Nokia Companys Sustainability in Competitive Market

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Research Background

In this section, the author will provide background information on the research conducted. To this end, the research will highlight the context of the research, the purpose of the research, relevance of the study, research areas, and structure of the proposal.

The traditional definition of the term sustainability views it as the ability of an organisation to maintain a balance between economic, social, and environmental priorities. The aim is to make sure that present or short- term needs of the organisation do not override the importance of future viability (Kolakowski 2012). The current research will address Nokia Company. As far as Nokia is concerned, sustainability is synonymous with taking advantage of the positive impacts of mobile phone technology in the society.

The company should make sure that it takes advantage of these positive impacts while at the same time reducing the negative outcomes that the business may have on the planet and on the people. Social and environmental responsibility should form the core of all the activities undertaken by individuals and corporations in the global market. Such stakeholders include, among others, suppliers and distributors that the company works with.

The company has to ensure that the devices manufactured and technological solutions offered safeguard the environment and the welfare of the community. In this regard, Nokia Company aims at enhancing the value of the organisation, the planet, and the consumers (Savitz 2011).

It is noted that Nokia is one of the most successful companies in the world as far as mobile technology is concerned. The company is the leader in the feature phone market. However, it lags behind in the smartphone market, which is dominated by key players, such as Apple Inc. and Google (Segan 2012). Currently, there are at least 1.3 billion people in the world who use Nokia phones to access information, share experiences, and talk to each other. In addition to manufacturing phones, the Nokia Siemens Network (herein referred to as NSN) is a leading provider of telecommunication infrastructure in the world (Woyke 2011).

In this proposal, the consultant endeavours to provide information on the future sustainability of the business in light of emerging competition in the industry. The proposed study will adopt the qualitative research design. The consultant is aware of the fact that Nokia is facing competition in the global market from other players, such as Apple. The proposed study is aimed at improving the sustainability of this company in such a competitive environment.

Research Design

In this section, the consultant provides information on the research design that is adopted for the proposed study. To this end, the consultant will highlight the research questions, the research style adopted, sources of data, types of data to be used, reliability of data, and representativeness.

Problem Statement

As already mentioned in this paper, Nokia has emerged as a very successful company in the manufacture and distribution of feature phones. However, since Research in Motion (herein referred to as RIM) introduced the first smartphone in the market, other players have flooded the industry with commitments to do away with the feature phone (Yoko & Doz 2012). Such a commitment on the part of the competitors jeopardises the future of Nokia in the global market.

Specifically, the entry of Apple Inc. into the smartphone market after the strategic drift experienced by RIM increased competition in this industry. Nokia had to contend with not only the old and established competitors, but also with new entrants whose strategies were not clear to the company. The new entrants included such companies as Google. The competition significantly transformed how people communicate using the cell phone.

Nokia was not prepared for this competition. The company was caught unawares. It made desperate attempts to catch up with competition by designing Symbian phones. However, the Symbian code was a failure, and so was the Linux platform that was used to produce Meego (Sen 2012). To address the problem, Nokia turned to Microsoft, and the two companies combined efforts and resources to design smartphones.

By the time the partnership between the two companies designed and introduced the first smartphone into the market, Apple and Google had dozens of brands already established in the same market. Nokia has bounced back into the industry quite well in the last two years. The company is gaining lost ground through the Lumia series of smartphones. The general problem is that Nokia still lags behind in the smartphone market. The specific problem is whether the company can successfully use the Lumia series to recapture lost ground or not.

Objectives

The proposed study has two major objectives. The collection and analysis of data will revolve around the two objectives. The objectives of the proposed study are listed below:

Study Objective 1: To determine whether Nokia can effectively use the Lumia series of smartphones to sustain its future business in the competitive smartphone market.
Study Objective 2: To determine whether reducing the price of the smartphones manufactured and distributed by Nokia can effectively sustain the companys future business in the competitive smartphone market.

Research Questions

The proposed study will have two research questions. The research questions are related to the research objectives identified above. What this means is that by answering the research questions, the research will have effectively addressed the research objectives. The two research questions are highlighted below:

Research Question 1: Is it possible for Nokia Company to use the Lumia series to effectively sustain its future business in the competitive smartphone market?
Research Question 2: Is it possible for Nokia Company to sustain its future business in the competitive smartphone market by reducing the prices of its smartphones?

