The current business environment is characterized by a considerable level of competitive rivalry and as a result businesses have to constantly reengineer their internal operations in order to build and maintain a competitive advantage. This is particularly so for Nokia Corporation which operates in the telecommunications industry. This industry is characterized by a fast process of change and therefore Nokia has to constantly engage in business process reengineering in order to maintain a competitive advantage. In this respect, the two most important stakeholder groups for the company are comprised by the customers and the employees. The company has to build the right organizational structure so that employee satisfaction is guaranteed. When employees are satisfied, their productivity goes up and as a result the company is in a more competitive position to satisfy customer requirements. However in order to formulate the right strategy in this regard, the management of the company has to conduct an environmental analysis.
As mentioned before, businesses have to engage in a continuous process of business process reengineering in order to maintain their competitive advantage. This is a project of change management that has to be guided by environmental analysis. This is related to the strategic alignment process which ensures that business strategy, IT strategy, organizational issues and information systems issues are aligned. When this alignment has been facilitated, the process of managing change can be said to be aligned to the strategic focus of the company. However the strategic focus of the company is in turn connected to environmental analysis. This is because external environmental factors determine what should be the core competencies of the company and the strategic focus is structured accordingly. However the intensely competitive nature of the current business environment demands that businesses engage in a continuous improvement process and this creates the risk of misalignment with the strategic focus of the company. In this situation loss of competitive advantage is very real threat.
In order to maintain alignment with its strategic focus, Nokia Corporation frequently conducts market research programs (cited in Evans, 2004). These programs enable the company to track the changing nature of customer tastes and preferences. This attention to customer details enables the company to set a new standard in the industry by pioneering products and services. This gives the company a first mover advantage and enables the company to maintain a competitive advantage. This is the strategy of product differentiation as formulated under Porters framework for strategy formulation. However the strategy of product differentiation cannot be made effective without rigorous environmental analysis because this analysis enables the company to understand the industry structure and the political, economic, sociological and technological implications of operating in the industry. These factors will determine whether the companys core competencies will have any strategic relevance. As a these factors change, the company will have to cope accordingly.
For global multinational companies like Nokia, the importance of environmental analysis cannot be overemphasized. This is because international markets are characterized by wide cultural variations. Therefore the global marketer has to customize its products and services to these variations. Environmental analysis is also important in terms of assessing the political structure of the new market. For example, the Chinese market is still characterized by a high level of government intervention. Therefore the management at Nokia has to monitor the political environment in order to assess the potential repercussions of government intervention. The same importance is attached to economic analysis as the purchase of its products will be affected to a considerable extent by the economic growth rate of the country. Sociological factors will determine the right positioning strategy while technological factors will determine to what extent the company will be able to meet its customers expectations. Environmental analysis enables the market planners to make an assessment of these issues and structure strategic focus accordingly.
Nokias competitive advantage is built on being a consumer led company (cited in Fred, 2006). Therefore, it is important for market planners to find out how consumer tastes and preferences are changing. This objective can only be met through a rigorous environmental analysis. For this reason, the company frequently engages in market research programs worldwide. This enables the company to differentiate its products in order to generate new demand for its products. Generating new demand for its products is the reason for the companys global diversification. This necessitates that market planners develop a detailed understanding of global market conditions.
When making the decision to enter a new market, the management has to assess the industry structure of that market in terms of the five forces analysis. Therefore environmental analysis is of particular importance when it comes to international diversification. This diversification strategy is critical for maintaining demand for products as the domestic market is saturated and in implementing this strategy, environmental analysis is essential. Only this analysis will tell market planners which products and services will suit the local market conditions.
Nokia Corporation is globally diversified. This is one of the strengths of the company. This international diversification creates for the company the resource base from which to launch strategies against competitors. The large financial base that this entails enables the company to set prices at a competitive level and therefore make the industry structure unattractive for new entrants. The large global presence also means that the company can conduct the process of internal benchmarking in terms of transferring the best practices from one subsidiary to another. This strategy is particularly feasible for firms in the telecommunications industry because in this industry global market segmentation is feasible. This makes it feasible for the company to implement the same set of strategies in different markets. This reduces the cost of operations.
