Expansion Strategy for Nokia

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Expansion Strategy for Nokia

  1. 1. Emerging on Top<br />Corporate Strategy for Nokia<br />Saturday, March 19, 2011<br />Daniel Rodic, Josh Xu, MarazRahman, Michael Le<br />Rotman Commerce Consulting Association<br />
  2. 2. Agenda<br />Saturday, March 19, 2011<br />Corporate Strategy for Nokia<br />2<br />Executive Summary<br />1<br />Developing Market Strategy<br />2<br />Developed Market Strategy<br />3<br />Risk & Mitigation Plans<br />4<br />Implementation & Key Takeaways<br />5<br />
  3. 3. Executive Summary<br />Corporate Strategy for Nokia<br />3<br />Saturday, March 19, 2011<br />
  4. 4. Nokia is a full service, global telecommunications company, with leadership in the emerging markets.<br />Saturday, March 19, 2011<br />Corporate Strategy for Nokia<br />4<br />Recently, Nokia has experienced a decline in developed markets (e.g. a 15% decline in European sales in Q4 ‘09) or complete exits from previously successful countries.<br />Complication<br />How can Nokia compete successfully in the global <br />mobile phone and telecommunications market?<br />In which market(s) should they compete?<br />What phone-types should they focus on for each market?<br />What services can Nokia leverage in each market?<br />
  5. 5. Nokia has strengths in developing markets, but is missing out on the huge North American Smart Phone market.<br />Saturday, March 19, 2011<br />Corporate Strategy for Nokia<br />5<br />World Mobile Phone Markets<br />Projected Nokia Revenues by Region (in $ Thousands) 2010 - 2013<br />Projected Smart Phone Revenues by Region (in $ Thousands) 2010 - 2013<br />Nokia should focus on their dominance in Emerging Markets while innovating in the US to capture an increased share of the Feature Smartphone Market. <br />
  6. 6. Nokia should compete in the developedanddeveloping markets, but with distinct strategy in each.<br />Saturday, March 19, 2011<br />Corporate Strategy for Nokia<br />6<br />Enhanced <br />Phones<br />Smart Phone Hardware<br />+ Android OS<br />
  7. 7. Developing Market Strategy<br />Corporate Strategy for Nokia<br />7<br />Saturday, March 19, 2011<br />
  8. 8. Changing demographics in developing nations has opened up a market for feature rich phones.<br />Saturday, March 19, 2011<br />Corporate Strategy for Nokia<br />8<br />Smart Phones<br />Basic Phones<br />Enhanced Phones<br />Pros<br />Pros<br />Pros<br /><ul><li> Highest Margins
  9. 9. Highest App Revenue
  10. 10. First Mover Advantage
  11. 11. More Access to App Revenue
  12. 12. Higher Margins
  13. 13. Growing Middle Class
  14. 14. Changing Preferences
  15. 15. Proven Success
  16. 16. Mass Appeal
  17. 17. Potential Growth</li></ul>Cons<br />Cons<br />Cons<br /><ul><li> No Infrastructure
  18. 18. Small Potential Market
  19. 19. Lack of Disposable Income
  20. 20. Low Barriers to Entry
  21. 21. Brand does not carry value
  22. 22. Low Margins
  23. 23. Low Turnover
  24. 24. Limited Disposable Income
  25. 25. Investment in Apps</li></ul>The Enhanced Phoneallows Nokia to capitalize on the change in demographics, <br />and reap additional revenues through new mobile apps.<br />
  26. 26. Projected revenues in Developing Markets of Enhanced Phones is much higher than revenues from Basic Phones<br />Saturday, March 19, 2011<br />Corporate Strategy for Nokia<br />9<br />Comparison between Projected Revenues (in Thousands of $ USD) from Enhanced Phones versus Basic Phones in the Developing Markets<br />Sensitivity Analysis on <br />Enhanced Phone Revenues<br />Even at a 45% Price Discount, Projected revenues for Enhanced Phones is <br />Double the Revenues of the Basic Phone<br />
