Nokia Case Analysis
Nokia Case
Problem statement
Until recently, the mobile phone industry’s sole profitable market was the developed one. Today, low end, emerging markets are growing rapidly and are proving to be profitable; the emerging market accounts for 60% of Nokia’s revenues alone. Determining which market to target affects both the production of phones as well as the services that need to be developed. Nokia is now faced with two options: should they continue operating in both the developed and emerging markets, or should they begin to focus solely on one market?
External environment analysis
- External segments of the general environment
* Technical * Development of the different networks (1G, 2G, 3G) * Economic * Differences in disposable income, “the average disposable income in the U.S. was eight times that of Brazil, 17 times that of China, and 45 times that of India” * Demographic * Need to understand local markets * Different countries have different trends (example: clamshell model in China) * Physical * Environmental changes, “adapted to the needs of emerging markets: a dust resistant keypad and an extra-strength case that protected the phone in rural markets”
- Industry analysis
* Mobile phone industry in 2009 * Industry size: by the end of 2008, 4 billion subscribers to wireless communications * Growth * In emerging markets, growth was through first time buyers * In developed markets, growth was through phone upgrades or purchases of secondary devices * Trends * Decline in prices of mobile devices * Rivalry (Intensive): main competitors - Samsung, Nokia, Motorola, Apple, RIM, LG, Sony Ericsson * Threat of new entrances (High): ZTE, Apple, RIM * Threat of substitutes * Television * AM/FM radio (in emerging countries) * Walkie-talkies * Computers * Bargaining power of
Problem statement
Until recently, the mobile phone industry’s sole profitable market was the developed one. Today, low end, emerging markets are growing rapidly and are proving to be profitable; the emerging market accounts for 60% of Nokia’s revenues alone. Determining which market to target affects both the production of phones as well as the services that need to be developed. Nokia is now faced with two options: should they continue operating in both the developed and emerging markets, or should they begin to focus solely on one market?
External environment analysis
- External segments of the general environment
* Technical * Development of the different networks (1G, 2G, 3G) * Economic * Differences in disposable income, “the average disposable income in the U.S. was eight times that of Brazil, 17 times that of China, and 45 times that of India” * Demographic * Need to understand local markets * Different countries have different trends (example: clamshell model in China) * Physical * Environmental changes, “adapted to the needs of emerging markets: a dust resistant keypad and an extra-strength case that protected the phone in rural markets”
- Industry analysis
* Mobile phone industry in 2009 * Industry size: by the end of 2008, 4 billion subscribers to wireless communications * Growth * In emerging markets, growth was through first time buyers * In developed markets, growth was through phone upgrades or purchases of secondary devices * Trends * Decline in prices of mobile devices * Rivalry (Intensive): main competitors - Samsung, Nokia, Motorola, Apple, RIM, LG, Sony Ericsson * Threat of new entrances (High): ZTE, Apple, RIM * Threat of substitutes * Television * AM/FM radio (in emerging countries) * Walkie-talkies * Computers * Bargaining power of