ACKNOWLEDGEMENT

Thanks to Allah Almighty who enabled me

and my group members to do research on
this project. I revere this patronage and moral
support extended with love of my parents
whose passionate encouragement made it
possible for me to complete this project.

I submit this heartiest gratitude to my

respected lecturer of marketing for his
sincere guidance and help for completing this
project.

Finally I would like to thanks to my project

members, who helped me and co-operated
with me in this project.

Adnan Tariq

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 Table of Contents

Terms of Reference ------------------------------------------ 3

Nature of Organizations ------------------------------------ 3

Procedure ----------------------------------------------------- 4

Findings ------------------------------------------------------ 9

PESTEL Analysis ------------------------------------------- 9

PESTEL Importance for Organizations ---------------- 10

Impact of the external macro environment on organisation ----- 11

 Political Factors------------------------------------- 12

 Economic Factors----------------------------------- 14

 Socio-Cultural Factors ---------------------------- 16

 Technological Factors ---------------------------- 17

 Legal Factors -------------------------------------- 19

 Environmental Factors --------------------------- 20

Conclusions ------------------------------------------------ 23

Recommendation For Future Performances --------- 24

References -------------------------------------------------- 26

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1.0 Terms of Reference
The analysis of Nokia in the United States shows that the company’s problems appear
to be related to the very characteristics of the U.S. market and the way Nokia has
reacted. First and foremost, Nokia has had a difficult relationship with the operators
who have required tailoring, technology variations etc. In addition to its focus on
GSM, Nokia seems to have refused to tailor for operators and insisted on sales under
the Nokia brand. Finally, over the years, Nokia’s situation has been complicated by
occasional disputes related e.g. to immaterial property rights and recently problems in
developing and having operators represent especially Nokia’s high-end models.

2.0 Nature of the organisation

A Finland multinational company, Nokia Corporation (Nokia) is one of the many
companies in today’s mobile industry. Nokia aims to provide a range of mobile
devices which enable people to enjoy their services and software in areas like
entertainment, business purposes and many more. In 1865, Nokia was founded by by
Fedrik Idestam with the business of cable, rubber and pulp manufacturer. Today, the
CEO of Nokia is Rajeev Suri and the chairman is Risto Siilasmaa. Nokia is one of the
worlds leading mobile phone provider operating in more than 150 countries around
the globe with more than 123,000 employees of which almost 30 percent is employed
for Research and Development in 16 countries. As of 2009, the global revenue for
Nokia was EUR 41 billion and the operating profit was 1.2 billion. Its rapid growth in
the 1990s coincided with a basal structural change of the Finnish economy and
industry which Nokia had played an important role. Despite being a leading
multinational company in Finland, Nokia plays an important role in the economic
growth of Finland as it has been one of the fastest growing companies in the whole of
Europe.
History of Nokia
In 1865 when the demand for paper was strong, engineer Fredrik Idestam established
a wood-pulp mill started manufacturing paper in southern Finland near the banks of a
river. This made the company’s sales improved tremendously and Nokia expanded
even faster. Nokia had first exported paper to Russia followed by the United
Kingdom and lastly, France. Nokia factory then employed a large workforce and a
small community grew around it. Finnish Rubber Works, one of the manufacturer for
Rubber goods was impressed with the hydro-electrcity produced by the Nokia wood-
pulp. They decided to merge and started selling goods under the brand name, Nokia.

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After World War II, it acquired a major part of the Finnish Cable Works shares. The
Finnish Cable Works had expanded quickly due to the increasing need for telegraph,
telephone networks and power transmission. Gradually the ownership of the Rubber
Works and the Cable Works companies consolidated. In 1967, Nokia Group was
formed when all the 3 companies merged-up. The Electronics Department generated 3
percent of the Group’s net sales and provided work for 460 people. In the beginning
of 1970, the telephone exchanges consisted of electro-mechanical analog switches.
Soon Nokia successfully developed the digital switch (Nokia DX 200) thereby
replacing the prior electro mechanical analog switch. The Nokia DX 200 was fixed
and improved with high-level computer language as well as Intel microprocessors
which allowed computer-controlled telephone exchanges to be the best and is the
basis for Nokia’s network infrastructure even till today. In 1981, the introduction of
mobile network enabled the Nokia production to invent the Nordic Mobile
Telephony(NMT), the world’s very first multinational cellular network. The NMT
was later on introduced in many other countries. Soon after, a digital mobile
telephony, Global System for Mobile Communication (GSM) was launched
and Nokia started the development of GSM phones. Beginning of 1990, there was an
economic recession in Finland which made Nokia’s sale of GSM phones increased
tremendously. This was the main reason for Nokia to not only be one of the largest
but also the most important companies in Finland. Based on resources, Nokia supplied
GSM systems to a total of 59 operators in 31 countries in August 1997. Improving
successfully; Nokia also became a large television manufacturer and the largest
information technology company in the Nordic countries. Today, Nokia is a world
leader in digital technologies, including multimedia terminals, wireless data solutions,
telecommunications networks and mobile phones.

3.0 Procedure
In less than a decade, Nokia emerged from Finland to lead the mobile phone
revolution. It rapidly grew to have one of the most recognisable and valuable brands
in the world. At its height Nokia commanded a global market share in mobile phones
of over 40 percent. While its journey to the top was swift, its decline was equally so,
culminating in the sale of its mobile phone business to Microsoft in 2013. It is
tempting to lay the blame for Nokia’s demise at the doors of Apple, Google and
Samsung. But as I argue in my latest book, “Ringtone: Exploring the Rise and Fall
of Nokia in Mobile Phones”, this ignores one very important fact: Nokia had begun

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to collapse from within well before any of these companies entered the mobile
communications market. In these times of technological advancement, rapid market
change and growing complexity, analysing the story of Nokia provides salutary
lessons for any company wanting to either forge or maintain a leading position in their
industry.

