Nokia Denmark
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Transcript of Nokia Denmark
Nokia Denmark
The Challenge
Create a strategic plan for the evolution of our product
development division
I. AnalysisI. PESTLEII. Porter’s Five ForcesIII. SWOT AnalysisIV. Value ChainV. JRD Analysis VI. FinancialsVII. Market Share
II.AlternativesIII.RecommendationIV.Implementation
.
Table of Contents
Economic• Highly competitive
industry with several global players
• Worldwide spread of mobile telecommunications
Enternal Analysis
Technological • Constant
introduction of new products
• High R & D efforts
Social • Growing popularity
of smart phones and tablets
• Strong Brand Awareness
pESTle
New Entrants
Competitive Rivalry
Substitutes
- Low threat- High cost barrier-High brand identity-High capital requirements
- Low power- Low differentiation of products- Low cost relative to total purchase- High importance of volume to supplier
- High power- High cost sensitivity- High buyer concentration- High buyer information- Low product differences
- Low threat- Low buyer propensity for substitution- Moderate relative price performance
- High rivalry- High idustry growth- High brand identity- Low switching costs- Moderate diversity of competitors
External Anaysis
Porter’s Five Forces
BuyersSuppliers
Internal Analysis
Value Chain
Research & Development• Success of
R&D activities in leading to product & process innovations
• Ability of work environment to encourage creativity & innovation
General Administration• Quality of the strategic planning system to achieve objectives• Coordination & integration of all value chain activities among all
subunits
Manufacturing• Effectivenes
s of production control systems to improve quality and reduce costs
• Productivity • Appropriate
automation of production processes
Distribution• Timeliness
and efficiency of delivery of finished goods
• Efficiency of finished goods warehousing activities
Marketing• Extent of
market dominance
• Effectiveness of market research
• Development of an image of quality and a favorable reputation
• Extent of brand loyalty among customers
Inbound logistics• Soundness of material and inventory control systems
Procurement• Procedures for procurement of plant, machinery, and buildings• Relationships with reliable suppliers
Profit Margin
Strengths• Understand how to
combine technological possibilities with commercial success*
• Integrated high-tech manufacturing and logistics
• Largest Nokia development centre outside Finland
• History of successful products and technologies
• Partnership with Microsoft Office
* Distinctive competency
Weaknesses
• Capacity issues• Distance from outsourcing
company• Declining market share
Opportunities
• Growing demand for telecommunications
• Growing market for smartphones• Constant innovation
Threats
• Strong competitive industry• Reputation of outsourcer• New industry replaces mobile
technology
Strengths• Understand how to combine
technological possibilities with commercial success*
• Integrated high-tech manufacturing and logistics
• Largest Nokia development centre outside Finland
• History of successful products and technologies
• Partnership with Microsoft Office* Distinctive competency
Weaknesses
• Capacity issues• Distance from outsourcing
company• Declining market share
Opportunities
• Growing demand for telecommunications
• Growing market for smartphones• Constant innovation
Threats
• Strong competitive industry• Reputation of outsourcer• New industry replaces mobile
technology
Strengths• Understand how to combine
technological possibilities with commercial success*
• Integrated high-tech manufacturing and logistics
• Largest Nokia development centre outside Finland
• History of successful products and technologies
• Partnership with Microsoft Office* Distinctive competency
Weaknesses
• Capacity issues• Distance from outsourcing
company• Declining market share
Opportunities
• Growing demand for telecommunications
• Growing market for smartphones
• Constant innovation
Threats
• Strong competitive industry• Reputation of outsourcer• New industry replaces mobile
technology
Strengths• Understand how to combine
technological possibilities with commercial success*
• Integrated high-tech manufacturing and logistics
• Largest Nokia development centre outside Finland
• History of successful products and technologies
• Partnership with Microsoft Office* Distinctive competency
Weaknesses
• Capacity issues• Distance from outsourcing
company• Declining market share
Opportunities
• Growing demand for telecommunications
• Growing market for smartphones• Constant innovation
Threats• Strong competitive
industry• Reputation of outsourcer• New industry replaces
mobile technology
Internal / External Analysis
SWOT Analysis
Analysis
Foxconn JRD• Started in 2007 due to capacity burdens at Nokia Denmark
• Previous supplier of electronic components • Worlds largest manufacturer of electonic components• 920,000 employees• Experienced in optimization of product development
processesAdvantages
• Relevant knowledge and expertise
• Experience in optimizing product development processes
• Helped Nokia engineers reduce product development time by 6 months
Disadvantages
• Large internal resistance among Nokia engineers
• Need to micromanage entire process
• High expenditures due to the education of Taiwanese engineers
• Controversial treatment of employees
Analysis
Financials
(All Numbers in EURm) 2010 2009 2008 2007Net Sales 42.446€ 40.984€ 51.085€ 51.058€ Gross Profit na 13.263€ 17.277€ 17.277€ Research and Development Costs -5.863€ -5.909€ -5.968€ -5.636€ Selling and Marketing Expenses na -3.933€ -4.380€ -4.397€ Administrative and General Expenses na -1.145€ -1.284€ 1.165€ Operating Profit 2.070€ 1.197€ 4.966€ 7.985€ Profit Before tax 1.786€ 962€ 4.970€ 8.268€ Profit 1.850€ 891€ 3.889€ 6.746€
