Globalization Strategy of Nokia — страница 2

  • Просмотров 2521
  • Скачиваний 51
  • Размер файла 35

tiny Nordic country competitive in an increasingly competitive, global market. In 2006, Olli-Pekka Kallasvuo, formerly Nokia’s Chief Financial Officer, took over as CEO from Jorma Ollila, who became chairman of Nokia’s Board of Directors. Nokia’s success has made Finland one of the fastest-growing and most prosperous economies in Europe. A company becomes a ‘multinational corporation-MNC’ when it conducts any business function beyond its domestic borders’ (Cullen & Parboteeah, 2010). Internationally Nokia has captured markets of over 60 countries in the world where China, India, USA, Middle East, Africa, Asia, Australia and New Zealand having largest market shares. It was ranked in 85th place of ‘Fortune 500 list’ and employees over 125,000 staff (Cable News

Network, 2009). "We are expanding our presence and operations in India, not for the local market alone. We want to strengthen our global presence by exploiting the skills found here.'' Said Kullasvuo to Bloomberg when India became the second largest market for Nokia surpassing USA in 2007 (Kallasvuo, 2007). This is clear intention of Nokia’s globalization strategy. The sales volumes depict how Nokia’s business arms have spread globally. Nokia Q1 2009 net sales were EUR 9.3 billion. This is enough proof for one to realize how Nokia’s presence in each country contributes towards GDP and employment statistics. (NOKIA, 2009) Finland already commits around 3.4 percent of its GDP (gross domestic product), or 6 billion [euro] (US$8.6 billion), to R&D. That compares with

the European average of around 1.8 percent. Around 28 percent of this is paid for by the government, with the lion's share--72 percent--being footed by the private sector. Nokia accounts for 45 percent of all industrial R&D in Finland and more than 80 percent of the R&D investment in the telecommunications sector (Blau, 2008). Time marches on and history has proven that standing still means death for any company (Bradford, Duncan, & Tarcy, 2000). Change is inevitable for telecommunication industry and the size doesn’t matter even for a company like NOKIA if it is not adoptive. Based on strategies and events of 2008-09, let’s look at the SWOT analysis of NOKIA. SWOT analysis will help a firm to understand its Strengths, Weaknesses, Opportunities and Threats.

Strengths • Long history of flexibility and adoptive to change • Steady revenue growth • Brand power • Strong financial position • Flexible Capital Structure • Investment in research and development of technology • Reached low operating costs in 2009 • Consumer retention rate of 55% • Product innovation bundled with value added services mainly focusing on maps, music, messaging, media and games. • Successful mergers, acquisitions and collaborations Weaknesses • Reduced staff strengths to achieve low costs. • Declining profitability ratio due to current economic conditions • Decline in the converged device share (by 32% in 2008 despite the shipment of over 60 million units). Opportunities • Consumer demand for mobile computers • New segments such as

potential first-time email users in India, Africa, etc • Consumers attracted to less expensive devices during recession Threats • Mobile device manufacturers • New entrants from the PC and internet industries • Contraction of the market due to current economic conditions • Innovative technologies in smartphone industry by competitors Out of the above weaknesses, reduction of overheads and staff was critical for Nokia since staff cut down had to be handled more humanly. Nokia announced plans to cut Operating expenses and cut production overheads by EUR500 million at an annualized level by the end of 2011. As part of this effort, the company is conducting a global personnel review, which may lead to headcount reductions in the range of 7% to 9% out of approximately

125,000 employees. Also to reap benefits from the opportunities Nokia renewed its business mobility strategy in year 2008 and set out to excel in the following three key areas (International Security & Counter Terrorism Reference Center, 2009): 1. Successful device portfolio; 2. Collaborating closely with carriers; 3. Partnering with industry's leading companies. One of the key strategies in surviving in the economic turmoil is to re-invent the business by way of innovative product and services (Fischer, Gebauer, & Fleisch, 2008). 3. Market Entry Strategy of Nokia The marketing mix: Price: The phones that Nokia produce are usually sold at high prices (new phones can be expected to enter the market at around £200+, if they carry the latest technology). The price of the