Nokia's Operating Strategy

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Nokia, Oyj

Table of Contents
Introduction1
Internal Analysis2
External Analysis5
Solutions to Strategic Challenge6
Recommendation9

Introduction
A. Company Summary:
Nokia Corporation (“Nokia”) has been the undisputed leader in the mobile phone space for as long as the market has been in existence. Under the previous generation of mobile phones, Nokia grew in scale and expanded its distribution channels and manufacturing flexibility to secure its place as the world’s largest handset developer. The handset giant currently commands roughly 37% of the world’s market for handset devices- manufacturing products in 10 countries across Europe, Latin America, and Asia. Further, the company has also built a solid brand that is highly valued for its reliability. Since the launch of Apple’s iPhone in 2007, however, Nokia’s dominance has been challenged. Apple’s radical expertise in operating systems featured user-interface and functionality technology that changed the way other handset manufacturers thought about their design philosophies. Nokia has been slow to adapt to the smartphone revolution and has since witnessed a steady erosion in its market share as it falls further and further behind a rapidly growing smartphone market. It has recently seen its market share slip from 44.6% to 36.6% and the company’s share price has also fallen by almost two-thirds since the iPhone launch in 2007 wiping about €60 billion off the group’s market capitalisation. B. Business Strategy Issue and Objective:

Nokia’s strength has been its hardware in feature phones and the company is losing the “middle-consumers” as consumers shift from midrange feature phones to smartphones. Symbian, Nokia’s core operating system platform, is, however, muddled by its user-difficulty, its lackluster developer tools, and relatively weak selection of applications. Analysts forecast that the company will not be a major player in the smartphone market. While Nokia still has the resources, the geographic reach, and the relationships to potentially challenge its competitors, it needs a compelling operating system strategy to appeal to the middle-consumers, who are balancing price and quality. Symbian is the core operating platform for Nokia’s mid-range devices. The company has been undergone immense criticism to move their operating systems to third party outsourced providers such as Android or Windows 7. Sony Ericsson and Samsung, have already reported that they will drop Symbian for now and focus on other operating systems such as Android- now the world’ second largest smartphone operating system. This report aims to review Nokia’s current operating system strategy for its mid-range devices, in particular to Symbian, and to ascertain whether Nokia should keep, vary or completely change its operating system strategy in the next few years. C. Strategic Challenge Question:

Should Nokia continue to offer the Symbian operating system platform for its mid-range devices? D. Methodology
For the purposes of this report, and taking into account all such relevant publicly available information, we have completed an in depth external and internal analysis of factors affecting Nokia’s operating system in order to evaluate best where the company may capture and appropriate value. Our internal analysis includes (i) review of the current operating strategy (ii) review of Nokia’s financial trends and metrics (iii) review of Nokia’s long term goals, strengths and weaknesses, resources and capabilities. Copies of detailed internal analyses can be found in Appendix 1. Our external analysis includes: (i) industry analysis of the smartphone industry in accordance with Porter’s 5 Forces (ii) a review of forces that shape the smartphone industry- such as: political, economic, social and cultural, and technology (PEST Analysis); (iii) a competitor analysis of Nokia’s competitors in the smartphone industry. Copies of detailed external analyses...
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