Module Code PM607

Module Title Strategic Management

Advisory Strategy Report

Assessment Type

Student ID Number P348481

Date of Submission 14 February, 2023

I confirm that this assignment is my own work. Where I have referred to academic sources,
I have provided in-text citations and included the sources in the final reference list.
Table of Contents

Executive Summary.............................................................................................1

Introduction..........................................................................................................1

Critical Analysis....................................................................................................2
PESTEL Analysis................................................................................................2-3

Competitor Analysis and Comparison..............................................................3

Game Theory ......................................................................................................4

Porter’s Five Forces Framework......................................................................4-5

 Competitive rivalry............................................................................................5

 The threat of entry and of substitutes..............................................................6

 The power of buyers and of suppliers..............................................................6

Conclusion and Recommendation ................................................................6-7

Appendix............................................................................................................7-8
I. SWOT ANALYSIS OF NOKIA...............................................................................7-8

References.......................................................................................................8-10

Table 1: PESTEL Analysis of NOKIA______________________________________________ 2

Table 2: Porter's Five Forces Framework of Mobile Industry _____________________ 4-5
Table 3: SWOT Analysis of Nokia ________________________________________________7-8
Executive Summary
Before "self-destructing" and selling its whole company to Microsoft, Nokia was once seen
as a symbol of the mobile communications sector. According to a lot of pundits, Nokia's
demise was brought on by the rapid emergence of companies like Apple, Google, or
Samsung. The analysis of the reasons why Nokia Group failed is the main purpose of this
strategic consulting thesis. To analyse the macro environment, a variety of strategic
frameworks have been employed, including PESTEL Analysis. The internals considering the
SWOT Analysis and Porter's Five Forces Theory and Framework for the electronics sector
examine competitiveness via a common strategy about the difference and the cost. The
fundamental challenge facing Nokia is undeniably undifferentiated goods with high costs
that are resistant to innovation, which is made worse by the top management's ineffective
leadership.

Introduction
Researchers and business managers have attempted to explain why some organisations
flourish while others fail, and they continue to do so.
One response is the company's capacity to adapt to environmental changes, such as those
brought on by technology advancements. In technologically sophisticated industries like
operating systems and mobile services, this is crucial. Several corporations, including SAP,
Kodak, Apple, Google, Microsoft, IBM, and Nokia, have successfully and unsuccessfully
advanced technology at various times. (H. C. Lucas & J. M. Goh 2009).
Technological advancements present businesses with possibilities or risks that need action
(C. H. Loch & B. A. Huberman, 1999), (R. Sabherwal & Y. E. Chan, 2001), ( S. Shane,
2001). The term "hypercompetition" refers to a business climate where technological
advancements are used both proactively and reactively by companies to achieve a
competitive edge. (R. A. D'Aveni, 2010). Market change and disequilibrium brought about by
technological innovation force enterprises to adapt (R. D'Aveni & R. E. Gunther, 1994).
Successful people are able to change or refresh themselves through technology
advancements and look into new business chances. Those that fail either made poor
decisions or were unable to adapt their business strategy in a timely manner (J. Hedman &
T. Kalling, 2003).

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Critical Analysis
The Nokia Company's purpose is to "connect people." The phrase that represents the
primary purpose and objective of a certain corporation is referred to as the mission
statement of any organisation. This is a blatant indication that Nokia's goal has been to
provide global connectivity via mobile technologies and phones. When compared to the
previous, time-consuming, and originally quite expensive communication routes, this will
make international communication simple and less expensive. As a result, Nokia Company's
key responsibility is to provide clients products that guarantee increased connection
throughout the globe. To overcome the numerous obstacles that must be overcome in order
to attain the goals, a lot of expenditures must be made in technology and innovation.

PESTEL Analysis
Table 1: PESTEL Analysis of Nokia

Political The government has refused to give it a bailout or special favours

Economic Economic turmoil in Europe has hurt NOKIA company badly

Social widespread use of smartphones and rising app usage

The rapid innovating technological sills

Technological

The problem of safely and economically disposing of its used products

Environmental
in an environmentally friendly manner

Legal The challenges of European Union.