Research Strategy

Research design has both specific and general definitions. In general terms, research strategy refers to the various issues that are taken into consideration in the process of planning and executing a project. The considerations range from identifying the general and specific problem of the research, to the time it takes to present the findings made in the research. Specifically, research design is a process used by researchers to avoid alternative interpretations of phenomena and corresponding findings.

The approach adopted for the proposed research is a qualitative case study (Kumar 2011). The approach was regarded as the most appropriate for the study, given the nature of the data that will be collected and such other considerations. The research design is analysed below:

The Proposed Case Study

When conducting a study, it is not always easy to determine which research method to employ. There are many methods at the disposal of the researcher. All the methods have their own pros and cons. The researcher opted to use a case study for the proposed study. A case study can refer to a person, an event, a process, a location, or an organisation. It also refers to a technique used by researchers to understand different facets of a given phenomenon (Stern 2005).

According to Mehl (2011), a case study is used to investigate a contemporary phenomenon in a setting where it is not easy to make a distinction between the said phenomenon and its context. Mehl (2011) adds that it is mostly used in studies with variables that cannot be displayed as data points. In such a case, the researcher finds it necessary to adopt triangulation technique, where information or data is collected from different sources. In this regard, it suffices to note that a case study is most appropriate in answering the research questions mentioned above. According to the definition given earlier, a case study is appropriate in a case where in- depth understanding of an organisation is required. The case study is appropriate because of other reasons, such as those highlighted below:

The proposed study in multi-disciplinary in nature. It cuts across different disciplines, such as politics, technology, and economics.
The proposed study addresses a contemporary issue that commands attention of scholars in the world. The issue cannot be adequately explained by the use of data points alone.
As a research method, case study has been used with a measure of success in most qualitative and quantitative studies in the past. As a result, it is dependable compared to other methods.
A case study is conducted using various techniques, meaning that the study can benefit from the strengths of such techniques.

In the proposed case study, the researcher will collect data using semi-structured qualitative interviews.

Study Technique

There are various reasons why the consultant recommends the use of a semi-structured interview.

A fully structured interview is comparable to a survey. Using such a technique will provide little information inadequate to explain the phenomenon at hand or answer the research questions (Kumar 2011).
Using an unstructured interview is not an option because it will be difficult to extract the required information from the informants (Kumar 2011).

Interviewing Technique

The consultant proposes the use of non- directive interview, where the participant is asked a specific question and given time to provide a response and an explanation. The researcher will only interrupt the informant where necessary. Otherwise, he will simply note the keywords from the response and proceed to the next question if he believes that the answer is adequate enough. The researcher will try to remain within the context of the research problem during all interview sessions.

Interview Setting

The consultant proposes a face- to- face interview setting, unless it is impractical. The researcher will conduct all interviews in a natural setting, where the possibility of disturbances and interruptions is minimised. The purpose of the study is to determine how Nokia can make a comeback and establish a sustainable future business model in spite of the competition posed by the Silicon Valley giants.

In light of this expectation, personal interviewing will be most appropriate to determine the current position of the company and what needs to be done with regard to the smartphone market. There are other options, such as video blogging, which are probably cheaper than conducting face- to- face interviews. However, the researcher will be more interested in capturing the personal experiences of respondents, which cannot be adequately attained using Skype or Facebook video conferencing.

Sample Selection

The sample for the proposed study will be selected randomly. It will include two renowned software application developers, two Nokia senior managers, and two specialists in the field of economics. The software developers will be included because the future of the smartphone market is in the development of applications (apps). Nokia is currently lagging behind in the development of apps compared to Apple and Google, which are miles ahead. The managers will provide the researcher with information regarding the possibility of Nokia to remain relevant and maybe regain its leadership position in the telecommunication industry. The economists will provide information on the economic status of Nokia and its competitors.

Viability and Reliability

The validity and reliability of a study determine the quality of the research (Coleman 2011). Research quality is a common term in quantitative study, where there are data points to analyse. Nonetheless, there are defined criteria to put in place to improve the quality of qualitative research. Validity refers to the appropriateness of the instrument used to collect data. In the proposed study, the researcher will use an interview guideline.

To ensure that the guideline adopted is appropriate for the study, the researcher will formulate it after widely reviewing available literature. The literature review is provided in the next section of this proposal. To enhance the reliability of a qualitative study, the researcher must refrain from providing their personal interpretation. They should go with the voice of the data. The researcher will try as much as possible to remain objective and present all the findings just as provided by the informants.

Literature Evidence Review

In section 1, the consultant highlighted several aspects of the proposed study. The highlighted aspects included, among others, the research questions and the research objectives. In this section, the consultant provides a critical review of the literature in this field. The section is divided into three subsections, which are introduction, analysis of relevant concepts, and conclusion.

