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Spandan Sarkar 1182103

Case Study On NOKIA

History:
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing company. In 1920, Finnish Rubber Works became a part of the company, and later on in 1922, Finnish Cable Works joined them. All the three companies were merged in 1967 to form the Nokia Group. In the late 1970s, Nokia started taking an active interest in the power and electronics businesses and by 1987, consumer electronics became Nokia's major business. Nokia created the NMT mobile phone standard in 1981 and launched the first NMT phone, Mobira Cityman, in 1987. The company delivered the first GSM network to Radkilinia, a Finnish company in 1991, and in 1992, Nokia 1011 - a precursor for all Nokia's current GSM phones - was introduced. In the 1990s, Nokia provided GSM services to 90 operators across the world. Another significant move of the company during this period was the divestment of its non-core operations like IT. The company focused on two core businesses - mobile phones and telecommunications networks. Between 1992 and 1996, the company exited from the rubber and cable businesses as well Nokia in India Nokia entered the Indian market in 1994. The first ever GSM call in India was made on a Nokia 2110 mobile phone on its own network in 1995. When Nokia entered India, the telecom policies were not conducive to the growth of the mobile phone industry. The tariffs levied on importing mobile phones were as high as 27%, usage charges were at Rs.16 per minute and, at these high rates, consumers did not take to mobile phones. Nokia also had to face tough competition from other powerful global players like Motorola, Sony, Siemens and Ericsson.

The Indian Mobile Phones Industry:

The mobile phones industry made a slow start in India in 1995. Several private players who had entered the industry in 1995 exited in the next few years due to the unfriendly telecom policies of the Indian government, high licensing fees and absence of a proper telecom regulatory body. The growth in the subscriber base of mobile phones remained sluggish initially, reaching the 1 million milestone in 1998. In 1999, the Government of India announced a new telecom policy. This policy planned to provide telephones on demand by 2002. Among other things, the policy allowed unrestricted private entry into almost all mobile service sectors. The government allowed cellular mobile service providers to share infrastructure with other operators. It also allowed existing operators to migrate from fixed license fee to one-time entry fee with revenue sharing. This policy helped many private operators to break even faster. By 2001, the demand for mobile services was growing well. The private companies concentrated on providing basic telephone services to consumers. The number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002.

ANNUAL REPORT :

NOKIA (NYSE)
NOK 5.15

ZACKS RANK: 5 - STRONG SELL

0.08

(1.58%)

Vol. 13,366,660

12.00 CST

Fiscal Year End for NOKIA CP-ADR A falls in the month of December. All items in Millions except Per Share data. 12/31/11 12/31/10

12/31/09

12/31/08

12/31/07

Assets
Cash & Equivalents Receivables Notes Receivable Inventories Other Current Assets

Total Current Assets

Net Property & Equipment Investments & Advances Other Non-Current Assets Deferred Charges Intangibles Deposits & Other Assets

Total Assets Liabilities & Shareholder's Equity

Notes Payable Accounts Payable Current Portion Long-Term Debt Current Portion Capital Leases Accrued Expenses Income Taxes Payable Other Current Liabilities

15,184.29 10,001.69 0 3,245.22 7,022.49 35,453.72 2,565.53 986.10 137.88 2,582.25 8,696.64 4.10 50,426.32

16,299.96 10,052.20 0 3,350.29 6,343.37 36,045.84 2,594.71 888.36 84.98 2,119.32 10,212.87 5.30 51,951.43

12,377.83 11,133.49 0 2,601.67 6,827.13 32,940.13 2,803.95 933.25 0 2,102.26 11,066.53 8.30 49,854.51

10,032.21 14,040.69 0 3,726.04 8,196.41 35,995.37 3,433.31 894.36 39.71 2,887.57 14,960.07 14.70 58,225.12

16,113.35 15,569.07 0 3,942.99 4,536.63 40,162.07 2,621.35 913.08 13.71 2,647.40 5,130.28 60.30 51,548.22

Total Current Liabilities

Mortgages Deferred Taxes/Income Convertible Debt Long-Term Debt Non-Current Capital Leases Other Non-Current Liabilities Minority Interest (Liabilities)

