VS
Nokia started from humble beginnings in1865, in Finland as a single paper mill
operation, Nokia found and nurtured success over the years in a range of industrial
sectors including cable, paper products, rubber boots, tires, televisions and mobile
phones.
The first GSM call was made in 1991 using Nokia equipment. By 1998, Nokia became
the best-selling mobile phone brand in the world.
In 2003 Nokia introduced the first camera phone and continued thriving in the market
for a number of years.
Nokia's main product was mobile phone and it has a wide range in its product
portfolio including over a hundred devices.
It targets all customer segments, has a wide range of price variations from the
lower price group to the higher price group depending on customer's positions and
needs.
Nokia uses a variety of promotion strategies involving above the line and below the
line methods, public relations, celebrity endorsements, etc and always emphasizes
their well-known slogan "connecting people" to build relationships, bring people
together, to collaborate and communicate.
Nokia doesn't contact directly with consumers but uses some
distributing channels to reach the customers and sells their
devices through the mobile service operators such as
Vodafone, T-mobile; and independent mobile phone retailers
like Simba Telecom in Uganda.
In 2018 Nokia came with the new feature phone and flagship
smartphone and also launched many devices
like Nokia 1, Nokia 4, Nokia 7 Plus, Nokia 8.
In 2019, HMD, the maker of Nokia-branded smartphones,
announced five new mobile phones at Mobile World Congress
(MWC) 2019 in Barcelona. In this update List, Nokia
unveiled Nokia 210, Nokia 1 Plus, Nokia 3.2, Nokia
4.2 and Nokia 9 PureView.
SWOT ANALYSIS OF NOKIA
STRENGTHS WEAKNESSES
•Experience User friendliness •Some products flopped, e.g. The E series
•Strong financial support for R & D •Less stylish in low priced products
•Large network of selling & distribution •Market skimming prices of high sets
•Wide range of products for all classes
•Durability
•Global Expansion
OPPORTUNITIES THREATS
•New growth markets •Samsung and Iphone
•Well designed and styled sets •China mobiles
•Increase their presence in 4G & edge •Cheap & wide range models from various
market Smartphone manufacturers
•Improvise on quality of camera
•Mini notebooks
HISTORY OF SAMSUNG
Samsung is a South Korean company that is one of the world’s largest producers of electronic devices. Samsung
was founded as a grocery trading store on March 1, 1938, by Lee Byung-Chull. He started his business
in Taegu, Korea, trading noodles and other goods produced in and around the city and exporting them
to China and its provinces.
During the 1970s the company expanded its textile-manufacturing processes to cover the full line of
production—from raw materials all the way to the end product—to better compete in the textile industry.
Samsung first entered the electronics industry in 1969 with several electronics-focused divisions—their first
products were black-and-white televisions. During the 1970s the company began to export home electronics
products overseas.
The late 1970s and early ’80s, witnessed the rapid expansion of Samsung’s technology businesses, with the
first mobile phone being manufactured in 1988.
In the 1990s, Samsung continued its expansion into the global electronics markets and climbed into top-five
positions in global market share.
The 2000s witnessed the birth of Samsung’s Galaxy smartphone series that frequently topped annual lists of
the best-selling smartphones in the world. Since 2006, the company has been the top-selling global
manufacturer of televisions.
Beginning in 2010, the Galaxy series expanded to tablet computers with the introduction of the Galaxy Tab.
SAMSUNG SWOT ANALYSIS
STRENGTHS WEAKNESSES
• Strong global brand tied to consumer • Dependence on Android OS
electronics
• Lack of a competitive comprehensive
• Semiconductors and electronics platform for hardware, software, and
manufacturing expertise services
• Synergistic support among divisions or
subsidiaries
OPPORTUNITIES THREATS
• Strategic partnerships with software • Competition, especially in the
developers and online service firms. consumer electronics industry
• Business growth through product • Imitation of consumer electronics
development products
• Business growth through diversification • Legal restrictions and lawsuits
THE DECLINE OF NOKIA
While its journey to the top was swift, its decline was equally so, culminating in the
sale of its mobile phone business to Microsoft in 2013.
According to a book authored by Yves Doz, “
Ringtone: Exploring the Rise and Fall of Nokia in Mobile Phones”, Nokia had begun to
collapse from within well before any of these companies entered the mobile
communications market.
Between 2001 and 2005, a number of decisions were made to attempt to rekindle
Nokia’s earlier drive and energy but, far from reinvigorating Nokia, they actually set up
the beginning of the decline.
In 2004, Nokia was restructured into a matrix structure. This led to the departure of
vital members of the executive team, which led to the deterioration of strategic
thinking.
In the consecutive years, Nokia was trapped by a reliance on its unwieldy operating
system called Symbian. While Symbian had given Nokia an early advantage, it was a
device-centric system in what was becoming a platform- and application-centric world.
Nokia’s decline in mobile phones was caused by poor Management decisions,
dysfunctional organisational structures, growing bureaucracy and deep internal rivalries
all played a part in preventing Nokia from recognising the shift from product-based
competition to one based on platforms.
THE RETURN OF NOKIA
A new CEO was installed, following the exit of the previous CEO in 2010. The
alliance with Microsoft was announced and market capitalisation declined by
50 percent between January 2011 and January 2012.