The main weaknesses for the company are weak presence in the US and declining expenditures in research and development (cited in Besterfield, 2002). Both weaknesses are resulting in loss of competitive advantage for the company. For example the companys current strategy of offering a widely diversified product portfolio consisting of mobile phones, multimedia, enterprise solutions and networks cannot reach its full potential because of its weak presence in the US market which is characterized by high usage of information sharing network connectivity. Declining expenditures in RD are also impairing the companys competitiveness because product diversification has become one of the important strategies for maintaining competitiveness and effective implementation requires a considerable level of research and development in this regard. However the company has been reducing its expenditures in this regard in order to maintain more cash for marketing expenditures. This has enabled the company to enhance brand awareness for its existing products but the existing products are fast losing market share because of rising competitiveness.
Forming strategic alliances is one of the most important opportunities for the company (cited in Aaker, 2004). Strategic alliances are enabling the company to enter new segments of the market without having to enhance expenditures in research and development. Therefore this strategy has enabled the company to overcome the weakness of limited research and development to some extent. Another opportunity is the high growth rate of the replacement market. This is happening because of the high rate of technological sophistication. The technological sophistication is taking place in the form of more user-friendly products and services and as a result consumers are also enhancing the complexity of their uses. Nokia is in a strong position to take advantage of the growing replacement market because this growth is taking place at a high rate in the emerging markets such as China and India in which the company has a strong presence. These are the opportunities which are enabling the company to capitalize on its strengths and overcome its weaknesses.
The company is facing a rising level of competition. As mentioned before, the telecommunications industry is characterized by a high level of competitive rivalry. As a result the companies in this industry are constantly upgrading their internal processes in order to build and maintain a competitive advantage. This reengineering takes place mostly in the form of techno-structural interventions in which the strategic alignment process is a critical success factor. This is putting pressure on Nokias operating performance because the company is investing a considerable level of its resources in order to keep pace with changes in the rest of the industry. In order to counter this threat, the company is focusing on an organizational culture based on innovation. This cultural orientation institutionalizes the process of change and thus facilitates the process of managing change. Another threat the company is facing is litigation issues arising from potential health hazards related to the use of mobile phones. This threat can have a strong negative effect on the strong brand reputation that is also one of the main strengths of the company.
The company is currently launching a touch-screen phone and unlimited music services (cited in ORegan, 2008). In this respect, the company had been facing a considerable level of competition from Apple and Google. Therefore the new product launch will ease competitive pressures to some extent. This is an extension of Nokias strategy to enter the content market. Previously the company had been focusing on the hardware manufacturing industry. However falling margins had forced the company to diversify its operations in order to enter the content market. In this respect, the problem with launching the Comes With Music service, the unlimited music service that is going to be launched in association with the touch-screen phone, is that Apples iTunes has already built up a strong position in this market. As a result, the company will have to invest a considerable level of its resources in order to ensure adequate brand exposure. It is through aggressive promotional campaigns that Nokia will have to face up to the competitive pressures from Apple and Google in this industry.
Nokia has built a core competency in the form of maintaining a tightly integrated global logistics management system (cited in Hitt, 2007). The core feature of this logistics system is information sharing. Nokia pursues a relationship based strategy with its suppliers and therefore maintains long term relations with them. In this respect, the company shares the cost burden of building and maintaining technologically sophisticated information systems so that information sharing can be facilitated. In this respect, the strategic alignment process is a particularly relevant issue as suppliers must be able to operate their own information system. This is a critical consideration for Nokia in view of the fact that timely delivery of required components is a must for the company considering its strategy of quick response. In the intensely competitive environment of the telecommunications industry, the company has to follow the quick response strategy in order to maintain a competitive advantage. This strategy can be made feasible only through tight coordination with suppliers so that incidences of supply disruptions are minimized.
In order to counter the threat of rising competitive rivalry, the company should continue to launch new products and services. This means that the company will have to enhance the level of expenditures in research and development. Although this will impair the companys operating performance to some extent in the short term, in the long term this strategy will lead profit optimization through diversification of the product portfolio. As a result, the launching of the touch-screen phone and the Comes With Music service is a very good strategy. However, as mentioned before, in implementing this strategy, the company has entered an industry which is already controlled by Google and Apple. Therefore the company should enhance its advertising expenditures in order to enhance global brand awareness of the new products and services. The company already has a strong brand reputation in the market. Therefore the company should capitalize on this strength to maintain the momentum in new launches which are technologically more advanced.