Early success
With a young, united and energetic leadership team at the helm, Nokia’s early success
was primarily the result of visionary and courageous management choices that
leveraged the firm’s innovative technologies as digitalisation and deregulation of
telecom networks quickly spread across Europe. But in the mid-1990s, the near
collapse of its supply chain meant Nokia was on the precipice of being a victim of its
success. In response, disciplined systems and processes were put in place, which
enabled Nokia to become extremely efficient and further scale up production and
sales much faster than its competitors. Between 1996 and 2000, the headcount at
Nokia Mobile Phones (NMP) increased 150 percent to 27,353, while revenues over
the period were up 503 percent. This rapid growth came at a cost. And that cost was
that managers at Nokia’s main development centres found themselves under ever
increasing short-term performance pressure and were unable to dedicate time and
resources to innovation.
While the core business focused on incremental improvements, Nokia’s relatively
small data group took up the innovation mantle. In 1996, it launched the world’s first
smartphone, the Communicator, and was also responsible for Nokia’s first camera
phone in 2001 and its second-generation smartphone, the innovative 7650.
The search for an elusive third leg
Nokia’s leaders were aware of the importance of finding what they called a “third leg”
– a new growth area to complement the hugely successful mobile phone and network
businesses. Their efforts began in 1995 with the New Venture Board but this failed to
gain traction as the core businesses ran their own venturing activities and executives
were too absorbed with managing growth in existing areas to focus on finding new
growth. A renewed effort to find the third leg was launched with the Nokia Ventures
Organisation (NVO) under the leadership of one of Nokia’s top management team.
This visionary programme absorbed all existing ventures and sought out new
technologies. It was successful in the sense that it nurtured a number of critical
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projects which were transferred to the core businesses. In fact, many opportunities
NVO identified were too far ahead of their time; for instance, NVO correctly
identified “the internet of things” and found opportunities in multimedia health
management – a current growth area. But it ultimately failed due to an inherent
contradiction between the long-term nature of its activities and the short-term
performance requirements imposed on it.

Reorganising for agility

Although Nokia’s results were strong, the share price high and customers around the
world satisfied and loyal, Nokia’s CEO Jorma Ollila was increasingly concerned that
rapid growth had brought about a loss of agility and entrepreneurialism. Between
2001 and 2005, a number of decisions were made to attempt to rekindle Nokia’s
earlier drive and energy but, far from reinvigorating Nokia, they actually set up the
beginning of the decline. Key amongst these decisions was the reallocation of
important leadership roles and the poorly implemented 2004 reorganisation into a
matrix structure. This led to the departure of vital members of the executive team,
which led to the deterioration of strategic thinking. Tensions within matrix
organisations are common as different groups with different priorities and
performance criteria are required to work collaboratively. At Nokia which had been
accustomed to decentralised initiatives, this new way of working proved an anathema.
Mid-level executives had neither the experience nor training in the subtle integrative
negotiations fundamental in a successful matrix. And so reorganisations will be
ineffective without paying attention to resource allocation processes, product policy
and product management, sales priorities and providing the right incentives for well-
prepared managers to support these processes. Unfortunately, this did not happen at
Nokia. NMP became locked into an increasingly conflicted product development
matrix between product line executives with P&L responsibility and common
“horizontal resource platforms” whose managers were struggling to allocate scarce
resources. They had to meet the various and growing demands of increasingly
numerous and disparate product development programmes without sufficient software
architecture development and software project management skills. This conflictual
way of working slowed decision-making and seriously dented morale, while the wear
and tear of extraordinary growth combined with an abrasive CEO personality also
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began to take their toll. Many managers left. Beyond 2004, top management was no
longer sufficiently technologically savvy or strategically integrative to set priorities
and resolve conflicts arising in the new matrix. Increased cost reduction pressures
rendered Nokia’s strategy of product differentiation through market segmentation
ineffective and resulted in a proliferation of poorer quality products.
The swift decline
The following years marked a period of infighting and strategic stasis that successive
reorganisations did nothing to alleviate. By this stage, Nokia was trapped by a
reliance on its unwieldy operating system called Symbian. While Symbian had given
Nokia an early advantage, it was a device-centric system in what was becoming a
platform- and application-centric world. To make matters worse, Symbian
exacerbated delays in new phone launches as whole new sets of code had to be
developed and tested for each phone model. By 2009, Nokia was using 57 different
and incompatible versions of its operating system. While Nokia posted some of its
best financial results in the late 2000s, the management team was struggling to find a
response to a changing environment: Software was taking precedence over hardware
as the critical competitive feature in the industry. At the same time, the importance of
application ecosystems was becoming apparent, but as dominant industry leader
Nokia lacked the skills, and inclination to engage with this new way of working. By
2010, the limitations of Symbian had become painfully obvious and it was clear
Nokia had missed the shift toward apps pioneered by Apple. Not only did Nokia’s
strategic options seem limited, but none were particularly attractive. In the mobile
phone market, Nokia had become a sitting duck to growing competitive forces and
accelerating market changes. The game was lost, and it was left to a new CEO
Stephen Elop and new Chairman Risto Siilasmaa to draw from the lessons and
successfully disengage Nokia from mobile phones to refocus the company on its other
core business, network infrastructure equipment.
What can we learn from Nokia
Nokia’s decline in mobile phones cannot be explained by a single, simple answer:
Management decisions, dysfunctional organisational structures, growing bureaucracy
and deep internal rivalries all played a part in preventing Nokia from recognising the
shift from product-based competition to one based on platforms. Nokia’s mobile
phone story exemplifies a common trait we see in mature, successful
companies: Success breeds conservatism and hubris which, over time, results in a
decline of the strategy processes leading to poor strategic decisions. Where once

