Nokia Corporation: Financial Statement Analysis

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Table of Contents

Introduction
Corporate Structure
Culture and competencies
Finance
Conclusion
References

Introduction

Corporations focus on generating revenues. The research centers on Nokia Corporation’s strategy. The research includes analyzing the financial performance of the Nokia Corporation. To survive, Nokia Corporation’s financial performance should be improved.

Corporate Structure

In terms of decision-making authority, the authority to make decisions is segregated among many units. Nokia has many branches strategically located in many countries. The Nokia units include branches in Europe, the Middle East, Africa, and Greater China. The other major branches are strategically located in the Asia Pacific, North America, and Latin America (Nokia Financial Report, (2012).

In terms of corporate organization, the Corporation’s organizational structure is grounded on geography(Hill, 2012, p.30). Each location makes decisions independently of the other branches located in other countries of geographical locations. The North America unit does not seek the advice or permission of the officers of the Latin America unit. In the same light, the European branch marketing managers will not wait for the Middle East manager’s approval before implementing new strategic marketing (Nokia Financial Report, 2012).

In terms of Nokia’s present corporate structure, the Nokia Corporation’s business structure is regularly implements established corporate strategies. The strategies include marketing responsibilities and production responsibilities. The firm’s international operations continue to implement the established market segmentation corporate strategy. Market segmentation centers on one target market. The China branch focuses on current and prospective China customers.

The African branch creates marketing strategies that cater to current and prospective African customers. Lastly, the Latin American branch is prohibited from selling their Nokia products to North American prospective customers (Thompson, 2010, p.265). In terms of what ways does the structure compare with the structure of similar corporations, the Nokia structure is similar to the structure of other corporations. The North American Coca Cola branch focuses on selling coke products to current and prospective North American customers. The New York McDonald’s branch caters to the hamburger needs of the busy New York professional.

Culture and competencies

The Nokia culture is consistent with the company’s current strategies. The sales personnel focus their time and effort to achieve the branch goal’s revenue targets. The Latin American production personnel are trained to generate Nokia products for current and prospective Latin American customers. Likewise, the French Branch manager takes into consideration the European temperament and culture in crafting a successful European marketing strategy (Sadler, 2003, p. 12).

Further, the Nokia Company has core competencies. The company’s first competency is focusing on its devices and services department. The department ensures that the production department maintains the high-quality standards of Nokia products. Besides, the department ensures that high quality is maintained in the after-sales services and marketing areas of all the Nokia branches. Next, the company ensures that its location and commerce competency is retained at all times and in all global branches.

Lastly, Nokia Company retains the high-quality Nokia Siemens Networks department does not drop while Nokia is in existence (Nokia Financial Report,2012). Also, the three Nokia competencies outclass and surpass the competitors’ products and services. With Nokia expert technicians strategically located in many countries, the Nokia name is synonymous with quality products. With the Nokia after-sales personnel, the Nokia name equates with quality after-sales service (Hill, 2012, p. 14).

Finance

In terms of the corporation’s financial analysis, the company’s financial performance is found wanting. The company’s gross profit ratio is 304 percent. The company’s 2011 revenue is 44.69 billion. The company’s 2011 gross profit is 14.69 billion. On the other hand, the company’s net profit ratio indicates an unfavorable – 6.85 percent. The company’s 2011 operations generated a net loss of $-3.06 billion.

The company’s capital structure is corporation based. Investors invest in shares of stocks. In turn, the investors receive dividend income. Since the company generated a net loss for 2011, the investors will not receive any dividend income. Dividend income crops up only if the company generates net income. Since the company generated a net loss, the diluted earnings of each share of stock are $ -0.82 (Shim, 2008, p.93).

In terms of balanced cash flow, the Nokia Company’s major cash inflow comes from selling Nokia cell phones. There is no balance in terms of total cash inflows generated from all Nokia products and services. The cell phones fall under the total devices and services section of Nokia’s marketing management plan. Nokia’s 2011 devices and services marketing plan generated a 27.7 percent gross margin. The ratio is lower than the 2010 marketing plan. The 201 marketing plan generated a higher 29.9 percent gross profit ratio (Nokia Financial Report, 2012).

In terms of emerging trend analysis, the financial analysis shows some global Nokia branches showed unfavorable 2011 sales results. The Greater China branch shows that the 2010 sales volume, 82.6, dropped to the unfavorable 65.8 sales volume in 2011. Likewise, the Europe market segment shows that the 2010 sales volume, 112.7, dropped to the unfavorable 87.8 sales volume in 2011. Similarly, the 2010 North America sales volume, 11.1, dropped to the negative 3.9 sales volume in 2011 (Nokia Financial Report, 2012).

On the other hand, other global branches show favorable sales reports. The Middle East and Africa branches showed that its 2010 sales volume, 83.8 rose to 94.6 during the 2011 accounting period. Similarly, the Latin America branches showed that its 2010 sales volume, 43.7 rose to 46.1 during the 2011 accounting period (p. 7).

In terms of common size statements, there are no significant differences when statements are calculated as common size versus reported dollars. The common size statements convert the dollars to percents. Since the percents are based on the dollar amounts, there is no difference between the ratios of both dollar amounts and the percentage figures (Droms, 2010, p.95).

In terms of trend impacts, the trend has an impact on past performances (Sadler, 2003, p. 5). The trend will explain why prior performances cropped up. The trend will trigger an audit of prior performances. If the trend indicates that the company will generate increasing profits, management will investigate why prior performances run counter to the trend analysis. Likewise, trends significantly influence future performance. The trend will guide management in their decision-making activities. The trend will persuade management to increase future production or reduce future production. The trend increase will indicate management is expected to increase revenues. A trend decrease will dissuade management from increasing production.

In terms of analysis support, the analysis supports Nokia Corporation management’s prior and awaiting strategic decisions. Nokia’s decisions are geared towards increasing the current accounting period’s revenue amounts. The analysis aids Nokia management’s present strategic decision to continue selling the Nokia cell phones and other Nokia products (Walton, 2000, p.279).

Conclusion

Based on the above discussion, corporations prioritize producing revenues. Nokia Corporation’s strategy focuses on increasing profits. The research indicates Nokia’s global operations are mixed. Indeed, Nokia Corporation’s must increase its 2011 annual operating performance results, a net loss.

References

Droms, W. (2010). Finance and Accounting for Nonfinancial Managers. New York: Basic Books Press.

Hill, C. (2012). Strategic Management. New York: Cengage Learning Press.

Nokia Financial Report. (2012). Web.

Sadler, P. (2003). Strategic Management. New York: Kogan Page Press.

Shim, J. (2008). Financial Management. New York: Barron’s Press.

Thompson, F. (2010). Strategic Management. New York: Cengage Learning Press.

Walton, P. (2000). Financial Statement Analysis. New York: Cengage Learning Press.

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