Changes Happened In The Telecom Device Industry

Published Date: 02 Nov 2017

1.0 Introduction:

As stated by Doughty (2011, p 90), "The word, Technology refers to the branch of knowledge that deals with the creativity and utilization of the technical terms of innovation. It defines the relationship of these creations with the life, society and environment. Technology is based on the subjects like, industrial art, engineering, applied science and pure science. Technology is also termed as the sum of the ways in which, the social groups involve the material objects of the civilization by providing them fully involved in this process (Carter and Hodgson, 2009). It is applied in various industries to design, produce and utilize the products and services from the organizations of human activities.

The technology is categorized into five different parts: Tangible, Intangible, High, Intermediate and Low. The tangible technology is all about the visible applications of knowledge like, models, operating manuals, blue prints etc. The intangible technology basically helps to improve the quality of the product and services. Consultancy, training methods, problem solving are under this type. The high technology refers to the fully automated technology, based on the intelligence that manipulates the power forces. Intermediate technology is semi-automated in nature, used to evaluate medium level forces. Low technology is basically the labour- intensive technology to assess the weaker forces.

1.1 Background of the topic:

According to Brodie e al. (2009), there are so many changes happened in the telecom device industry in last half decade. The telecom industries have diverted from their core operation of telephoning and texting to a broader concept of network development. The industry now has changed their concentration to develop the software and hardware entities that not only provides the mobile communication but also entertainment as well as network experience. These improvements are represented by a wider range of software applications that are able to run in a range of modular devices. As opined by Ho and Tang (2009, p 364), "The application software is common operating system to support all kind of telecom devices". The competition in the mobile industry has increased with a constant growth of this industry and the business. As the technological changes happened, with the improvement of mobile devices, the buying behaviour of the consumers has also changed in similar way (Macdonald and Sharp, 2007). A current survey states that the sales of smart phones have increased in a higher rate in last few years. Now days the customers concentrate on betterment of life through by social networking rather than only make calls or text. This is one of the major reasons to increase in sales of the multimedia telephonic device.

Nokia now is facing a harder competition from some of its strong rivals like Samsung, Apple, and HTC due to a drastic change in mobile devices in terms of technological improvements across the world. A market parameter states that the sales of the Nokia device have decreased in last few years. As a reason, the company has caught the market paradigm shift in late as the paradigm has shifted for the mobile industry in a faster way in these years (Heylen et al. 2007). Considering to this change, Apple is treated as one of the first company that develops the mobile device by converting it to an integrated entertainment by including music, movies, photography and many more applications in to its devices. The Iphone is the best example of the change. It represents a wide range of consumer acceptance for the touch screen device. Being advantageous as the first mover the company enables it to increase the customer by evaluating the services of the related companies.

The Samsung Company represents the development of the Smartphone revolution from a different dimension. It started by providing its high class mobile parts to the other mobile manufacturing industry. Then by developing the free android operating system with Google server, it becomes capable to manufacture its own products using its hardware manufacturing abilities. Jarzabkowski and Spee (2009) have stated that the products of Samsung has the top of the line hardware specs such as, the screen, processors, cameras etc. the package of the products are inexpensive and it comes to the mass market as it capable to fulfil all the requirements of the customers. According a recently survey, he Samsung has surpassed the sale of Nokia as world’s largest selling mobile handset.

1.2 Purpose of the study:

The main purpose of carrying out of this study is to identify the technological performance of the company to assess the benefits of those technologies in relation to the competitors. The researcher has conducted the research to evaluate the operational and financial performance also to gain the knowledge about competitive advantage of the company in the market. It also evaluate that the company has better knowledge about its own strength and competitors’ performance and movements or Nokia is technologically weak, compared to Samsung and Apple. The researcher has also benefited by getting a wider knowledge about the research skills as well as the way of developing skills to exercise better performance, in order to maintain a constant growth of the organization, in healthy competitions.

Therefore, by conducting this research study, both Nokia and its customers can be benefited by identifying both the technological benefits and faults by looking into the activities in detail. As a result, the better technology can bring excellence in telecom devices, in order to compare in the rivalry in the mobile industry.

1.3 Aims and Objectives:

1.3.1 Aims of the study:

The primary aim of the current research is to evaluate how the choice of technology of Nokia has affected its operational and financial performance in relation to its competitors. Here, he researcher has selected two of its greatest competitors in the telecom industry, Samsung and Apple.

1.3.2 Objectives of the study:

The ultimate objectives of the present research to support the primary aim are:

To identify the innovations of Nokia compared to its competitors.

To measure the efficiency of the company through computing its financial performance.

To evaluate the correlation between the technology that has been used and the performance according to the technology.

1.4 Research Questions:

The researcher has constructed the research question in supportive format to the objectives. As a reason the answer of the following research question can help o reach to the objective of this research.

How innovative is the technology of Nokia in comparison to its competitors?

How does it affect the performance of the company?

What are the impact of its choice of technology on its financial performance, related to Samsung and Apple?

1.5 Structure of the research:

The researcher has divided the current research study into seven consecutive chapters to conduct the research in a systematic way.

First chapter states about the introduction of the whole research. This chapter is about the overview of the research. It contains some declaration, related to the study, which are necessary to make it reliable to the readers. The rationale of the study, the purpose and background of the research show a fair view of the entire dissertation and its reason of conducting the current research. The researcher also provides the aims and objectives with some supportive research question, in order to proceed with the research in a systematic fashion.

Second chapter explores the existing theories and concept relating to the technological choices and strategies that impact on the performance of the company. A critical evaluation of the related factors and some theoretical evidences help to go ahead with his study to identify the areas that have not been covered yet so far. The researcher has tried to implement the theories, described in his chapter, to this research to link the ultimate conclusion with its objectives. The chapter has also covered the industrial background from the perspective of technological choices and implementation of the selected company with its two major competitors. This chapter aims to visualize the current situation of the operational as well as financial performance of the industry and the areas of improvement.

