Should Nokia’s growth strategy be to focus on the developed markets, emerging markets or both? Case Analysis Handset manufacturer worldwide market share of 38% in 2009 Market leader in emerging markets like India(60%) and China(40%) Financial performance pre-2008 was exceptional Known for innovation Offers products at all price points Post-2008 started losing ground in developed markets European market revenue declined by 15% in 2009 Exited the Japanese market after 20 years of operations Nokia was fifth most valuable brand globally in 2000 Analysis of Emerging Market Employed the cost leadership strategy: Purchasing power low in emerging markets hence Nokia provided cost effective products successfully. First time purchasers: Only 20% of the emerging market were not first time purchasers Services as the key selling point: People of emerging markets wanted value added services bundled with the phone Analysis of Developed markets Consumers not very price sensitive Delivering innovative products more important 57% of the market goes for a second phone, most of the time for an upgrade Emergence of i-phone, considered as replacement for normal handsets with users looking for upgradation Growing competition from companies like Samsung, LG, Motorola and Sony Ericson was also making things worse for Nokia. New Operating System – e.g. – Emergence of OSs like Google’s Android and Microsoft’s Windows mobile further bothered Nokia. Inability to understand demand – Nokia failed to understand growing demand for touch phones Why focus on Emerging Markets? As Nokia has already gained the following benefits by being the first mover, it should strive hard to maintain it’s market share in developing economies. Advantages it has – Earlier entry, early start of the learning curve. Its crucial and experience is tough to imitate. Nokia can develop enhanced reputation by being pioneer and using its already established brand image Absolute cost advantage can be gained by early commitments to supplies of materials and distribution channels…. Recommendations- Emerging Market Nokia should concentrate on Improved as well as Basic phones as the market is still evolving Tie up with Telecom players and bring dual sim phones to increase the switching cost It should follow innovations in developed countries and adapt them to emerging markets in order to stand against competition. One general strategy should be to outsource the services part as it is not Nokia’s competency and customers are giving more regard to services (Exhibit 6) Instead of charging customers for Life tools, revenues should be earned from advertisers.

1. Emerging Nokia –
Group 12
Ankur Kislaya-DM18206
Ajay Norman-DM18202
Melissa Alex-DM18233
Saurabh Arora-DM18246
Shivam Shukla-DM18248

2. Problem Statement
Should Nokia’s growth strategy be to
focus on the developed markets,
emerging markets or both?

3. Case Analysis
• Handset manufacturer worldwide market share of 38% in 2009
• Market leader in emerging markets like India(60%) and China(40%)
• Financial performance pre-2008 was exceptional
• Known for innovation
• Offers products at all price points
• Post-2008 started losing ground in developed markets
• European market revenue declined by 15% in 2009
• Exited the Japanese market after 20 years of operations
• Nokia was fifth most valuable brand globally in 2000

4. Analysis of Emerging Market
• Employed the cost leadership strategy: Purchasing power low in
emerging markets hence Nokia provided cost effective products
successfully.
• First time purchasers: Only 20% of the emerging market were not first
time purchasers
• Services as the key selling point: People of emerging markets wanted
value added services bundled with the phone

5. Analysis of Developed markets
• Consumers not very price sensitive
• Delivering innovative products more important
• 57% of the market goes for a second phone, most of the time for an
upgrade
• Emergence of i-phone, considered as replacement for normal handsets
with users looking for upgradation
• Growing competition from companies like Samsung, LG, Motorola and
Sony Ericson was also making things worse for Nokia.
• New Operating System – e.g. – Emergence of OSs like Google’s Android
and Microsoft’s Windows mobile further bothered Nokia.
• Inability to understand demand – Nokia failed to understand growing
demand for touch phones

6. Porter’s Five Force Model
Threat OF New Entrants
Medium
•Computer manufacturers entered industry such as
Acer and Dell
Bargaining Power Of Buyers
Strong
The market was price sensitive
Bargaining Power Of Supplier
Weak
Market leader
Threat Of Substitutes
Weak
No direct substitute for handsets
Competitors Rivalry
Strong
Many companies coming out
with similar products

7. SWOT Analysis
Very strong brand name and positive image
Strong distribution network
Best Navigation (Nokia OVI Maps)
Phones were not always good as competitors
E.g.- in 2003, company was too late with clamshell
models.
Introductory phones were not user friendly, couldn’t
attain expected success
Companies like Samsung, Sony and Motorola were
eating into Nokia’s market share
New Operating Systems were putting Nokia into
back foot
Have high competitive advantage in terms of brand
recognition and large market penetration
With little innovation and existing low prices,
company can improve market position
S W
T O

8. Why focus on Emerging Markets?
As Nokia has already gained the following benefits by being the first mover, it
should strive hard to maintain it’s market share in developing economies.
Advantages it has –
1. Earlier entry, early start of the learning curve. Its crucial and experience is
tough to imitate.
2. Nokia can develop enhanced reputation by being pioneer and using its
already established brand image
3. Absolute cost advantage can be gained by early commitments to supplies
of materials and distribution channels….

9. Recommendations- Emerging Market
• Nokia should concentrate on Improved as well as Basic phones as the
market is still evolving
• Tie up with Telecom players and bring dual sim phones to increase the
switching cost
• It should follow innovations in developed countries and adapt them to
emerging markets in order to stand against competition.
• One general strategy should be to outsource the services part as it is not
Nokia’s competency and customers are giving more regard to services
(Exhibit 6)
• Instead of charging customers for Life tools, revenues should be earned
from advertisers.

10. Recommendations–Developed Market
• Nokia should follow the innovations in developed countries especially USA
• Nokia should look to divest in Japan as it is largely smartphone driven market
and Nokia has very little market share
• Having an edge over the technology and vision of R&D for better quality
products and value added supply chain, it can occupy the space after Apple and
RIM, slowly increasing its market share.
• Can compete with other OS and with Apple and RIM. Strategy will be to form
an Alliance with Microsoft.
• That can lead to better compatibility and better performance. But they have to
share revenue with the alliance company

11. Strategy to be followed
• Nokia needs to change from its International Product life cycle approach
as innovation is needed in both markets for products to succeed
• Adopt a Multi-domestic strategy to cater to the needs of both markets
• Manufacturing should be done on a global scale to minimise cost
• Local talent and recruitment should be made from developing countries
like India especially in software development

12. Thankyou