Industry Analysis Case Study

Nokia (A): A Stable Player in a Turbulent Industry

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Abstract:
With an estimated global market volume of 1.15 million units in 2007, the mobile handset industry is the largest consumer electronics market in the world. However, from 2008, growth has slowed down for the industry that till now has enjoyed a double digit growth. Added to the woes is the increase in demand for low-priced handsets, which means lower margins for the handset manufacturers. Nokia is a dominant industry player and has held the top position since 1998, after upstaging Motorola. The company till now has managed to stay ahead of rivals. Now, with Samsung challenging Nokia in the low-cost handset market, there is impending saturation as the industry matures and margins are expected to go down. In such a scenario how can Nokia maintain its competitiveness and stay ahead of its competitors? This case study is the first in a two part series on Nokia and provides a thorough outlook on the mobile handset industry and the changes therein. It details the changes in the mobile handset value chain and then enables a discussion on what do these changes imply for the incumbent players. The discussion centres on what have been Nokia’s strengths and based on the industry analysis, what are the opportunities and threats to the company. Based on this, what should be Nokia’s strategy and what course of action should the company take to maintain its competitiveness?

Pedagogical Objectives:

• To understand the telecom industry based on Michael Porter’s Five Forces analysis
• To analyse the emerging trends in the telecom industry and the critical success factors for the handset makers
• To understand the changes in the mobile handset value chain and the evolving product concept and its significance for the incumbent players
• To understand the strategies that Nokia, the industry leader, should follow to maintain its competitiveness.

Keywords : Mobile; Success; Value Chain; Segmentation; Total Product; Industry Analysis; Scenario Analysis; Porter; Nokia; SWOT; Competitive Advantage; Managing in Troubled Times Case Studies; Growth; Theodore Levitt; Samsung; Motorola