Nokia Corporation

1) Overview of Nokia Corporation

In 1967, three Finnish companies merged to form the Nokia Corporation; entering the telecommunications market and establishing a corporate position of innovation; aesthetically-pleasing products and high technology development. During the 1980s, Nokia strengthened its position in the telecommunications and consumer electronics markets through the further acquisitions of French, Finnish and German firms operating in consumer electronics operations which provided the basis for the long term acquisition growth strategy (Steinbock, 2001; www.nokia.com)

The cellular industry is tpically divided into two parts: cellular infrastructure and mobile handsets. Nokia has operated in both of these segments but most of its recent success derives from handsets (Steinbock,2001) The company includes four business groups: mobile telephones; multimedia; enterprise solutions and networks. The mobile device business accounts for 80% of Nokia's revenue and 82% of its profit, and despite recent declines, Nokia still controls nearly a third of the global handset market (Schwartz, 2005)

Nokia has production in 11 countries and a global network of distribution, sales, customer service and other operational units (www.nokia.com)

1.1 Current Position

Nokia is ranked as the fifth most valuable brand in the world earning $40 billion in sales within 140 countries. With 55,000 employees worldwide and a focus on a global mindset, innovative corporate culture, R&D and high market segmentation; Nokia has built a strong global market position.

In the past 3-5 years, Nokia has been losing market share to its major handset development rivals: Motorola, Siemens and Sony-Ericsson. The steady decline has been a result of internal factors such as the future-orientated strategic focus that has not responded to the present and recent changes in the market and consumer preferences.

1.2 Corporate Objectives

Mission Statement

The stated mission statement reflects and enforces the consumer focus of Nokia, and the objectives to bring technology and communication to more people:

“By connecting people, we help fufill a fundamental human need for social

connections and contact. Nokia builds bridges between people- both when they are far apart and face-to-face вЂ" and also bridges the gap between people and the information they need” (www.nokia.com)

Corporate Goals and Objectives

The Nokia strategy continues to focus on three activities to expand mobile

communications in terms of volume and value:

Expand mobile voice

Drive consumer multimedia

Bring extended mobility to enterprises

2) External Environment

2.1 Industry Analysis

Global Industry Trends

The mobile communications industry continues to undergo significant changes as more users in growth markets gain access to mobile communications, enterprise becomes increasingly mobile, the importance of end-to-end solutions increases, and technology continues to evolve. Another trend is an increased emphasis on the role of customisation in mobile devices. These changes have demanded flexibility from handset developers to adapt to new market conditions and shifting consumer trends.

The current global industry trends include:

 Convergence of products and technologies to add maximum value to handsets.

The mobile communications, information technology, media, and consumer electronics Industries are converging in some areas into one broader industry. Some of the first examples of this convergence include camera phones, as well as the use of mobile devices for email, web browsing and applications, and music downloading. It also includes Multi-radio solutions and devices, which automatically transfer connectivity among cellular networks and complementary access technologies.

 Global cross-industry partnerships to capitalise on technology and knowledge sharing to provide competitive advantage;

 Shifts in consumer demands towards more attractive and fashion-orientated handsets;

 High fragmentation of markets (www.accenture.com, Steinbock,2001)

 Development of �End-To-End’ Solutions:

A solution is considered end-to-end when it provides the hardware and software elements, including infrastructure, applications or service platforms and mobile devices. The ability to offer tailored end-to-end solutions is becoming increasingly important to meet the needs of operators, enterprises, and consumers.

PESTLE model

Political

Domestic Government Support

The Finnish government has long been supportive of the telecommunications industry, resulting in the number of cellular phone subscribers as well as the number of Internet connections per capita in Finland used to be the highest in the world. Future plans include further support for the industry involving a high-level Information Society Committee, led by the prime minister, to drive active national IT policy.

Future Issues: Industry Clusters

Western Europe and Scandinavia are carrying out strategic efforts to attract different industry segments to specific regions. The European Commission is striving to make Europe the "world's most competitive and dynamic knowledge-based economy" Nokia is involved in the cluster development process, including establishing research in Sweden, clustering with other international IT companies to focus on wireless technology; these include Compaq, Ericsson, Hewlett Packard, IBM, Intel, Motorola and Microsoft.

Economic

Market Trends

Based on volume developments during the first quarter 2005, Nokia now expects the overall mobile device market for 2005 to reach about 740