A PESTEL study, which takes into account six environmental elements in terms of political,
economic, social, technical, ecological, and legal aspects, was utilised to assess Nokia's
macroenvironment. These elements undoubtedly have an impact on how a company

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conducts business overall (Prahalad & Hamel, 1990). First of all, the entire sales of Nokia
goods are directly impacted by the political climate in every given market location.
Additionally, additional governmental actions like the amount of taxes levied on Nokia items
have an impact on the product's general availability. Sales of imported goods tend to be
lower in areas with high import duties since customers will find these goods to be more
expensive. Besides, the level of sales in a certain area is also influenced by the clients'
financial and economic standing. Nokia has had difficulty entering the fast-growing Chinese
market, in contrast to Apple. Furthermore, Nokia lacks some of the enormous financial
resources possessed by competitors like Google, Apple, and Samsung. The research and
development resources that have enabled these companies to develop novel products and
enter unexplored markets appear to be lacking at Nokia, in particular. Nokia's inability to
finance the same crucial R&D activities as its competitors due to a lack of financial
resources is one factor contributing to this. The purchase of Nokia goods is also influenced
by the social interactions of individuals in various parts of the world. A generation of
consumers that exclusively purchase Apple devices in a few nations, such as the United
States, has resulted in a dramatic decline in Nokia's market share. The idea that there are
only two smartphone manufacturers on the market—Apple and Samsung—and only two
operating systems—iOS and Android—has lately been challenged by Nokia. As a result,
many consumers have opted to rule out buying anything from Nokia. The emergence of
open-source operating systems like Android and the spread of applications, together with
the technological aspect, have fundamentally altered the mobile phone industry. The mobile
phone, which formerly served as the primary means of communication, gave rise to the
portable computer. Customers want to use their phones for many different things as a
consequence, such as snapping photos, watching movies online, and conducting business.
The issue has been made worse by Nokia's decisions to stick with its own operating system
and adopt the less well-liked Windows Phone operating system. Customers' options are
constrained as a result, and selling Nokia devices to younger consumers is challenging.
Finally, due to legal and environmental considerations as well as the product's political
issue, Nokia was forced to come up with a cost-effective, ecologically friendly solution to
dispose of its discarded items. United Kingdom.

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Competitor Analysis and Comparison

Nokia is one of the top producers of telecommunications equipment for mobile phone
networks worldwide. The corporation used to be a market leader in mobile phone
manufacturing, but it currently concentrates on professional network services, cloud-based
software portfolios, and research and development. There are 120 countries where Nokia is
active and has clients. The Networks section of Nokia's business comprises Mobile
Networks, Fixed Network, IP/Optical Networks activities and Global Services. Nokia's
business is further separated into three segments: Nokia Technologies, Nokia Software, and
Networks. About 80% of Nokia's revenue comes from the Networks business, followed by
the Software section with more than 10% of sales and the Technologies segment with the
remaining 20%. UK, the United States, France, China, Germany and other major nations in
every area that Nokia serves all have R&D facilities.
Game Theory
An approach to the company's dynamic competencies that builds on its resource-based
viewpoint (J. B. Barney, 1996), (B. Wernerfelt, 1984), is a branch of strategic management
theory that addresses these problems particularly. A key idea of dynamic competence is a
company's ability to innovate or adapt to a changing environment. (D. J. Teece, G. Pisano &
A. Shuen, 1997). A company may do this through utilising, producing, gaining access to,
and releasing its resources (K. M. Eisenhardt & J. A. Martin, 2000). Although it has showed
potential, the dynamic capabilities framework has also drawn criticism for being "abstract
and even arcane" (E. Danneels, 2011). Another issue is that it ignores the influence of
history on present and future actions by concentrating on internal capacities (G. Schreyögg
& M. Kliesch-Eberl, 2007). As a result, we emphasise the importance of history when
examining a firm's capacity to adopt technical breakthroughs This problem is not fresh. Over
the past 8 decades years, it has been investigated (R. Sabherwal & Y. E. Chan, 2001), (E.
M. Rogers, 2010), (J. A. Schumpeter, 1934). We employ the perspective of route
dependency rather than using dynamic capabilities (S. Shane, 2001), (W. W. Powell, 1991).
Historical choices, events, deeds, and triumphs may be used to shed light on why
businesses struggle to reinvent themselves in the face of technological advancements in a
case study, we show why and how historical choices have constrained decision-makers'
capacity to make judgements, supporting our claim that history may blind decision-makers.
recognising and comprehending the function of developing technologies. A multi-layer route
dependency framework is created by us. The framework becomes subtle when used with
Nokia, a business that has long been prosperous but has recently faced more difficult
competition. We will be able to add to our theoretical knowledge of why businesses might
fail by using our theoretical lens and the empirical setting.

Porter’s Five Forces Framework

Table 2: Porter's Five Forces Framework of Electronics Industry

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 THE COMPETITIVE FORCES DEGREE TECHNOLOGICAL INDUSTRY

 Intensely rivalrous competition

 Low differentiation in the products
Competitive rivalry Very high
 Short industry life cycle
 Low growth

 high financial investment needs

modern knowledge, innovation, and
engineering
The threat of entry Low
 Differentiation
 Economics of scale

The threat of substitutes Low  Very few substitutes

 Undifferentiated products and a
lack of innovation.

