The primary way in which Nokia achieves its competitive advantage is through the ability of the firm to continually bring out and establish new high-quality consumer products and continually represent its brand name it the mobile electronics sector. Specific to Nokia are the ways in which the company it “provides both the personalized communication technology through customized handsets and integrated & enterprise solution as well as network infrastructure to mobile operators” (Bhutto 236). Nokia, then, attempts to use these particular methods in order to drive a wedge between the buyers’ WTP (willing to pay) and its own internal supply opportunity costs.
Nokia, long since in decline as a mobile phone manufacturer, has chosen to implement the strategy of segmentation and customization. Driven by the directions of its Executive Board, Nokia’s strategy is one of “segmentation for consumer goods and integrated services for corporate consumers” (236).The superior long-run performance of the company is built on the core concept of attracting high returns per product for customized solutions for corporate networks and a comparable approach to consumer segmentation of smartphones and other mobile devices. While Nokia cannot outcompete its direct rivals, it can, however, diversify and specify its particular target niches into very individual sectors that increase profitability. Their successful merger with Microsoft has also been beneficial.
Lowering the supply opportunity cost, moreover, is a critical part in Nokia’s global strategy of competitive sustainability. While the company faces high employment costs, it can, however, implement “effective management of human resources” that helps to “turn employees’ potential into the desired results” (Tahvanainen 267). Here, we see that Nokia opts to employ globalization strategies in line with other prominent multinationals, albeit more effectively. Nokia chooses to deploy its domestic workers abroad to satellite firms and subsidiaries. These expatriates then “establish companies or a company function in a foreign location and provide a unit with the knowledge that the company considers necessary for the foreign unit to function effectively” (268).
Moreover, as the native Finns interact and form local bonds with native people, Nokia itself benefits from the increased presence of local experts that are culturally similar to the home office in Finland. This system of personnel management, then, is of critical importance when determining the extent to which Nokia can seek to maintain lower supply opportunity costs than its competitors—the added utility of integrating native and domestic workers into a cohesive corporate entity controlled by the dominant Finn culture is an effective way to help effectively manage personnel abroad and reduce the cost of human resources.
In the future, it is clear that Nokia will continue to act as a powerful force in the international market. There are three main ways that Nokia will maintain its current competitive advantages: first, Nokia’s scale “will give strong defensible competitive advantages and breadth of product portfolio and distribution”; second, “Nokia's ability to consolidate market share through portfolio refreshes” is incredibly powerful; third, “Nokia's strong balance sheet is likely to be more and more valued by investors” as time goes on (Ferragu and Viswanathan 102). Nokia’s sheer size guarantees its ability to continue operating against smaller competitors. The company’s ability to innovate and re-launch its product lines is well documented, and its power in 2003 to launch a new clamshell phone design quickly put Nokia back on the map on the mobile phone market. Moreover, “this new, more-integrated Nokia organization” appeals to prospective investors, as healthy balance sheets and relatively strong growth in a competitive market bodes well for the future (Doz, 108). In the end, Nokia will sustain its competitive advantage by maintaining higher levels of operational effectiveness and targeting specific market niches that avoid competitors.
Nokia maintains several advantages that will help support its competitive sustainability: brand recognition, a strong ability to refresh its product offerings, and a large network of eager satellite providers and cellular phone carriers such as Verizon that are eager to carry Nokia products. In addition, generous customer service policies and an acceptance to continue innovative designs are strong points. Lastly, Nokia does well to stress the importance of customization for corporate needs as well as market segmentation for basic consumers. Overall, Nokia is in a strong position to retain its competitive advantages into the future.
Bhutto, Arabella. "Managing Interindustry Differences through Dynamic Capabilities: The Case Study of Nokia." International Journal of Innovation & Technology Management 2.3 (2005): 235-257. Business Source Complete.
Doz, Yves, and Mikko Kosonen. "The Dynamics of Strategic Agility: Nokia's Rollercoaster Experience." California Management Review 50.3 (2008): 95-118. Business Source Complete.
Ferragu, Pierre, and Tarun Viswanathan. "Nokia: Recession Already Priced-In, Improving Product Portfolio and Attractive Valuation." Black Book - The Best of Bernstein-Pan-European Edition (First-Quarter 2009) (2009): 99-104. Business Source Complete.
Tahvanainen, Marja. "Expatriate Performance Management: The Case of Nokia Telecommunications." Human Resource Management 39.2/3 (2000): 267. Business Source Complete.