Chinese Operations.Nokia

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  • 1. Chinese Operations Nokia Corporation
  • 2. Nokia’s Present Profile
    • Positioned as Market Leader having 40% share in mobile phones market
    • Turnover exceeds EUR 50 billion (2008 figures)
    • Recognized as the 5 th most valued brand in the world
  • 3. Nokia’s Vision
    • World where every one can be connected
    Nokia’s Promise
    • To help people feel close to what is important to them
  • 4. Nokia’s Business Beliefs
    • Trusted consumer relationship
    • Best Mobile devices every where
    • Context enriched services
  • 5. History of Nokia
    • Founded in 1865 in Finland by a Mining Engineer, Fredrik Idestam
    • Named after famous Nokianvirta River
    • Three Companies Nokia Ab, Finnish Rubber Works and Finnish Cable Works merged to form Nokia Corporation in 1967
    • Main businesses were Rubber, Cable, Forestry, Electronics and Power Generation
    • Divested from all businesses in 1992 except mobile phones and telecommunications
  • 6. Nokia’s entry into China
    • Initially during 1930’s Nokia exported forestry products to China
    • Again entered China in mid 1980’s as a result of decision of Chinese govt. to accept Foreign Direct Investments
    • Established its first representative office in Beijing in 1985 and began work with just 5 employees
    • cont.
  • 7. Nokia’s entry into China (cont.)
    • Being an early mover, it easily acquired human resource, other facilities and information at reasonable prices due to absence of competition
    • Chinese Ministry of Posts and Teleco-mmunications promoted wireless networks instead of landlines
    • Nokia’s entry through joint ventures helped it improve its competitive position and procure a share in the local market
  • 8. Nokia’s Joint Ventures in China Provision of a full range of services, manufacture and supply of products for fixed networks 1998 Partners ChongQing Telecom. Bureau, ChongQing PTAC ChongQing Nokia Telecom. Co. Ltd. Main activities in the field of GSM technical services, primarily network planning and optimization 1997 Partner Fujian PTA Fujian Nokia Mobile Telecomm. Ltd. Prod. of GSM digital cellular systems and mobile phones 1995 Partner Beijing Capitel Co., Ltd. Beijing Capitel Nokia Mobile Telecom. Co., Ltd. For Year Partner Name
  • 9. Nokia’s Joint Ventures in China (cont.) Software Develop. Platform technology development related to Nokia’s 3G networks 2001 Zhejiang Provincial Govt. of China Hangzhou R&D center Development manufacturing and marketing of digital multimedia terminals 1999 Partners CITIC Technology Co. Ltd. And the Academy of Broadcasting Science Nokia Citic Digital Technology Co. (Beijing) Ltd. For Year Partner Name
  • 10. Nokia’s Initial Growth in China
    • First GSM call in China was made using a Nokia mobile phone on Nokia network in 1994
    • China emerged as second largest market for Nokia after US with sales of EUR 3,418 million in year 2001
    • China accounted for 10% of Nokia’s total turnover
    • Nokia had around 4375 people working for them in China
  • 11. Problems faced by Nokia in China
    • Govt. introduced licensing system to encourage domestic players
    • Market flooded with cheap Chinese handsets
    • Nokia was not able to reach rural markets of China
    • Competitors launched new models like Clamshells which had high demand in the market
    • cont.
  • 12. Problems faced by Nokia in China (cont.)
    • Nokia was too slow in launching Color and Camera phones
    • Many Chinese majors like TCL, Ningo Bird etc. made their presence felt in the Chinese market
    • Motorola still controlled the major portion of Chinese mobile phones market
  • 13. Nokia’s decline
    • Revenue decreased drastically and went as low as EUR 2802 million in 2002 as compared previous year’s figure of EUR 3418 million
    • Operating profits decreased by almost 14% as compared to last year
    • Total Sales of Mobile phones went down by 12%
    • Market share of Nokia fell below 20%
    • Nokia faced competition from more than 30 local manufacturers who had better distribution network than Nokia
  • 14. Nokia’s Share (2003) Nokia’s Product Life Cycle 1994
  • 15. Management’s View on Decline
    • Management of Nokia made an analysis of the company’s position in the market and came up with the view that, “its core reference design portfolio needs to be updated to allow greater product flexibility that will divert share losses over the long-term .”