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companies embraced new ideas and experimentation to spur growth, with success
they become risk averse and less innovative. Such considerations will be crucial for
companies that want to grow and avoid one of the biggest disruptive threats to their
future – their own success.
Nokia’s strategies
Here are some strategies Nokia has:
Changes of competitive environment – Traditional competitors which are in the low
end are making an effort to increase their volume share. As the mobile telecom,
Internet and PC industries converge, the industry ecosystem is expanding, and new
entrants like Apple, RIM and Google are creating new mobile solutions.
Change of consumer needs – The importance and volume growth of voice and design
driven devices business continues and will resume. Many consumers look forward to
innovative mobile solutions. Nokia aims to be a truly consumer driven company and
is responding to these divergent consumer needs.
Believing in a world of changing paradigms – Changing of the nature of consumer’s
relationships with companies.
Nokia’s business – Nokia services and devices has two major priorities;
Products(business emphasized on maintaining and increasing sale advantage) and
Solutions(business delivers mobile solutions emphasizing on innovation and unified
UX). The delivery of ground breaking location-aware solutions and advertising
prospect is enabled by NAVTEQ’s mapping content. NSN enables Communications
Service Providers to make the most of networks efficiency and to bring rich
experiences.
Nokia uses the power of we – Nokia uses their scale for good by presenting
maintainable products and solution across the whole portfolio, advocating sustainable
choices with mobile services and ensuring a world-class global take-back program
Competitive advantage now and in future – leveraging Nokia’s main strengths;
leading brand, scale, distribution capability, product portfolio excellence & leading
market position in most markets. Developing new strengths; seamless, delightful and
effortless user experiences, vibrant partner ecosystem, people and places enriched
solutions, direct and endless consumer relationships, regain market standing in all
markets
Irresistible solutions and vibrant ecosystems – starting from a consumer needs and
wants, radically improve the user experience, co-creating value with developers,
operators, and partners by building an open ecosystem.

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Direct and endless consumer relationships – Nokia devices strive to initiate all
consumers to the rich world of services. Consumer understanding to maximize
Nokia’s value to the consumer. Privacy and trust: permission based. 300Million active
users by end 2011.
Best devices – three devices areas with different ways to create and capture value;
computers, smartphones and phone. Seamless user experience is number one priority.
Smart services – focus on four interconnected services under Ovi brand.
Differentiation through context enrich services – people and places.

3.1 Findings
Why did Microsoft buy Nokia?

Microsoft hopes to triple its smartphone market share over the next 5 years.
Microsoft has just announced that they are purchasing Nokia’s devices and services
divisions. Nokia has been the main manufacturer of Windows Phone 8 devices, and it
looks like Microsoft will be using this acquisition to further merge their software and
hardware engineering and design.

In a joint statement from (outgoing) Microsoft CEO Steve Ballmer and Nokia CEO
Stephen Elop, the two executives stated, “Today’s agreement will accelerate the
momentum of Nokia’s devices and services, bringing the world’s most innovative
smartphones to more people, while continuing to connect the next billion people with
Nokia’s mobile phone portfolio.”

This is not a complete takeover, as Nokia will still be its own entity with its own
patent portfolio. However, Microsoft will be granted a “10-year license” to Nokia’s
patents.

The purchase is expected to close the first quarter of 2014 and will net Nokia EUR
5.44 billion (~$7.1 billion).

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Some interesting tidbits from the announcement:
“At closing, approximately 32,000 people are expected to transfer to Microsoft,
including 4,700 people in Finland and 18,300 employees directly involved in
manufacturing, assembly and packaging of products worldwide.”

“Microsoft is acquiring Nokia’s Smart Devices business unit, including the Lumia
brand and products.”

3.2 What is a PESTLE analysis?

A PESTEL analysis is a framework or tool used by marketers to analyse and monitor
the macro-environmental (external marketing environment) factors that have an
impact on an organisation. The result of which is used to identify threats and
weaknesses which is used in a SWOT analysis.

PESTLE analysis of Nokia

Nokia (NYSE: NOK), based in Finland, was once the world’s premier manufacturer
and marketer of mobile phones. Unfortunately, it has been unable to adapt to
changing market conditions created by the introduction of smartphones and the rise of
aggressive competitors such as Apple Inc. and Samsung. Nokia’s problems and
struggles are clearly exposed by its financial numbers. As recently as June 2012
Nokia reported revenues of $34.08 billion, but on June 30, 2015, Nokia reported
revenues of $16.31 billion. Those revenues actually represent something of a
turnaround for the company; in June 2013 Nokia reported revenues of just $8.57
billion, or a little over a quarter of the number from the year before. Recent revenue
figures indicate that Nokia is maintaining its market position but not growing. The
troubles affecting Nokia arise from a radical transformation in its business
environment. A brief examination of the Political, Economic, Social/Cultural,
Technological, Legal and Environmental, or PESTLE, conditions affecting Nokia can
give us a glimpse of the company’s potential future

3.3 Importance for organisations

PESTEL stands for Political, Economic, Social, Technological, Environmental and
Legal impact on a company. There are people who will roll their eyes and believe that
a PESTEL analysis is just another exercise in data for geeks. It isn’t. What the
PESTEL analysis is intended to do is give decision-makers an understanding of
changes that may be occurring within a given market. These can influence marketing

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and relationships that a company has worked hard to develop. Knowing ahead of time
that a change may be occurring will help in making better business decisions.

Putting Meaning behind the Acronym

Political changes are the kind of news that gets major attention. Elections can remove
a pro-business, government and replace it with one that is in favor of regulations. A
company that has extensive government contracts has to be aware of possible shifts
that could result in either new business, or decisions not to renew agreements.
Business must be very in tune with any economic changes that occur. The market may
serve up bitter medicine or handout superior rewards depending on the circumstances.
Interest rates, cost of labor, and danger of possible inflation are going to have an
impact on any corporate budget. The social factors may be something as simple as
changes in popular trends in spending. Age demographics might also come into play
and the social changes concentrate attention on the consumers. Our global economy is
heavily influenced by technology and developments in electronic communication and
mobile applications can play a role in business decisions. The latest technology could
even cause a needed revision in blue prints or product design.
Importance in a Global Market
The PESTEL analysis is concerned with the outside environment. Within each
criterion are some elements such as the law, physical environment, and perhaps even
the mores and ethics of the population. Those who are doing business in a foreign
country would find the results of the analysis extremely valuable. Information can
determine whether there should be an expansion, or just consolidation of business
within the borders. As regulatory restrictions collapse around the world, companies
are looking for new markets that have not been probed before. The PESTEL analysis
can help make the decision whether or not a particular country or region holds any
potential for profitable business. Any market has the potential for good or bad, and the
analysis helps weigh things in a very objective balance. It goes without saying that
PESTEL analysis encourages strategic planning and provides the necessary data.

