A SWOT analysis for Nokia
In this part of my investigation I am constructing a SWOT analysis for Nokia. I will have to analyse the external factors that may prevent Nokia from re-launching WAP enabled mobile phones onto the market. SWOT Analysis What is a SWOT analysis? A SWOT analysis conducts an external and internal scan of Nokia’s business environment, it is an important part of the strategic planning process. Environmental factors internal to the firm usually can be classified as strengths (S), or weaknesses (W), and those external to the firm can be classified as opportunities (O) or threats (T).
Such an analysis of the strategic environment is referred to as a SWOT analysis. The SWOT analysis provides information that is helpful in matching the firm’s resources and capabilities to the competitive environment in which it operates. As such, it is instrumental in strategy formulation and selection. Strengths Of Nokia One of Nokia’s main strengths is it is the market leader, this point is recognised by many of the general public. From this we can see that the public must see Nokia, and the products it produces as by far the highest quality and best selling available in the current market.
Therefore because of such high public opinion of Nokia, a new successful product can almost be guaranteed. Nokia offer the most reliable products available in the current market. This therefore makes it appealing and alluring for a consumer, because they feel secure that the Nokia phone they purchase will offer a reliable and steadfast product. The mobile phone market is currently very unstable. The majority of the mobile phone manufacturers are struggling financially currently.
Motorola have had a torrid couple of years in terms of sales and profits, Eriksson’s share price has been hit badly and Hutchison Wampona are encountering financial funding issues as the launch of their 3G phones has been delayed. Against this background Nokia’s financial results have been very steady and although their share price has seen a low of 10. 40 and a high of 21. 30, they are currently trading at around the 15 pound mark and have been for the past few months. This gives them financial credibility and support in uncertain times.
Nokia have a very popular image amongst the public. The public see Nokia as a modern and fashionable company that produce stylish phones, which offer simple yet, sound services on their phones. This will obviously increase sales of their products and limit the failure of new products Nokia are a very environmentally conscious company, who place an emphasis on recycling. This positive environmental stance promotes public opinion of them and minimizes the chances of bad press, which will reflect poorly upon them. This could affecting sales and popularity amongst the public. Weaknesses Of Nokia
A major weakness of Nokia is their employment and production of products. They currently manufacture their phones in Salo, Finland. They believe the production of their phones in this area of the world improves the quality and precision of their mobile phones as a final product. However, if they were to operate a manufacturing plant in somewhere such as Taiwan they would be able to save money on production and therefore increase profit. Fragmentation of the market may bring unwanted problems for Nokia in the future.
For instance if competitors began the production of specialists products (e.g. gaming phones), Nokia may be left behind because they currently operate machinery that may not be able to cope with the needs of the new products. This therefore will enable competitors to exploit this gap in the market and leave Nokia trailing. If they don’t anticipate such changes their adaptability may be to slow. Nokia are currently located in Salo, Finland. Due to their location in relation to their predominant market (United States Of America) the great distance between them means the costs of transporting their goods is very high. Opportunities For Nokia
When WAP was first launched it was aimed at the business sector of the market. Its main selling point was it enabled business people to access their e-mails whilst not at their desk. However the vast majority of businesses operate on the intranet. This is an internal Internet that can only be accessed when someone is within the company. It is also where the business peoples e-mail services are based. Because a WAP phone only offered connection to the internet people where unable to collect e-mails of their companies personnel intranet, without breeching security measures such as firewalls.
This meant a lot of companies discouraged the use of WAP enabled mobile phones and encouraged employees to purchase other phones. If Nokia can address this problem by altering the capabilities to fit the requirements of business people more specifically they can make a success of WAP phones. Nokia may be able to address the problem, concerning the assembly of new masts in certain areas by developing disguised masts. For instance by designing and constructing masts disguised as trees other natural features they may be able to erect them in areas where they have currently been restrictions mainly due to local protests.
If this were possible it would enable them to offer their customers a signal in a wider area than their competitors, giving them an advantage. Nokia realize that their production is still not enough to currently meet customer demands. There is therefore an opportunity to increase production, increase sales and in turn increase the profit Nokia make. Threats Upon Nokia If the world economy were to become inconsistent, this would greatly affect Nokia’s growth as a company, because they would be unable to exploit possible opportunities.
This is because they will be unable to construct accurate financial plans to budget the execution of their plans, due to continually fluctuating interest rates, inflation, growth rates and tax. Another big threat to Nokia may be the changes made within a competitors business. For instance their competitors may offer the market phones at a cheaper price or they may also offer phones with capabilities currently unavailable on the market, allow them to exploit a new market sector (e. g. Hutchinson with the first 3G phones).
This may therefore decrease the sales of Nokia products and increase the sales of their competitors enabling them to take a higher market share and possibly in the future contest for the position of market leader. The media can also offer up a threat to Nokia and much of the mobile phone industry. Via bad publicity in papers on TV or via any other mediums, consumers may be affected by false or inaccurate reports. For instance in 1999 scientists apparently discovered that mobile phone handsets give of radiation, which may give the user cancer to the brain.
This obviously discouraged the public from buying mobile phones. Since however this theory has been successfully disapproved, but it will take the public a long time to realize this and respond. In the mean time sales of phones will decrease and the market will dip. Finally current affairs such as the war on Iraq affect the economy, consumer spending and the availability of raw materials. Many of the public will limit their spending money for luxury items such as a mobile phone, because they are unsure of how the war might affect them and would prefer to save money in case they required it for emergency needs.
They are therefore content to keep their current phone as appose to upgrading it. The prices of raw materials will also increase due the obvious risks that may be apparent in the transportation of them. This will obviously increase the overall price of production and reduce profit intake. However this is a relatively short-term affect and will come to a close at the end of the war. It may also mean that there’s a market boom at the end of the war. This is because the people who were reluctant to upgrade or buy a new phone during this period are now able to purchase it due to the fade of their previous reasons for not purchasing one.