Third chapter deals with the targeted company, Nokia, its historical background and its performance. The current chapter also covers the product and services of the company, along with the additional innovation that the company has taken under consideration to improve the performance of both product and the company. The researcher has also mentioned competitive advantages as well as disadvantages of Nokia’s technological choices, compared to Samsung and Apple within the telecom industry.

Fourth chapter is all about the methodology of the research study, opined by Collis, (2010). A relevant research methodology refers to an appropriate combination of suitable research philosophy, research approach, a proper research design and a reliable data collection method with its valid data analysis method to resolve the research problems, identified. The researcher has chosen all the components of its methodology on the basis of the characteristics of the whole research and its objectives.

Fifth chapter deals with the data analysis and findings from this analysis. The analysis has been conducted on data, obtained from the primary research, in context of the research objectives set in chapter 1 and the theoretical evidences mentioned in chapter 2. The findings from data analysis play a pivotal role to satisfy the research objectives and answer to the research questions.

Sixth chapter refers to the discussions and evaluation of the findings, obtained from fifth chapter. This chapter contains comparative results and its discussions to assess the overall performance of the companies within the industry. The research has also explained the reasons of the current position of the company, compared to its competitors with the help of the theories and background of the industry, mentioned in the second chapter.

Seventh or the Last chapter describes about the conclusions, recommendations and the limitations of the study. The research here, describes the ultimate position of the companies as well as the industry on the basis of the findings. The chapter also involves the critical reflection of the whole research work, in order to recommend the way of improvement of the performance of the company to maintain sustainability and growth, staying in a healthy competition. It explores the limitations of the study to identify whether there is any future scope for the further study with similar topic.

1.6 Rational of the study:

Although all the sectors can be benefited, the researcher has only chosen the telecom industry thus, the three telecom device organization. Consumer behaviour, especially the buying behaviour of the consumer is subjected to a constant change. Apart from that, there are other factors also to control the buying behaviour of the consumers. The biggest issue for the customer satisfaction is pricing strategy of the product and services. The modern customers are aware of his issue. Their attitude is to pay sufficient money for the product, in order to get maximum value from the service in terms of money and satisfaction. The customers’ choice of technology is another vital area of consideration hat varies over time. The current study aims to evaluate the technological implementation of Nokia in its mobiles whether it is superior to the Samsung mobiles and Apple iphones or the competitors are more efficient to capture the market by applying their advanced technology. By exploring his information through the research, the researcher can help the Nokia to develop new strategies that help the organization to improve its revenue and profit margins. The present study also enables the researcher to gain knowledge about technological applications of the telecom industry as well as the area of performance it impacts.

1.7 Ethical Issues:

The researcher conducts the research by following and maintaining all types of ethics that are required to follow. Firstly, it is crucial to ensure that the collected data are no used for any commercial purpose. The author has followed all ethical issues to gather reliable and valid data at the time of conducting the survey. The researcher has gone through an appropriate manner while collecting data from the secondary resources such as, online journals, books and related websites of the topic as well as the companies. All the data are extremely confidential and confirmed to keep under security.

1.8 Chapter Summary:

The first chapter basically describes the reasons of conducting the research study. The author has set an appropriate aim and related three objectives, along with three supportive research questions to meet the research goal. Setting a proper aim and is related objectives helps the researcher to reach to the desirable conclusion of the study. The rationale of the current research work states about the concept of the topic, its importance to conduct as a research and role of this research to help the researcher, in order to reach to0 the ultimate objectives. The structure of the research gives an overview about all the chapters of the whole dissertation. The author has also mentioned the background of the research as well as the industry, along with the ethical issues that the researcher has followed while conducting the research.

Chapter2: Literature Review

2.0 Introduction

According to Bingham and Eisenhardt (2011), a literature review is the preamble to any research study. It discusses the past work done on the topic and related subject. Not only does the unit discuss about the past work it also has current details mentioned. This is done so that at the end of the study when the study is being concluded, there is a match between the theories, data and related stuff (Barry and Starks, 2009).

2.1 Conceptual Framework

Understanding of the global telecom market

Global Telecom sales

Why did Samsung and Apple succeed

Profitability in telecom sector

Figure1: Conceptual Framework

(Source: As created by the author)

2.2 Information on Telecom Market

In a recent data published relating to the operating system and the market share of brand according to its. Nokia had the highest market share in the Microsoft operating devices. Most of the Nokia phones work on the Windows 8 technology, only 6% of the total phones produced by Samsung have Windows OS installed. On the other hand HTC has 14% of total phones produced by Windows8 OS. In fact out of 5 phones sold in the market, 4 belong to Nokia. What is more surprising is that all these phones have Windows8 OS installed (Alvarez and Casielles, 2008).

In the words of Klasnja et al. (2009), Microsoft would have died long back if Nokia had not supported it by installing the OS on its phones. On the other hand, when the market share is calculated not many phones have a Windows OS installed. Only Nokia phones are the ones with Windows OS. In the opinion of Laroche et al. (2009), will too much depend on Windows OS have a negative effect on the Smart phone business.

Microsoft at one point of time was supplying software for Apple but then the relationship was cut off (Luehrman, 2008). Nokia and HTC stepped in to bail out Microsoft from the debacle. As Microsoft did not have the hardware capability, a tie up was required for marketing its software. In the words of Naghibzadeh (2009), the relationship with Nokia and Microsoft was like a strong never ending bond. But when HTC joined in and produced a phone similar to Lumia 820, it was thought that there would be trouble for HTC. As reported by O'Sullivan and Abela (2007), Nokia let go the incident as they believed the copied version of the phone did not match up to the standards of the original.

In the words of Pieters and Bijmolt (2008), if Nokia where to shift from Windows OS and move to Android, this would kill Microsoft totally. Even the thought of Nokia moving from Microsoft is not a possibility. Microsoft would require Nokia to meet its objectives as the company is lagging behind in the products that are being manufactured under the Microsoft name.