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3.4 Analysis of the impact of the external macro
environment
Nokia Corporation PESTEL analysis is a strategic tool to analyze the macro
environment of the organization. PESTEL stands for - Political, Economic, Social,
Technological, Environmental & Legal factors that impact the macro environment of
Nokia Corporation. Changes in the macro-environment factors can have a direct
impact on not only the Nokia Corporation but also can impact other players in the
Communication Equipment. The macro-environment factors can impact the Porter
Five Forces that shape strategy and competitive landscape. They can impact
individual firm’s competitive advantage or overall profitability levels of the
Technology industry
PESTEL analysis provides great detail about operating challenges Nokia Corporation
will face in prevalent macro environment other than competitive forces. For example
an Industry may be highly profitable with a strong growth trajectory but it won't be
any good for Nokia Corporation if it is situated in unstable political environment.

3.4.1 Analysis of the impact of the Political external

environment
As Nokia Mobile Phone Company is large company and it is exporting its products in
about 150 countries, so every country has its own rules and regulations to deal with
trade of the IT products and mobile phone services. The companies do not have any
option to follow the rules and regulation, which are imposed on the business and trade
activities. In some of the countries, Nokia has to face strict regulations and it has to
stop its business there. As far as the business of the mobile phone company in India,
the company has to follow minimum wage laws and the company has to pay the same
pay to the workers. India has regulated the number of working hours for the
employees and the companies have to adhere these regulations strictly (Academic
sample papers, 2015). The companies have to follow the taxation policy, government
stability and employment laws to follow them in the country, where they conduct their
operation. In some parts of the company, the educated work force is necessary for
better working and they can take care of the infrastructure of the economy
“Nokia” is continually given to a common number of novel organization sways. Each
country has its legitimate skeletons other than interesting controls and terms of trade
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 and the supportive association is still to an awesome degree managed. Then again, as
an issue in the accommodating association with wide experience, Nokia joined with
the essentially organization Chinese suppliers advance more than 10 years past. It is in
the same course key to note that Nokia has moved its thought making blueprints to
Chinese suppliers and neighbourhood nearby Indian and thusly any overseeing body
intervention in those countries can straight effect Nokia.
Political environment are usually considered as one because they are enforced by the
nation’s government. It is vital for Nokia’s operation because different nations with
their respective government have different Political/Legal platforms respectively;
Nokia operating on global level must abide to ground rules and regulation in different
markets of host countries around the world. To its success, Nokia surveys its scope of
limits in order to isolate prohibited actions, regulations and aid from the government
so as to withstand the international trade. Quotas (limit to goods imported),
embargoes (restrictions), tariff and tax charges, subsidies and patents over certain
technology or equipment are decided by the government so Nokia works hand-to-
hand with authorities to gain maximum advantage to the Nation’s target market. Laws
of copyright and abuse of phone usage keeps Nokia ahead, it limits any space of
intrusion or misuse of their products. Political factors play a significant role in
determining the factors that can impact Nokia Corporation's long term profitability in
a certain country or market. Nokia Corporation is operating in Communication
Equipment in more than dozen countries and expose itself to different types of
political environment and political system risks. The achieve success in such a
dynamic Communication Equipment industry across various countries is to diversify
the systematic risks of political environment. Nokia Corporation can closely analyze
the following factors before entering or investing in a certain market.
 Political stability and importance of Communication Equipment sector in the
country's economy.
 Risk of military invasion
 Level of corruption - especially levels of regulation in Technology sector.
 Bureaucracy and interference in Communication Equipment industry by
government.
 Legal framework for contract enforcement
 Intellectual property protection
 Trade regulations & tariffs related to Technology
 Favored trading partners

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 Anti-trust laws related to Communication Equipment
 Pricing regulations – Are there any pricing regulatory mechanism for
Technology
 Taxation - tax rates and incentives
 Wage legislation - minimum wage and overtime
 Work week regulations in Communication Equipment
 Mandatory employee benefits
 Industrial safety regulations in the Technology sector.
 Product labeling and other requirements in Communication Equipment
The impact of political factors on Nokia is hard to ascertain. The company is based in
the European nation of Finland, but the Finnish government has refused to give it a
bailout or special favors.[1] This forced Nokia into an uneasy alliance with Microsoft
(NASDAQ: MSF) that has since fallen apart.[2] Unlike some tech companies, Nokia
lacks strong government support because it is based in a small country. This can both
help and hurt the company because it is not associated with a major power, but it
might lack the political clout of American- or Chinese-based rivals. Political unrest or
other changes in China could disrupt production and limit Nokia’s manufacturing
capabilities in that country. This could force it to move production to higher-cost
locations such as the United States.

3.4.2 Analysis of the impact of the Economic external

environment
The manufacturing and export of Nokia mobile phones left great impact on the
economy of Finland, so government takes great interest in its working and export of
its products to other countries of the world. When Nokia dropped out some
employees, the government helped the company to secure the jobs of these workers.
There is consistent up and down in the current exchange market and the changing rate
of currency affected the business. The exchange rates operate across the world so this
consistent change leaves economic effects on the business and the company has to
face various problems in settling down their financial matters (Academic sample
papers, 2015). There is possible threat of recession on the economy of the western
countries and this bad economic situation affected the interest rates. Nokia borrowed
money from the banks to carry out different business activities and the cost of the
borrowing amount has increase.

