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Why Did Nokia Fail in the Global Smartphone Industry?

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Added on  2021-06-14

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The study will analyze the reasons why Nokia failed in the global smartphone industry and why the firm was unable to cope up with the competition. The most vital competition that was faced by the firm was within the smartphone segment, with their own and existing operating system named “Symbian”, which they were rigid to change. As Nokia didn’t alter its strategy of marketing and also was unable to change itself with changing technology, it came as a negative effect for the firm (Cateora, Gil

Why Did Nokia Fail in the Global Smartphone Industry?

   Added on 2021-06-14

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WHY DID NOKIA FAIL IN GLOBAL SMARTPHONEINDUSTRY1. Executive summary The study investigates dimensions of the competition within global mobile phoneindustry special within the segment of smartphone. The study will analyze the reasonswhy Nokia failed in the global smartphone industry and why the firm was unable to copeup with the competition. Proper situation of the entire Smartphone segment within mobilephone sector throughout the globe is also described. 2. Introduction:The firm named Nokia corporation was established in the year 1865, when an engineernamed Fredrik Idestam founded a pulp mil within Finland and then started papermanufacturing business, expanded to a rubber factory and later attempted to shift itsbusiness line to electronics. In the year 1968, Nokia shifted to the telecommunicationsbusiness and played a vital role in early fruition of the mobile phase. In 2007, the firmwas known as the world’s 5th most esteemed brands (Ali-Yrkkö, Rouvinen, Seppälä &Ylä-Anttila, 2011).Nokia was globe’s largest producer and manufacturer within mobile phone industry. Butit lost its market in few years. The most vital competition that was faced by the firm waswithin the smartphone segment, with their own and existing operating system named“Symbian”, which they were rigid to change. All big and small players in the industrystarted capturing Nokia’s share in several developing nations like India and China(Linden, Kraemer & Dedrick, 2009).Nokia’s long run dominance got challenged and the firm couldn’t survive the changes.Lowering of the ASP i.e. average sales prices and also market share had a major effect onthe firm. Nokia soon was forced to re-think about its existing strategy towards the
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developed as well as the emerging markets. Mobile industry rapidly went through vitalchanges in few years and many top classes mobile suppliers were also losing marketshares and many new firms were entering the market. Meanwhile people started buyingmore mobile phones than ever before (Cateora, Gilly, Graham & Money, 2016).With development of smartphones, mobiles were not just phones, rather became asubcategory option of computers, GPS navigations, cameras, social networking tools,Internet terminals and much more. As Nokia didn’t alter its strategy of marketing andalso was unable to change itself with changing technology, it came as a negative effectfor the firm (Cateora, Gilly, Graham & Money, 2016).2.1 Motivation for research- Nokia’s share in the market declined to 28.2% from36.7%. It was marked as the lowest share that the firm had ever had after the year 1999.Even in the global smartphone market the share of the firm fell from 44.6% to 36.6%.Being a market leader what actually happened with the firm? Why did it fail? Whycouldn’t it survive the competition? All these questions and urge to find their answerscame as a motivation for this study (Paliwoda, 2013)2.2 Importance of International business environment for companies- Businessecology comprises of all the facets, which affect a firm’s operations. It involvescompetitors, suppliers, customers, stakeholders, regulations, industry trends, social aswell as economic factors and also technological facets. A business being an open systemconstantly interacts with its ecology. Every business intakes inputs from its environmentand turns them into services or goods later sending them back to the environment. Thus,it is vitally important for every firm to properly recognize its threats, opportunities,changes, strengths, market demands and also changing technology (Surowiecki et al.,2018).
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2.3 Strategic issues with NokiaCompany’s information- When iPhone was launched in the year 2007, Nokia’s share inthe smart phone industry dropped to 27% from 51%. In midrange, all the phonesinculcating the operating system of Google named “android” exceeded the smart phonesales of Nokia. The difficulty for the firm can be comprehended by Nokia's CEO StephenElop's statement in which he said that the firm is "standing on burning platform” and thusthe firm needs to "alter its behavior "("Nokia saw the future, but couldn't build it", 2018).2.4 Problem analysis- “Strategy is direction and scope of the firm”, Nokia’a tactic started giving a dissimilardirection to the business in long run. To analyze the real problem one needs to understandboth Micro as well as Macro environment of the firm.2.4.1 Microenvironment analysisEmployees- the firm had properly suitable and perfect employees and later they evenmotivated those staffs for the business. Nokia’s major competitors like Apple, SonyEricson and Samsung, did not have a good employee base whereas Nokia due to itssupportive and flexible staff base was able to increase their business to international level(Bhatt, 2002).a)Customers-Nokia provided its buyers with extra benefits than their expectableproduct. Nokia provided best assortments to its market, which helped the firm inthe long runb)Suppliers- the firm had regular providers of its raw materials who were veryreasonable and loyal ones. Nokia also had good contractors to get all its naturalresource punctually to preserve their accessibility and enhance its creditability (Jia& Yin, 2015).c)Raw materials- Nokia had all its raw materials readily available.
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