1,385.83 1,222.99 1,075.54 5,282.36 1,468.34 7,704.96 8,101.51 6,905.25 7,685.97 9,698.45 497.22 154.03 0 0 0 0 0 0 0 0 10,349.89 9,779.98 9,073.08 10,330.83 9,753.29 0 0 0 0 0 4,358.07 4,032.83 4,133.38 6,643.03 5,096 24,296 23,291.36 21,187.26 29,942.20 26,016.09 0 0 0 0 0 1,114.24 1,357.11 1,817.68 2,628.67 1,320.27 0 0 0 0 0 5,528.02 5,632.95 0 0 0 0 0 0 0 0 105.85 116.85 6,274.71 1,368.03 441.46 0 2,452.63 2,317.09 3,386.24 3,516.61

Total Liabilities Shareholder's Equity

Preferred Stock Common Stock (Par) Capital Surplus Retained Earnings Other Equity Treasury Stock Total Shareholder's Equity

31,044.11 32,850.91 31,596.75 37,325.15 31,294.44

Total Liabilities & Shareholder's Equity

Total Common Equity Shares Outstanding Book Value Per Share

0 342.62 504.19 10,913.98 8,518.30 896.96 19,382.20 50,426.32 19,382.20 3,744.90 5.18

0 326.66 414.30 13,942.95 5,296.90 880.39 19,100.51 51,951.43 19,100.51 3,744.90 5.10

0 343.17 389.20 14,134.14 4,341.20 949.99 18,257.76 49,854.51 18,257.76 3,744.80 4.88

0 361.86 650.18 17,198.93 5,455.90 2,766.95 20,899.96 58,225.12 20,899.96 3,800.90 5.50

0 337.26 882.92 19,015.77 4,330.90 4,313.16 20,253.78 51,548.22 20,253.78 3,936.90 5.14

CASHFLOW STATEMENT :
NOKIA (NYSE)
NOK 5.15
ZACKS RANK: 5 - STRONG SELL

0.08

(1.58%)

Vol. 13,550,781

12.00 CST

Annual Cash Flow Statement

Fiscal Year End for NOKIA CP-ADR A falls in the month of December. All data in Millions except Per Share data. 12/31/11 12/31/10

12/31/09

12/31/08

12/31/07

Cash Flow From Operations, Investments & Financial Activities Net Income (Loss) -1,621.21 2,456.61 1,242.94
Depreciation/ Amortization & Depletion Net Change from Assets/Liabilities Net Cash from Discontinued Operations Other Operating Activities Net Cash From Operating Activities Property & Equipment Acquisition/ Disposition of Subsidiaries Investments Other Investing Activities Net Cash from Investing Activities

5,866.34 0 -3,745.16 0 2,581.60 4,702.78 -1,420.98 -8,709.79 5,682.47 175.04 -4,273.25

11,617.85 0 829.45 0 -1,641.08 10,806.22 -1,096.80 346.86 -213.87 -9.59 -973.41

0 -888.60 0 4,093.43 1,583.61 -764.64 -1,140.70 4,054.44 -61.28 2,087.80

0 3,119.23 0 763.54 6,339.39 -873.75 13.27 -2,355.69 1.32 -3,214.84

0 195.30 0 3,091.32 4,529.56 -601.24 44.64 -2,466.36 26.50 -2,996.46

Uses of Funds
Issuance (Repurchase) of Capital Stock

1.32

-4,513.02

-3,882.67

Issuance (Repayment) of Debt Increase (Decrease) Short-Term Debt Payment of Dividends & Other Distributions Other Financing Activities Net Cash from Financing Activities Effect of Exchange Rate Changes Net Change In Cash & Equivalents Cash at Beginning of Period Cash at End of Period Diluted Net EPS

-69.64 -82.17 -2,139.34 760.46 -1,530.68 149.02 2,289.76 10,574.13 12,863.90 -0.41

632.08 173.95 -2,017.08 0 -1,209.71 297.44 2,212.28 7,869.13 10,081.41 0.68

5,150.34 -3,964.59 -2,156.67 0 -970.92 -34.87 527.31 7,739.46 8,266.77 0.34

1,000.28 4,252.66 -3,012.60 0 -2,272.69 -72.07 -1,915.24 10,076.35 8,161.10 1.54

135.72 906.23 -2,412.96 0 -5,253.67 -20.56 4,558.57 4,832.77 9,391.35 2.51

Reasons for Which Nokia is Standing on Firm Grounds:

There are many reasons because of which Nokia are standing on firm grounds and have such a market share in Indian market.