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 The energy for adaptable cell phones is investigated, accordingly the budgetary
structure speaks with a major part as to profit for the convenient cell phone and
lightweight industry. The conceded budgetary subsidence has unmistakably impacted
all players in the association and a couple have been propelled to get to. Heavenly
representation, new Samsung sold its versatile cell phone movement to Google not
long from now and LG is considering stopping their supportive action in the joined
with few years. Additionally, in light of the way that in all made reaches the
transmission rate of compact telephones is high, customers will supplant their
adaptable cell phone fundamentally if conviction for money is impeccable; this will
honestly make the well being between genuine players (BMI, 2011).
Economy in tells the production and consumption of goods and services. As far as
Nokia is concerned, the economic system is critical as it can control what the
organization is to produce, how it should produce and the category of recipient who
should use their end products. On one hand, aspects of international trade is important
for Nokia being the global supplier of mobile phones and on the other hand, the
knowledge concerning the nation’s economic status (Type of economic
system practiced, Inflation rate, level of employment and exchange rate) is equally as
important to realize future plans for personal and financial safety together
with enhancing entrepreneurship. With incomes rising, people have more disposable
income, which enables consumers to be more selective with their choice of mobile
phone, looking to other factors rather than fulfilling the most basic of user needs (text
messaging and phone calls) and price being such a key factor. The Macro
environment factors such as – inflation rate, savings rate, interest rate, foreign
exchange rate and economic cycle determine the aggregate demand and aggregate
investment in an economy. While micro environment factors such as competition
norms impact the competitive advantage of the firm. Nokia Corporation can use
country’s economic factor such as growth rate, inflation & industry’s economic
indicators such as Communication Equipment industry growth rate, consumer
spending etc to forecast the growth trajectory of not only --sectory name-- sector but
also that of the organization. Economic factors that Nokia Corporation should
consider while conducting PESTEL analysis are :

 Type of economic system in countries of operation – what type of economic

system there is and how stable it is.
 Government intervention in the free market and related Technology
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 Exchange rates & stability of host country currency.
 Efficiency of financial markets – Does Nokia Corporation needs to raise capital
in local market?
 Infrastructure quality in Communication Equipment industry
 Comparative advantages of host country and Technology sector in the particular
country.
 Skill level of workforce in Communication Equipment industry.
 Education level in the economy
 Labor costs and productivity in the economy
 Business cycle stage (e.g. prosperity, recession, recovery)
 Economic growth rate
 Discretionary income
 Unemployment rate
 Inflation rate
 Interest rate
Nokia suffered heavily from the European downturn of recent years. Economic
turmoil in Europe has hurt it badly by limiting buying power in its home markets.
Unlike Apple, Nokia has had a hard time tapping into the fast-growing Chinese
market. Nokia also lacks the vast economic resources available to some of its
competitors, such as Google, Apple and Samsung. In particular, Nokia seems to lack
the research and development capabilities that have enabled these companies to
develop new devices and tap new markets. One reason why it lacks those capabilities
is that Nokia simply does not have the money to finance extensive research and
developments efforts like its competitors do.

3.4.3 Analysis of the impact of the Socio-cultural external

environment
The mobile phone should understand the new trends in the market and also know
about their culture. Nokia is mainly supplied in the European markets and the
technological developments are made in these markets quickly. They should
understand the nature of the people, who buy these products. Some people like to
have new technology and features in the smart phone, so they need to prepare such
smart phone with innovative features to meet their demand. Some people like to have
simple calling mobile phone and simple mobile phone will fewer number of apps are
good for them. Some people do not waste their money over expensive smart phones

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 and the trend shows that most of the people follow looking the small and inexpensive
handset, so you need to prepare some models having simple calling and SMS facility
Social effects have a brief effect on the versatile cell and remote affiliations. As an
issue of first vitality, the move of the standard data pack has made information
exchanges ponder more central to customers, both concerning instigation and work.
Besides, the blueprint underneath in a general sense shows that Japan, China and
African-American offer the best potential for improvement. Those degrees contain a
dividing measure of people that don’t use a minimized phone as a bit of light of the
way that it is starting now past their schedules. Obviously, respect trailblazer
designers, for example, Nokia are routinely engineered to abatement their worth
giving watchful thought to the last goal to make their things more sensible. It is
moreover basic to note that recompenses from those extensions are obliged to end up
quickly. (BMI, 2010).
Socio-culture focuses on how Nokia blends in with components in a society; that is
culture, social class, lifestyle and demographic and psychological factors making up
the society. Nokia operates in a diverse number of culture and all levels of social class
simply because different models are frequently released to satisfy all individuals
despite their difference in race, nationality, religion, income level or beliefs among
each other. Mobile phones can easily adapt to any culture and can be used to support
different aspects and existing patterns of Individual’s lifestyle or behavior. The rise of
the so-called information society has made telecommunications increasingly more
important to consumers, both in terms of work and leisure. Users are more aware of
mobile phone handset choice and advancements due to increased information
availability. Society’s culture and way of doing things impact the culture of an
organization in an environment. Shared beliefs and attitudes of the population play a
great role in how marketers at Nokia Corporation will understand the customers of a
given market and how they design the marketing message for Communication
Equipment industry consumers. Social factors that leadership of Nokia Corporation
should analyze for PESTEL analysis are

 Demographics and skill level of the population

 Class structure, hierarchy and power structure in the society.
 Education level as well as education standard in the Nokia Corporation ’s
industry
 Culture (gender roles, social conventions etc.)
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 Entrepreneurial spirit and broader nature of the society. Some societies
encourage entrepreneurship while some don’t.
 Attitudes (health, environmental consciousness, etc.)
 Leisure interests
The major cultural factor that has hurt Nokia has been the widespread adoption of
smartphones and the growing use of apps. Many of the most popular apps, such as
WhatsApp, are designed for more popular operating systems such as Google’s
Android and Apple’s proprietary iOS. Nokia’s decision to utilize the Microsoft
Windows Phone instead of Android limited its appeal to many customers. The
popular association of Apple with smartphones in some countries—such as the United
States—has cut deeply into Nokia’s market by creating a generation of customers that
only buy one brand. In more recent years, Nokia has had to deal with the popular
misconceptions that there are only two brands of smartphone in the market, Apple and
Samsung, and only two operating systems: iOS and Android. This has kept many
customers from even considering Nokia products.

