The telecommunications market is a big and flourishing industry which brought about an unprecedented growth on many other supplying industries. Where before, telephones made it big for wired communication providers and the back-office manufacturers of telephone units, now telecommunication has taken a long and insistent phase in the cellular phone market. This wireless generation has not completely phased out the wired technology. In fact, it complemented what has become a necessity for people to communicate.
However, it is undoubtedly true that cellular phones are often much favored, not only because of the ease of use and connectivity that it brings but also because of the prestige that comes with owning it—especially if it is the latest and the more advanced models. When talks about cellular phones surface, an international brand always comes up. Despite the highly saturated cellular phone market, Nokia stands still. Nokia was able to battle the competition and stand the test of competition in the mobile telecommunications industry.
As a trend setter and starter of many technologies, mobile applications, and models, Nokia has become widely known to the point that owning the brand has a prestige in itself. But Nokia is still a business and as with all businesses it has several requirements. This applies most especially when it opened its doors in China, where a large consumerist market has become a global business target. Everywhere, from clothes to books, CDs to shoes, China has become the it district. Nokia did not shrug this off, too—and there Nokia found a well of endless opportunities.
Defining Nokia’s Strategic Decision External analysis Studying Nokia’s strategy in China is relatively easy. To begin with, the Chinese consumers are already exposed with how other countries have been dealing with the, at the time, emerging telecommunications trend. Through the lens of Porter’s Five Forces Model and Enterprise Architecture, Nokia equally enjoyed strengths and weaknesses in its entry to China. First, there is the threat of existing telecommunications products. Like with any other country, China already has a telecom structure before Nokia came.
This is a challenge that Nokia had to manage when they entered the Chinese market. (Blumenthal, nd) What could be a big competition to Nokia in China would be Motorola, a big player in the Chinese mobile communications market. However, Motorola has been taking things quite slowly since last year. Ericsson, despite forging partnerships with Sony introducing an all-new brand, is also lagging far behind. Nokia cited that the local companies are taking advantage of this slow-down. Many local companies have started introducing phones with the latest features that are at par with Nokia’s new technologies.
However, Nokia remained on top. (Nokia sees new rivals emerging in China: paper, 2007) Nokia also had to create phones that will please both their suppliers and buyers. The sudden industry boom in China has widely increased consumerism, but there should also be consideration on how materials will be sourced, how much will they be as compared to the production and delivery costs in the West, and how willing are the customers to pay its ending price tag. (Blumenthal, nd) Stakeholder analysis According to the Environmental Report of Nokia Corporation (2004), Nokia has two sets of stakeholders.
The internal stakeholders are the Nokia personnel, who form the core of Nokia’s different operating arms and initiate the different activities of the company. Nokia ensures that these internal stakeholders are well-informed and equipped to cooperate with the different company efforts. They maintain an internal network where employees can log in and know more about the latest with the company. There are news items and updates for employees as well as features that allow them to communicate. (Environmental Report of Nokia Corporation, 2004) Training and development is also crucially planned and laid out by Nokia for all of its employees.
Nokia also gives pride to their external stakeholders. They are the consumers; corporate customers including universities, shareholders, governments, and NGOs; suppliers; and investors. Periodic surveys allow Nokia to be in touch with the consumers. Location-specific dialogues carried out per region under different Nokia offices are done as well. In the same way, suppliers are taken cared of through supplier management. By holding meetings with investors, as well as initiating what is dubbed the Investor’s Day, Nokia reaches out to their investors and creates a positive and long-term relationship with them.
(External stakeholders, 2006) Nokia is also cooperating with non-government organizations. The Nokia Environmental Campaign is in part by the World Wide Fund for Nature. Benefits are also given to the Red Cross, UNICEF, and the International Youth Foundation. Involvements with the United Nations, International Chamber of Commerce, and other global organizations are also sustained. Being a global brand, these affiliations are in the same way done with all other countries where Nokia is operating. (External stakeholders, 2006)
Looking at statistics, it may be said that Nokia’s appeal to the consumer emotion is working. In 2003, a large percentage of Nokia’s $3 billion sales were from China. (China: The pursuit for competitive advantage and profitable growth, 2003) In its 20th year in China, Nokia sales hit a record high of 7. 4 billion euros on the first quarter of 2005. This is said to be a 17% raise from the preceding year. The 3G market, which Nokia was lucky to be among the first one to capture, is to thank for this big leap for the company. (Nokia sales hit new high in china, 2005)
Internal analysis If there is anything that makes Nokia stand out, it is the value that it offers consumers. Even before entering the Chinese market, Nokia China is lucky to already have an established inbound logistics care of Nokia in Finland. The concentration, then, is to migrate the turn-key operations to China. While this is easy to say, this is not at all as easy to do. To begin with, and going back, China already had an established telecommunications system that can very well challenge that of what Nokia can offer.
The mobile phone industry in China at the time of Nokia’s entry, though not at all advanced in its present sense, is already stable and thriving. Key players are already enjoying the communication need, and the fact that they can satisfy them with their products and services. But this is where the other factors in Porter’s Value Chain come in. (Recklies, 2001) Nokia’s primary activities focused on localizing their brand to China, while trying to keep up with the lifestyle trending which is the way products sell in China. There is a need to make the products low-cost, but maintain a high-end image for them.
In hindsight, the support activities were also responsible in keeping Nokia’s good presence in China. Source: Recklies, 2001 It became important for Nokia to tailor the brand and the products to China. The company figured that China, while there is a consumerist growth, may still have a different market whose buying power, decisions, and needs are different from the rest of the countries they have led before. Thus, change in the primary activities was done. Operations were made in-house, employing locales who better understand the nature of workforce in China.
Inbound logistics were tailored to the needs of the Chinese. The same adjustments were made for marketing and sales, and product services. (Recklies, 2001) Yet if ever there is a flourishing factor in Nokia’s shift to China, it is the aspect of technology development and procurement. As will be discussed later on, Nokia’s investment on research and development globally, majority of which is happening in China, is surprising yet impressive. The development of a system and the propagation of ideas, as well as turning the ideas into realities were some of the good points of this Chinese shift.