Innovations:
Nokias ability to grow up the Brand Equity ladder can be attributed to its product innovation and strong marketing strategies. Nokias ability to build a strong brand positioning is its product innovation and strong marketing and distribution capability. Within of average of 40 models are introduced every year, Mr. Shivkumar, the managing director of the company stated that40% of the turnover in 2008 came from product introductions. Some of the models like Nokia-5130, Nokia-N73, and Nokia1100i are very much in demand.

Consistent brand value:

It is extremely important that the core value of the brand remains consistent. It must consistently communicate to the customers across all the available media vehicles. Ever since it came in the Indian market in 1996, Nokia has communicated a single core value in mobile communication devices

Consistency in communication:
The brand communication should be perceived as consistent. Brand is a powerful differentiator in a highly competitive market place. It provides the company the power to deflect competitive moves. A strong brand rings trust, confidence, comfort and reliability in the customers mind. It enables the customer to create beliefs, around brand values. Any break or distribution in beliefs creates dissonance the customers mind. The fact that customers

Research analysis:
1) First we come to the multimedia aspect of the cell phones. In the survey we saw that the Nokia users are satisfied with the multimedia features provided by Nokia. Well there are many genres of cell phones manufactured by Nokia. Some of them are Express music, N-series, E-series and Classic series. The Classic series phones are not provided with much multimedia features. They are mainly provided with radio or maximum VGA camera. The Express music phone mainly concentrates on music. They have music dedicated keys. So the users of express music phones are quite happy. The users of express music phones are mainly youth. They meet their passion of music by these handsets. The hones which are in demand in the market are Nokia Xpress music 5130, Nokia Xpress music 5310. The N-series handsets are loaded with multimedia features. They provide excellent sound quality, excellent resolution and good quality camera. Among the N-series handsets N-73 is the greatest success. But on the other hand N-72 is one of the biggest flops in the history of Nokia industry. The users are N-72 are disappointed with their handset. They at least expected some more from the handset. Well the Nokia N-72 is the first handset in N series. Might be that is why that turned to be a big disaster. As we can see in the graph most of the people are happy and satisfied with the multimedia features.

Multimedia Aspects:
80 70 60 50 40 30 20 10 0 Multimedia Aspects Excellent Good Satisfactory Below Expectation

2) Then we come to the battery backup of Nokia phones. Well here we saw mixed reactions of the people. The Nokia classic phone users are really satisfied by the battery backup of their handsets. Even the Xpress music handsets users are also happy, but some are just satisfied and not so much happy. The same is the case with N- series users. The N-73 users are really happy, even the N-70 users are happy, but again the N-72 users are not satisfied with their battery backup.

Battery Backup of Nokia Phones:

60

50

40

excellent good

30

satisfactory below Average

20

10

0 Battery backup

3) After that we come to business compatibility of Nokia phones. In this the E-series users are most happy. Business compatibility like internet, organizer office tools are not so much updated in Nokia classic series. Internet is present in some of the Xpress music phones. In the N-series phones also business compatibility is appreciable enough but E-series leads the way in this category. The business features provided in E-series phones are really appreciable. The users even are too much happy with their phones. And that is reflected in the pie chart below.

Business compatibility of Nokia phones:

Excellent Good Satisfactory Below expectation

4) At last we come to the pricing of the phone. The most basic model of nokia is priced around Rs. 1100. We saw in the survey near about 80% of the people we surveyed said that Nokia phones are affordable in price. Many of the people even said that Nokia phones are low priced. The basic models are priced between Rs 1100 to 4000. Then comes the Xpress music handsets which are priced between 5700 to 13500. The N-series and E series has a huge range in prices. Its just because the features provided in the sets are diverse. But here also the users of N-72 have a complaint that their phones are a bit high priced.