3.4.4 Analysis of the impact of the Technological external

environment
The cell market has dependably depended on after shocking tremendous changes.
Besides, among the most recent a few years, the move specifically changes has
obliged the key gamers to re-secure and development their new things at a much
speedier rate than they did a while prior. Additionally, the change of structures (“3G,
4G and WiMAX”) has an effect on the telephones market. The “fourth creation (4G)”
of out of achieve mechanical change is in no time beginning to be conceded as far and
wide as could be ordinary in light of the current circumstance. Most flexible
construction overseers have shown themselves to building frameworks that will help
4g; then, relationship like “Nokia Siemens Structures division” can give these
procedures and should can maybe prosper their offers basically.
Technology change defines how fast technology advances. Being the predominate
medium by which we get things done; technology as a process, in terms of mobile
phones defines the way we make contact. Not only does it helps shape culture but also
changes other aspects within and/or outside the organization for example the need to
upgrade Equipment’s to en-better the manufacturing of the end products. The success
of Nokia is based on constant innovation on human technology. By enhancing

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 communication and exploring new ways to exchange information, connecting people,
Nokia allow users to get more out of life.
Technology is fast disrupting various industries across the board. Transportation
industry is a good case to illustrate this point. Over the last 5 years the industry has
been transforming really fast, not even giving chance to the established players to
cope with the changes. Taxi industry is now dominated by players like Uber and Lyft.
Car industry is fast moving toward automation led by technology firm such as Google
& manufacturing is disrupted by Tesla, which has stated an electronic car revolution.
A firm should not only do technological analysis of the industry but also the speed at
which technology disrupts that industry. Slow speed will give more time while fast
speed of technological disruption may give a firm little time to cope and be profitable.
Technology analysis involves understanding the following impacts -
 Recent technological developments by Nokia Corporation competitors
 Technology's impact on product offering
 Impact on cost structure in Communication Equipment industry
 Impact on value chain structure in Technology sector
 Rate of technological diffusion
The technological challenges affecting Nokia are at the root of the social factors
limiting its business. The development of open sourced operating systems such as
Android and the invention of apps radically changed the mobile phone market.
Mobile phones were transformed from simple communications devices into handheld
computers. This led to a situation in which customers wanted to perform a wide
variety of tasks with phones, including taking photographs, watching streaming video
and performing business functions. The problem was compounded by Nokia’s
decisions to utilize the less popular Windows Phone operating system and to stick
with its own operating system. This limited customers’ choices and made it difficult
to sell Nokia products to younger consumers. Nokia has not been able to significantly
tap the potentially lucrative market for other kinds of mobile devices such as tablets
and wearable technology. This could greatly reduce its competitive edge in the future.
There are various other competitors in the market in IT industry and they are
introducing new smart phones with latest technological developments. People like to
have new changes and some technology, which can give them more convenience and
novelty in the products can make them impress others. So Nokia should enhance the
quality of internet, camera, email, call record and run social media and make video
calls to others. Nokia has made a partnership with Microsoft for introduction of some

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 innovative apps in its smart phones and this technological development has increased
the trust of the clients over these handsets (Academic sample papers, 2015). The new
technology leaves its impact on the smart phone and help in minimizing costs of
handsets and improvement in the handsets. They need to introduce new technological
developments in the handset like online gambling, MP3 players and high definition
TVs. The clients can also do online shopping, manage computer aided designs and bar
coding, which are big technology advancements in the business to yield better result
with the use of latest technology

3.4.5 Analysis of the impact of the Legal external

environment

Nokia’s legal environment is extremely challenging because it operates within the

European Union. That body’s regulators have been investigating Google’s use of
Android for a possible antitrust case.[3] EU action against Google could lead to
radical changes in Nokia’s market, such as Android being spun off into a separate
company.
It is not clear how exactly such action would affect Nokia, but it could create a more
level playing field and increase Nokia’s access to the European market. One possible
game changer could be that popular Google solutions such as Gmail could be taken
off of Android, which could limit its popularity. In number of countries, the legal
framework and institutions are not robust enough to protect the intellectual property
rights of an organization. A firm should carefully evaluate before entering such
markets as it can lead to theft of organization’s secret sauce thus the overall
competitive edge. Some of the legal factors that Nokia Corporation leadership should
consider while entering a new market are -
 Anti-trust law in Communication Equipment industry and overall in the
country.
 Discrimination law
 Copyright, patents / Intellectual property law
 Consumer protection and e-commerce
 Employment law
 Health and safety law
 Data Protection

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These personal government courses of action, statutes and veritable issues in the
country of farthest point. As outline, laws and regulations of specialists, force
framework and government constant quality. Legitimate decisions can effect on a few
basic fluctuates for affiliation, for example, the arranging of the experts, the country
wellbeing and the characteristics of the budgetary pattern base, for instance, the street
and train structure.
Mobile phone manufacturing companies have great competition in the preparation of
the smart phones so they have to make them innovative for their clients. They should
protect their products and new technology and they should not choose the features of
the smart phones of other companies. There are some precedence in which smart
phone companies use ideals of other companies, which is the copy right issue and it
can be handled legally (Academic sample papers, 2015). The mobile phone has
various plants to manufacture new handsets and they should ensure that they are
abiding by the rules and regulation and nothing is happening against the law. The
company should avoid copying the copy right products or features, otherwise it can be
great threat for this company and it can be legally sued. They should give proper
attention on the manufacturing of new products and introduce features in software of
the handsets, which is the best way to make their smart phone innovative and unique
(HubPages, Business and Employment, Business Management & Leadership, (2012).