The power of buyers High  No exclusive NOKIA stores

 Low switching costs

 significant global supply chain

 a low cost of switching
The power of suppliers Low
 increased supplier backward
vertical integration

 Competitive rivalry

There are five competing factors that should be taken into account while analysing an
industry, according to Porter's Five Forces Framework. These forces include the level of
rivalry between current rivals, the danger of replacements and new entrants, as well as the
purchasing power of consumers and suppliers. (Johnson et al 2017). Because of its
ferocious attempts to dominate others, the NOKIA industry stands out because of its intense
rivalry. The market often experiences rapid expansion thanks to the homogenous products
and short industrial life cycle. slow expansion Therefore, a pricing war can result.

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  The threat of entry and of substitutes

Secondly, Nokia is an industry innovator in the fields of mobile, cloud, and fixed solutions.
The mobile phone industry is very competitive, and numerous major companies—including
Apple, Samsung, and others—dominate the market's volume. Large corporations may
expand their market share by selling more mobile phones at lower prices. Additionally, given
to the high expenses associated with R&D and production, it is challenging for new
competitors to establish a mobile manufacturing facility like Nokia. A more solid financial
base is required. Additionally, clients have strong relationships with and confidence in
established brands, making it challenging for new rivals to overtake them. All of the
aforementioned requirements restrict the admittance of new participants, lowering their
danger.
 The power of buyers and of suppliers
Additionally, purchasers in the mobile phone industry have significant negotiating power.
The bulk of mobile phone purchases are made after customers compare features and
prices on several websites, which just takes a few mouse clicks. Furthermore, Nokia doesn't
have a single location where its phones are sold; as a consequence, its products are
featured on websites and in shops that provide a wider range of options. Additionally, the
market has several suppliers that can provide the essential components, and the weakening
of the bargaining position as a result of the growth of supply to additional providers.
Manufacturers of mobile phones, like Nokia, also purchase materials in bulk in order to
haggle for cheaper pricing. The worldwide chip scarcity has, nevertheless, had a significant
effect on the mobile phone industry. Due to chip shortages, industry reserves have
decreased, and as major corporations will have easier access to chips, chipmakers will
have more negotiating strength.

Conclusion and recommendation

In general, the academic community is familiar with our account of Nokia's rise and decline
as a maker of mobile phones (S. Q. Mian, J. Teixeira & E. Koskivaara, 2011), (J. Teixeira
and T. Lin), (J. West, 2003). But what our case study offers is a fresh viewpoint on the
interconnected reasons for and turning points at the technical, organisational, strategic,
leadership, and early collaboration levels. leads to the notion of a route before it leads to a
clearly defined path. outcomes after a time.

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It is possible to find strategic ideas as a way to attempt to stop the significant sales decline
that the Nokia Company has been experiencing for a considerable amount of time. If the
advice is followed, it is anticipated that the current situation may be reversed, and
adjustments can be made to guarantee that total sales of Nokia products can once again
begin to increase. Major suggestions that can be implemented include internal corporate
development, takeover, acquisition or mergers, and strategic partnerships. These
suggestions will be examined in a way that demonstrates how important they are in Nokia's
situation and the need for their implementation. Adopting these suggestions is necessary to
save the company's rapidly declining customer base. Nokia must focus on certain markets
and make financial investments there. These funds might be used to fund innovation
directly, allowing the corporation to stay up with the fierce competition in technology it faces
from rivals like Samsung and Apple. Additionally, these expenditures may be used to create
additional distribution and post-sale support centres across the world. The majority of these
centres have to be set up in areas where the corporation has been dealing with intense
competition, particularly in the United States, India, and China.

Appendix
I. SWOT Analysis of NOKIA

The strengths, weaknesses, and potential opportunities and threats for Nokia Corporation
were detailed in the company's SWOT analysis. After completing the investigation, we have
discovered that Nokia had a very solid reputation among its customers and still does. It has
a chance of success in the smartphone industry. The challenging times that Nokia Mobile is
currently experiencing may be quickly overcame if new strengths are established and the
available chances are effectively seized.

Table 3: SWOT Analysis of NOKIA

NOKIA

Strengths Weaknesses

 Experience Base  Slow reaction to the competition

 Expertise  Poorly Designed Smartphones
 Knowledge of Customers  Low performance of Smartphones
 Distribution Network  Poor After-Sale-Service
 Reputation  Low Sensitivity to Industrial Changes
 User-friendliness of Smartphones
 High resell value

Opportunities Threats

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 Ever growing Market
 Growing Demand for  Stronger Competitors
Smartphones  iPhone’s Popularity
 Development of  Samsung and other Competitors
Underdeveloped Countries  New Entrants
 Adaptation of Android

quote from: Swot Analysis Template. (2020). SWOT Analysis of NOKIA | NOKIA Strengths
& Weaknesses 2020. [online] Available at: https://www.swotanalysistemplate.com/swot-
analysis-of-nokia/.

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