Price in accordance of customers:

price
80 70 60 50 40 30 20 10 0 High Priced Affordable Low priced price

Conclusion from the survey:

There are some conclusions that can be derived clearly from the survey. We saw in the survey that Nokia has a clear cut focus on what they are producing who are going to be their target customers. We observed in the survey that that Nokia Xpress Music mainly attracts the age group between 15-25 years. Same is the case with Nokia N- Series. But Nokia N-Series attracts a large range of customers. It is just because in the N-Series Handsets technology and style are matched perfectly. But Nokia is most successful in the E-series. We saw in the survey that only 2-3 percent of E-series handsets are typical business phone. They are heavily loaded with business features. Moreover the consumers are really happy with the services provided by Nokia. They are many Nokia stores in Bhubaneswar and all of them are easily accessible and they provide really quick service. Nokia has created a strong brand reputation. Nokia is also referred as Master Marketer

Nokias marketing strategy:

No doubt that the products from the Finnish company, Nokia, are some of the very best in the world, but the company still hasnt found a profitable way to market its goods. The very reason that other mobile phone companies are fast eating up Nokias market share is their superior (yet simple) marketing practices. Motorola and Samsung must now be in the FUW (frequently used words) list in Nokias board meetings. These companies have made Nokia pay dearly for its rudimentary approach in marketing its phones. The aggressive marketing practices followed by Motorola have hit Nokia very hard and it is losing very crucial global market share every month to its American competitor. Nokia, quite alarmed by the dropping sales of its phones, is now putting all its weight behind the N-Series range. The N-Series is packed with multimedia features and Nokia believes that these phones might woo the costumers back to the big daddy of the mobile phone world. But Espoo, we have a problem!! (Nokia is headquartered at Espoo, Finland). While Motorola (quite intelligently) gives a dashy-flashy name to every phone it brings into the market, Nokia tends to do the exact opposite. Nokia from the very start has relied on numbers rather than names. This strategy worked very well in the past, but only because there wasnt much competition back then. But times have changed. Every month the market sees at least a dozen new handsets from an equal number of manufacturers. Consumers now have more than they can choose. Consumers are more attracted by names because they can thus easily relate to the features of the phone. This is evident from the success of the MotoRazr, MotoSlvr, MotoRizr and MotoKrzr. These phones are not packed with heavy multimedia features like the N-Series; still they are selling like hot cakes. Just by reading the name of the handset, one gets a broad idea what the phone looks like or what its features are. Nokia advertises more than Motorola. Still its market share is dropping. Motorola does not need to spend much money for the promotion of its products and it doesnt have to worry about the marketing of these phones; it just simplifies its job by naming its products right. Take the example of Apple. It did not have to do much to promote its iPhone. Thanks to the leaked photos and technical specifications, it became the most anticipated gadget of all times. It is high time that Nokia starts applying some common sense to its marketing strategies. It doesnt have to do anything great, other than just naming its phones. A few months ago, a highly placed Nokia official told Reuters that his company would soon go the Motorola way and start using names for its new phones. It is in Nokias best interest that it takes to this path as early as possible, otherwise the once market leader might see its market share plummeting to even lower depths.

RECOMMENDED marketing strategy:

There are many priorities within a business, but in a marketing orientated company like Nokia, many of the following principles will be high on the agenda: 1. Customer satisfaction: Market research must be used to find out whether customers' expectations are being met by current products or services. 2. Customer perception: this is based on the images consumers have of the organization and its products, this can be based on; value for money, product quality, fashion and product reliability. 3. Customer needs and expectations: This is anticipating future trends and forecasting for future sales. This is vital to any organization if they wish to keep their entire current market share and develop more. 4. Generating income or profit: This principle clearly states that the need of the organization is to be profitable enough to generate income for growth and to satisfy stakeholders in the business. Although satisfying the customer is a big part of a companies plans they also need to take into account their own needs. 5. Making satisfactory progress: Organizations need to make sure that their product is developing along with the market, if a product is developing well, then income should increase, if not then the marketing strategy should be revised. 6. Be aware of the environment: An organization should always know what is happening within their designated market, if it is changing, saturation, technological advances, slowing down or rapidly growing, being up to date on this is essential for companies to survive.