According to Sanchez-Fernandez and Iniesta-Bonillo (2007), every software computer needs a supporting partner to establish the brand in the market. Google needed Motorola to produce the smart phones. The strategy did not go down well, market share of Google based phones were low. When Samsung started working with Google on the Smartphone business, there was a growth in the numbers. In the opinion of Shiner (2006), Google was lucky that Samsung partnership worked out and the loss from Motorola project could be minimized. On the other hand Microsoft is still hanging from the thread. If Nokia pulls out, there is no chance any other phone company would come to support Microsoft. This would mean Microsoft will get into deeper problem (Shoming, 2007).

In the words of Shrader et al. (2009), symbian technology is full of glitches and is not a standard technology to be used in the smart phones of today. Brands like Samsung, HTC and the others know about it. The only benefit that symbian phones have is that they come for cheap. In the words of Stallings (2008), if the competition can manage to produce smart phones with android software, chances are Symbian will face a lot of trouble. According to Sunde and Brodie (2008), a customer always looks for the best possible product available in the market against the price paid. In case the price of android based devise is lower than symbian, most customers entering the shop would leave with android device (Wang et al., 2009).

In the words of Winer (2008), Nokia competitors have understood the way to beat it to the post. Most brands like Samsung, HTC etc is working towards cutting down cost of the devices. The impact of it is showing on the bottom line of Nokia. According to Woodcock et al. (2008), Nokia has been losing market share consistently for a couple of years now. In Q3 2010, Nokia was standing at a market share of 33%. It had lost almost 5% in just 3 months time. The dip was slowed down after the symbian 3 was launched.

According to Yoo and Donthu (2006), Nokia had played it wrong when they started dumping devices into the distribution channels across China and Europe. This was on the back of slight success from symbian launch and was in the year 2011. With hardly any upgrade on the old models, Nokia phones were unable to make a dent in the mind of the people. In the words of Zott, and Amit (2008), old stock was lying in heaps with the distributors. On the other hand Samsung and competitors were selling like hot cakes. Sales figures reported from Europe and China would highlight the poor form of Nokia in these two markets. European market sold 21% less, similarly China sold 53% less of the total Nokia phones produced [Available from: http://www.nokia.com/global/about-nokia/about-us/about-us/,24th February 2013].

According to Alvarez and Casielles (2008), the current state of Nokia is its own doing. The management failed to understand the need for a change to newer and faster operating system. symbian would outsmart its competitors at a time when there was no android (Bearden and Teel, 2007). This was on the basis of the processing speed, but as time went by, Nokia failed to catch up with the competition. In the words of Bingham and Eisenhardt (2011), Nokia fell into the Moore’s law trap, computing power got cheaper and was in larger supply. Whatever advantage the Symbian technology had on virtue of being fast was lost.

According to Boulton et al. (2009), phones like N8 which were supposedly the high end phones from Nokia and were supposed to lead the market failed to perform before competition from Samsung Galaxy S and HTC Desire. As opined by Dawar and Philip (2008), new technology always has greater acceptance from people, this is what happened with Samsung and HTC. They produced upgraded version of the Galaxy S and similar models. On the other hand Nokia was just making cosmetic changes to its existing models (Doughty, 2011).

In the opinion of Hatch and Schultz (2008), Nokia will continue to lose share at a drastic rate because of its inability to accept change. Even it showed inability to understand the psyche of the customers (Heisler et al., 2007). Once a brand to die for is today dying (Heylen et al., 2007). Many reports seem to predict that Nokia will end up with single numbers in market share index.

2.3 Teleocom Sector Sales Details

In the words of Jarzabkowski and Spee (2009), data represents the health and fitness of a brand. On the other hand the same data reflects the causes that have led to such a dismal performance. According to Javalgi and White (2007), people in the management who can read and understand numbers and have the mindset to react will be successful brand guardians.

Let’s look at some of the data related to the sales figures of Nokia, Samsung and Apple. The data has been reported by IDC, Canalys, Strategic Analytics and Gartner. The numbers from the four have been used and averaged out. This data would run for handsets and operating systems both.

According to Lavie et al. (2012), in the year 2012 total handsets sold were reported to be at 695 million. For the 4th Quarter, numbers ended at 217.2 million handsets. The table below would be help in understanding the numbers better.

Rank

Brand

2012 Units

Share

2011 Units

Share

2010 Units

Share

1 (2)

Samsung

215 mil

31%

91 mil

19%

24 mil

8%

2 (1)

Apple

136 mil

20%

93 mil

19%

48 mil

16%

3 (8)

Huawei

55 mil

8%

20 mil

4%

5 mil

2%

4 (3)

Nokia

35 mil

5%

77 mil

16%

100 mil

34%

5 (10)

ZTE

35 mil

5%

12 mil

3%

4 mil

1%

6 (4)

RIM

33 mil

5%

53 mil

11%

48 mil

16%

7 (6)

Sony

32 mil

5%

27 mil

6%

10 mil

3%

8 (5)

HTC

32 mil

5%

45 mil

9%

25 mil

8%

9 (7)

LG

28 mil

4%

23 mil

5%

7 mil

2%

10 (-)

Lenovo

25 mil

4%

-

-

-

-

Others

70 mil

10%

-

-

-

-

Total

695 mil

-

486 mil

-

298 mil

-

Table1: Global Sales figure by Brands

[Source: Available from: http://mobithinking.com/mobile-marketing-tools/latest-mobile-stats/a#sales, 25th February 2013]

43% increase in the market share of the future phones year on year, 2012 vs 2011. Around the world future ready phones sold 39% of the total handsets produced. Samsung came from behind to dislodge Apple, leader in the future phones business. The position that Samsung now holds in the market was once dominated by Nokia. In the words of McEvily et al. (2009), the brand was at the helm for almost 12 years till Apple took over.

In the words of Luehrman (2008), China is a growing market for the future ready phones. As per released data, in China for every 10 future phone produced, a quarter of it is being bought. This fact is again emphasized by the fact that Lenovo’s only future ready phone was only sold in Chinese market.

According to Lavie et al. (2012), Nokia (4) is in a very tight race with HTC (8) on the sales grid. The difference between the two is just 10%. The market is going to heat up more with the recent announcement from Sony on its target to reach 3rd place in 2013.

