EMERGING NOKIA:

ASSIGNMENT QUESTIONS:

1. COMPARE THE MOBILE PHONE INDUSTRY IN EMERGING VS. DEVELOPED MARKETS USING MICHAEL PORTERS FIVE FORCES FRAMEWORK. USE THE FOLLOWING FRAMEWORK FOR COPARATIVE ANALYSIS.

ELABORATE ON EACH POINT. BULLET POINTS ARE NOT ALLOWED.

FORCESEMERGING MARKETDEVELOPED MARKET

BUYERSLow product differentiation: With so many players in the market, the competitors put in similar or better products to survive in the cut throat competitionUpsurge price sensitivity: With more options, everyone looks for best value for their money that they have investedLow consumer churn ratio: People but phones on long term contract and hence refuse to move from one mobile phone to another

ENTRY BARRIERSHigh capital requirement: The factors that distinguish mobile phone devices are lesser and hence companies need to adopt various means by having niche technology usage, higher spending on marketing and advertisement etc. Also, high capital investment is required to manage the economies of scale, and it is tough to enter the market with current firms already operating on cost and differentiation strategies.Legal issues: With so many players in the market which sell similar products, the mobile phone requires a lot of patents and knowledge.Restrictive government policy

Brand identity: People refuse to try new products and services and brand switching is a major problem.Profitability potential is high when both entry and exit barriers are high. In this situation, firms do face more risk because poorer-performing ones tend to continue to produce regardless of profitability and, therefore, continue to add to the supply Expected retaliation: Since there are bigger players, the new players might not enter the market

RIVALRYThe rivalry will be high because there are a lot of similar players in the market who give the same products and services

SUBSTITUTESIt is difficult to find substitute to mobile phone technology. But to survive more and better features are to be added by the companies

SUPPLIERSThe bargaining power of suppliers will be low since they provide such high volume orders that suppliers have been cautious not to temper with the relationshipThe bargaining power of the suppliers has a correlation with profitability of the company. Due to an increase in the bargaining power of suppliers there is a negative impact on profits. The fewer there are, the more power they have.The suppliers can credibly threaten to integrate forward into the industry. In that case, if industry participants make too much money relative to the suppliers, they will induce suppliers to the enter the market

COMPLEMENTORS

1. Now that the Finnish phone maker that once dominated the global market has collapsed into the arms of the U.S. software giant Microsoft, devise an integrated strategic option for Microsoft - Nokia along the dimensions of: source of competitive advantage

Choice of scope: whether it should operate both in emerging and developed markets? Or, it should operate in selected markets? What product it should offer?

It is seen from the case that Nokia is famous for its ability to reinvent itself. Also, Nokia claims itself to have the engineering expertise throughout its history. To add to it, Nokia has the longest, most complex supply chain the world. They have the most efficient sourcing, logistics, manufacturing and distribution of any company in the world for their mobile phones division. These two fortes of the company can play a vital reason in their ability to penetrate and dominate the emerging markets in China, India, Latin America and Africa where the consumers are extremely price sensitivity due to very low levels of disposable income compared to the population in the developed markets.

At the start, Nokia should first attract the developing markets by offering low end units at the price point affordable to the consumers and profitable for the company. After establishing their presence in the market then Nokia needs to keep a close eye on the emerging middle class and their new and more sophisticated demands because of the growing consumer power in the emerging markets. Through R & D they can then focus on coming up with high end and business oriented phones. This will help Nokia cover all the range of cell phones. The should also have various services offerings

Choice of activities: what sort of activities it should focus on, where should it locate these activities (for instance, manufacturing, sales, R&D etc.)

Since Nokia will venture into a very dynamic market, it is imperative to focus on the changing needs of the consumers. Hiring psychologists and anthropologists will understand the businesses need of their consumers in order to develop products andmarketing campaignsthat appeal to their target audience. This often involves first figuring out the target audience for a particular product includingthe gender, age and socioeconomic status of the typical shopper. Next, the consumer psychologist might begin researching the types of products andmarketing messagesthat appeal to these types of buyers.

Once the needs are identified, the expertise can then work on developing the appropriate cell phones and then embed the technology in it. Nokia can go for a joint ventures with other renowned technology companies and produce better cell phones and better services. This in turn will be profitable to both the companies