Information On Telecom Market

Published Date: 02 Nov 2017

Abstract:

The following research is based on the different areas of Nokia and its technological choices o evaluate the overall performance of he company, as compared to its competitors. The researcher has mainly focused on the areas that are needed to examine, in order to assess the sustainability of Nokia by taking relevant and appropriate decision about the technological choices. The areas that are taken into account are SWOT analysis, BCG matrix, liquidity, profitability, investment, asset management, sales revenue and other internal and external factors like, human resources, financial resources etc. The author has also explained the concept of the tiopic and its related theories that can be applied to the company to come ou from the problem areas to make a sable position in the competitive market. The author has used mixed philosophy and quantitative data analysis to evaluate the current as well as previous year’s financial position of the organization with the help of relevant secondary data collected from reliable sources. The researcher has also taken relevant approach of this research to match the objectives of the study to the ultimate conclusion. From the analysis of the collected data, it is clear that the poor financial position of Nokia has been caused for the technological advancement of the competitors of this company and other inefficient management of the various financial and non-financial areas that are to be watched carefully, in order to avoid unexpected losses and downturn profitability. Nokia can go for other attractive policies that help the organization to recover the inadequate position of Nokia.

Acknowledgement:

I would thank my supervisor to have provided me the opportunity to work on the research study that is based on the "how has Nokia’s choice of technology affected its performance in relation to its competitors"? I would like to thank my friends and co-workers, who have helped me while conducting the research.

I would like to thank to Mr. ------------------------------------------------ to guide me in each step of my research study.

I would like to thank my parents for their moral and financial support. Last but not the least; I would like to thank my best friend. Without the constant help of my friend, it would have been impossible for me to complete the research in an appropriate manner.

Thanking you,

Yours Sincerely,

Chapter 1: Introduction

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 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), the telecom industries have diverted from their core operation of telephoning and texting to a broader concept of network development. 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).

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. 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). It represents a wide range of consumer acceptance for the touch screen device.

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. 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 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. 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.

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, the 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:

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. 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.

Second chapter explores the existing theories and concept relating to the technological choices and strategies that impact on the performance of the company. 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.

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.

Fifth chapter deals with the data analysis and findings from this analysis. 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 Seventh chapter 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.

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1.6 Rational of the study:

Consumer behaviour, especially the buying behaviour of the consumer is subjected to a constant change. 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.

1.7 Ethical Issues:

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. 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 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.

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).

Meanwhile Microsoft's Windows Phone launch has made barely a ripple, with the company's share of the market falling in every country as the last of its previous-generation Windows Mobile phones are phased out. Kantar's figures suggest that only 1m Windows Phone devices were sold since they launched - around half the number that Microsoft has repeatedly said have been "shipped".

"The key underlying trend is that Android is growing in every country," said Dominic Sunnebo, consumer insight director for Kantar. "Windows Phone handsets have had virtually no impact on the market; until Nokia starts to produce versions of them, I don't think that we are going to see anything, because there's no key reason why you could choose one over an iPhone or Android phone - those can already do everything you might want to do with a Windows Phone handset."

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.

Sunnebo warned that Apple faces serious dilution of its market share unless it expands its handset range quickly. "The lesson of Android is that if you release enough handsets, they are going to sell. It's hard for Apple to compete against that if they're only producing one new handset per year, especially when the growth in this market is among the low-end devices. Apple is profitable in the developed markets such as the US, but if you look into the future, at countries like Brazil, Mexico and Argentina, there's no way that they can get serious penetration there because of the import duties adding to the sheer cost of the phone (Oulasvirta et al. 2007). Places like that are where [Nokia's] Symbian is dominant, and that's where Android is getting to be dominant now."

Rumours have circulated for some time that Apple will try to expand its iPhone offering to take in low-end buyers, as it did when it expanded into the cheaper end of the digital music player market with its iPod mini in 2004. But at that time it controlled the music player market - a situation that doesn't apply with mobile phones.

RIM faces problems because the ASP (average selling price) of its handsets is falling as it tries to expand sales - which keeps revenues strong but cuts profits. "They've realised that they can't compete with Apple and they're struggling against Android," said Sunnebo.

Meanwhile Windows Phone faces a difficult transition period while it waits for Nokia to make its move, announced in February, to bury Symbian on smartphones and replace it with Windows Phone. The Guardian has forecast that Nokia will not be selling any Windows Phone devices before October, when Microsoft is expected to release a substantial upgrade to the OS, codenamed "Mango", with enhanced functionality that should put it on feature parity with iOS and Android's present capabilities.

