Nokia to Sustain Market Leadership

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Nanyang Technological University
School of MAE

Academic Year 2010/2011
Semester II

MA6535 MANAGEMENT OF GLOBAL MANUFACTURING

STRATEGIC INITIATIVE BY NOKIA CORPORATION TO SUSTAIN MARKET LEADERSHIP

Team Members:

BALAGURUNATHAN BALACHANDER
KALAICHELVAN REDDIAR VIGNESH
KUMARAVEL MUTHU SELVENDERAN
PALANISAMY KAVIYARASU
RAMANATHAN SARAVANAN
NOKIA

1. Introduction:
In the later part of 20th century, the world switched into new Technology called Mobile Communication. Nokia was one of the market leaders in the manufacturing of Mobile Phones. In the year 1998 and with the invent of the technology called GSM, Nokia has leveraged its ability to introduce fashionable and cheap handsets with its strength in GSM Technology it becomes the global industry leader. After seeing the drastic growth and opportunity in the market, almost all the players in the consumer electronics industry and computer manufacturers have entered into the mobile phone market. This has increased huge competition and thus reduces the life cycle of the product, i.e., new models coming every three months which is a challenge to the supply chain team to satisfy the market demand. In the year 2007, the launch of Apple i-Phone have rocked the mobile Industry, simultaneously Chinese producers such as ZTE aggressively entered into the Asian and African market with cheap low end handsets and Korean producer Samsung Electronics solidified its position as the number two player in the market. The intense competition on both high end and low end markets weakens the Nokia’s position as a Market leader. When Nokia Corporation landed in a financial crisis in the year 1991, they have made a strategic move of employing one-third of the total employees and 10% of its revenue in R&D, which has initiated them to become a market leader. According to inter brand Nokia has been the 5th most value brand globally in 2000. Nokia has the unique Supply Chain model which helps them to satisfy drastic customer demand and after sales services.

Mobile Phone Industry:
There are various improvements in the design and technology which has let mobile phones to be an essential instrument for every man's life. As a result of huge competition and at the same time, competition has yielded process improvements that have driven prices down to the point in which these phones are affordable to the masses which also has increased opportunity for the new entrants. Many new technologies have been the results of the high competition. Mobile phones have started with 0G, which Motorola has introduced in the market in the early 80's now it has grown to 4G which is the latest technology for communication. And the major mobile phone manufacturers are Nokia, Apple, Samsung, LG, Blackberry and HTC Corporation.

History of Nokia:
The eponymous telecommunication giant Nokia was founded in 1865 by Fredrik Idestam as a paper mill. The company would become a major industrial force between 1865 and 1967.Then it would merge with a cable company (Finnish Cable Works) and a rubber firm (Finnish Rubber Works) to set the new Nokia Corporation on the path to electronics. The newly formed Nokia Corporation then decided to focus on telecommunication. The ground work for telecommunications was laid in the 1960s.In the late 1970s, the mobile phones and Telecommunications infrastructure products were developed for both domestic and international customers.

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Current Problem:
Nokia has lost the market share in the developed countries: the company only sold one in ten handsets in the US compared to one in three in 2002 and it had recently pulled out of Japanese market after twenty years of operation. Nokia’s revenue in Europe declined by 15% in the fourth quarter of 2009, and the overall market share has come down from 36% in 2007 to 30% in 2010. Still Nokia is the Market leader in the Mobile phone Manufacturing Industry. Nokia was able to keep its cost low...
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