Under introduction, the consultant will provide information on the rationale for the topic, the boundaries within which the proposed study will be conducted, and terms of reference.

According to Albanesius (2012), most reviews touching on Nokias latest smartphone, Lumia 900, are largely positive. It is noted that the positive reviews represent a very significant achievement for both Microsoft and Nokia companies, which are collaborating to make an impact in the smartphone industry. Lumia 900 was received well in the United States, and it is currently available at AT&T at half the price of comparable smartphones.

In one of the most respected phone reviews, the product is described as powerful, fast, and beautiful (Segan 2012). Alexis (2012) notes that the phones hardware and software are more beautiful and presentable compared to those of other smartphones, such as Android and iphone. In addition, most of the phones functions are as powerful as those of smartphones manufactured and distributed by competitors. However, Alexis (2012) is of the view that Lumia has less apps compared to competing phones. The lack of adequate apps is a serious flaw that should be addressed if the company is to move forward in the competitive smartphone company.

Woyke (2011) laments that many people, just like him, are not very pleased with this phone. He asserts that in comparison to the most recent Galaxy Nexus and iphone 4S, Lumia 900 has many drawbacks. The drawbacks must be addressed for the company to regain its foothold in the telecommunication market. Ammisetti (2012) averred that although the phone is good looking and attractive to the eye, it has many limitations. For example, the phone has a single- core processor, which negatively affects its functionality. In addition, the phones RAM and resolution display are lower than those of the competitors. Such issues pose considerable challenges to Nokia as far as operating in the smartphone market is concerned.

The above are some of the issues that inform the projects terms of reference. In addition, the issues form the rationale or justification for the proposed study. The project is limited to Nokia and the companys future in the smartphone industry. The next section of the proposal highlights various concepts relevant to this field. Some of the issues addressed include the companys five forces analysis, PEST analysis, and value chain analysis. The aim is to examine how Nokia can sustain its future business in the midst of stiff competition evidenced in the smartphone market.

Analysis of Relevant Concepts

Five Forces Analysis

New Entrants

The threat of new entrants in the smartphone market is quite low because of the significant amount of initial outlay required. The major companies in the industry are well established and have well defined brand loyalty. In addition, the market is getting saturated as Google collaborates with, among others, Motorola, Samsung, Techno, and Sony Ericson to produce cheap Android phones (Sorensen 2012).

Some of the most successful companies in the market, such as Apple Inc., have patented most of their technological innovations. A new entrant will have to come with their own software technology, which is quite expensive. Alternatively, a new player can choose to collaborate with established software companies. However, the costs involved are way too high. Moreover, most companies are not willing to form collaborations, as witnessed in the case of Nokia approaching Google before the Nokia-Microsoft collaboration (Avenell 2012).

Competitors

Competition has crippled Nokias endeavours to remain relevant in the smartphone market. Although RIM is regarded as the pioneer in smartphone technology, the company has gone under because the management failed to take the right direction after coming up with the technology. Currently, the main competitors are Apple and Google. The two companies will remain ahead of the competition for a long time because they have what it takes, which is experience in software technology (Sen 2012).

It is difficult to overcome competition in the smartphone market because Nokia is dealing with some of the most successful companies in the world. For instance, in 2011, Interbrand named Apple Inc. the second most valuable company in the world after Coca-Cola. In the same year, Apples profits were higher than those realised by most smartphone companies, including Google and Microsoft. However, Nokia displays a great deal of resilience. The management wants to prove that the company can lead in the manufacture of both feature phones and smartphones.

Suppliers

The bargaining power of suppliers in the telecommunication industry is between medium and high. There are several major distributors in the market, but most of the companies have long standing contracts with suppliers. For instance, the main supplier for Microsoft and Nokia is Intel, while Motorola is the main supplier for Apple. In this case, the smartphone manufacturers rarely change suppliers because such a step will reflect negatively on the market. Most customers have their own preferences and tastes (Savitz 2011).

Buyers

Buyers in the smartphone market have weak bargaining power. Individual customers cannot influence the prices of phones. On their part, corporate consumers constitute a small fraction of the market. According to Holbein (2012), buyers in the smartphone market may change the companies they buy from, but they make such decisions on the basis of other factors and not price.

Substitute Products

The threat posed by substitutes is medium. Most people are still using feature cell phones. However, a recent study found that one out of every three feature phone owners will replace their phones with a smartphone within the next twelve months (Savitz 2012).