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.

New figures provided exclusively to The Guardian by Kantar World Panel Comtech shows Nokia's market share for smart phones dropping from 10% to just over 1% in the US over the past six months, meaning it sold only about 160,000 top-end devices there. The story is the same for the troubled Finnish phone manufacturer in every country over a 12-month or six-month period, with a collapse in market share that bodes badly ahead of its quarterly financial results due this Thursday (Chend, 2008).

The story is no more encouraging for RIM, which according to Kantar has seen a huge fall in the number of sales in the US, the world's biggest Smartphone market. There its share has fallen from 32.5% in June 2010 to just 10.6% in March 2011, meaning that it only sold an estimated 1.4m devices there.

Apple is also being rapidly eclipsed by Android devices, though Kantar notes that the introduction in the US of its iPhone to the Verizon network provided uplift to sales, so that it actually increased its market share there (Perry et al. 2009). But in other countries, notably the UK, Germany, France and Japan, the iPhone saw double-digit falls in market share - which could mean that even if it is selling more phones, it is not growing the number as quickly as the market is expanding.

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).

Nokia is suffering dramatic falls in market share worldwide, and RIM has seen a calamitous fall in its US sales - while the Android mobile operating system is streaking past rivals in almost every developed country to become the dominant player everywhere.

Android, iPhone, and to a lesser extent, BlackBerry, are poisoned for substantial growth, while Nokia (though still the world leader), Sony Ericsson, and Motorola are on the decline. Of course, that’s not to say there’s no hope for them whatsoever in 2010 – Linux handsets saw a significant drop, but I could see the First ELSE doing a lot to popularize the platform, and Motorola stands to do very well once their huge family of Android handsets make the rounds. RIM maintains a firm grip on the second place for smart phone market share, and given Symbian’s slow and steady drop continues, BlackBerry could overtake them in time (Johnson et al. 2007). That, of course, is contingent on iPhone’s momentum slowing down, which seems unlikely at this point. It’s a little sad to see web OS making so little traction, but the smart phone world is getting quickly crowded, so someone will have to be shouldered out sooner or later.

Over the years when Nokia started losing market share to Android and iPhone, the argument has always been "but Nokia is still the largest smart phone manufacturer" or that "it still dominates the poor countries". Nokia have already lost their crown in smart phones last quarter to Apple and Samsung, and they’ve lost the smart phone OS crown with Symbian by the end of last year, when Android first surpassed Symbian. And they are quickly losing their market share in countries where they’ve been huge market leaders, like India.

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 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.

2.5 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.

The fact that Nokia have basically announced the death of Symbian themselves earlier this year because of the deal with Microsoft, the decline of Symbian has actually been accelerated. This has made the company weaker and weaker financially with each passing quarter (Yajun, 2008). They might find out that by the time they’re launching their first WP7 phone, they might not have enough money to push it strongly themselves.

One thing is for sure, even if Nokia succeeds in pushing WP7 to 20% by 2015, as predicted by Gartner (a claim which I find completely bogus and random), they would still own only a part of that, while the other manufacturers like HTC and Samsung will get the rest. So Nokia’s old days of being the largest phone manufacturer, and dominating the market, are not going to come back.

2.6 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.

Since Android clearly dominates smart phones now with about one out of every 2 smart phones being old around the world being an Android Smartphone, and since all feature phones are being replaced by smart phones, it’s pretty clear where all this is going for Symbian and Nokia. As opined by Culpeper (2009, p 15), "As smart phones are getting cheaper and cheaper, most people will end up buying an Android Smartphone from a company different than Nokia, and instead of Nokia’s less capable feature phones". It’s only a matter of time before Android replaces Symbian at every level.

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 (Nicosia And Mayer, 2009). 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 (Omar, 2007). 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.

2.7 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 are 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; today Nokia 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).

2.8 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 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.

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Figure 4: Human Resource of Nokia

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

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 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. 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). 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.

Weaknesses:

There are some weaknesses also into the products and strategies of the company. 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. 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. 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.

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.

