Nokia is the biggest name in the world of mobile phones. It enjoys a market share of around 35%
at the moment. The Finland based company caters to GSM as well as CDMA segment. Nokia's
phones are loved by a lot of people and its name is synonymous with reliability. Nokia has its
presence in every segment of the market. It offers the cheapest range of phones with the most
basic features as well as high-end level phones with all the latest features. On the process of
Nokias development, the company achieved success because it could balance the two
approaches well i-e Market led and Resource based approach.
Q#1 Drawing on the five forces model, why Nokia is successful in telecom
industry?
Porters Five Forces Model:
Threat of entry
Medium
Bargaining power of
Bargaining power of
Buyers
Suppliers
Strong
Strong
Weak
Strong
Threat of Entry:
The Nokia mobile phone industry is already a well established market and the threat of a new
entrant is medium, although there are many potential competitors present in the market but a
huge investment is required so to enter in the market.
Nokia has the technology needed to stay in the market as it is now owned by the Microsoft so,
rival devices already available is quite advance if they want to differentiate from them.
Barriers:
The barriers to entry in the mobile phone industry is high because any new entrants will need
high investments in R&D, technology and marketing in order to compete with the Nokia mobile
phone.
Customers of Nokia have a strong brand loyalty even now, after the company faces the distress.
As Nokia exists in the market from decades so it has a benefit of cost advantage.
Switching cost for the customers of Nokia is relatively high because in order to switch you have
to convert your operating system from symbian to android etc.
This force is Weak in case of Nokia because Nokia heavily need supply equipment for their
advanced handsets and there are many suppliers available in the market so, there is no such
pressure from supplier point of view.
There is a Low Threat from the powers of suppliers because although the hardware suppliers
have a very low power. Although opportunity to get raw material at cheaper rate.
Hence, all four approaches are of equal Important in the success of Nokia in Telecom Industry.
Q# What are the opportunities and threats in industry, what must Nokia do to
exploit the opportunities and counter the threats?
Following are the opportunities that are needed to avail and threats that are needed
to counter:
Opportunities:
Mobiles with windows operating system.
Huge Loyal Customer Base.
Advantage of economies of scale
Better variety of Reliable Mobiles
Emerging Market for high end mobiles
Emerging Markets in Developing countries
Weak Bargaining Power of supplier.
Threats:
Strong competition from other Smartphone companies.
Strong Bargaining Power of buyer.
Lost Market Share.
New Potential Competitors.
Low-cost threats by China mobile companies and others.
By studying the whole of case study what I concluded is that , If Nokia aligned its external
opportunities with the internal strengths in the same direction than it can again become a market
leader.
If I talk about Threats so, the biggest threat for Nokia is china mobile companies who are selling
their phones at a very cheaper price and penetrating their product in small towns. Nokis has to
make emergent strategy to cope up with this situation. Another thing is Product innovation, if
Nokia wants to survive in the market it has to work on its R& D.
Name:
Junaid Subhani
Reg.#
L4F14MCOM0017
Section:
MA-04
Course:
Business Strategy
Topic:
Porters Five Forces Analysis
Submitted To:
Prof. Nahan Iqbal Sindhu
Submission Date:
04/05/2016