3.4.6 Analysis of the impact of the Environmental external

environment
Like other electronics manufacturers, Nokia is faced with the problem of safely and
economically disposing of its used products in an environmentally-friendly manner.
One costly requirement that it could face in the years ahead is laws making electronics
manufacturers responsible for the disposal or recycling of used devices, a potentially
costly expense, particularly if the devices use lithium batteries. Another
environmental concern that could affect Nokia is increased costs for materials and
components, particularly lithium for batteries. Increased demand for lithium for other
uses such as electric cars could limit its supply and raise costs. A long-range
challenge could be climate change created by global warming, which could disrupt
transoceanic shipping and Nokia’s supply chain. New environmental laws in China
designed to curb greenhouse gases could increase production costs in that country and
affect Nokia’s costs.
Different markets have different norms or environmental standards which can impact
the profitability of an organization in those markets. Even within a country often
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 states can have different environmental laws and liability laws. For example in United
States – Texas and Florida have different liability clauses in case of mishaps or
environmental disaster. Similarly a lot of European countries give healthy tax breaks
to companies that operate in the renewable sector. Before entering new markets or
starting a new business in existing market the firm should carefully evaluate the
environmental standards that are required to operate in those markets. Some of the
environmental factors that a firm should consider beforehand are -
 Weather
 Climate change
 Laws regulating environment pollution
 Air and water pollution regulations in Communication Equipment industry
 Recycling
 Waste management in Technology sector
 Attitudes toward “green” or ecological products
 Endangered species
 Attitudes toward and support for renewable energy
A few affiliations see positive circumstances as more essential than a strong decent
administer and this can run perform and affiliation perform. Some flabbergasting
frameworks are unlawful and affiliations can’t become consolidated in them.
However there are other than a couple of techniques that are true by law yet are
respected essentially exploitative by the using open. Affiliations who manage in these
techniques can lose an essential study of bit of the general market on the off chance
that they are gotten. Case in point, unimportant evaluating on creatures is reasonable
to goodness, yet a measure of the general inhabitants are not bewildering about it and
boycott. In perspective of this affiliations, affiliations must be amazingly watchful
about how they act.

SWOT analysis
Strengths
One of the big Strengths of the Nokia company is their large network of selling and
distribution it has the largest distributor of mobile phone in the mobile phone industry,
their strong brand name also is a big point and also experience they’ve been there for 142
years and their products are user friendly and very durable and have high re-sale value.
Nokia has a strong brand name which is one of the most important strength as it is
then favorable for Nokia to launch its new products and it is reliable for the

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customers. Its distribution network very wide, globally so that their products are
easily available for their target customers.
Nokia has also strong finances which make it possible to make innovations
easily. Nokia products are user-friendly, even an illiterate person from developing or
third- world countries can use their products easily. The financial aspect of Nokia is
verystrong as it has many profitable businesses.
Nokia has a high variety of products which is attractive for their customers and each
set have high re-sell value as compared to other brands which is favorable for Nokia
as well as for the customers. The product also being user friendly which also have all
the accessories one would want which is why it is in high demand, making it the No.1
selling mobile phones brand in the world.
Nokia has one of the largest networks of distribution and selling as compared to other
mobile phone company in the world. Also, Nokia has a HRD Department employed
with the high quality and professional team in the HRD Dept. The product also being
user friendly and have all the accessories one want that is why is in great demand
making it No-1 selling mobile phones in the world.
Weakness
Although Nokia products are much more costly as compared to others, it has good
quality and is reliable which somehow cover this weakness of Nokia but still it is this
weakness that the people belonging to the lower class is unable to purchase Nokia
products.
Some of the Nokia products are not user friendly which was why it is not successful
in the market.
Nokia’s has only a few sales and service centers therefore it’s after sale service is not
impressive. If customers were to face difficulties or problems regarding the product,
they will have to wait for a period of time before their questions or doubts get
answered.
In conclusion for Nokia’s strengths and weaknesses, there are more strengths
compared to weaknesses. The main weaknesses are the price of the product and the
very little service centers.
Opportunities
Nokia can expand its market shares by introducing their brand and by catering new
target market as well.

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Nokia can also improve their sales by attracting more customers in the existing
market, by changing the prices, introducing new product range and also by innovating
product features of existing products.
Telecommunication market is growing rapidly and more people are being interested
towards the industry so it is great opportunity for Nokia to expand market share and to
grow as well.
Through excessive advertisement and effective market communication it can build a
strong reputation and increase its sales and also create good brand image among the
people and their customers.
With the wide variety in their products, their features and different price ranging for
different people, it has an advantage over the competitors around. With the
opportunity like ‘Telecom penetration in India’, Nokia has an opportunity to increase
its sales as well as the market shares. As the standard of living in India has increased
more people would want to purchase even better products, so Nokia has to target the
right customers at right time to gain the most out of the situation.
Threats
As the telecommunication industry is increasing, not only will the opportunities
increase but also threats.
Nokia has many threats to face to maintain its position as the market leader in the
mobile telecommunications market. The threats like emerging of other mobile
companies in the marker like Motorola and Sony Eriksson can increase more
competition which may lead to a decrease in sales. These companies have come to the
stand of tough competition with Nokia in the field of Mobile Phones.
Some competitors even offer products which may be similar of Nokia at a much low
price and as the economy is falling down. This fact can attract more customers
towards the products due to the low prices.
Another threat for Nokia is the growth of WLL network because Nokia provides CDMA
cell phones so its products can go toward the down fall with the rise of WLL network.