One of the main problems for the company is its weak presence in the US market. Therefore this weakness has to be eliminated. This is a particularly critical concern if the company is going to succeed with its touch-screen phones. The company maintains a diversified portfolio in terms of targeting four market segments mobile phones, multimedia, enterprise solutions and networks. In order to reach the full potential of the diversification strategy, the company has to increase its presence in the US market which is characterized by a high level of business automation. The success of the business automation process depends on the potential for information sharing. In other words, the critical success factor in this case is to build an information-sharing infrastructure. Nokia is in a unique position to offer the products and services in this regard because of its strategic alliance with Siemens (cited in Grover Kettinger, 2008). This enables Nokia to offer systems integration services to businesses in the US which are globally expanding and thus expanding their information sharing networks.
Nokia is a global multinational company. It has built up a strong position in the emerging markets of China and India. However its global competitors such as Sony Ericsson, LG, Motorola and Samsung are also globally diversifying their operations (cited in Hill Jones, 2007). Therefore Nokia should maintain a continuous improvement program with an aim to strengthening its position in the emerging markets. In this respect, decentralization of the decision making process is a critical success factor. The company should decentralize its structure further in thus regard so that local management teams can formulate strategies that are applicable to the market conditions in their regions. This is a critical consideration in view of the fact that market conditions vary widely in terms of their political, economic and sociological environments. Therefore strategy formulation has to take place keeping these environmental characteristics in sight. That objective can only be met through empowering local management teams to formulate and implement strategies as they see fit. This will enable its global subsidiaries to counter the threat of competition effectively.
In order to create an effective decentralization process, the company should focus on building an organizational structure based on ownership, responsibility and accountability (cited in George Weimerskirch, 1998). This will motivate the employees in its subsidiaries to conduct the strategy formulation process effectively. This is a very important issue considering the fact that employee productivity will be maximized when they take the initiative to improve the effectiveness and efficiency of their processes. As a result of enhanced productivity, employee interests and organizational interests will be aligned.
Lastly, the Nokia Siemens Networks should be capitalized upon in order to make the launch of the touch-screen phone effective. This strategic alliance will enable the company to build further strategic alliances with mobile phone operators in order to maximize market penetration of new products and services. In this respect, the Nokia Siemens Networks provides an opportunity to attract mobile phone operators because this strategic alliance gives them the opportunity to expand market bases for their own products and services.
As a result a synergistic combination can be achieved. Such strategic alliances will also minimize the need for advertising expenses as association with the reputable brand names will ensure high market penetration during the introduction stage.
As mentioned before, businesses have to engage in a continuous process of business process reengineering in order to maintain their competitive advantage. This is a project of change management that has to be guided by environmental analysis. This is related to the strategic alignment process which ensures that business strategy, IT strategy, organizational issues and information systems issues are aligned. When this alignment has been facilitated, the process of managing change can be said to be aligned to the strategic focus of the company. However the strategic focus of the company is in turn connected to environmental analysis. This is because external environmental factors determine what should be the core competencies of the company and the strategic focus is structured accordingly. However the intensely competitive nature of the current business environment demands that businesses engage in a continuous improvement process and this creates the risk of misalignment with the strategic focus of the company. In this situation loss of competitive advantage is very real threat.
In order to maintain alignment with its strategic focus, Nokia Corporation frequently conducts market research programs (cited in Evans, 2004). These programs enable the company to track the changing nature of customer tastes and preferences. This attention to customer details enables the company to set a new standard in the industry by pioneering products and services. This gives the company a first mover advantage and enables the company to maintain a competitive advantage. This is the strategy of product differentiation as formulated under Porters framework for strategy formulation. However the strategy of product differentiation cannot be made effective without rigorous environmental analysis because this analysis enables the company to understand the industry structure and the political, economic, sociological and technological implications of operating in the industry. These factors will determine whether the companys core competencies will have any strategic relevance. As a these factors change, the company will have to cope accordingly.
For global multinational companies like Nokia, the importance of environmental analysis cannot be overemphasized. This is because international markets are characterized by wide cultural variations. Therefore the global marketer has to customize its products and services to these variations. Environmental analysis is also important in terms of assessing the political structure of the new market. For example, the Chinese market is still characterized by a high level of government intervention. Therefore the management at Nokia has to monitor the political environment in order to assess the potential repercussions of government intervention. The same importance is attached to economic analysis as the purchase of its products will be affected to a considerable extent by the economic growth rate of the country. Sociological factors will determine the right positioning strategy while technological factors will determine to what extent the company will be able to meet its customers expectations. Environmental analysis enables the market planners to make an assessment of these issues and structure strategic focus accordingly.
