Monday, July 16, 2012

Strengths of nokia

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Based on an analysis of Nokia’s value chain, that is its various characteristics, strengths and weaknesses discuss how they can be a dominant competitor in the cellular phone industry.

At this present time, Nokia is a very dominant force in the communications market. One way to determine how strong a force they are is to carry out a SWOT analysis, which consists of a list of their strengths, weaknesses, opportunities and threats.


• Introduction of new products.

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• Broad knowledge base from many standards.

• Large home market and 5% of global market.

• Roaming agreements.

• Investment in research and development (R&D).

• Concurrent engineering ensures quick delivery.

• Incorporation of recycling & material re-use in product life cycle.

• Human resource management � knowledge transfer and flexibility.

• Business partnerships.

• Locked into suppliers.

• Nokia brand stands for quality.

• Attack markets.

• Internal IT systems.

• Products in each market segment.

• Group effort therefore large knowledge base.


• Difficult to make transition from national to global brand name.

• Distribution networks not well established.

• Home market is a limited size.

• Finance needs to be carefully planned.

• Initial low brand recognition.

• Brand identification.

• Low profit margins.

• Challenge of innovation.

• Skills for emerging technology.

• Volatile markets.

• Dependence on suppliers.

• After sales support.

• Late into market for G phones.


• Products

o First to market.

o Internet.

o Business to business.

o Substitute products.

o Network infrastructure.

• Develop software � more features.

• High growth in consumer market.

• Global competitor.

• M-commerce.

• Mergers.

• Product replacement.

• G / Out sourcing.


• Competing with very large phone companies.

• Regulation � lack of standardisation.

• Dependant on service providers.

• Health issue � radiation.

• Environmental issues.

• Rate of growth with short product life cycle.

• R&D is in very large demand.

• Low cost producers.

• Losing best people.

• Internal work ethic.

• Quality.

• Product life cycle.

The value chain consists of primary activities and support activities. These are no different in Nokia’s case. The primary activities are inbound logistics, operations, outbound logistics, sales and marketing and customer service. The support activities are firm infrastructure, human resource management, technology development and procurement.

Primary Activities.

Inbound Logistics.

Nokia try to re-use and recycle their products wherever possible. They also make suppliers pay a penalty for late deliveries. Nokia are also tied to a production schedule. All of these are aimed at the quick and smooth production of their products.


Nokia try to keep the environment priority at production sites. This is for the long-term benefit of everyone. Most of the manufacturing at Nokia is outsourced. They get a lot of their parts from Motorola and AT&T. However, Nokia produces the electrical components. At present, Nokia manufacture across the globe. By using local production facilities and joint ventures allows fast development of products. Nokia also do a lot of research and development at this stage to guarantee quality and assist in product maintenance.

Outbound Logistics.

Outbound logistics are also a very important part of the value chain for Nokia. Operations are based on a decentralised structure and a measured control. They also collect finished products from sites across the globe. All scheduling and ordering is done via operators. Storage costs are very important the lower the storage cost the more profit the company makes.

Marketing & Sales.

Nokia use a distribution of networks to sell their products. They use the likes of Vodafone and O stores to distribute their handsets. The different phone networks do a lot of advertising for Nokia handsets, as it is in their interests to attract customers before the other networks do, this is good for Nokia as its free advertising for them. Where you would see most of Nokia’s advertising is in newspapers and on billboards. Nokia also use the internet for advertising as a lot of people use the internet daily. As phone networks make the majority of their money from the calls alone, the aren’t too bothered with not making money on the handsets, so they often do promotions like free connections or free handsets. They also subsidise the handsets, so Nokia get more money than the consumer actually pays. Nokia are a dominant force in the market because the capture all areas in the market, from business use to leisure use.

Customer Service.

Nokia offer many services to assist their customers, one service that Nokia offers on their products is a 1-month warranty. There are also upgrades available on all handsets. Nokia use there own Nokia stores for customer services rather than sales. Club Nokia is a membership available at these stores, if you are a member and your phone breaks down they will loan you the same handset while your handset is being repaired. This service isn’t available at any other stores. Nokia use their website for most of their customers support services.

Support Activities.

Firm Infrastructure.

Nokia tend to concentrate on environmental management. They also have a lot of alliances. Along with these the mergers, acquisitions and business partnerships, Nokia have a very strong infrastructure.

Human Resource Management.

Human resource has a major part in Nokia, they have a continuous training program and they are always recruiting new staff. New ideas are the basis of Nokia’s success in the market, and it is no surprise that one in four of Nokia’s staff are employed in the research and development department.

Technology Development.

Nokia are constantly creating new designs and new technology, even after a phone has been released, Nokia develop new and improved versions of the software. There is also a lot of research of the market and the customer’s expectations and wants. Nokia use technology to their advantage when it comes to advertising, sales, support and customer feedback.


As Nokia outsource a lot of their development, it reduces the amount of buildings and machinery the need to maintain. Nokia have OEM agreements with external suppliers.

Sponsorship also plays a major part in their company.

How can Nokia improve their supply chain management systems?

Nokia need to manage their supply chain because mobile phones have a short life cycle and with the huge product variety available. Nokia need to ensure the supply chain is designed to reduce market mediation costs. The aim is to get supply on par with demand. If supply is greater than demand they will have excess stock, but if demand is greater than supply they will lose out on valuable sales. Nokia need as much flexibility as possible when it comes to production. They need to be able to act fast if an unexpected demand occurs.

When choosing suppliers the important factors Nokia need to consider are, the speed at which they will be able to supply, the quality of their products, the cost of their products and most importantly the flexibility of switching products they offer.

To improve their supply chain Nokia need to identify a strategy for managing uncertainty in demand. Although Nokia phones come in an array of different sizes, weights, functions and standards, if they could share common components in their products, it would make production more flexible. Another way of improving their supply chain is to reduce lead times. This can be carried out by more orders received direct via the Internet or having direct ordering systems with agents.

If Nokia located production facilities close to their main market it would lead to faster and cheaper distribution. By producing their products close to the market, Nokia could distribute direct to their agents and customers. This would lead to shortening delivery cycles and faster development. Nokia’s policy of employing mergers, acquisitions and business partners as a means to extend their geographic scope reinforces these supply chain management strategies. It is also important that they share info such as production requirements, design databases, etc.

How can E-commerce assist Nokia in building a competitive advantage in sales and service?

With all the new technology at Nokia’s disposal it is important that they use it to their advantage. One way that it is very beneficial is their website. Having a well designed website allows them to display new products, display product details and display product features. Their website can be used to make sales and acquire customer profiles and real time customer information. The website also gives Nokia the option to display pricelists and information about new product developments.

Nokia could also use expert systems to share expertise with retailers and agents by allowing them to suggest a configuration that would satisfy customer requirements. E-commerce can also be used for after sales service. It can be used to monitor performance; hence, detecting any futures bottlenecks and develop methods for improving network performance.

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