Nokai Company Success

...

Reasons for Company`s initial success

In the 1990s and at the beginning of the new millennium, Nokia was the top dog in the mobile manufacturing industry having a whopping 40 percent of the total market share and no close competitors. The Finnish Company was considered the number one choice in South East Asia including India and China (Baker). The Company`s success was attributed to its:

- Focus. Unlike other companies which were involved in the manufacturing of mobile phone handsets, Nokia concentrated solely on the mobile phones and did not engage in the production of other electronics.

- Early investment. Nokia invested in the mobile manufacturing industry before any other electronic brands. The Company considered the vertical approach in the handset ecosystem which includes investment in manufacturing, distribution, design, research and development.

- Distribution. Nokia distributed its products in two major ways: by forming distribution partnerships with retailers and they distribute the remaining products on their own. For example in India, Nokia has about 75000 distributors of its handsets.

- Innovativeness. Nokia was the first Company to manufacture mobile phones which had extra features such as a flash light and gaming consoles. Moreover, it was the first Company to develop a smartphone.

- Correct pricing. Nokia estimates the prices of its products by assessing the trend in the high end market and the low end market.

- Quality products. The qualities which make the Nokia phones to be so popular are: good call quality, longer battery life, robustness among others.

Company`s current status

Currently, Nokia has only 3 percent of the global smartphone market share. This is approximately five times less its market share at the beginning of the millennium (Nokia Corporation). This change sows that the consumer perception of Nokia phones has deteriorated. The recent Company`s failure can be attributed to the following factors:

- Expensive. Some of Nokia`s phones are overly costly. For instance, the Nokia Lumia 920 had a starting price of 800 dollars

- Increased competition. In the first three months of 2012, Nokia reported losses of up to 929 euros owing to the competition that it is getting from Samsung and Apple in its high end market; Huawei and ZTE in its low end markets. Consequently, its position in the world wide smart phone market share fell from position 3 to 7.

- Production consistency. Compared to its rivals, Nokia has not shown any consistency in the production of new phones. For instance, with the introduction of Samsung galaxy series, Samsung has persistently built the consumers anticipation and demand by manufacturing models of the galaxy series on a yearly basis.

- Nokia lagged behind compared to its rivals in making the transition of switching to the production of smartphones. As a result the Company`s popularity in the market declined.

- Disappointing. For instance, the Nokia n97 which was praised by the Company`s CEO as being the phone to beat did not meet these praises. The consumers found the phone to be normal and lacking when compared to the Iphone.

- Outdated brand. Consumers find the brand`s catchphrase ‘connecting people’ as passée and superficial. This is because the Nokia phones do not meet the current need for connectivity required in the high tech era we live in. The competing brands, such as Iphone, provide the consumers with a portable pocket size mini-computer. .

- Underestimation of the importance of software. Nokia is more of a hardware company and its employees focus mostly on how to improve on the phones` hardware at the expense of software.

- Nokia uses many different softwares in its devices with some of them using the old Symbian S60 stacks, others use the newer Symabian 3 and 4. Getting and maintaining all these softwares to be at par with consumer`s requirements is hard.

Improving the Company

In a bid for the Company to regain its lost glory, Nokia has outlined a new strategy which involves the introduction of new leadership and organizational structure (Robert). It has also begun a partnership with Microsoft Company. Below is a brief discussion of each of these strategies:

- The partnership between Nokia and Microsoft aims to deliver innovative products. These products, according to Nokia press release, will focus on software customization, hardware optimization, language support and scale.

- Nokia has changed its leadership with its former CEO Mr. Elop being part of its new leadership team. This team is composed of innovative people and it will focus on ascertaining product reliability, efficiency, accountability and speed in terms of the time the product reaches the market.

- Nokia is keen on investing more in the next generation disruptive technologies.

- Nokia has also restructured its organization. There are two main business units: the smart devices unit and the mobile phone unit. Each unit is responsible for the product management, product development and product marketing. Other units include: marketing, services and development experience, CTO office which is responsible for Nokia`s technology strategy, design, corporate development, corporate relations and responsibility among others.

Conclusion

It is clear that the Company`s initial success was due to successful market mixing. Therefore in order for Nokia to bolster its resurgence, it needs to carefully ensure that the strategies it is going to adopt will gravitate towards fulfilling the 4P`s-Product, Price, Promotion and Place.

---------------------------------------------------------------

Works Cited

Baker, Stephen. "The Race To Rule Mobile ." Business Week (2009): 58-60.

Fox, Justin. "Nokia`s Secret Code." Fortune (2009): 161-164.

Nokia Corporation. "Annual Report." Annual Results 2012 (2012): 12-13.

—. "Story of Nokia." Nokia`s first century (2009): 3-5.

Robert, Guth. "Nokia Fights." Wall- Street Journal (2010): 26.