Let’s look at the sales data of phones as per the OS installed in them

Rank

OS

2012

Units

Share

2011 Units

Share

2010 Units

Share

1 (1)

Android

452 mil

65%

208 mil

43%

54 mil

18%

2 (2)

iOS

136 mil

20%

93 mil

19%

48 mil

16%

3 (4)

Blackberry

33 mil

5%

52 mil

11%

48 mil

16%

4 (3)

Symbian

19 mil

3%

81 mil

17%

116 mil

39%

5 (5)

Bada

16 mil

2%

9 mil

2%

3 mil

1%

6 (6)

Windows

16 mil

2%

5 mil

1%

2 mil

1%

Others

15 mil

2%

-

-

-

-

Total

695 mil

486 mil

-

298 mil

-

Table2: Global sales figure by operating system

[Source: Available from: http://mobithinking.com/mobile-marketing-tools/latest-mobile-stats/a#sales, 25th February 2013]

In the words of Klasnja et al. (2009), it needs to note that 1 out every 3 mobile device sold in 2012 ran on android operating system. Apple’s iOS sold 1 out of every 5 unit. Nokia and symbian are in a falling spree, they have lost their 3rd spot to Blackberry. On the other hand Bada, the software developed by Samsung on its own has been threatening the established players. In fact Windows OS has been out ranked by Bada (Jarzabkowski and Spee, 2009).

The fight for the operating system is almost settled now, Android is the upfront leader. As per data received, Android has 100% strike rate in sales for every 3 device manufactured. Apple stands at 2nd spot. In the words of Jarzabkowski and Spee (2009), Android and Apple constitute around 85% of the total future ready phones. Other players are not to be seen within striking distance of the leaders. Blackberry with its recent launch of BB10 OS might make some sound. On the other hand, the reviews received about the beta use of BB10 OS are not very pleasing (Gary et al. 2012).

2.4 Understanding the reason of Samsung and Apple’s success

In the words of Pieters and Bijmolt (2008), Samsung has been the opportunistic in the whole telecom industry. Whenever Nokia faltered in its strategy Samsung was there to make profit out of the situation. On the other hand models like Galaxy, Galaxy Beam, Galaxy Note, and Galaxy Camera came up as Apple gave Samsung the opportunity. In the words of O'Sullivan and Abela (2007), Samsung was considered as the poster boy of mobile phones, yet the brand managed to serve both ends of the spectrum. It could manufacture devices that catered to the lower end of the price band and also to the higher end (Naghibzadeh, 2009).

In the words of Luehrman (2008), Samsung had played it very safe by dividing the offering into various operating systems. The table below would highlight the details more

Brand

Operating System

Share

Samsung

Android

94%

Samsung

Bada

5%

Samsung

Windows

1%

Table3: Samsungs presence across operating systems in 2012

[Source: Available from: http://mobithinking.com/mobile-marketing-tools/latest-mobile-stats/a#sales, 25th February 2013]

The way Samsung has raised in the whole future ready phone market is really admirable. In the words of Laroche et al. (2009), Samsung has broken the record of Apple and Nokia in the way it has tackled competition and surged ahead. Nokia had done the same to Motorola in the digital phone segment a decade ago and Sony had to face the same scene at the hands of Apple in the compact music player segment. The way Samsung has done it puts Apple and Nokia to shame (Fombrun et al., 2008).

According to Gary et al. (2012), the growth that Apple was showing previously has been slowly going down. The current market share of 22% as against a 24% reflects on the same. On the other hand many critics feel that with these decrease also Apple still gives Samsung a run for the money. In the words of Doughty (2011), for Apple to succeed, it should start looking into developing cheaper models of its existing product. In most developing markets cheaper phones are sold better.

2.5 Profitability in Telecom Industry:

The telecommunication industry is one of the fastest growing industries across the world. According to published reports, the number of customers has increased from 543.20 million in November 2009 to 562.21 million in December 2009 and that is by 3.5% in one month.

D:\TANUMOY\February\EHRR882 dissertation\research\literature\Teledensity.png

Figure 2: International Teledensity

[Source: Available from: http://www.itu.int/osg/spu/sfo/missinglink/kelly-20-years.pdf,25th February 2013]

The teledensity (numbers of telecom devices per 100 people) of the international telecom industry has achieved 47.89. This industry has earned the revenue from the sales of the products is US$ 8.56 billion during the last quarter of the year ended December 31, 2009. This huge earning within the industry can help it to recover the deficit as well as increase the earnings in both the mobile and landline devices.

D:\TANUMOY\February\EHRR882 dissertation\research\literature\CAGR.png

Figure 3: Compounded Annual Growth Rate of Telecom Industry

[Source: Available from: http://www.itu.int/osg/spu/sfo/missinglink/kelly-20-years.pdf,25th February 2013]

The telecom manufacturing sector is considered as one of the largest manufacturing sectors in the world. The international market survey states that the mobile handset has been estimated to grow at the CAGR of 28.3% in 2006-2011. The total handset that has been manufactured in 2010 is 107 million. The sales revenue in this sector is estimated to grow at the CAGR of 26.6% in the same year of study. The revenue has touched at US$ 13.6 billion globally.

There is no other industry that has been able to achieve the growth rate as the telecommunication has. This industry has improved not only the traditional areas of local as well as distant telephones but also the advanced technology based services including the wireless communications, interne and satellites. The telecommunication is also involved in all types of entertainment. The cable TV services, which currently offer the high speed internet service in a reasonable subscription cost, helps to establish the relationship between the telecommunication and cable sector. This has become a complicated process as the traditional telecom firs are now offering television with internet connection to compete with the direct cable companies, in order to entertain more dollars. Consequently various authorized organization, who monitor the telecommunication industry apply their own way of estimating the total revenue by their own thoughts of including the sector in to account. There were approximately 5.9 billion wireless subscriptions worldwide in November 2011. The international telecommunication union has estimated 1.16 global landlines at the end of 2011, which has little decreased from 1.21 in 2009. As a reason, the wireless subscription has been increased a lot in this year. The number of sales in mobiles handset of different companies has increased as per the standard of living has got higher than the previous years.

