Nokia's Failure

Topics: Mobile phone, Nokia, Smartphone Pages: 17 (5185 words) Published: July 16, 2013
Strategic Management
MBAE Assignment
Nafiz Mostafa, ID: 0712071085

Executive Summary
This paper seeks to analyze an underperforming company, its strategy, the reasons behind underperformance and suitable recommendations for strategic change. As case study Nokia Corporation has been chosen, which has lost its market leadership in the mobile phone industry in the past five years, although it had market leadership for decades. In carrying out analysis of Nokia, this paper has critically scrutinized the mobile phone industry, the external environment and the internal dynamics of Nokia Corporation. Initially Mobile phone Industry analysis is carried out to determine that it belongs to the matured stage of the lifecycle and also to determine that the market has reached saturation and is unattractive for new entrants as identified by the Porter’s Five Forces model. The model shows that the bargaining power of customers is high and suppliers are moderate, whereas threat of substitutes and new entrants is low; however competitive rivalry is intense. The paper then goes on to analyse the impact of the PESTLE factors on the mobile phone industry and concludes that all of the factors have significant impact. Furthermore the industry’s profitability condition, its KSF’s products and participants are identified, along with Nokia’s competitors. The paper then moves onto the Internal Analysis of Nokia to identify its strengths and weaknesses and further evaluate its opportunities and threats. Critical analysis is then carried out of Nokia’s strategy with respect to corporate level, business level, functional level and the multi-domestic global strategy that it follows. The company’s structure and control is also evaluated. And finally the reasons for underperformance are analyzed which includes lack of leadership, failure to innovate, slow adaptability etc and the paper is concluded with recommendations.

Table of Contents
Executive Summary| 2|
Company Overview- Nokia| 4|
Industry & Environmental Analysis- mobile phone industry| 5| Industry Overview & Lifecycle| 6|
Porter’s 5 Forces Model| 7|
PESTEL Analysis| 9|
Industry’s Profitability condition, products and services and KSF’s| 12| Industry Participants| 12|
Industry Competitors| 14|
Critical Evaluation of Nokia| 14|
Internal Analysis: SW Identification| 17|
Business Model Canvas| 19|
Implication of Strategy at Nokia| 22|
Company’s Structure and Control System| 24|
Reasons behind Low Performance| 24|
Strategy Recommendations| 25|
Bibliography| 27|

Company Overview- Nokia Corporation
Nokia Corporation headquartered in Finland, is a Finnish origin communications and IT based MNC which initially started off as a paper production plant in 1865. Today Nokia mainly produces mobile telephones and portable IT devices as well as offering Internet services. Nokia has global presence in more than 150 countries, with annual revenues of around €30 billion, employing around 101,982 employees worldwide. After Samsung, in 2012 Nokia was ranked as the world's second-largest mobile phone maker by unit sales. Conversely, in the past five years Nokia has encountered a sharp decline in market share thus losing its competitive positioning as the market leader owing to the enhanced demand and use of smart-phones offered by other competitors primarily Apple’s iPhone and other android operating devices. Becoming synonymous with phones and its leading market position made Nokia develop complacency and closed mindedness thus it fell into the position of Icarus Paradox and ultimately leading to its failure in the smart-phone market. (Nokia, 2013)

Industry & Environmental Analysis- Mobile Phone Industry * Industry Overview and Life-Cycle

Nokia Corporation belongs to the mobile phone...

Bibliography: * All things D. 2013. Latest Lumia Smartphone: high quality, but it’s heavy. [Online] available at accessed on 2nd July 2013
* Bamford,C.E; West,G.P
* Cellular-News. 2011. Nokia retains smartphone leadership position, but competitors closing the gap. [Online] available at accessed on 2nd July 2013
* Engadget
* Hill,C.W.L; Jones,G.R. 2012. Strategic Management: an integrated approach. USA: CengageBrain
* Ireland,R.D; Hoskisson,R.E; Hitt,M.A
* NDTV. 2013. Nokia Lumia 920 gets 2.5 million pre-orders, sold out in U.S. [Online] available at accessed on 2nd July 2013
* Nokia
* Sabrautzki,S. 2010. Strategies, mission, vision and goal. USA: GRIN Verlag
* Xbit Labs
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