Introduction:

Nokia is the biggest name in the world of mobile phones. It enjoys a market share of around 35%
at the moment. The Finland based company caters to GSM as well as CDMA segment. Nokia's
phones are loved by a lot of people and its name is synonymous with reliability. Nokia has its
presence in every segment of the market. It offers the cheapest range of phones with the most
basic features as well as high-end level phones with all the latest features. On the process of
Nokias development, the company achieved success because it could balance the two
approaches well i-e Market led and Resource based approach.

Q#1 Drawing on the five forces model, why Nokia is successful in telecom
industry?
Porters Five Forces Model:

Threat of entry

Medium

Industry Competitors rivalry

Bargaining power of

Bargaining power of

among Existing Firms

Buyers

Suppliers

Strong

Strong

Weak

Threat of Substitute Products

Strong

Threat of Entry:
The Nokia mobile phone industry is already a well established market and the threat of a new
entrant is medium, although there are many potential competitors present in the market but a
huge investment is required so to enter in the market.
Nokia has the technology needed to stay in the market as it is now owned by the Microsoft so,
rival devices already available is quite advance if they want to differentiate from them.
Barriers:
The barriers to entry in the mobile phone industry is high because any new entrants will need
high investments in R&D, technology and marketing in order to compete with the Nokia mobile
phone.
Customers of Nokia have a strong brand loyalty even now, after the company faces the distress.

As Nokia exists in the market from decades so it has a benefit of cost advantage.
Switching cost for the customers of Nokia is relatively high because in order to switch you have
to convert your operating system from symbian to android etc.

Rivalry among Existing Firms:

This force is relatively high for Nokia because its rivals have moved to smart phones and
androids while Nokia have only few models released as smart phones leaving them trailing their
rivals such as Apple, Samsung etc. Nokia operate in an industry where the competition is
extremely fierce with high investment in R&B and marketing to compete with some of the
biggest organizations in the world.
The competitive rivalry is the biggest Threat to Nokia because in the Smartphone market they
are considerably behind and to increase their market share will take a lot of work in a market
where some of the biggest names in business operate in such as Apple and Samsung. Nokia
belongs to Consolidated Industry as it takes so many initiatives in the telecom industry like
GSM etc.

Bargaining Power of Power:

The power that customers have is Rising because of the increasing number of choices in the
mobile telecommunication industry as there are number of mobile companies available in the
market. The mobile phone industry is a competitive market where the number of choices is very
wide, resulting in the consumer having a lot of power because they can choose to go to one of
Nokias many rivals if they feel Nokia are not good enough.
So, bargaining power of buyer is Strong and supposed to be as Threat for Nokia because the
buyers have a high amount of power of the other handsets they can purchase instead of Nokia.

Bargaining Power of Suppliers:

This force is Weak in case of Nokia because Nokia heavily need supply equipment for their
advanced handsets and there are many suppliers available in the market so, there is no such
pressure from supplier point of view.
There is a Low Threat from the powers of suppliers because although the hardware suppliers
have a very low power. Although opportunity to get raw material at cheaper rate.

Threat of Substitute Products:

This force is also high nowadays for Nokia because it has a number of active competitors
available in the market. As we had already discussed that there are number of choices available
for customers in the market.
This is supposed to be the threat for Nokia as it has to produce better and innovative products
than competitors in order to survive in to the market.

Why Nokia Is Successful?

According the case study provided to us there are basically two approaches that played a key role
in the success of Nokia Telecom industry i-e Marketing Led strategy and Resource-based
strategy.

Marketing Led strategy & Resource Based Strategy:

Nokia by entering in the telecom industry adapt itself according to the need of the customer and
basically take the environment and efficient utilization of resources as the starting point and it
proves that it is an advantageous position in the market.
Planned and emergent approaches:
Since Nokia lost the control to make sense the market trends and then starts concentrated on its
planned strategy. Nokia adjusted its strategy by aligning its internal strengths and external
opportunities and balanced the emergent and planned strategies, by doing this the company
recaptured its market share again.

Hence, all four approaches are of equal Important in the success of Nokia in Telecom Industry.

Q# What are the opportunities and threats in industry, what must Nokia do to
exploit the opportunities and counter the threats?
Following are the opportunities that are needed to avail and threats that are needed
to counter:
Opportunities:
Mobiles with windows operating system.
Huge Loyal Customer Base.
Advantage of economies of scale
Better variety of Reliable Mobiles
Emerging Market for high end mobiles
Emerging Markets in Developing countries
Weak Bargaining Power of supplier.

Threats:
Strong competition from other Smartphone companies.
Strong Bargaining Power of buyer.
Lost Market Share.
New Potential Competitors.
Low-cost threats by China mobile companies and others.

Suggestions for External Factors:

By studying the whole of case study what I concluded is that , If Nokia aligned its external
opportunities with the internal strengths in the same direction than it can again become a market
leader.
If I talk about Threats so, the biggest threat for Nokia is china mobile companies who are selling
their phones at a very cheaper price and penetrating their product in small towns. Nokis has to
make emergent strategy to cope up with this situation. Another thing is Product innovation, if
Nokia wants to survive in the market it has to work on its R& D.

PUNJAB COLLEGE OF COMMERCE

Assignment# 02

Name:
Junaid Subhani

Reg.#
L4F14MCOM0017

Section:
MA-04

Course:
Business Strategy

Topic:
Porters Five Forces Analysis

Submitted To:
Prof. Nahan Iqbal Sindhu

Submission Date:
04/05/2016