P.E.S.T Analysis :
Political factors- Legal constraints (such as the G3 technology constraints that Nokia have to take into consideration) must be taken into account because many businesses aim to make a profit so they may be tempted to mislead their customers about prices, quality of products and the availability of their products. They may also try to cut expenditure by using lesser quality materials in their products (such as weaker materials for Nokia cases and batteries), also some companies may also dispose their waste in ways that damage the environment (pollution) and not ensuring high standards of hygiene and safety in the workplace and outlet stores, all of these are illegal and can leave companies in big legal trouble. The governmental bodies in the U.K have introduced new laws into the business environment,

which ensure that none of these procedures take place; if a company is to be successful they must follow all of these laws. Environmental social and ethical factors- some businesses view profits are more valuable then a strong ethical code and this can govern behaviour and business conduct. Some un-ethical practices are against the law and companies cannot become involved in them (I have mentioned these above) but there are also some practices that aren't illegal by law but are considered highly un-ethical by the consuming public, companies who engage in these practice's can lose a lot of market share if they are found out. An example of this is cosmetic testing on animals, it is legal but some of the consuming public are not happy about it and boycott Certain products because of it, companies must be very careful about how they conduct themselves. Nokia have managed to be quite environmentally friendly and have not done anything that the consuming public have taken huge offence to, they have been very careful about this and this is one of the reasons they are such a popular brand of mobile phones. Technological- In the communications market technology is perhaps the most important factor that companies like Nokia have to take into consideration. They have to keep up to date with all the newest technological advances (like camera and motion capture phones) if they are going to capture the biggest market share and stay ahead of their competitors (Sony and Seimens).

S.W.O.T Analysis:
SWOT analysis is also another way of deciding on a successful marketing scheme, we must look at strength, weakness, opportunity and threat. Strength - Is looking at the companys current market share and researching how recognized Nokia is amongst consumers in the target market. Nokia is currently one of the most popular Mobile communications companies in the industry, generating over 52,000 sales in 1997, which was a 34% increase from 1996. Nokia's net sales for the October-December period in 1997 came to a total of FIM 15,857 million (FIM 12,669 million in 1996). Weakness - This is basically looking at where the product is failing or not doing as well as it

should in the market. Nokia's problems are that: 1. They are currently aiming their products at a saturated market segment. 2. Their wage costs are forever rising. 3. Higher import charges have now been put into place. 4. There are some quite high supply chain costs that Nokia are currently paying. Opportunity - This is the area in which Nokia can make more profit, or gain more market share. There are 2 ways in which Nokia can currently do this: 1. Improve the technology that they are using to make their phones and use in their products, for example, camera phones and advanced picture messaging would attract new consumers to purchase phones under the Nokia brand name. 2. Using innovation to re-invent their products, change and develop within the market to offer something none of the competitors have. Also the fact that phone call charges are being forced to fall should prove to be an opportunity for Nokia to sell to the people, who previously may have not purchased a phone because of higher call charges. Threat: the main threat of Nokia is now is that other mobile companies like Samsung, Motorola, Siemens are strengthening their brand equity very rapidly. So Nokia should evolve with new marketing strategies so that they can hold their grounds tightly.

8Ps IMPLEMENTED TO OVERCOME THE SITUATION:

Price- The phones that Nokia produce are usually sold at high prices (new phones can be expected to enter the market at around 200+, if they carry the latest technology). The price of the new phones usually decreases after an introductory period, which is usually around 2 months long. Nokia's prices are usually competitor based, in such a way as, they try to keep their prices a bit lower than those of the closest competitors, but not as low as the "smallest" competition as consumers do not mind paying the extra money for the "extra quality" they will receive with a well known brand, such as Nokia. Product- Nokia phones tend to include all the latest technology and a lot of the consumers favourite aspects such as text messaging and games like Snake and Memory. When the phones

came out they were big and bulky and quite unattractive but now they are all quite sleek and stylish with phones now getting small enough to fit in the palm of your hand as standard. Most of the phones produced nowadays have accessories that consumers must buy with them (carry cases, hands free kits and in-car chargers) these generate Nokia a lot of profit, as they are very high priced. Nokia's marketing mix has worked very well until recently as the market they are aiming at has become more and more saturated and after looking at all the mobile phone sales figures, it looks as if the phone companies can aim at this same youth market for about another 2 years until they need to change, but they should change sooner so they can start making a bigger profit and get a head start on the competition who will also have to change the market they are aiming at. Nokia's current promotional strategy is working very well as they are able to "talk to" a large number of consumers in different markets rather than the niche markets the old promotional strategies where restricted to.

