Strategic Issues for Nokia

Nokia

Strategic Issues for Nokia

Nokia has been particularly successful in its ventures in the developing world. In its development, the developing world has 'leapfrogged' over the creation of landlines, going straight from inefficient communication systems to modern wireless providers. Nokia quickly adapted to these markets, shifting to a pre-paid card model and emphasizing services like text messages, which were cheaper than phone calls for many residents. Nokia notes that while Apple has been successful in the high-end market, suiting the customized needs of American consumers, it has been successful at democratizing the Smartphone. Nokia does not offer inferior technology; rather it offers the best technology consumers can afford.

Nokia's challenge is to be a competitive business in a competitive mobile phone market while selling to the poor. It must keep its costs low, but also keep its product quality high. This has been difficult, given that many of its component manufacturers have not been equally successful in sustaining such a business model in the developing world. China and India accounted for 20% of its revenue, but Nokia must find partner companies to sustain it if it wishes to build a deeper infrastructure within these two nations. Given the rapid expansion of the middle class, Nokia should continue to cultivate joint ventures with local entities in the burgeoning commercial market. China and India's economies have been less-hard hit by recent economic crises than other major economic powers, and it is critical that Nokia sustain its first-mover advantage in these markets. While its European sector should not be ignored, the growth potential is far greater in the Pacific Rim nations. Untapped consumers in Asia have less recourse for other venues of communication.

Another critical issue is the expansion of services for Nokia. The company that offers the most diversified services through its phones is Apple. Apple does not compete on price, but it does compete on quality and innovation. Even though Nokia has positioned itself primarily as a value-based company, it cannot ignore Apple's dominance of music, location trackers, and messaging. Consumers are growing more affluent in Nokia target regions, and without offering something comparable to Apple, it may still lose business and perceptions of 'quality.' With this in mind, Nokia has acquired companies to expand its offerings in the GPS and music-based segments of the mobile market.