2.6 How naming strategy has helped brands:

According to Dawar and Philip (2008), there is a direct connection between the name and the market share of a brand. In a recent study conducted worldwide has cemented this fact, many respondents have said yes to mobile phone names which are thought to be up-to-date, creative, chic and easy to mouth (Doughty,2011).

In the year 2005, Samsung, LG and Nokia were at a marketing share of 15%. To make a change to their status, LG and Samsung decided to change the names of their product. Impact showed on the sales, share grew to 20%. On the other hand Nokia overlooked this and the market share fell to 9%.

According to Alvarez and Casielles (2008), the name game started with the famous Motorola RAZR in 2004. When the RAZR was first introduced in the US market, it garnered a share of 35% across. However, when LG and Samsung became cheeky and started introducing their own models with more innovative names, it was fall for Motorola.

In the words of Doughty (2011), Motorola lost out to its competitors because the current names of Motorola products are not up-to-date, creative, chic and easy to say.

According to Dawar and Philip (2008), LG models are what Motorola was earlier. Some of the names that the LG models sport, Chocolate, Vu and Voyager.

In the case of Samsung, the names had been easily remembered and unique. Names like Galaxy, Blackjack, Flip shot are catchy and creative.

In the whole list of cell phone players who have been toying with the idea of innovative names, Nokia is very much absent from the scene (Gary et al., 2012). Once a leader in telephone manufacturing domain, Nokia today is hardly considered an up to date phone. On one hand it lacks the software’s that can help it to step up to the stiff competition of Samsung, LG, HTC etc. Similarly the model names are also archaic and reflect the traditional thinking process in built in the organization (Jarzabkowski and Spee, 2009).

2.7 Conclusion:

In the words of Alvarez and Casielles (2008), any organisation or brand which is aiming to reach the top has to be aware of the needs of the people it is serving. In the case of Samsung these has worked to perfection. On the other hand a few of Samsung’s decision have caused a few troubles in the mind of the consumer. Launching S3 just after the launch of S2 was such an occasion (Gary et al., 2012).

By constantly working on the operating system and trying to present at all levels, Samsung has shown the kind of innovation they are trying out. In case of Nokia, there is no innovation, they are still sticking to the old OS of Microsoft when the world has moved to android (Bingham and Eisenhardt 2011).

Chapter3: About Nokia

3.0 About the company:

Nokia Corporation is the largest telecommunication device manufacturer across the world. The business of this company has largely spread in all areas to support the customers need and a constant growth of the telecommunication industry. The company also has other product such as, voice telephony, ISDN, broadband access, professional mobile radio etc. The company provides a number of mobile communication equipments and the protocols including GSM, CDMA and WCDMA. The offerings of the corporation contain basic and high end mobile devices, telecommunication network equipments and related services. The other major subsidiaries of this company are NAVTEQ, which is known as the provider of digital map and related location based content and services and Symbian, the developer and licenser of open source operating system for the mobile devices. The primary operation of this corporation had in Asia and Europe. It has it’s headquarter in Finland and about 126000 people are working in this organization around the world [Available from: http://www.nokia.com/global/about-nokia/about-us/about-us/ 24th February 2013].

3.1 Strategic management of the company:

3.1.1 PESTLE analysis of the company:

According to Bearden and Teel (2007), the PESTLE analysis helps to determine the external forces of the company that control various strategic decisions. This model looks into the Political, Economical, Social, Technological, Legal and Environmental factors relating to Nokia and the industry it operates in.

Political:

The political factors refer to the instability of government and its rules and regulations that the company has to follow. As in recent years, the company has moved its manufacturing segment to India, Nokia has to follow the business rules and regulations to maintain its stability in his country. According to McEvily et al. (2009), it is crucial for the company to look for the minimum wage and maximum hours a week the employees can work as well as the health and safety regulations. This is to avoid the negative feedbacks from the employees that can hamper the reputation of the company.

Economical:

Nokia has a vital role in the economy of Finland as it currently occupies a third of the whole market on Helsinki Stock Exchange. The organization is important for the Finland economy that the government has announced jobs for the sacked people of Nokia at the time of recession. Besides that, as the business is getting larger, the company needs to be aware of the exchange rates. Otherwise it affects on the financial operation of the business. The interest rate is another vital factor to consider maintaining the cost of borrowing in both the long-term and short-term.

Social:

As Nokia mainly operates in the western countries, the company has to understand the social factors of this market. The most important factor it needs to understand is the culture of the society. The culture of the society states that the most updated fashion is the key factor that helps the business to grow. Therefore, the consumers always look after more innovative and good looking smart phones as per the trend of the society (Marinova and Singh, 2008). This trend pushes the smart phones more to the customers than the other standard. As a result, Nokia has concentrated developing smart phones to compete with the rival products of Samsung and Apple.

Technological:

This is the most important area as the whole industry is based on technology. As the competition on technological innovation rises over time with changing behaviour of the customers, Nokia needs to ensure their technology to be best in this industry. It is also necessary to include other functions in smart phones besides camera, internet, and email facilities to stand out from the rivals. Nokia must consider its position in industry as it decline due to existence of its rival groups. Therefore, the strategic alliance of this company with Microsoft seems to be best initiative to increase technological capabilities in the products of Nokia.

Legal:

The legal issues are considered to protect the right of the product and its technologies. In the telecom industry, it is difficult to differentiate the product from other companies. If the company release any product with innovative technologies, then company requires to protect the rights through patents, trademark, and copyright to ensure the uniqueness of its technology. Nokia can also consider the other legal issues like, employment laws, trade restrictions, health and safety issues as the company has various plants in different countries with different rules and regulations.

Environmental:

It is important in recent culture to show the environment friendliness and ethical correctness for the organization (Erevelles, 2008). In the current declining environment, the company needs to ensure that hey operates in appropriate manner. Mobile recycling makes the company more popular as battery disposal is an important to reduce the harm in environment as well as human life.

