Mobile Phone and Nokia

Ansoff Matrix for Nokia

Market penetration

Product development

Market development

Diversification

Current markets

New markets

Figure: The Ansoff matrix

Market penetration

The aim of market penetration is to sell existing products to an existing market, to do this Nokia must do a few things:

■ Change the pricing scheme (for example, penetration or competitor based)
■ Introduce discounting

■ Start up a different advertising campaign or consider changing an existing one.

Market development

To complete market development successfully, Nokia must look into the following:

■ Researching and selling to a different market (in case of saturation or poor market share)

■ Change times that television adverts are aired at and alter the places in which print adverts are being displayed (this can help your products appeal to a whole new market segmentation)

■ Lower current prices to help the products appeal to a wider range of consumers.

Product development

This area of the Ansoff's matrix involves keeping up to date with the latest technologies available in your chosen market and using them to appeal to different people (for example, WAP phones are aimed at more professional people while Camera phones are aimed at the youth market)

Diversification

This refers to developing technology that offers consumers something new or different, this is the most common way of companies trying to gain greater market share and increase their profits Founded in 1865 in a small Finnish town outside Helsinki

■ Originally a manufacturer of wood pulp and pulp

■ A government-orchestrated merger in 1966 resulted in Nokia acquiring an electronics subsidiary.

■ In 1975, Kari Kairamo was appointed CEO.

■ Kairamo decided to focus Nokia's operations on high-tech ventures, with a particular focus on the telecommunications industry.

■ Kairamo also decided to expand Nokia's target market from Finland to all of Europe.

■ In 1980, Nokia helped create the Nordic Mobile Telephone network, the first international cellular system.
2005 and November 2006.
Nokia has several suppliers for BL-5C batteries who have collectively produced more than 300 million BL-5C batteries including that produced by Matsushita. Though the company initiated product recalls at an early stage, these recalls would negatively impact the company's reputation and brand image.

Increasing competition
Nokia is facing severe competition in all the segments of the communications market it operates. In the mobile devices segment, the company has been facing competition from other mobile device companies such as LG, Motorola, Samsung and Sony Ericsson. Additionally, it is also facing competition from mobile network operators offering mobile phones under their own brand.
In the multimedia and enterprise solutions segment, the company is facing intense competition from internet based products and services, consumer electronics manufacturers and business devices and solutions providers. The launch of iphone by Apple, and Microsoft's entry into this segment has further intensified competition.
Litigation issues
The company is facing allegations related to possible health risks from electromagnetic fields generated by base stations and mobile devices. Nokia, and other manufacturers, and cellular service providers have been involved in several class actions for the last seven years.

This is in relation with the alleged failure to properly warn consumers of potential adverse health effects and failure to package headsets with every handset to reduce the potential for adverse health effects. Two of these cases were either withdrawn or dismissed.

The remaining cases are before the US District Court for the District of Maryland in Baltimore, Maryland. Any negative results from these cases and further studies could lead to significant changes of devices, which could affect operations of mobile device manufacturers such as Nokia.

4. PESTEL Analysis

Political factors

Legal constraints (such as the G3 technology constraints that Nokia have to take into consideration) must be taken into account because many businesses aim to make a profit so they may be tempted to mislead their customers about prices, quality of products and the availability of their products.

They may also try to cut expenditure by using lesser quality materials in their products (such as weaker materials for Nokia cases and batteries), also some companies may also dispose their waste in ways that damage the environment (pollution) and not ensuring high standards of hygiene and safety in the workplace and outlet stores, all of these are illegal and can leave companies in big legal trouble.

The governmental bodies in the U.K have introduced new laws into the business environment, which ensure that none of these procedures take place; if a company is to be successful they must follow all of these laws.

Economic factors

According to the fact that Russian Federation was collapsed in early 1990s and it assaulted with Finnish economics Organization for Economic Co-operation and Development (OECD, 1996). Nokia also face with the problem, and changed its functions from single market and overall products to global market and focusing mobile phone market.