    • Nokia should come up with various strategies to arrest its falling market share in China
  • 16. Strategies followed by Nokia
    • Reduced number of national distributors to 3 from 8
    • Opened sales offices all across the country and the no. grew from 3 in 2003 to 70 in 2006
    • Increased the no. of distribution offices from 8 to 50 by opening several provincial distribution offices
    • Build a direct sales force comprising 5000 people
    • cont.
    New Distribution System
  • 17. New Distribution System (cont.)
    • Renounced the earlier manufacturer-general agent-regional distributor-second tier distributor-retailer-consumer distribution model and opted to distribute its products directly to large distributors and to retail outlets
    • Increased the no. of distribution outlets to reach 48000 by year 2006
    • Personalized the shopping experience by opening stand alone flagship store in shanghai where personal attention and guidance was given to customers which helped them select the products
  • 18. Market specific products
    • Nokia revamped its design and came up with phones in slider and clamshell designs
    • It customized its products according to the wants of Chinese service providers
    • Nokia introduced models with predictive text inputs and menu in Chinese
    • Introduced a product containing Chinese-English-Chinese dictionary for direct translation of words from Chinese to English and vice a versa
    • cont.
  • 19. Market specific products (cont.)
    • Launched mobile phones which used stylus to write Chinese, had features like lunar calendar, China specific wallpaper and multiple address books, etc.
    • Nokia also launched products with a call time tracking system through which user could set the calling limit and when the limit was reached, call ended automat-
    • -cally
  • 20. New Promotion Techniques
    • Nokia launched an TV advertisement in order to connect with the consumers and rule out the myth that “Nokia was a Japanese Brand”
    • Released various press, outdoor and internet advertisements which carried the tagline “It’s about the little pleasures in life”
    • Launched a website music.nokia.com.cn which was designed in a magazine style and provided a range of downloads like ring tones, news, information, interviews with celebrities etc.
    • cont.
  • 21. New Promotion Techniques (cont.)
    • Launched another website NCool in December 2007 which targeted the young, urban, educated Chinese and intended to promote the N-series mobile phones
    • Nokia also sponsored “Project 95-Explore China with Nokia N-series”, a 20000 kilo-meter road trip across the country which aimed to show the targeted audience, the multimedia capabilities of Nokia N-series
    • cont.
  • 22. New Promotion Techniques (cont.)
    • Nokia also started an English teaching service called “Mobiledu” aimed at making people learn English rapidly through mobile phones, before the Beijing Olympic Games
    • Village Public address system was launched so that villagers could get their mobile phones serviced
  • 23. Investment in Production and Technology
    • Build up a new 3G base station manufacturing facility in Suzhou, a city near Shanghai, where it already had an R&D center
    • Established a CDMA R&D facility in Beijing which focused on software support and technical expertise in CDMA technology
    • Nokia had 49% stake in joint venture with China Putian Corporation and the venture aimed at third generation network solutions for TD-SCDMA and W-CDMA technology
    • cont.
  • 24. Investment in Production and Technology (cont.)
    • Entered into partnership with Tsinghua University to establish research facility on several topics like wireless and the internet, interaction solutions and multi-media communications devices
    • Nokia would produce 40% of handsets from its Beijing Product Creation Center
    • Created a unit in 2004 to promote open standards and technology standardiz-ation
  • 25. Result of these strategies
    • Nokia became market leader in Chinese handset market with share of 31.7%
    • Emerged as leading business brand in China according to survey conducted by Global Sources Magazine
    • Sold 70.7 million handsets in China during year 2007 and Nokia’s exports from Greater China were valued at EUR 6240 million
    • Customers began to prefer Nokia as quality problems started emerging in the products of local manufacturers
  • 26. Future challenges and Threats
    • Companies like Tianyu are emerging and are posing a challenge to the established players, by making inroads to smaller cities and towns backed by heavy promotional campaigns
    • Rising economic nationalism in India
    • Chinese Mobile Operators are demand-ing exclusive models from Nokia
    • Emergence of new technologies like Time Division Synchronous Code Division Multiple Access (TD-SCDMA) in China
  • 27. Conclusion
    • Although Nokia has emerged as the Market Leader but if it wants to sustain this position, it has to continuously monitor its business environment which is dynamic in nature and has to bring in additional features and market specific software in its products and for this it may have to incur additional costs to make these specific models.
    • The biggest challenge for Nokia is to maintain customer loyalty and long customer relationships in this highly competitive mobile phone market
  • 28. THANK YOU
  • 29. Presented By: Rajinder Gupta RR1801 A14 10802619 2 nd Semester Lovely Professional University