Nokia – internal analysis
We start our internal analysis by looking at Nokia’s sales and profitability. Strong sales and profitability results can indicate that the previous strategies were successful and changes in either can implicate a change in the market viability (Aaker, Mcloughlin, 2007). In 2007, Nokia realized total sales of about 435 million units and a net profit of €7,205 million. Although it has only a market share of 9.8% in the United States market, Nokia has a worldwide market share of 37,8%. This makes Nokia the market leader in the telecom industry and hereby a dominant player in the market. Nokia has 10 manufacturing facilities in 9 countries, and from these locations she distributes her products to more than 150 countries and different segments. With sales growing considerably compared to 2006, Nokia’s large customer base has only increased. Assuming new customers will create loyalty, future earnings are brought in. However, growth in the industry is declining, making it a difficult task for Nokia to keep their customers with the company. In 2007, Nokia’s total assets were €35,599 million (annual report Nokia, 2007), resulting in a Return On Assets (ROA) of €7,205/€35,599 = 20.24%. Nonfinancial performance
Financial performance measures are primarily a reflection of the short-term business results. Because of this, nonfinancial performance measures must also be considered. Nonfinancial performance measures often provide better measures of long-term business health (Aaker, Mcloughlin, 2007). Relative costs
Since 2004, Nokia is offering cheaper phones for the emerging markets. By using her economies of scale, Nokia was able to lower her costs, resulting in an average building price of only 69 euros per handset. This was giving Nokia a dominant position because it was very difficult for Nokia’s rivals to keep up with this cost reduction. However, Nokia’s produces most of its production volume in high-wage countries,...
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