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Hou-Hollingshead - MGMT 590 Final Presentation - Nokia

Nokia: Analytical Assessment

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Hou-Hollingshead - MGMT 590 Final Presentation - Nokia

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  1. Final Presentation Eric Hou & Derek Hollingshead MGMT 590 EMBA Pgm Washington State University August 23, 2020

  2. Company Introduction - NOKIA • Founded in 1865 • Located in Espoo, Finland • In 2018, 100K+ employees across 100 countries, 23 billion (EUR) revenue • Nokia contained 62.5% of the mobile phone market share in 2007 • GSM (1987), 3G, LTE standards -> 5G • Create the technology to connect the world

  3. Current Situation • In 2007 – 62.5% of the mobile phone market share. • Brand name – the biggest strength. • Acquired by Microsoft in 2013 • Windows Lumia vs Android and iOS • Strong competition from Samsung, LG and Apple iPhone • Low-cost threats by China mobile companies

  4. External Environment:Demographic Segment • Mobile devices for all age groups and pricing categories • Women market – Nokia Roxo • Sports phone – N79

  5. External Environment:Economic Segment • World’s largest manufactures of cell phone in 2010 • $56 billion revenue • Sold to Microsoft for $7.6 billion in 2013 • Sold phone brand to HMD in 2016 • Market share gone from essentially zero to 1.3%

  6. External Environment:Political/Legal Segment • Patent lawsuits with many telecommunication companies • Apple • Samsung • Daimler • Blackberry • Philips

  7. External Environment:Sociocultural Segment • Voice/SMS • Entertainment • Imaging • Media • communicator

  8. External Environment:Technological Segment • Core issue – CDMA • Lack of innovation in touch screen and high battery use technologies • Compete with iTunes in 2006 • Symbian vs iOS and Android in 2007 • Windows OS, 2011 • 2018 – Android phone only

  9. External Environment:Global Segment

  10. External Environment:Physical Segment • Green Phone • Full charged notification • Screen brightness adjustment • Packaging – reduced paper • Old phone recycle programs

  11. Industry Definition • Communication equipment - $383 billion in 2019 • Appx $504 billion in 2023 • Major players: • Huawei • Cisco • Fujitsu • NEC • Nokia • Ericsson • Qualcomm • Motorola

  12. Industry Definition • 2007: Top of Market (51%) • 2012: Lost phone market-leading position • 2018: Nokia – Ranking 5th - global telecoms equipment • 2020: 16.1% telecom infrastructure • North America • Europe • Asia Pacific

  13. Five Forces: Bargaining Power of Buyers • High customer’s bargaining power • Strong competitors: Apple, Samsung, LG etc.. • Handset discounts: AT&T, T-Mobile, Sprint etc.. • Long term contracts, hard to switching • 0% finance plan • Low visibility

  14. Five Forces: Bargaining power of suppliers • Moderate bargain power of suppliers • 20+ handset models • Between low-end to mid-range handsets • Large suppliers selection • Window mobile OS and Android • Result: • Large variety of components selection • Low volume for each components

  15. Five Forces: Threat of new entrants • Low threat of new entrants • High investment • Fast innovation • Complexity of components • Advance Hardware • 4K big screen • HD Camera • Fast and low power CPU • Long last battery

  16. Five Forces: Threat of Substitute • Low threat of substitute • 3.5 billion smartphone users worldwide • Almost 4 hours daily usage Mobile shopping Web traffic usage Digital media Mobile retail conversion rate

  17. Five Forces: Interfirm Rivalry • Very High interfirm rivalry • Big players stay big • Time usage on mobile device more than TV

  18. Internal analysis • 2nd lowest debt to equity ratio • 5G innovation • Least profitable but trending positive • Efficiently Progressive • Consistent increase in value

  19. Resources Similarities

  20. Capabilities Similarities • High quality within the price range • LG: • 5G innovation • Large HD display • Hardware design • Samsung: • high volume manufacturing • Wide price range models • Apple: • Software • High-quality materials

  21. Competitor analysis: Samsung • South Korean company founded in 1928 • In 2017, 6th highest global brand value • In 1988 – first mobile phone • In 2010 – Galaxy S become leader (Android) • In 2017 – 18.9% market share • Risk: • Low profit margin • High licensing fee

  22. Competitor analysis: LG • South Korean company founded in 1958 • In 2014, 4th largest chaebol in South Korean • Three main areas • Electronics industries • Chemical industries • Telecommunications • 2010: Entering smartphone industry • 10% market share • Pricing target: Mid-range

  23. Competitor analysis: Apple (iPhone) • American company • Top 5 US tech companies • First iPhone in 2007 partnered with AT&T • Pricing target: High with IOS • In 2018, 15.8% market share • Strategy • Customer segments • Brand culture • Never fighting price wars

  24. Key problem: Knowing their customers • Defined target customers • Understand customers’ demand • 20 smartphone models • Price range: Low to mid price • Too many models in same price range

  25. Key problem: Profitability • Cost for manufacturing is increasing • Low market-share • High cost to support and maintain numbers of models • Large amount of material parts with low volume

  26. Key problem: Brand Recognition • Targeting in younger age group • Marketing strategy for 5G network • Partner with top major cellphone carriers

  27. Recommendation 1: Knowing their customers • Price tier • Functionality tier • Business, Multimedia, Classic • High and low Performance

  28. Recommendation 2: Profitability • Average 0.05% market share per model • Complex inventory control • R&D overhead • Quality control • High production costs • Low bargaining power of suppliers • Three targeting models • Solved above 5 issues • Targeting marketing • Clear selection for customers

  29. Recommendation 3: Brand Recognition • Partners with top 5 US cellphone carriers • Low-end phone: Free phone promotion • High-end phone: Demo display phone for all carrier stores.

  30. Justification • “Knowing their customer” • Separate customer into a few simple tiers • Each phone model per customer tiers • Reduce R&D cost • Targeting marketing channels

  31. Implementation • Business Phone • Security • Screen size and battery life • Power and storage • Multimedia Phone • Camera • Screen quality • Battery life • Classic • Design • Material quality

  32. Implementation • Partners with top cellphone carriers • Verizon • T-Mobile • AT&T • Spring • Released unlocked phones • Easier for customer switch to Nokia phone • Market promotion • Promotion pricing with contract • 0% finance without contract • Old phone trade-in promotion

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