Globalization Strategy of Nokia

Korea University

Graduate School of International Studies

Professor: Dong Ki Kim

Course: Global marketing management

Prepared by Mykhailova, Karolina

(Sogang University Student)

ID: I25004

November 8, 2010

Contents

Abstract

1. Introduction: NokiaтАЩs background

2. Role of Nokia on the telecommunication market

3. Market Entry Strategy of Nokia

4. NokiaтАЩs Foreign Direct Investment

5. Mergers, Collaborations and Acquisitions by Nokia

6. Foreign Exchange Market Impact over Nokia

7. Culture and Environment

Summary

References

Abstract

The mobile phone usage is increasing every day, revolutionizing the field of technology and our lives throughout the world. We all spend a considerable amount of time using our mobile phone for various purposes making it the technical innovation that we use most frequently. Nokia is one of the biggest brands in Telecommunications Industry globally. It enjoys a market share of around 35% at the moment. The Finland based company Nokia caters to GSM as well as CDMA segments. 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 of phones with the most basic features as well as high-end swanky phones with all the latest features.

The purpose of this paper is to briefly look at NokiaтАЩs impact on the international business under the following topics:

тАв NokiaтАЩs market entry strategy: Marketing Mix, Branding, PLC

тАв Foreign Direct Investment

тАв Foreign Exchange Impact over international Trade of Nokia

тАв Culture of Nokia and CSR

This will help to understand how NokiaтАЩs way fits in to the theories of International Business and what strategy put it on the top of mobile phone market.

1. Introduction: NokiaтАЩs background

Nokia was founded by Fredrik Idestam in 1865 as a wood-pulp mill in south-western Finland. It was later relocated to the town Nokia where the company got its name. The name Nokia is an old Finnish word for a dark, furry animal (such as the sable). In the beginning of the 20th century Finnish Rubber Works established its factories and began using Nokia as its brand. The companies merged in 1967 as Nokia Corporation, which went on to produce paper products, bicycles, car tires, footwear, personal computers, communication cables and televisions. It was not until 1987 that Nokia introduced one of the worldтАЩs first handheld phones, the Mobira Cityman 900. It weighed only 0.8 kg and cost тВм4,650. In 1992 Jorma Ollila became the President and CEO of Nokia and focused the company on telecommunications. Nokia launched its first GSM handset in 1992, the Nokia 1011. In 1994, the first mobile to feature the Nokia Tune the Nokia 2100 was launched. In the same year, world's first satellite call was done using one of Nokia's GSM handsets. In 1997, the first mobile to feature Nokia's classic Snake game was launched, the Nokia 6110. 1998 was the year when Nokia became the world leader in mobile phones. The year 1999, was very significant as the Internet went mobile when the world's first WAP handset, Nokia 7110 was launched. 2002 saw the launch of Nokia's first 3G phones, the Nokia 6650. Nokia launched the N-Gage in 2003. It helped in making the mobile gaming multi-players. Another significant year in the history of Nokia was 2005 when the тАШNseriesтАЩ was introduced. In the same year, Nokia sold its billionth phone. Nokia continues to be the market leader. It is now a huge multi-national company with manufacturing units all over the world. In the highly competitive world of mobile phones, Nokia still has a lot of market presence and provides a lot of mobile contracts and will continue to do the same (Nokia, 2010).

2. Role of Nokia on the telecommunication market

Finland, home of Nokia, the world's largest manufacturer of mobile phones, has honed a new innovation plan aimed at keeping the tiny Nordic country competitive in an increasingly competitive, global market. In 2006, Olli-Pekka Kallasvuo, formerly NokiaтАЩs Chief Financial Officer, took over as CEO from Jorma Ollila, who became chairman of NokiaтАЩs Board of Directors. NokiaтАЩs success has made Finland one of the fastest-growing and most prosperous economies in Europe. A company becomes a тАШmultinational corporation-MNCтАЩ when it conducts any business function beyond its domestic bordersтАЩ (Cullen & Parboteeah, 2010). Internationally Nokia has captured markets of over 60 countries in the world where China, India, USA, Middle East, Africa, Asia, Australia and New Zealand having largest market shares. It was ranked in 85th place of тАШFortune 500 listтАЩ and employees over 125,000 staff (Cable News Network, 2009). "We are expanding our presence and operations in India, not for the local market alone. We want to strengthen our global presence by exploiting the skills found here.'' Said Kullasvuo to Bloomberg when India became the second largest market for Nokia surpassing USA in 2007 (Kallasvuo, 2007). This is clear intention of NokiaтАЩs globalization strategy. The sales volumes depict how NokiaтАЩs business arms have spread globally. Nokia Q1 2009 net sales were EUR 9.3 billion. This is enough proof for one to realize how NokiaтАЩs presence in each country contributes towards GDP and employment statistics. (NOKIA, 2009) Finland already commits around 3.4 percent of its GDP (gross domestic product), or 6 billion [euro] (US$8.6 billion), to R&D. That compares with the European average of around 1.8 percent. Around 28 percent of this is paid for by the government, with the lion's share--72 percent--being footed by the private sector. Nokia accounts for 45 percent of all industrial R&D in Finland and more than 80 percent of the R&D investment in the telecommunications sector (Blau, 2008). Time marches on and history has proven that standing still means death for any company (Bradford, Duncan, & Tarcy, 2000). Change is inevitable for telecommunication industry and the size doesnтАЩt matter even for a company like NOKIA if it is not adoptive. Based on strategies and events of 2008-09, letтАЩs look at the SWOT analysis of NOKIA. SWOT analysis will help a firm to understand its Strengths, Weaknesses, Opportunities and Threats.

Strengths тАв Long history of flexibility and adoptive to change тАв Steady revenue growth тАв Brand power тАв Strong financial position тАв Flexible Capital Structure тАв Investment in research and development of technology тАв Reached low operating costs in 2009 тАв Consumer retention rate of 55% тАв Product innovation bundled with value added services mainly focusing on maps, music, messaging, media and games. тАв Successful mergers, acquisitions and collaborations

Weaknesses тАв Reduced staff strengths to achieve low costs. тАв Declining profitability ratio due to current economic conditions тАв Decline in the converged device share (by 32% in 2008 despite the shipment of over 60 million units).

Opportunities тАв Consumer demand for mobile computers тАв New segments such as potential first-time email users in India, Africa, etc

тАв Consumers attracted to less expensive devices during recession

Threats тАв Mobile device manufacturers тАв New entrants from the PC and internet industries тАв Contraction of the market due to current economic conditions тАв Innovative technologies in smartphone industry by competitors

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