Nokia External Environment Analysis

External Environment Analysis
Changes in the external environment, coupled by the responses of Nokia’s management, created significant influences on rise and fall of Nokia’s mobile phone business.

Shifts from Industrial Market to Customer Market Mass production greatly reduced the prices of mobile phones, giving rise to the popularization of the products. Consequently, the focus of the entire industry shifted from industrial market to customer market in the late 1980s. The role of mobile phones also switched from business tools to designer items. In response to the changes, Nokia implemented a prompt reorientation to its marketing strategies. It placed less emphasis on technical details, but greater efforts on product designs, customizations

During the period 1980 to 2013, the region’s average purchasing power, indicated by Gross Domestic Product (GDP) per capita, grown at a rate of 3.31 percent, twice as much as that (1.39 percent) of the world average. (The World Bank, Excel) Identifying such growth potentials in the emerging markets, Nokia, under Ollila’s administration, penetrated into the emerging markets with localized strategies. Furthermore, it offshored a number of its business centers to the above mentioned regions. (Nokia Case p.9) They maintained over 30 percent of market share in the Asia-Pacific regions before discontinuing their business. ()

Trade Liberalization In endeavors of financial, human and technological assets for expansion, Kiramo and Vuroile realized it was to the global stage Nokia needed to turn, not tiny Finland. Subsequently, they developed a set of global visions for the company. Their successors implemented a range of international strategies to extend Nokia’s coverage out of the home base. The most remarkable move was Nokia’s listing on the New York Stock Exchange in 1994.

The policy created an enormous potential market for Nokia, who has been heavily involved in R&D activities in attempt to integrate GSM technology into handsets.
Without doubt, the tapped into the lucrative opportunity and marched into the European GSM market with a market share of %. (Book: Insider) Nokia also tried to spread its wings to penetrate into the U.S. mobile phone market. The American phones, by that time, were dominated an entirely different wireless network called Code Division Multiple Access (CDMA). Nokia faced fierce competitions from Motorola, the leading player in America. The U.S. penetration was proved to be a complete failure when Nokia abandoned the CDMA production in the 13th year after its launch to the region. (Case: Annex 2) The products were never visible to the mainstream. One of the reasons for the setback lied in the reality that CDMA phones have never been the niche of Nokia, despite that it tried to make it happen.