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. 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. 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:

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Figure 5: Net Sales of Nokia

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

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. Kotler and Armstrong (2008) have stated hat the purpose of including this chapter in this project report indicates the importance of this 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 only the secondary research by collecting the secondary data. Here, the secondary data are collected from secondary sources like journals, books and websites. Three companies have been taken as the sample size while conducting the research. In this present research the researcher has applied the Meston model to analyze the collected data. The researcher has used the Meston analytical method, to compare the current situation and the performance of the Nokia Corporation with the main competitors, Samsung and Apple. According to Saunders et al. (2009), this helps the researcher to identify the lacking areas of the company that may be the strong part of the competitors. It also helps the organization to overcome the weakness and convert it to its strength by identifying the threats of the organization. The researcher here also used the regression analysis to display the current trend of the financial as well as non-financial performance, in order to forecast the future actions that the organization has to take for its better performance. The researcher has also followed different ethical issues, in order to establish the reliability of the collected data.

4.2 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 8: Data collection process

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

4.2.1 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.

4.3 Sample Size:

Here, the author has undertaken a well reputated 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 the financial and other circumstances of the competitors with the key company. All the companies are under the same industry. The selections are made on the basis of availability of information. The researcher has chosen annual reports of three companies during five years, in order to assess the trend of the performance of Nokia, compared to its two major competitors, Samsung and Apple.

4.4 Research Method:

The researcher has considered the quantitative analysis method to reach to its primary objectives. As opined by Ellis and Levy (2009, p 327), "The research is mostly interested to look into core competencies, innovations, customer offers and performance efficiencies by selecting secondary resources that helps to obtain more reliable data, having influence to the valuable research objectives". It also helps to find out the relevant answer to the research questions. It is very easier to evaluate the performance of the company with the numeric result by using trend analysis and some useful calculative tools. The quantitative analysis is important to identify the deficits of the company in terms of technological acceptances and the financial performance of the company, in order to compare the competitive position of the company with Samsung and Apple (Bernard, 2011). The tools that the researcher has used for the analysis purpose are:

4.4.1 Statistical Tools:

Here. The researcher has used the regression analysis to evaluate the trend of its performance in comparison of Samsung and Apple. Regression analysis helps the researcher to determine how sales of the product might be affected by investment in another field of business like advertising, technological improvements, short-term capital etc. The regression analysis helps the researcher to calculate how typical value of dependent variables changes over time at the change of any of the independent variables, remaining other variables same. Another reason of selecting the regression analysis for the current research is, this tool helps to fore cast the future position of the business by drawing the scatter diagram and calculating regression coefficient.

4.4.2 Financial Tools:

The author has used the financial tools to evaluate the financial background as well as the performance of the company. The annual reports of competitors have been taken for the comparison purpose. An appropriate comparison between two or more companies within an industry can help each of the companies as well as the industry to identify the faults they are performing without rectifying those errors. This can help Nokia to make more improved strategies, excluded the errors, to improve the quality of products and services, along with its overall performance. Here, the researcher has assessed the balance sheet of three companies within the same industry, in order to evaluate the capital resources of the company both the long-term and short-term basis.

4.5 Regression analysis:

Regression analysis is a statistical tool that evaluates the relationship between the variables. As demonstrated by Morgan (2007, p 50), "The regression analysis is used to predict the continuity of the dependent variables over the independent variables". The variables can be continuous or the dichotomous. The type of regression depends on the nature of the variables. The logistic regression is used in case of the dichotomous variables. The main objective of the regression analysis is to determine the values of the parameter taken under consideration to measure the trend of the collected data.

4.6 Ethical Consideration:

The researcher has maintained all the ethical issues while conducting the research. It is very important to verify the validity and reliability of collected data on the telecommunication industry as well as three telecommunication organizations. Without the valid data, it is not possible to generate a perfect visibility and genuine research result in terms of findings of impact of the technological choices of Nokia on its performance relating to its competitors. This is the reason why the researcher has collected data from academic journals, company websites and other valid online resources. The collected data are used only for the main purpose of the research. The confidentiality has been maintained while collecting the information from the secondary resources like journals, books and websites. The author has also maintained appropriate referencing style with a proper manner, in order to make the research more reliable and valid to the readers. Website links have been used for the direct referencing purpose. Therefore, the collected data are valid and reliable.

4.7 Chapter Summary:

The chapter provides an overview of the research design, methods, approaches and techniques in detail. The above mentioned methods are applied to gather the information to interpret and analyze the collected data. He researcher has tried to find out the current performance of Nokia, compared to Samsung and Apple, which is evaluated with the help of the technological choices of Nokia, made during the current years. To assess the financial and technological position of the company, the author has chosen the secondary data, collected for the quantitative analysis purpose only. The secondary data are collected from the secondary resources like, books, journals, company websites and annual reports of three mobile companies. The data are analyzed on the next chapter.