Nokias competitive advantage is built on being a consumer led company (cited in Fred, 2006). Therefore, it is important for market planners to find out how consumer tastes and preferences are changing. This objective can only be met through a rigorous environmental analysis. For this reason, the company frequently engages in market research programs worldwide. This enables the company to differentiate its products in order to generate new demand for its products. Generating new demand for its products is the reason for the companys global diversification. This necessitates that market planners develop a detailed understanding of global market conditions.
When making the decision to enter a new market, the management has to assess the industry structure of that market in terms of the five forces analysis. Therefore environmental analysis is of particular importance when it comes to international diversification. This diversification strategy is critical for maintaining demand for products as the domestic market is saturated and in implementing this strategy, environmental analysis is essential. Only this analysis will tell market planners which products and services will suit the local market conditions.
Nokia Corporation is globally diversified. This is one of the strengths of the company. This international diversification creates for the company the resource base from which to launch strategies against competitors. The large financial base that this entails enables the company to set prices at a competitive level and therefore make the industry structure unattractive for new entrants. The large global presence also means that the company can conduct the process of internal benchmarking in terms of transferring the best practices from one subsidiary to another. This strategy is particularly feasible for firms in the telecommunications industry because in this industry global market segmentation is feasible. This makes it feasible for the company to implement the same set of strategies in different markets. This reduces the cost of operations.
The main weaknesses for the company are weak presence in the US and declining expenditures in research and development (cited in Besterfield, 2002). Both weaknesses are resulting in loss of competitive advantage for the company. For example the companys current strategy of offering a widely diversified product portfolio consisting of mobile phones, multimedia, enterprise solutions and networks cannot reach its full potential because of its weak presence in the US market which is characterized by high usage of information sharing network connectivity. Declining expenditures in RD are also impairing the companys competitiveness because product diversification has become one of the important strategies for maintaining competitiveness and effective implementation requires a considerable level of research and development in this regard. However the company has been reducing its expenditures in this regard in order to maintain more cash for marketing expenditures. This has enabled the company to enhance brand awareness for its existing products but the existing products are fast losing market share because of rising competitiveness.
Forming strategic alliances is one of the most important opportunities for the company (cited in Aaker, 2004). Strategic alliances are enabling the company to enter new segments of the market without having to enhance expenditures in research and development. Therefore this strategy has enabled the company to overcome the weakness of limited research and development to some extent. Another opportunity is the high growth rate of the replacement market. This is happening because of the high rate of technological sophistication. The technological sophistication is taking place in the form of more user-friendly products and services and as a result consumers are also enhancing the complexity of their uses. Nokia is in a strong position to take advantage of the growing replacement market because this growth is taking place at a high rate in the emerging markets such as China and India in which the company has a strong presence. These are the opportunities which are enabling the company to capitalize on its strengths and overcome its weaknesses.
The company is facing a rising level of competition. As mentioned before, the telecommunications industry is characterized by a high level of competitive rivalry. As a result the companies in this industry are constantly upgrading their internal processes in order to build and maintain a competitive advantage. This reengineering takes place mostly in the form of techno-structural interventions in which the strategic alignment process is a critical success factor. This is putting pressure on Nokias operating performance because the company is investing a considerable level of its resources in order to keep pace with changes in the rest of the industry. In order to counter this threat, the company is focusing on an organizational culture based on innovation. This cultural orientation institutionalizes the process of change and thus facilitates the process of managing change. Another threat the company is facing is litigation issues arising from potential health hazards related to the use of mobile phones. This threat can have a strong negative effect on the strong brand reputation that is also one of the main strengths of the company.
The company is currently launching a touch-screen phone and unlimited music services (cited in ORegan, 2008). In this respect, the company had been facing a considerable level of competition from Apple and Google. Therefore the new product launch will ease competitive pressures to some extent. This is an extension of Nokias strategy to enter the content market. Previously the company had been focusing on the hardware manufacturing industry. However falling margins had forced the company to diversify its operations in order to enter the content market. In this respect, the problem with launching the Comes With Music service, the unlimited music service that is going to be launched in association with the touch-screen phone, is that Apples iTunes has already built up a strong position in this market. As a result, the company will have to invest a considerable level of its resources in order to ensure adequate brand exposure. It is through aggressive promotional campaigns that Nokia will have to face up to the competitive pressures from Apple and Google in this industry.
