Synopsis of the Situation
Nokia, headquartered Finland was a global telecommunications equipment manufacturer operating a luxury mobile phone brand called Vertu, founded by Frank Nuovo in the late 1990s, which pioneered the luxury mobile phone market by using precious materials such as diamonds, sapphires, titanium and exotic leather for phone production. (Kwong-Kay Wong, 2011). In 2002 when Vertu launched the world’s first- ever luxury phone, the Vertu Signature. At that time, the global luxury mobile phone market was considered a niche, but a fast growing one. In less than a decade, annual sales revenues had grown to US$11 billion in 2009 and it was estimated to exceed US$43 billion in 2013 on a global basis (Kwong-Kay Wong, 2011).
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In creating a better value proposition always think about your customers first. Take a hard look at your market and research your market objectively asking this question, what value are you bringing to the market, and for your customers? Craft a value proposition, then take what you’ve learned and do something with it by measuring what works, and what doesn’t work.
A necessary master plan for sustainability and growth is a diverse and organizational strategy. Nokia, the leading consumer mobile phone producer needs to take the next step towards dominate the global markets with new technical advances for their products and services. Let’s take a closer look at this strategy! Competition influences diversification, diversification is a direct result of competition. This can occur at many different levels – Competitors in the same space can offer the same product at different price points, or they offer different features and functionality in their products, or they offer value added services and brand loyalty programs. Given that we live in the Age of Now – consumer demand is fickle and fast- companies must be able to adapt and react quickly to the changing needs of the consumer before the next trend comes along.
Implementation
Creation of clear short-term objectives and action plans by the development of specific functional
Increase the frequency of purchases by your customers. No matter how poor your current product or service, you must have some customers or clients. One key strategic dimension that you should be thinking about is how to augment and reposition your product in order to sell more to this group.
Higher value can attract more customers or increase the profit margin for the value add benefit.
Due to the growing competition and diminishing market share, companies are opting for different strategies to achieve their survival objectives as well as growth. Companies are thus executing grand strategies to provide their businesses with a clear direction for its strategic actions. These strategies, therefore, aim at both short term and long term sustainability and growth, and they include innovation, market development, product development, and concentration.
HTC start up as a professional original engineering manufacture company (OEM) for PDA and other computer parts in 1999. While it changes its core business from PDA to smart phones, it discovered an opportunity of developing its own brand. In 2007, it brands itself into HTC while introducing the “TOUCH” series. This paper discusses the theory of global strategy for individual organizations and the necessary strategic actions for HTC in order to transfer itself into a leading smart phone company in the
2000-2006: HTC made first time profits when it engineered and developed PDA for Compaq computer. HTC made an alliance with top hardware companies and became best hardware maker which led to release of the XDA, the first Windows based smartphone by collaborating with Microsoft. HTC operated in ODM business and Mobile operator business. HTC designed customized phones for Mobile operators based on their specifications which led them to gain attractive contracts from different Mobile operators. HTC contracts with mobile operators was reason for HTC’s early success. HTC relationship with Handspring to develop Treo smartphone facilitated the opportunity to learn about software and User-Interface design. By 2006, HTC was shipping more than 70% of the world Windows Mobile smartphones.
Nokia’s aggressive strategy to dominate mobile communication cluster would be the main reason how Nokia could become a world leader in the sector among other reasons. Nokia’s passion for mobile communication industry was great enough to give up more than 40% of its revenue in is pre-owned communication industry to concentrate only in mobile communications. Nokia was also lucky enough to see the possibility of mobile communication early enough to predominate the industry and prevent any competition from
Product diversification is a feasible way to obtain growth through new products. The company can use existing product knowledge to develop the brand into new lines to increase exposure and use similar technology to increase synergies. Leveraging off an existing well-known brand to a market that is familiar with the brand will also increase the possibility of success while maintaining lower marketing costs in
Few elements of value proposition is customer needs and insights , promise of value , competitive differentiation , proof and qualification .
From Nokia’s vision and mission statement it can be inferred that Nokia wants to be known for its credibility and to be a market leader again as it was before the year 2007 (Kess, 2014). Nokia understands that the company has to use innovation to offer products that are not yet
Vertu is a subsidiary to Nokia and its most profitable unit (Sanderson, 2006). Vertu is taking a unique approach to that of the technology-obsessed mobile-telephone industry. Its concept is based on craftsmanship
A value proposition should aim to solve problems of customers or satisfy the needs of customers [10].
EV: Generally, the threat of substitutes is low in the smartphone industry as there are not definite products that can readily substitute the smartphone. Consumers rely heavily on Smartphone and would not be able to find a close substitute that has all the function of a mobile phone. Furthermore, Nokia is a long and established company with many loyal customers. These people may continue to stay faithful to Nokia and are hence less resistant to change. Also, the perceived level of product
Prior to the turn of the 21st Century Nokia been the leader of world telecommunications. Nokia the town had diversified into the business in the 1990’s after producing everything from toilet roll, rubber boots, and televisions within its eleven divisions. (Sainsbury 2013:55). However in recent years, Nokia’s telecommunications sales has decreased with net sales falling by 17% from 2013/14 (Nokia Annual financial reports page 93). Previously they have been delving into a more software driven acquiring Gate 5 and Navteq both software companies. Nokia also adopted Microsoft’s Windows Phone Operating System for Smart devices as an alternative to IOS and Android in the hope of bolstering their competiveness within the market in 2011, as well as the purchase
The Swedish telecommunications company Ericsson, one of the “Big Three” mobile handset manufacturers in the 1990s, started to reach difficulty as it entered the new millennium. In 2001, Ericsson’s sales dropped by 52%, recording a $1.39 billion loss which preceded an announcement that would lay off 20% of their workforce. Ericsson found itself losing market share to “Big Three” rivals Nokia and Motorola and eventually even to Siemens. Analysts attributed this downfall to Ericsson’s stagnant phone designs, slow time to market and their inability
Nokia entered the market in 1960, however it was not until 1992, under the commands of, then chief executive officer (CEO), Jorma Ollila that the group became a mobile communications company, centering all its activities on mobile phones, as its priority, consumer electronics, networks and cable (Taylor, 2001). By late 1992 Nokia was Europe’s biggest producer of mobile phone, and second worldwide behind Motorola.