3.1.2 SWOT analysis of the company:

As demonstrated by Gary et al. (2012, p 1240), "The SWOT analysis deals with the acronym for the internal strengths and weaknesses of the organization and the external or environmental opportunities and threats that the firm faces over time". A wide utilization of the technique helps he mangers of the organization to create a quick overview of its strategic position of the company. This assessment method is dependent up on the assumption that the effective strategies can be derived from the relevant position between the internal and external resources. A good fit between this two factors help the organization to maximize is strengths and opportunities as well as minimize the weaknesses and threats (Hatch and Schultz, 2008). An accurate implementation of this assumption can obtain a powerful strategy of the organization.

Strengths:

Nokia is the largest producer of cell phones having world’s largest network of distribution and selling, compared to the other mobile phone companies. It is the name of the brand with creativity, innovation, durability and reliability as the business is a long run business as compared to the other telecom organizations. A high quality and professional team of HRD department makes a strong support to this business to sustain long run profitability between competitors (Lorenzoni and Lipparini, 2009). The financial aspects of this company are very strong as it has many more business across the world. As a result, it has achieved a good financial position with higher return on equity, higher return on assets and higher net profit margin. A wider range of products for all classes, the user friendly operations of the devices and a strong R&D facility makes the corporation highest selling mobile phone company. The re-sell value for its products is also higher than the other companies.

Weaknesses:

There are some weaknesses also into the products and strategies of the company. The prices of the products are not set according to the value of the products. Some of the products like, N97 are not so user friendly to operate for all the customer whereas, I phone from apple is easier to operate with higher quality. According to Jarzabkowski and Spee (2009), the company is not concerned about the lower class people. As a result the products of lower price are less stylish than the other products of Nokia or the other companies like, Samsung and Apple. Still here is no targeting promotion towards them. Price of the product is a major issue that average number of handset has been priced higher whereas, the same feature in other phone like Samsung has lower price with user friendly operations. The customer relation is also another issue as the company has a very smaller number of service centres especially in India. Another weaknesses are low voice quality and heavy handsets.

Opportunities:

Nokia has a large opportunity to expand its business with the help of its wider range of products, having different features and various price range different economic zone. By accepting the opportunity of Telecom Penetration in India the company can increase its sales with its market share. As the standard of living has become high, the company can capture the right customer at the right position by providing advanced technology like 3G and edge market. Quality improvisation in mobile camera can be the area of capturing the market of cell phone. Nokia can go for promotion of another product named mini notebook to increase its sales. The alternative product of Samsung has already in the market that has generated huge number of sales. The another opportunity of the company to expand is business is to utilize its joint venture with Siemens of Germany and the potential demand of the product in Bangladesh, China, Pakistan and India (Lavie1 et al. 2012).

Threats:

Nokia has many threats to handle the existing position of the company as the market leader as the options are becoming more complicated in the choice of handsets due to the craze of new styles of china mobiles. The major threat for this company is emerging of other mobile companies like Samsung and Apple. These can provide stylish handsets, having higher quality with lower price and the customers are satisfied with these products as the operating system, used in this are user friendly to the customers. As opined by Lindberg-Repo and Gronroos (2008, p 230) "After sale service is another aspects that has been proved to be a major threats for Nokia". The growing demand of WLL network can be the reason to drop the sale of Nokia mobiles as Nokia provides many less CDMA phones to the customers. Some specific models have strong competition with the handsets of Nokia. As example the N97 has its competitor, I phone from the Apple company. The Iphone is easier to use than Nokia N97 and I phone is cheaper than N97 whereas, the features of both the phones are same.

3.1.3 Internal Analysis:

Kotler and Armstrong (2008) have stated that the internal environment analysis helps to identify the factors within the organization, responsible to make advantages and disadvantages. The related areas are as follows:

3.1.3.1 Resource Audit:

Human Resource:

The human resource refers to the account of all skilled and unskilled employees of the organization (Perry et al. 2009). As the nature of technology of this company provide proper raining to all the staffs, in order to keep the updated, this means the company always hire and works with the skilled staffs. This may affects the profitability of the firm at the time of recession and economic downturn. In this time, Nokia has incurred losses and thus decided make 1000 of its employee’s voluntary redundancies. As a reason the sales revenue of this company has decreased as the mobiles of Samsung and Apple has increased its sales and capture a part of Nokia’s market (Oulasvirta et al. 2007).

D:\TANUMOY\February\EHRR882 dissertation\research\6-4fc9053766.jpg

Figure 4: Human Resource of Nokia

(Source: Javalgi, R. and White, D.S., 2007, p 580)

3.1.3.2 Physical Resource:

The physical resources refer to the tangible assets of the company such as, land, building, equipments, machineries and factories across the world. Nokia is a wealthy company from the perspective of the physical resources as the business has a large spread all over the world. The headquarter of this company is situated in Finland but its branches are in many countries. The company has recently taken an important step towards cutting the production cost by establishing is other production plans in India and China.

3.1.3.3 Financial Resource:

The financial resources of Nokia have received a blow by the current market with a higher profit margin hat has been shown in the following diagram. There is a drastic downturn in the sales of the company from 12660 million EUR in 2008 to 9274 million EUR in 2009.

D:\TANUMOY\February\EHRR882 dissertation\research\7-62e089d558.jpg

Figure 5: Net Sales of Nokia

(Source: Brennan, M.J. and Subrahmanyam, A., 2009, p 445)

3.1.3.4 Intangible resources:

The trademarks are the resources that worth the organization a lot. Nokia has a very strong branding between is competitors. This brand image helps the company to retain its loyal customers by making the company as the trend setter in the telecommunication industry.

3.1.4 BCG Matrix:

The word BCG refers to the Boston Consulting Group. The BCG matrix helps to measure the long term viability of the company and the profitability of the products as well as the market share (Patel e al. 2009). Here the vertical axis is considered as the market growth and corresponding horizontal axis is considered as relative market share of the company in case of different products and services. There are four categories that are included in this matrix.

