Swot Analysis Of Nokia - Assessment Answer

Discuss about the SWOT Analysis on Nokia.

 

who are not regularly updated. To have more brand visibility in greater market portion, it should be present in places like marriages, fairgrounds where large number of people are present. They can provide with some free SMS or free minutes to minimize the entry of rivals. It should be positioned in market with some nice packing depending on the livelihood of people (Sabri, 2013).

Geographic markets: Nokia’s market areas were Europe, Africa, Middle-east-55% of the total sale, Asia pacific, China- 25% of the total sale, America- 20% of the total sale

Distribution network: FactoryàWarehouseàcorporate storesàWholesalers or retailersàConsumers

Competitors: Samsung, Apple, Sony Ericcson

Apple and Samsung both are smartphones and together they take around 88.1% of market share (62% by Apple and 26.1% by Samsung) while Nokia occupies the third position with around 9% market share (Tonner, 2015).

SWOT Analysis of Nokia

Good position in market- The Company has about 39% of the market portion which is about double when compared to other brands. Nokia gives handsets with GSM, WCDMA, CDMA technologies and also gives features like Bluetooth, WLAN and GPS and also offers interactive multimedia for entertainment, song players, cameras and navigation devices. The good position in market gives the company prospects of future growth (Financial Analysis, 2009).

Strong brand value and image – Many of the customers often choose nokia because their handsets do not break and can withstand pressure, can perform consistently and are creative in their designs.

Efficient use of resources- Nokia’s rate of return on money invested by the stock holders was 26.1% for the financial year 2015 (Nokia ROE, 2016). This percentage was more than the average for communications tools segment, around 6.7%. This greater value shows that nokia is effectively utilizing the stakeholder’s cash and is producing greater returns in comparison to other brands (Financial Analysis, 2009).

Strong operating margin- Nokia’s revenue left after giving the wages and other costs was 20.3% for the financial year 2015 (Corporation Report, 2015). This percentage mentioned is higher than the communication tool segment which is around 4.37%. This shows effective price management or a good price planning (Financial Analysis, 2009).

Strong Research & Development – Nokia has a qualified team of people in research and development and has centers in about 16 countries and employ about 37020 workers (SWOT analysis, 2010). The major nokia copyrights are developed by nokia research center.

Weakness

The process of facing legal actions- Nokia has a number of Litigations in many courts on account of making, using, selling patent inventions. In 2008 Nokia has done an agreement with Qualcomm to protect present or future technologies like GSM, EDGE, CDMA, WCDMA etc. Nokia decided not to utilize its patents straight away contrary to Qualcomm, thus causing a huge payment of USD 2.3 billion to Qualcomm. In 2007, Qualcomm has made 3 litigations against Nokia. These legal actions causes extra expenditures and thus affects the profits and destroys the brand name (Financial Analysis, 2009).  

Increasing Interest Expense- The interest paid on any borrowing by Nokia in 2015 was EUR 151.97million in comparison to EUR 43 million in 2007. The high interest rate can be due to interest-forming accountabilities linked to sponsoring of NAVTEQ attainment. The greater value can decrease the profits of Nokia.

Lack of apps- Any country’s youth market is attracted towards phone having large number of apps. But Nokia fails to keep up with the android phones and their handsets are not attracting the young generation. Moreover Nokia is not inviting developers to design app for them (Jha, 2014).

Restricted cash to meet the immediate or the long or short term assets- Nokia’s liquidity ratio in 2015 was 1.871 which was less than the communication tool segment of about 2.32. This less value shows that Nokia is not strong financially in comparison to other brands (Financial Analysis, 2009).

Some products not user friendly – Bluetooth was used as a device to share folders. But the Nokia lumia brands were not having this feature and so files cannot be shared (Jha, 2014).

Opportunities

Making joint ventures- Nokia has made business arrangement with Siemens Company in Germany to jointly pool their resources which will give chances to multiply in Europe market. Forming joint ventures like this will increase the share of Nokia in market (SWOT analysis, 2010).

Microsoft nokia deal- This deal is a win to win situation for both the companies, if both companies makes optimum use of their resources. Microsoft will become the biggest operating system and get around 14% of share in market and Nokia will also get a profitable market (SWOT analysis, 2014).

Telecom Diffusion- Being establish itself at the crowning time gives it a chance to makes it sales higher and contribute a large portion of market share.

Progress strategy for coming markets- Nokia made a strategy to bring those handsets which are less costly and within the limit of common man. Thus it brings up a pilot program in Andhra Pradesh and Karnataka in coordination with a small finance firm to whom Nokia sells its handsets which again they sell at part payments. After its success Nokia expands its program (Financial Analysis, 2009).

Call for smartphone: Nokia can take opportunity as call for smartphones is increasing. Researchers show that call is increasing at a rate of 30% in 2008-12. Even in conditions of poor economic their demand will not fall off owing to their liking.

Threats

Strikes by workers- Nokia’s progress will be affected when workers go on strike. In 2009, in Chennai workers went on strike for increasing their wages. Though strike was over but damage lasts for long.

World’s economic slowdown- Nokia functions al around the world but it gets its income from America and Europe. Researchers show that in America GDP rate has decreased from +1.1% to -3.15%. Such a poor economic growth will affect nokia’s revenue and thus impact its business. Also in Europe it falls from 2.9% to 1.4% (Financial Analysis, 2009).

Facing many new competitors especially in Asia- Hard competition from other brands like Apple, Samsung will make difficult for Nokia to establish its market and increase its shareholders (Haque, 2015).

Price sensitive market- Low cost phones made by China are a serious threat to Nokia and also the android phones are coming which are at a cheaper rate than Nokia (SWOT analysis, 2014).

Changing preferences- The customer choices are shifting and has become more complex. They want more designer, trendy, and modish, stylish handset with new features and Samsung is coming up with all these designs and features.

Conclusion

Nokia company is running through a very difficult time. By collaborating with Microsoft many of its threats and weakness can be overcome and opportunities can result out to be fruitful.

List of references

Tonner, A. (2015). Could Nokia’s Smartphone compete with Apple or Samsung. The Motley Fool.

Nokia Corporation- Financial and strategic analysis review. (2009). Nokia Corporation.

Marian, L. (2013). Is Nokia’s performance in the Smartphone market affected negatively by marketing strategy decisions?  Aarhus School of Business and Social Sciences.

SWOT analysis of Nokia Company. (2015). UK essays.

Satpathy, S. (2014). A brief history of Nokia: From a paper mill, to the world’s biggest mobile company to being acquired by Microsoft. BGR.

Sabri, S. (2013). Forbes: Nokia positioned to own the low end smartphone market against apple, Samsung. Forbes.

SWOT analysis of Nokia corporation. (2010). Mbalectures.

Nokia return on equity. (2016). Ycharts.

Haque, F. (2015). SWOT analysis of Nokia. Business Management and analysis.

Jha, A. (2014). Microsoft Nokia deal: A SWOT analysis. International Journal of Business Management and Leadership. 5(1). 13-18.