Promotion- Nokia have never been defeated in its field of promotion but its old & gold promotional activities never exists nowadays. Modern promotional activities becomes successful only with the help of the catchy and attractive tag lines and obviously a great presentation part, so company should adopt this new idea. Not only this NOKIA should also take part in the promotional activities like seasonal sales offer n luky draw offers ,etc.

Place- Nokia phones are generally sold at all established mobile phone dealerships such as Carphone Warehouse and The Link, although they are also sold at other retailers such as Dixon's and other electrical suppliers. The products are only sold in the electrical suppliers and store other then dedicated phone dealerships after the introductory period so the phones can remain limited edition, as this will encourage younger consumers to buy them. Promotions- Nokia tend to promote the new technologies and mobile devices they create using one big advertising campaign that focuses on a singular technology instead of each individual handset so they can appeal to a lot of different markets with one campaign.

Process- Process not only involves the activities of the producers rather sometimes it also involves the customers in a different way when customers informs their mates about the product & their operational benefits. In this field of process advertise may play a huge role by

demonstrating about the manufacturing process of the product. Companys website can also be visited to gather further information.

Physical Environment- The Physical environment speaks all about the physical entity i.e. the assets of the company such as building of new offices n plants will increase the asset values of the firm. Not only this the other services provided by the company to its employees like living places(flats) n schools for their children, hospitals, maintain of roads near the office and its logged areas. providing free transport facility to its employees also sometimes lead to the good impression on customer minds. Beside this the physical environment also denotes the modern equipments & manufacturing & processing plant of the company. Experienced employees are also a part of the physical environment & they are the key to success to drive NOKIA forward with expertise knowledge.

People- Here in this segment the company fixes about its target i.e. in this case the product is targeting the young generations as its prospective buyers. The company should use its distribution channel to meet the demand of even rural areas.

Productivity & Quality- NOKIA handsets are basically famous for their hardy & durable formation but the main thing is that only the durability will not do cause nowadays people especially the youths on whom NOKIA based its target market wants to use handsets which looks trendy & stylish girls use to choose peppy colors thus we have to include variations of different colors in our product segment. Last but not the least customers who are interested in business phones complaints a lot on its old symbian o.s which is a very old & backdated thus we should implement new o.s i.e. android o.s. or windows mobile to mke our product more reliable for the use of our prospective consumers.

RECOMMENDATIONS :
DIVERSIFY ITS OPERATIONS: The company should expand its operational activity to capture the market of rural areas also along with the prospective buyers of urban areas. Not only that the company should have a wide range distribution of its product rather it should provide a good bulk of supply to each of its dealer or outlet so that the customers could get the variety of options to choose their product according to their needs and demands and didnt switch on to products of other companies.

CREATE A STABLE MARKET BY INTEGRATION KNOWLEDGE WITH MODERN IDEAS : The company should keep on doing research and try to introduce new ideas and revolutionary concept in the field of cell phones. PROVIDE INNOVATIVE PRODUCTS TO ITS CUSTOMERS: The company should have some unique feature and specification in its own product so that it attracts the customers and they gets persuaded to buy this products only. STRIVE FOR GLOBAL POSITIONING AS A LEADER : The company should also discover new ways and ideas of promotional activities, so that it never fades away from the minds of the customers & always remain at the peak level of their choice. REALIZE ITS CORPORATE SOCIAL RESPONSIBILITY: The company should realize its corporate social responsibility such as providing flats and living places to its employees, schools for their children, hospitals, maintenance of roads near the office and its logged areas. providing free transport facility to its employees, etc and sometimes all this lead to the good impression on customer minds.

CON CLUSION :
Nokia is really Connecting People It is leading the Indian telecom market. Made for the common people. (Nokia 2700) Nokia Xpress Music attracts age group of 17 to 25 (Nokia Xpress music 5130) Nokia N-Series attracts a large range of consumers. In N-Series style matches with technology. (Nokia N79) E-Series mainly attracts Business persons and Service persons ( Nokia E63)