Porters five forces on Nokia
Porter’s Five Forces on Smart Phone industry
Threats of New Entrants
1. The Smartphone industry is a well established market and the threats of a new entrant is low, as technology needed to rival the devices already available is quite advance if they want to differentiate from them
2. Barriers to entry in the mobile phone industry is high because any new entrants will need high investments in R&D, capital investment, technological investment and marketing in order to compete with the established organisations
3. Currently, Apple holds 39.2% of the market share, followed by Samsung 23.0%1. This makes it hard for new entrants to obtain their own market share
4. Product differentiation needed especially in this market. Nokia has created an established brand name for them internationally and this makes it hard for new entrants to compete.
5. Big firms may retaliate and try to prevent companies from entering the market by giving out special deals or lowering price to the point where it is not viable for new entrants to compete.
6. Patents also limit innovation and this will potentially deter new entrants.
7. Due to the size of the big firms such as Nokia, they will have an advantage over new entrants in terms of Economics of Scale. For example, Nokia is able to gain cheaper deals with its suppliers as it has been in the market for a longer period of time. Moreover, financially, Nokia has the advantage as it is able to obtain more funding from banks, shareholders or even the Finland government for R&D EV: Threats of new entrants is very low and not a factor which Nokia should worry about. This is because the new entrant will need very high investments on product differentiation, marketing strategies and a long period of time to build their customer base and establish their company name.
Furthermore, after the merger with Microsoft, Nokia may prove to be a stronger force in the market especially now that Nokia will be able to have financial
Threats of New Entrants
1. The Smartphone industry is a well established market and the threats of a new entrant is low, as technology needed to rival the devices already available is quite advance if they want to differentiate from them
2. Barriers to entry in the mobile phone industry is high because any new entrants will need high investments in R&D, capital investment, technological investment and marketing in order to compete with the established organisations
3. Currently, Apple holds 39.2% of the market share, followed by Samsung 23.0%1. This makes it hard for new entrants to obtain their own market share
4. Product differentiation needed especially in this market. Nokia has created an established brand name for them internationally and this makes it hard for new entrants to compete.
5. Big firms may retaliate and try to prevent companies from entering the market by giving out special deals or lowering price to the point where it is not viable for new entrants to compete.
6. Patents also limit innovation and this will potentially deter new entrants.
7. Due to the size of the big firms such as Nokia, they will have an advantage over new entrants in terms of Economics of Scale. For example, Nokia is able to gain cheaper deals with its suppliers as it has been in the market for a longer period of time. Moreover, financially, Nokia has the advantage as it is able to obtain more funding from banks, shareholders or even the Finland government for R&D EV: Threats of new entrants is very low and not a factor which Nokia should worry about. This is because the new entrant will need very high investments on product differentiation, marketing strategies and a long period of time to build their customer base and establish their company name.
Furthermore, after the merger with Microsoft, Nokia may prove to be a stronger force in the market especially now that Nokia will be able to have financial