Nokia has built a core competency in the form of maintaining a tightly integrated global logistics management system (cited in Hitt, 2007). The core feature of this logistics system is information sharing. Nokia pursues a relationship based strategy with its suppliers and therefore maintains long term relations with them. In this respect, the company shares the cost burden of building and maintaining technologically sophisticated information systems so that information sharing can be facilitated. In this respect, the strategic alignment process is a particularly relevant issue as suppliers must be able to operate their own information system. This is a critical consideration for Nokia in view of the fact that timely delivery of required components is a must for the company considering its strategy of quick response. In the intensely competitive environment of the telecommunications industry, the company has to follow the quick response strategy in order to maintain a competitive advantage. This strategy can be made feasible only through tight coordination with suppliers so that incidences of supply disruptions are minimized.
In order to counter the threat of rising competitive rivalry, the company should continue to launch new products and services. This means that the company will have to enhance the level of expenditures in research and development. Although this will impair the companys operating performance to some extent in the short term, in the long term this strategy will lead profit optimization through diversification of the product portfolio. As a result, the launching of the touch-screen phone and the Comes With Music service is a very good strategy. However, as mentioned before, in implementing this strategy, the company has entered an industry which is already controlled by Google and Apple. Therefore the company should enhance its advertising expenditures in order to enhance global brand awareness of the new products and services. The company already has a strong brand reputation in the market. Therefore the company should capitalize on this strength to maintain the momentum in new launches which are technologically more advanced.
One of the main problems for the company is its weak presence in the US market. Therefore this weakness has to be eliminated. This is a particularly critical concern if the company is going to succeed with its touch-screen phones. The company maintains a diversified portfolio in terms of targeting four market segments mobile phones, multimedia, enterprise solutions and networks. In order to reach the full potential of the diversification strategy, the company has to increase its presence in the US market which is characterized by a high level of business automation. The success of the business automation process depends on the potential for information sharing. In other words, the critical success factor in this case is to build an information-sharing infrastructure. Nokia is in a unique position to offer the products and services in this regard because of its strategic alliance with Siemens (cited in Grover Kettinger, 2008). This enables Nokia to offer systems integration services to businesses in the US which are globally expanding and thus expanding their information sharing networks.
Nokia is a global multinational company. It has built up a strong position in the emerging markets of China and India. However its global competitors such as Sony Ericsson, LG, Motorola and Samsung are also globally diversifying their operations (cited in Hill Jones, 2007). Therefore Nokia should maintain a continuous improvement program with an aim to strengthening its position in the emerging markets. In this respect, decentralization of the decision making process is a critical success factor. The company should decentralize its structure further in thus regard so that local management teams can formulate strategies that are applicable to the market conditions in their regions. This is a critical consideration in view of the fact that market conditions vary widely in terms of their political, economic and sociological environments. Therefore strategy formulation has to take place keeping these environmental characteristics in sight. That objective can only be met through empowering local management teams to formulate and implement strategies as they see fit. This will enable its global subsidiaries to counter the threat of competition effectively.
In order to create an effective decentralization process, the company should focus on building an organizational structure based on ownership, responsibility and accountability (cited in George Weimerskirch, 1998). This will motivate the employees in its subsidiaries to conduct the strategy formulation process effectively. This is a very important issue considering the fact that employee productivity will be maximized when they take the initiative to improve the effectiveness and efficiency of their processes. As a result of enhanced productivity, employee interests and organizational interests will be aligned.
Lastly, the Nokia Siemens Networks should be capitalized upon in order to make the launch of the touch-screen phone effective. This strategic alliance will enable the company to build further strategic alliances with mobile phone operators in order to maximize market penetration of new products and services. In this respect, the Nokia Siemens Networks provides an opportunity to attract mobile phone operators because this strategic alliance gives them the opportunity to expand market bases for their own products and services.
As a result a synergistic combination can be achieved. Such strategic alliances will also minimize the need for advertising expenses as association with the reputable brand names will ensure high market penetration during the introduction stage.