally partnered with Microsoft. Apparently, Lumia Windows
phones have not been able to make their way into the market, primarily because the partnership
was too late i.e two years after iPhone and Androids appeared into the market and picked up the
pace (Steinbock, 2013; Marian, 2013).
Nokia could have emerged as a more stable company if its leaders would have been more
visionary. In times of disruptive market change and innovation, the leaders of Nokia were not
visionary due to which the company failed to turn its ideas into the future of the business
(Bouwman et al., 2014, pp. 5). This lack of vision was also led by its poor decision-making and
particularly bad management (Marian, 2013).
1.7 Solution
Nokia should exploit Microsofts expertise and resources with its own expertise and
resources to the brand and become a market leader by coming up with unique, original,
innovative and creative products.
1.
value.
2.
3.
4.
5.
Organize phones under a flagship umbrella brand, like Apples iPhone and
1.9 Recommendations
The company has to make the most of the creativity present, has to be more willing to
take up creative and innovative ideas and has to be risk-taking. Resources to develop products
that would address the emerging market needs were lacked by the company. For various market
segments worldwide and to develop a vast array of smart phone models, sufficient attention was
not paid by the company to the emotional undercurrents caused by internal competition for
resources. To incorporate creative and innovative ideas, a powerful research and development
budget would be required by the company in terms of resource implications. More technical staff
would also be required to be hired by the company globally. The manufacturing process should
be more environment-friendly and the company should reduce its carbon footprint.
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In the creation of its procedures being used, the processes and the products, the company
may be forced to become more creative due to the increased competition from other
organisations like Samsung and Apple. Moreover, the company would be forced to generate a
more creative environment for its employees due to the incessant changes in technology in the
present day world. The preference of customers is another external factor that may affect the
creative environment of the company. With products being preferred by individuals, there are
constant changes in the environment that could impose a significant impact on the companys
creative environment. The changes in the market would prevent managers of the company from
supporting creative ideas and taking risks, due to the cohesive Finnish culture of the company.
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References
Bouwman, H., Carlsson, C., Carlsson, J., Nikou, S., Sell, A., & Walden, P. (2014). How Nokia
failed to nail the Smartphone market, pp. 5-16.
Chang, A. (2012) 5 Reasons Why Nokia Lost Its Handset Sales Lead and Got Downgraded to
Junk. http://www.wired.com/2012/04/5-reasons-why-nokia-lost-its-handset-sales-leadand-got-downgraded-to-junk/
Kenney, M., & Pon, B. (2011). Structuring the smartphone industry: is the mobile internet OS
platform the key? Journal of Industry, Competition and Trade, 11(3), 239-261.
Marian, L. (2013) Is Nokias performance in the Smartphone market affected negatively by
marketing strategy decisions? Analysis of marketing strategy choice and implementation
for Nokia Lumia in Europe. Aarhus School of Business and Social Sciences. Available
from <http://pure.au.dk/portal/files/53734147/nokia_marketing_strategy.pdf>
Nokia Annual Report (2014) Available from
<http://company.nokia.com/en/system/files/download/investors/nokia_results_2014_q4_e
.pdf >
Shah, J. J., Kulkarni, S. V., & Vargas-Hernandez, N. (2000). Evaluation of idea generation
methods for conceptual design: effectiveness metrics and design of experiments. Journal
of mechanical design, 122(4), 377-384.
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