SWOT Analysis - Nokia

Abstract

The market of mobile telephony was created in the early years of the 90s and was developed with a strong growth until 2000. In the last 5 years, this market has experienced less rapid development due to the fact of the existing intense competition and rate of penetration of new companies in the market.
The intensification of competition and the ever changing market trends requires the actors present in the market to identify factors to lead their respective companies to success (technology, increased services, etc).

In this report, we will conduct an external analysis to study the environment of the market and identify the strengths and weaknesses, and the opportunities and threats of Nokia. Finally, we will formulate some recommendations and identify the key success factors of Nokia. To know more about the external environment of the company, we will conduct a PEST analysis which includes the study of the political, economic, sociological and technological aspects of the company.

The environmental policies and the regulatory attributions of License operating systems come under the NCIP (National Center to Improve Practice) factor. The Commission on European Directives of 1998 obliged the country members to put in service the UMTS Licenses before the 1st of January 2002. The country members being free of their choice, some introduced the Licence while some others opted for attribution action.

Set at 32.5 billion of CHF, the price of the Licence in France was seen divided by 8 by the government during the fall of 2001. In the reversed part, the system provides compensation of 1% for the State figure of e-business made by the Licencies. In addition, the duration of Life of the License has been extended to reach twenty years against fifteen before.

The economic environment in this sector is witness to many fast developments and it must face the opportunities and threats of all businesses in this sector. In the market of OEMs, we can first note the place of new equipment infrastructures for mobiles along with rapid expansion of the use of the internet (thanks to the development of ADSL). However, the provisions show that there is a risk of slowdown due to the slow growth in the US.

In the market of telecommunications, we should bear in mind that there had been a forecast of a 1540 billion growth in 2007 and it turned out that the forecast had been true. Compared to it, there had been only a growth of 806.7 milliards in 1998. This shows the tremendous growth that the telecommunications industry experienced in a span of 10 years.

Indeed, for the United States, Japan and Europe, it represents a 71% growth in their markets of mobile telephony and world telecommunications. It has proved to be an engine of growth, but now lately the market has been getting saturated due to the competition. In the market of OEMs, the real threat comes into the picture when considering the infrastructure of the GSM (Global System for Mobile Communications). Indeed, the settlement of the market in 2003 had been on the basis of prices between the operators and the amount of stocks that each company owned.

In the market of services in telecommunications, the average price provided by each subscriber has been getting lower by the day due to the strong competition in the market. The margins are continuing to drop in the UMTS (Universal Mobile Telecommunications System) of the market. There has been a forecast that companies will have faced huge losses in the period 2007-2013. There are several threats which have to be given attention as soon as possible.

First, the global market has a highly competitive character, this leads to a drop of prices in the regular mass media to give rise to a new form of communication called RTC (Reserve Telecommunications). The operators have high debts which decreases their rate of development. On the other hand, being given that the values of all the operators are down, the bankers are rather reluctant in their advance for providing funds. Finally, a strong need of investments were expected for 2002, this had been a risky process due to the reluctance of bankers.

Tags: telecommunications, Universal Mobile Telecommunications System, Global System for Mobile Communications, United States, Japan, Europe, France, mobile telephony