Problem Child or Question Mark:

The problem child or the question mark is the product that has high market growth with low relative market share. According to Greenley and Bayus (2007), this refers to the newly launched products. At the time its promotion the products have low relative market share but due to the customers’ changing attitude the products achieve higher market growth and thus the potential to be star. In case of Nokia, the N-series smart phone N96 had high market growth accordingly it struggled to capture the market.

Star:

This refers to the product with both the high market growth and relative market share. The 1110, 1110i and 3110classic has played vivacious role in this category. These handsets have captured the high market growth with high relative market share by creating demand and huge number of sales. The Samsung metro series phones and I phones of apple are also under this category.

Cash Cow:

The products, which are in mature market with slower demand and large market share is called as the cash cow. These types of products can generate huge cash for the company (Bearden and Teel, 2007). For the Nokia N95, the product has reached to its market demand but died away because of the new technology, introduced by its competitors.

Dog:

The dog defines those product ha has low market growth with low market share. These products can be died away any time due to its characteristics. The E75 mobile of Nokia, the high price and competitive strategies has resulted the turnoff of this handset as the blackberry mobiles are main competitors of this set.

Figure 6: BCG Matrix

(Source: Dawar, N. and Philip P., 2008, p 85)

Figure 7: SWOT Analysis

(Source: Boulton et al., 2009, p 30)

3.2 Evaluation using BCG and SWOT:

The above diagrams sates about the relationship of BCG and SWOT analysis of Nokia. The strength of the company supports he Stars as all the strong characteristics are present in this handsets. The Cash Cows are the main weaknesses of Nokia. The N95 and 3300 models have generated huge cash from market. But, it died away because of less stylish and heaviness for 3300 and complexity in operations and technological advancement for N95. The problem child refers to the products that provide the opportunities to grow. Nokia N96 and 2700classic have the higher market growth as the technological advancement like camera quality, connectivity, application software etc. This type of sets has the potentiality to capture the market in a hard competition. On the other hand, the E75 handsets are termed as dogs as there are major competitors to compete with the company. These sets are higher in price as other companies have similar product in lower price like Samsung.

3.3 Conclusion:

The chapter states about the various strategic management decision of Nokia and its impact on the sales of its products and other internal and external factors. For this business, i is necessary to manage the resources, strategies and other important factors by taking advantages of the opportunities of growth. It is also necessary to assess the threats and competitors to stay in the competition with its own position.

Chapter4: Methodology

4.0 Introduction:

The research methodology refers to the process of conducting the research to focus on the problem figures in an efficient manner. Research methodology is all about the way of conducting the whole research. The methodologies are dependent up on the objectives that the author has pointed out to reach to a desired conclusion. The purpose of including this chapter in this project report indicates the importance of his chapter towards the whole research. Without an appropriate method, it is not possible to find out a suitable path to reach to the desired objectives. His chapter also provides the justification behind selecting the particular methodology because of the research background and the rationale, discussed in previous chapter. The researcher has conducted this research to know the technological position of a well-known telecom company, Nokia, compared to its two major competitors, Samsung and Apple. The author also discusses the impact of the technological choice of the company to its operational as well as financial performance. The current chapter justifies he selected methodology to solve the problems, the company faces in terms of its technological faults.

4.1 Methods Outline:

As opined by Brannen (2009, p 8), the method outline explains the basic structure of the methodology chapter, along with all the elements of the methodology, used in this chapter. The topic of this research is ‘how has Nokia’s choice of technology affected its performance in relation to its competitors’? The researcher has selected relevant methodology, compared to the topic. Matching with the topic, the researcher has chosen positivism and interpretive philosophy, approach and design. Both the primary and secondary sources are used to collect data for the analysis purpose. Here, the secondary data are collected from secondary sources like journals, books and websites. Fifty people have been taken as the sample size while conducting the research. The researcher has also followed different ethical issues, in order to establish the reliability of the collected data.

4.2 Research Onion:

The research onion is basically the transparent picture of the research methodology as a whole. According to Saunders et al. (2009), the research onion helps the author to frame the way of conducting the research with a sophisticated method and suitable strategies. Each layer of the onion describes each section of specific research methodology. Using each of the layers in this study, the author can answer each of the research questions, related to the research objectives. The following diagram shows a research onion, along with its every layer into it, in order to get detailed idea about the methodology of conducting the research.

F:\Powerpoint\pe_uk\PE083-Saunders\Final_Files\Gif\ch04\C04NF001.gif

Figure 8: Research Onion

(Source: Chend, J., 2008, p 78)

4.3 Importance of research onion for the current study:

The research onion is very necessary to understand, in order to reach to a feasible conclusion. The position of each layer indicates the way through which research has been conducted. Unfolding of the layers shows the completion of selecting each method successfully. It helps to choose appropriate philosophy, approach and design to carry on the study towards the ultimate goal. Here, the research onion is important to understand technological description of Nokia to correctly evaluate its performance, relative its competitors. The research also needs to analyze the impact of those technological applications on the overall performance of the company. Simultaneously, the researcher needs to identify the areas or the technological faults that results downturn market share, the company faces within industry. The innermost layer is data collection and analysis. This means without choosing appropriate philosophy and design, it is not possible to collect relevant data as well as analyze it. Therefore, difficulties can come to reach to the primary objectives without going through this research onion.

4.4 Research Philosophy:

Research Philosophy comes in the first layer of the research onion that helps to predict the possible research techniques at its initial stage. The researcher needs to choose an appropriate philosophy to get idea about the impact of the technology, selected by Nokia on the performance of the company, related to its competitors. It refers to the perspective of the researcher towards the research as a whole. An appropriate philosophy is necessary to choose to gather, analyze and utilize the data to draw a suitable conclusion, related to the objectives. The three major research philosophies are Epistemology, Ontology and Axiology.

Epistemology:

According to Johnson et al. (2007), the epistemology refers to the truth of the theory. It helps to convert the theory, which is believed to be true into the theory, which is known to be true. It questions about the nature and scope of knowledge. The Epistemology has three major perspectives: Positivism, Realism and Interpretive.

