Figure [ 1 ] Nokia’s current Logo, with its “Connecting People” slogan, Courtesy: Wikipedia Figure [ 1 ] Nokia’s current Logo, with its “Connecting People” slogan, Courtesy: Wikipedia Nokia Corporation is a Finnish multinational communications and information technology corporation. It is comprised of three operating segments: Devices & Services; NAVTEQ, and Nokia Siemens Networks. Devices & Services is responsible for managing the company’s portfolio of mobile devices, as well as related services such as applications and content. NAVTEQ is a wholly owned subsidiary of Nokia which provides digital map information, navigation systems, and other location-based content and services for mobile devices. Nokia Siemens Networks, a joint venture between Nokia and Siemens, provides telecommunication infrastructure and network services. Nokia’s main products are mobile phones and portable IT devices. As of 2012, it is the world’s second largest mobile phone vendor by unit sales (after Samsung), with global market share of 22.5% in the first quarter. In 2011, Nokia is ranked 143th as the world’s largest company by revenue on the Fortune Global 500. Its revenue in 2011 was around €38 billion. Nokia currently has about 122,000 employees across 120 countries and sells in over 150 countries.4 Nokia was the world’s largest mobile phone manufacturers from 1998 to 2012, but its market share has significantly declined in the past five years due to intense competition in the smartphone market by RIM’s BlackBerry, Google’s Android-based devices, and most importantly, the Apple’s iPhone.2 Nokia’s stock price dropped over 92% from its high of almost US$40/share at the end of 2007 to only about US$3/share in 2012. Since 2011, Nokia has been undergoing a period of restructuring, with combined planned and actualized job cuts over 24,500 positions worldwide by the end of 2013. On 18 June 2012, Moody’s Rating Agency downgraded Nokia’s bonds to junk. On 11 February 2011, Nokia announced a strategic partnership with Microsoft, where all future Nokia smartphones will use Windows Phone operating system, reducing the number of devices running on Symbian (the previous OS for Nokia smartphones) over the next two years. In October 2011, Nokia released their first Windows Phones, Lumia 710 and 800.2
Porter’s Five Forces Analysis: At A Glance
Porter’s Five Forces| Points to be considered| Scale|
Threat of New Competition| * Well-established mobile phone market, but with growing opportunities * High barrier of entry * High investment in R&D, technology, marketing * Intellectual property * Cost advantages * Technology moves fast in this space and it is difficult to predict what may potentially disrupt the smartphone market. It is possible that some of the innovative products in development such as Google Glass will become the Next Big Thing| Moderate| Threat of Substitutes| * Smartphones performs a variety of functions, which overlaps with other existing items/devices such as laptops, tablets, simple telephones, MP3 players, E-book readers, cameras, and even credit cards, so there are a lot of substitute products * However, the value of a smartphone lies in the integration of different functions into one device, and the trend of integrating more functions into a smartphone is likely going to continue in the future| Low| Bargaining Power of Customers| * Customers have plenty of choices for mobile phones thanks to highly competitive market * The customers has become price sensitive due to different companies offering similar packages * The US’s 2-year contract with carriers may prevent buyers from switching to new phones before the contract expires| High| Bargaining Power of Suppliers| * As one of the world’s largest mobile phone manufacturers, Nokia has a strong position when bargaining with its hardware suppliers * There are a number of hardware manufacturers that...