  27. 27. Developed World Strategy<br />Corporate Strategy for Nokia<br />10<br />Saturday, March 19, 2011<br />
  28. 28. Nokia’s strengths are in hardware development, not in Smart Phone OS Development.<br />Saturday, March 19, 2011<br />Corporate Strategy for Nokia<br />11<br />Smart Phones<br />Basic Phones<br />Enhanced Phones<br />Pros<br />Pros<br />Pros<br /><ul><li> Establish Brand in growing market
  29. 29. Leverages Hardware Advantage
  30. 30. Meets Consumer Demand for a Multifunctional Device
  31. 31. App Revenue
  32. 32. Low Production Cost
  33. 33. Established Discount Brand</li></ul>Cons<br />Cons<br />Cons<br /><ul><li> No Current Brand Equity
  34. 34. No Operating System
  35. 35. Low Margins
  36. 36. Low Growth
  37. 37. Low Barrier to Entry
  38. 38. Aging Technology
  39. 39. Does Not Take Advantage of New Infrastructure of New Consumer Tastes </li></ul>Nokia should leverage competencies in hardware and existing Android OS<br /> to be immediately competitive in developed Smart Phone markets.<br />
  40. 40. Partnering with Android allows for a reduction in Nokia Operating System R&D expenses.<br />Saturday, March 19, 2011<br />Corporate Strategy for Nokia<br />12<br />Effect of Reduction in R&D over Three Years (in € Millions)<br />The 17.8% increase in net income can be put towards Android-compatible <br />hardware development to help compete with other Handset Manufacturers<br />
  41. 41. Risk & Mitigation Plans<br />Corporate Strategy for Nokia<br />13<br />Saturday, March 19, 2011<br />
  42. 42. Nokia faces three key risks with the proposed strategies.<br />Saturday, March 19, 2011<br />Corporate Strategy for Nokia<br />14<br />
  43. 43. Implementation & Key Takeaways<br />Corporate Strategy for Nokia<br />15<br />Saturday, March 19, 2011<br />
  44. 44. There are two distinct work streams for each strategy.<br />Saturday, March 19, 2011<br />Corporate Strategy for Nokia<br />16<br />High<br />Launch App Campaign in Developing Market<br />Transition from Basic to Enhanced Phones in Developing Markets<br />Phase out Meego OS R&D Activities<br />2010<br />Begin Android <br />Hardware Development<br />Launch Nokia-Android Smart Phone<br />Medium<br />Priority<br />Phase out low-end phones in Developed Markets (North America, EU)<br />2011<br />Low<br />Time from Today<br />2012 +<br />
  45. 45. The lesson is clear that a <br />one-size-fits-all approach <br />just doesn’t work.<br />Olli-PekkaKallasvuo<br />
  46. 46. Appendix<br />Corporate Strategy for Nokia<br />18<br />Saturday, March 19, 2011<br />
  47. 47. Sensitivity Analysis on Projected Developing Market Revenues for 2010 – 2013 <br />Saturday, March 19, 2011<br />Corporate Strategy for Nokia<br />19<br />
  48. 48. Assumptions on R&D Reduction Calculation<br />Saturday, March 19, 2011<br />Corporate Strategy for Nokia<br />20<br />
  49. 49. Sources<br />http://www.forum.nokia.com/Distribute/Ovi_Store_statistics.xhtml<br />http://www.mobilecrunch.com/2010/11/18/nokia-3-million-apps-downloaded-from-ovi-store-every-day-165-million-ovi-users/<br />http://gigaom.com/2009/11/30/for-nokia%E2%80%99s-ovi-the-world-minus-the-u-s-is-enough/<br />http://www.symbian-guru.com/welcome/2010/02/distimo-shows-ovi-store-apps-are-cheaper-than-iphone-apps.html<br />http://www.businessweek.com/technology/content/feb2011/tc20110214_758033.htm<br />Saturday, March 19, 2011<br />Corporate Strategy for Nokia<br />21<br />

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