PEST Analysis

Political Factors

Nokia operates in countries with very different political outlooks. The ability of the market to sustain its business operations is affected by political stability in the markets. For instance, Nokia shifted a major manufacturing plant to India in 2010. However, the employees worked for a few months and went on a go-slow (Yoko & Doz 2012). Politics affect the purchasing decisions made by corporations and individuals. For instance, the tax charged on the company in different markets determines the degree of investment and the prices of the products. In the United States and the EU, various studies were conducted to determine the impacts of mobile phone radiation on the health of users. The findings of such studies may have a negative impact on the companys future comeback (Mlot 2012).

Economic Factors

The economy determines the consumers purchasing patterns. Most countries are still struggling to deal with deficits caused by the recent global economic downturn. In comparison to Google and Apple, Nokia has made more investments in Asia. Asian countries are still economically stable because they were only peripherally affected by the downturn. Nokia can use that opportunity to market its cheaper smartphones in the continent. However, Nokia derives more than 40% of its sales from the European market, which is still reeling from the effects of the recession (Lev-Ram 2012).

Social Factors

In the United Kingdom, there are at least 58 million registered cell phone users. The number is higher in other nations with populations higher than that of UK. Such statistics imply that the cell phone is a very successful consumer device. The number of people using the cell phone is increasing. As noted earlier, most consumers are shifting from feature phones to smartphones. The expanding market means that Nokia has a high potential of making a comeback. Employees are the most essential social factors for a company. They determine how the public views the company (Leach 2012).

Technology

Technology is an essential factor as far as Nokias comeback is concerned. The company is still lagging behind in software technology. Collaboration with Microsoft and investment in research and development is essential as far as the companys future is concerned (Kolakowski 2012).

Value Chain Analysis

Inbound Logistics

The company acquires raw materials from suppliers and distributes them to production plants as needed. Nokia ensures that all suppliers make their deliveries on time. In most cases, Nokia does not change suppliers unless there is a breach of contract (Avenell 2012).

Operations

Nokia estimates the demand for products before manufacturing them. The company has a detailed consumer database, which is used in estimating demand (Avenell 2012).

Outbound Logistics

Nokia sells directly to consumers, unlike the competitors who employ the services of distributors. Direct selling makes it possible for the company to keep track of market dynamics. Consequently, the company manufactures products that are in line with current demand (Savitz 2012).

Sales and Marketing

The company has invested heavily in marketing. Selling directly to consumers has helped the company to reduce its marketing budget. From 2011, Nokia has increased the funds earmarked for the marketing of Lumia and Asha smartphones (Mlot 2012).

Service

Nokia conducts annual training for all segment managers. In addition, the company invests in capacity building for the employees to help them discern changes in consumer trends. The empowered employees are able to identify threats and opportunities in the competitive market (Lev-Ram 2012).

Human Resource

According to Stephen Elop, Nokias CEO, the company is aiming at reclaiming its position in the telecommunication industry. The employees of the company are focusing on value addition and customer satisfaction (Segan 2012).

Conclusion

In part two above, the consultants highlighted some of the concepts salient to the proposed study. In conclusion, the researcher will highlight the various issues addressed in this research proposal. They include, among others, researchable areas and the adequacy of the literature available for the research.

For a very long time, Nokia Company was regarded as one of the most successful organisations in the cell phone manufacturing and distribution industry. In a nutshell, the company was regarded as the market leader in this industry. The leadership and the ability of the company to sustain its future business in the industry are threatened by the entry of new competitors in the smartphone market. The competitors have a wide experience in software development. It is noted that the dominance of feature phones in the telecommunications market is slowly coming to an end. As a result of this, the company is shifting its focus towards the development of its own smartphones.

The number of customers loyal to the company is still high. Recent statistics put this number at 1.3 billion customers. However, the growth of the company has slowed drastically in the last ten years, with 2011 recording the least rate of growth compared to other years. In early 2012, it was reported that Samsung has overtaken Nokia as the number one supplier of mobile phones. During the launch of the iphone 5, Tim Cook, Apples CEO, announced that the company was not interested in growth in the sales of iphone in the smartphone market.

On the contrary, the company was interested in growth in the entire telecommunication industry. He proceeded to present outstanding growth rates in emerging markets, such as Asia. Nokia needs to succeed and sustain its future business in the smartphone market. To this end, the consultant proposes that Nokia should focus on developing the Lumia series while reducing the price of its smartphones in the emerging markets.

References

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