By pegging future actions to objective performance data rather than making
them subject to later discussion, directors reduced the biasing role of
emotions in planning the next strategic steps.
Microsoft offered to buy Nokia’s mobile phone division and in September
2013, the deal was completed in 2014 for US$7.2 billion. Concurrently, Nokia
bought back the joint venture Nokia Siemens Networks (NSN).
Nokia’s recovery was due to a wholesale strategic shift towards
telecommunications networks, culminating in the US$16.6 billion acquisition
of Alcatel-Lucent, a deal completed in 2016.
An acquisition strategy focused on creating the
industry’s leading global, end-to-end 5G portfolio
HMD Global is a Finnish start-up that was launched in late 2016 following a
complicated story of naming rights, patents and product lines drawn from
Nokia, Microsoft, and Foxconn.
HMD announced its debut phone, the Nokia 6 towards the end of 2017.
In October 2018, Nokia announced plans to accelerate strategy execution,
sharpen customer focus, and maintain long-term cost leadership.
Nokia’s operating profit rose 12 percent to 1.12 billion euros ($1.29 billion) in
the fourth quarter of 2018 .
While about 90% of the company's sales come from network equipment that
brought in a profit increase of about 7% to €1 billion ($1.2 billion/£842
million), licensing payments on Nokia patents are highly profitable, and the
company has recently struck licensing deals with all the main handset
makers.
The company holds a significant share of essential patents relating to GSM, 3G
radio and 4G LTE technologies, many of which were developed back when the
company dominated the mobile handset business.
Samsung is a multi-national company with 56 world wide subsidiaries.
Samsung operates in three major markets - electronics, engineering and
chemicals - and employs people in more than 60 countries.
Because Samsung operates in so many product and market areas, it combines
all its expertise, technology and facilities in order to improve product
development. This is known as ‘synergy’.
It is a vertically integrated company, controlling all phases of the process,
from raw materials through to manufacture, the retailer and the customer.
Samsung increases general brand awareness through corporate sponsorship,
lending its support to such events as the Samsung Open tennis tournament, in
addition to other above the line and below the line techniques.
Samsung’s generic competitive strategy and intensive strategies for growth
are suited to the current business environment and the strategic positioning
of its operations as a MNE namely broad differentiation; market penetration,
new product development, market development and diversification.
STRATEGY
Porter’s 5 forces model is used to analyze the global memory chip industry and Samsung’s strategy
to date has been able to increase the gap from other competitors in terms of technology and
market share by following the strategy below:
1. Samsung Electronics had maintained its technology leadership by outspending its rivals.
which was possible thanks to the Samsung group’s diversified portfolio that allowed it the take
calculated financial risks.
Samsung was able to create and maintain technology leadership it was able to earn a very high
premium at the initial stages of a new product to recover its initial investment and if
competitors began producing the same product it could aggressively lower prices to make it
difficult for followers to stay in the competition.
2. Samsung developed the classification of broad product differentiation to provide unique products
targeting a wide market, like:
Frontier
Legacy: Current products, potentially manufactured using technology
Specialty: Products to target niche markets
3. Cost advantage - Samsung was able to command better operating margins as compared to its
competitors because of :
Cheap labor
Use of new design rules
Better sourcing
Lower depreciation costs: By collocating and scaling its fab investments, Samsung saved an
average of 12% of the fab construction costs.
4. Price advantage - Samsung was able to command a higher average selling price as compared to its
competitors.
Ability to offer customized memory chips that no other manufacturer could offer allowed them to
command premium pricing on these products
Better quality control that lead to reliability enabled Samsung to obtain an average price
premium of 1% average price
5. Human resource policies - Samsung was able to maximize its advantages in technology by creating
a company culture that was unique to Samsung.
Talent hiring: Samsung actively recruited the best global people
Talent development Sponsored employees to gain further knowledge by sponsoring their MBA/PhD
studies Merit based promotions to motivate new hires Foreign assignments to develop global skills
Talent retention very generous benefits package allowed the employees to focus on work
Performance and productivity based profit-sharing incentives Tolerance for mistakes how
Samsung is able to use its capabilities relating to manufacturing
Samsung develops phones with innovative designs, which are deliberately positioned in the
medium to high end of the market.
Samsung is so much more than a smartphone-maker. It is a conglomerate, a manufacturer,
and the world's largest chip-maker.
Samsung is currently the world's largest technology company by revenue and is better than
anybody else at learning from its competitors.
Rather than just providing a cheaper and lesser iPhone, it's differentiated itself with larger
screens, different features, successful marketing, and delivering what consumers want.
Samsung's research spend is 5.7 percent of its revenue, compared to 2.4 percent for Apple.
Samsung is very much a Korean company, and has been, at times, accused of being overly
hierarchical and dominated by its founding family.
Samsung reported its worst net profit in more than two years, hit by both memory chip and
display panel prices. Net profit dropped 57 per cent from 2018 in in the first quarter and
sales fell 13.5 per cent.
The two main factors in Samsung’s poor performance are identified as “lackluster demand in
the memory business” and intensifying competition in the smartphone business from the likes
of Huawei and Xiaomi.
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