Technological
In the communications market technology is perhaps the most important factor that companies like Nokia have to take into consideration. They have to keep up to date with all the newest technological advances (like camera and motion capture phones) if they are going to capture the biggest market share and stay ahead of their competitors (Sony and Siemens).

Environmental social and ethical factors

Some businesses view profits are more valuable then a strong ethical code and this can govern behaviour and business conduct. Some un-ethical practices are against the law and companies can not become involved in them (I have mentioned these above) but there are also some practices that aren't illegal by law but are considered highly un-ethical by the consuming public, companies who engage in these practice's can lose a lot of market share if they are found out.

An example of this is cosmetic testing on animals, it is legal but some of the consuming public are not happy about it and boycott certain products because of it, companies must be very careful about how they conduct themselves.

Nokia have managed to be quite environmentally friendly and have not done anything that the consuming public have taken huge offence to, they have been very careful about this and this is one of the reasons they are such a popular brand of mobile phones.

Legal factors
These are related to the legal environment in which firms operate. In recent years in the UK there have been many significant legal changes that have affected firms' behaviour.

The introduction of age discrimination and disability discrimination legislation, an increase in the minimum wage and greater requirements for firms to recycle are examples of relatively recent laws that affect an organisation's actions. Legal changes can affect a firm's costs (e.g. if new systems and procedures have to be developed) and demand (e.g. if the law affects the likelihood of customers buying the good or using the service).

4.1 Ansoff's Matrix

Why I choose Ansoff's matrix-

Since most of Nokia products are existing products in an existing market, this research made use of Ansoff’s matrix in a bid to help Nokia grow as a business. With this, the research looks at:

■ Market penetration

• ■ Market development

■ Product development and

■ Diversification

Current products New products

Market penetration

Product development

Market development

Diversification

Current markets

New markets

Figure: The Ansoff matrix

Market penetration

The aim of market penetration is to sell existing products to an existing market, to do this Nokia must do a few things:

■ Change the pricing scheme (for example, penetration or competitor based)
■ Introduce discounting

■ Start up a different advertising campaign or consider changing an existing one.

Market development

To complete market development successfully, Nokia must look into the following:

■ Researching and selling to a different market (in case of saturation or poor market share)

■ Change times that television adverts are aired at and alter the places in which print adverts are being displayed (this can help your products appeal to a whole new market segmentation)

■ Lower current prices to help the products appeal to a wider range of consumers.

Product development

This area of the Ansoff's matrix involves keeping up to date with the latest technologies available in your chosen market and using them to appeal to different people (for example, WAP phones are aimed at more professional people while Camera phones are aimed at the youth market)

Diversification

This refers to developing technology that offers consumers something new or different, this is the most common way of companies trying to gain greater market share and increase their profits.

TASK-2

4.1.1 Mission and Vision Statement of Nokia

Mission Statement: Connecting people

By connecting people, we help fulfil a fundamental human need for social connections and contact. Nokia builds bridges between people-both when they are far apart and face-to-face and also bridges the gap between people and the information they need.

The mission of our venturing activity: the renewal of Nokia.
Venturing at Nokia contributes to Nokia's renewal by identifying and developing new businesses. The Nokia Ventures Organization and the other venturing teams throughout Nokia are working on new businesses that fall outside the scope or current focus of Nokia's core business units.

■ The next year Nokia purchased control of the largest mobile phone company in Finland.

■ In 1986 Nokia made a huge investment in a mobile phone that would bear the company's name and be marketed internationally.

■ After several challenging years, the company's mobile phone sales grew rapidly during the 1990s.
■ Presently, Nokia is the world's largest manufacturer of cellular phones with annual sales of more then $30 billion.

■ Key strengths: Aggressive management team that continually searches for new products and merger candidates.

■ Key challenge: Overcapacity in mobile phone industry has cut sharply into Nokia's profits.

■ Key challenge: Company's worldwide operations pose many administrative logistical problem