Figure 9: Epistemology

(Source: Nicosia, F. M. And Mayer, R. N., 2009, p 69)

As opined by Ellis and Levy (2009, p 327), "The positivism philosophy emerges in response to the inability to speculate the philosophy, in order to solve the problems that have arisen as the outcome of scientific development". This philosophy claims not to be metaphysical philosophy that modelled the empirical sciences by providing them an appropriate methodology.

Under the Interpretive philosophy the focus of the research is more the people rather than the objects. Most of the researches on the social sciences follow this philosophy as the interpretation of the respondents’ answer is necessary for those studies. As per the belief of his philosophy, the reality can be understood only through the subjective interpretation.

The realism philosophy refers to the operation between two extremes of positivism and interpretive approaches of philosophy. This is a scientific approach to develop the knowledge about the subject on which the research has been conducted.

Ontology:

As demonstrated by Morgan (2007, p 50), "the Ontology analyzes the reality and compares it with the assumptions of the researcher". It means the Ontology helps to relate the nature of the reality that whether the assumptions of the researcher have really existence to relate with the fact of the research study. This philosophy is also here types named Subjectivism, Objectivism and Pragmatism. The Subjectivism states that the creation of social phenomenon comes from the perceptions and actions. As per the Objectivism, the social entities have existence in reality external to the social factors. The Pragmatism emphasizes on the research question as a fact and treated as the most important determinant of philosophy in current research.

Figure 10: Ontology

(Source: Omar, O. E., 2007, p 59)

Axiology:

The Axiology philosophy deals with the research problems in terms of the value and process. It focuses on individual’s belief, principles and values about the research topic. Most of the society related problems and the studies on social sciences follow this philosophy.

4.5 Justification using Positivism and Interpretive:

The researcher has chosen mixed philosophy of Positivism and interpretive. The Positivism philosophy has been chosen as the current research is based on the fact. Here, the researcher has collected the fact about the technological choices of Nokia that influence its performance relating to its competitors. This philosophy helps the researcher providing a clear view of outcomes of the research study to analyze whether the whole research can able to generate positive result to the industry or not. To know the impact of the technological implementation on the operational and financial performance of Nokia, the interpretation of the problem statements is necessary in terms of the individual opinion and knowledge. The current research helps to determine the consumers’ attitude towards the product of Nokia and its competitors like Samsung and Apple. Here, the researcher has considered the people to understand the consumer behaviour, in order to draw a subjective interpretation. Therefore, the Positivism and Interpretive philosophy are appropriate to conduct this social research.

4.6 Research Approach:

The second layer of the research onion refers to the research approach. Inductive and Deductive are two basic approaches, used in the research study. Brannen (2009) has stated that the Inductive approach goes through observation, data collection, data analysis through statistical and financial tools and development of theories relating to the research topic. On the other hand, the Deductive approach follows theory selection, hypothesis testing, implementation of relevant tools to evaluate the findings and confirmation of selected theories, as opined by (Lancaster, 2012). The Inductive approach is theory development whereas; the Deductive approach is theory confirmation or theory improvement.

Research Approach

Inductive

Deductive

Figure 11: Research Approach

(Source: Culpeper, R., 2009, p 15)

4.7 Justification of choosing Deductive Approach:

The researcher has chosen the deductive approach to implement the theoretical evidences mentioned in second and third chapter. The theories are implemented to develop various tests on the collected data with the help of different statistics and financial tools, which develop the findings and therefore the discussion and evaluation of those findings. The deductive approach helps to explore the known phenomenon regarding the technological development, in order to perform better in further years. Going through this approach, the existing theories are confirmed. Therefore, the selected approach is appropriate for the current research.

4.8 Research Design:

The next layer of the research onion is research design. The research as a whole helps he research to draw the design of the research (Cameron, 2009). The design of the research depends on the primary objectives and characteristics of the research. The exploratory, explanatory and Descriptive are three main research design, applied in most of the research. The exploratory design helps to obtain background information of the study, in order to identify the problem statement by explaining the theoretical terms. Burns et al. (2008) has stated the explanatory design as a tool to focus on the reasons of the problem identified. On the other hand, the descriptive design helps the researcher to establish the relationship between the findings with the research questions and the primary objectives of the current research (Crouch and Pearce, 2012).

Research Design

Exploratory

Explanatory

Descriptive

Figure 12: Research Design

(Source: Yajun, H., 2008, p 100)

4.9 Justification using Exploratory design:

The researcher has used the exploratory design for this research. As a reason, this method is appropriate to identify the problem statement with the help of background of the company and its historical performance. This design helps to explore the competitive result of the company and it tries to establish new concept to improve the technology. The application of new technologies can fulfil the customer requirements in order to attract the new customer, along with its existing customers. As a result the profitability of the company can be increased to improve the overall performance of the company, compared to the competitors. The exploratory design refers to attaining the information by both the direct and indirect observations (Cameron, 2009). Therefore, the exploratory design is appropriate for this research to draw conclusion by exploring the background information about the company as well as the industry, with the help of analysis of collected data.

4.10 Data Collection Process:

The data are collected for the analysis purpose. The two major data collection process are primary data collection and secondary data collection.

Figure 13: Data collection process

(Source: Weimin, H., 2009, p 210)

4.11 Justification behind selected method:

Here the researcher has collected the secondary data only to analyze the scenario of the company.

The researcher has collected the secondary data to draw suitable findings after analyzing those data. These data are analyzed with the help of various financial tools like ratio analysis, simple percentage analysis etc. Internet and other commercial websites such as, company websites, topic related websites rate the major resources that the author has taken under consideration for the secondary data (VanderStoep and Johnson, 2009). Moreover, the researcher has also gone through different books, international journals, company annual reports and various related articles to gather the concept about the telecom industry and its current position from the perspective of technological development. The annual reports of the selected companies are gathered to assess the financial performance of the main company and others as the competitors, in order to compare the financial position and its reasons.

4.12 Sample Size:

Here, the author has undertaken a well reputed telecom device company Nokia as the main purpose of analysis and two other mobile companies, Samsung and Apple are take as the competitors of Nokia. The competitors are taken to compare t