Return on Capital Employed na 7% 27% 54%
Income Statement
Analysis
Market Share
Vendor 4q 2010 (Market Share) 4q 2009 Market Share Nokia 30.8% 37.2%Samsung 20.1% 20.2%LG Electronics 7.6% 10.0%ZTE 4.2% 2.8%Apple 4.0% 2.6%Others 33.2% 27.3%Total 100.0% 100.0%
Vendor 4q 2010 (Market Share) 4q 2009 Market Share Nokia 28.0% 38.6%Samsung 16.1% 16.1%LG Electronics 14.5% 19.9%ZTE 9.6% 3.3%Apple 8.5% 4.5%Others 23.3% 17.6%Total 100.0% 100.0%
SmartPhone Market Share
Global Market Shares
• Potential Growth • Entrepreneurial Spirit Highly decentralized and organized to encourage creativity, entrepreneurship, and responsibility• Mission Statement “Empower everyone to share and make the most of their life by offering irresistible personal experience”• Ease of aligning projects with
organization• Financial Justification
Key Success Factors
Analysis
Alternative #1
Scale-up JRD with Foxconn
Alternatives #2
Phase out JRD with Foxconn
Alternative #3
Continue parallel organizational structure
Alternatives
Alternatives
Alternative Advantages Disadvantages
Scale-up JRD with Foxconn
• Enable focus on creativity
• Lack of control • Necessity for
micromanagement
Phase out JRD with Foxconn
• More control• Financially
justified• Highly integrated
value chain• Reduces possible
information loss
• Increased capacity requirements
Continue parallel structure
• No increase to capacity requirements
• Little growth potential
• Necessity for micromanagement
Alternatives
Alternatives
Alternatives
Scale up JRD with Foxconn
Phase out of JRD with Foxconn
Continuation of Parallel
Structure
Key Success Factors Rating Rank Total Rank Total Rank Total
Potential Growth ,25 4 1,00 4 1,00 3 ,75
Entrepreneurial Spirit ,25 1 ,25 5 1,25 3 ,75
Mission Statement ,20 2 ,40 3 ,60 2 ,40
Ease of aligning projects with organization
,20 1 ,20 5 1,00 2 ,40
Financial Justification ,10 1 ,10 2 ,20 3 ,30
Total 1.0 1,95 4,05 2,60Ranking Scale1. The alternative does not effectively address this criterion.2. The alternative may contribute to addressing this criterion.3. The alternative provides an average solution to this criterion.4. The alternative provides an above average solution for this criterion.5. The alternative effectively addresses this criterion. .
Weighted Competitive Strength Analysis
Analysis
Alternative #2
Phase out Joint Research & Development agreement with
Foxconn
Recommendation
Recommendation
• Phase out JRD agreement with Foxconn
• Reduce number of mobile phones developed each year
• Concentrate in growing smartphone market share
• Cultivate partnership with Microsoft
• Continue innovation in-house
Recommendation
Recommendation
Implementation
2009 2010 2011 2012 2013 2014 201520
25
30
35
40
45
50
Global Market ShareSmart Phone Market Share
Market Share
%
Future Market
Recommendation
2009
Smartphones53,9 Million
(38,6% captured)
Mid-priced
Low-end
2020
Smartphones &
High-end
Mid-priced
Low-end
2010Smartphones100,9 Million
(28,0% captured)
Mid-priced
Low-end
Short-TermWhat Who
Establish plan for phasing out JRD Executive StaffDetermine and cut product focus to fewer devices
Board / Executive Staff
Bring back priority items from Foxconn Entire staffImplement company image mitigation Public RelationsRelocation of ex-patriot employees HR / ManagementCut in-house items according to strategic plan Entire staff
Coordinate precise approach to cultivate Microsoft partnership
Executive Staff / Management
Implementation
Implementation
1 month 3 month 6 months 9 months
1 year
Establish plan for phasing out JRDDetermine and cut product focus to fewer devicesBring back priority items and phase out Foxconn Implement company image mitigation Relocation of ex-patriot employeesCut in-house items according to strategic planCoordinate precise approach to cultivate Microsoft partnership
Milestone Review Implementation
Short-Term
Long-TermWhat Who
Evaluate/create plan to incorporate services into devices
Product Development
Market to emerging markets MarketingEvaluate utilization of mobile technology and tablets
Product development
Implement mobile/tablet strategic plan Entire staffPhase out products with small market share Entire staffContinue innovation into new products Entire staff
Implementation
Implementation
1 year 2 years 3 years 4 years
Evaluate/create plan to incorporate services into devicesMarket to emerging markets Evaluate utilization of mobile technology and tabletsImplement mobile/tablet strategic planPhase out products with small market shareContinue innovation into new products
Milestone Review Implementation
Long-Term
Risk Level Mitigation/ContingencyFoxconn refuses to continue supplying components
Low Switch suppliers
Unable to meet capacity Moderate
Expand capacityContinue research into process improvements
Lack of skilled workers Moderate Establish internship program
Expand training program
Implementation
Contingency Plan
Risk Level Mitigation/ContingencyFoxconn refuses to continue supplying components
Low Switch suppliers
Unable to meet capacity
Moderate
Expand capacityContinue research into process improvements
Lack of skilled workers Moderate Establish internship program
Expand training program
Implementation
Contingency Plan
Risk Level Mitigation/ContingencyFoxconn refuses to continue supplying components
Low Switch suppliers
Unable to meet capacity Moderate
Expand capacityContinue research into process improvements
Lack of skilled workers Moderate
Establish internship programExpand training program
Implementation
Contingency Plan
Phase out Joint Research & Development agreement with
Foxconn
Recommendation
.
Nokia Denmark