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4.0 Conclusion
Higher authority uncovered a trade fundamental composed exertion with Microsoft
affiliation, and discharged it would supplant “Symbian” and “Meego” with the
“Microsoft windows mobile 7”. Likewise, Nokia additionally settled that it will hold
Symbian as its imperative working structure on its mid-to-low-end gadgets. With a
particular last terminus to assess the potential impact of this affiliation together, a
social occasion was running with the Head of Record & Control, Nokia Italy through
Skype. In delicate of the information aggregated among the social undertaking, four
key purposes of wander will happens as an eventual outcome of this affiliation
together.
Hearty decision to “Edge Blackberry Mobile”
Nokia has never been amazingly convincing at getting the test business industry.
Regardless, the Edge Blackberry cell mobiles is at this minute the critical level for
steady exertion approaches. Microsoft relationship with Microsoft windows for PC is
the fundamental level for the meander market. Likewise, Microsoft affiliation is a
pivotal supplier of united trades levels, for instance, the Work space Messages Server
2007 also has a submitting with the “Microsoft affiliation working environment”
bunch.
By commonly orchestrating all Microsoft affiliation plans with Nokia mobiles,
“Office Messages Server”, Microsoft affiliation working environment programs,
“Microsoft SharePoint” and other Microsoft web servers and applications, the
Microsoft/Nokia perception will offer a segregating decision to the Edge Blackberry
mobiles.
Money related sponsorship and interest in imaginative work
Microsoft has other than guaranteed to put unlimited dollars in building with a
particular final objective to help Nokia lessening its “Inventive work” utilizing and as
necessities be enhance its organizing position without exchanging off the
improvement of new imaginative “Nokia-Microsoft” contraptions.
More relationship for end customers
Nokia’s “NAVTEQ unit” will get as far as possible picture, applying, and area
affiliations. This should comprehend a strong edge in smooth of the way that starting
now Edge Blackberry cell mobiles, the apple affiliation, and New Samsung don’t
have any applying arrangements, and basically Google does. Besides, Microsoft
affiliation offers a few affiliations that can pull in the more adolescent time, for
example, the clear “MSN and Hotmail” perpetual banner bearer other than the Google

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web pursue device or the Comfort Live structure and a couple of Comfort leisure
activities allows that can be use into compact improvement.
Climb level for the expert and unrivalled assignment shop
Microsoft and Nokia will other than harden their undertaking stores (“OVI”, “Store”,
and Microsoft windows business concentrate), accordingly the measure of
employments open will climb totally. Furthermore, Microsoft affiliation and Nokia
will existing a level for experts that will help any program that is starting now
extraordinary with Microsoft windows to be ported to the new “Nokia-Microsoft”
convenient in a massively direct and persuading way. This comprehensively level
should attract more creators, and particularly, experts that will be a need spot for
corporate endeavors.

5.0 Recommendations to improve future performance

As Nokia got very tight competition, Nokia need to be very careful for choosing any
strategy. Nokia is responding with the environment, which is appreciable. But Nokia
still need to quicker in responding technological change, as technology is changing
more rapidly than anything else. Again Nokia has increase ASP (average selling
price), which will increase the profitability unite wise but might not going to much
effective. Because if the total selling amount get decline ,only having extra revenue
gathered by ASP will not able to make up the total profit. We believe that Nokia
might need to rethink about their marketing mix. Consumer is very careful what are
they getting. So Nokia need to very much careful about the performance of their
product. Especially, their operating system needs to speed up. Nokia also need to
speed up their after sell service. Those all Nokia can do to reinforce their market
.However, if look at the financial analysis. We can see a huge change in their
profitably. There is a sharp decline in Nokia profit margin, more than 12% in last
three years. This indicates step reduction of the sell. This will affect the share price
and de motivate stake holder to invest in Nokia. Then analysis the current ratio Acid
test ratio, we see that Nokia do not have enough assets to pay its liability. As it is less
than one. But still there is hope as Nokia is investing in Nokia Simence network,
which need high investment in initial time and it takes time to get the profit. Finally
comparing both the opportunity and current wealth of Nokia we suggest Nokia to
diversify from to mobile business, as it in high risk of having less market share then
before and high price device. This will reduce potential buyer for higher price. In the
same time by looking the opportunity of new extension of Navteq and Nokia Siemens

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network, the reason for referring these two sections is, they got high level of
possibility. If we see current market they are only few competitors in sat nav industry.
There are is very high prospective market base in UK and Europe. Another plus point
for Nokia is they know these markets very well and they already got existing
distribution channel. So they is high possible of new market .moreover they can
continue built network for different operator. As they are joint venture with Siemens,
which give the both company more financial and technological strength. So we
suggest continuing investment in these two sections and eliminating the mobile
section to stop draining the capital. Though Nokia has many good points and that is
has some good strategies, Nokia should come up with something unique to its own
companies so that it wouldn’t be so easily rivaled by other companies easily. Like for
example maybe come up with its own software that’s only unique to Nokia and not
use the same software that Sony-Ericsson uses too. Nokia can also come up with more
user-friendly and customer satisfactory phone models.
Nokia faces serious challenges in a radically altered mobile phone market. It will need
to radically alter its business model and products simply to survive. At this junction, it
is unclear if Nokia will ever be able to become a major player in the consumer
electronics business again.

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6.0 References
 https://knowledge.insead.edu/strategy/the-strategic-decisions-that-
caused-nokias-failure-7766#orrGJCqwdwkm0DKw.99

 http://fernfortuniversity.com/term-papers/pestel/nyse4/3769-nokia-
corporation.php

 https://pestleanalysis.com/pestle-analysis-of-nokia/

 https://www.ukessays.com/essays/marketing/market-and-financial-
analysis-of-nokia-marketing-essay.php

 http://myassignmenthelp.info/assignments/pestel-analysis-nokia-
company-46167/

 https://www.quora.com/Why-did-Microsoft-buy-Nokia-1

 https://www.brightonsbm.com/news/pest-analysis-important-for-a-
business/

 https://www.google.com/amp/s/freepestelanalysis.com/pestel-
analysis-of-nokia/amp/

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