This report is to analyze the strengths, weaknesses, opportunities, and threats that set Nokia in context in terms of its operations and marketing activities. It discusses Nokia’s culture and values, and how these elements impact on Nokia’s overall performance. In addition, it identifies Nokia’s current financial position, and how the current financial position is likely to impact on future marketing activities that include its new products and its investment.

The report finds that high quality and advanced technologies are the important factors for Nokia’s success. In Nokia’s human resource management, the features are to improve employee’s techniques by regularly training and developing effective teamwork. Moreover, the other finding is that Nokia’s financial position is surpass its competitors in telecommunication.

The report concludes that Nokia has established its leadership in mobile phone market according to its successful marketing strategies and internal management. Nokia’s philosophy is to learn continuously, to satisfy consumers, and to respect individual and pursue professionalism. The report recommends that Nokia should target consumers in group markets rather than in individuals.

1 Introduction

This report will focus on the famous mobile telecommunication—Nokia. There are three main parts in the report. Firstly, it is a SWOT analysis in which Nokia’s internal and external environments are analyzed its advantages and disadvantages. Secondlt, it will explain Nokia’s culture and values, discuss how these two factors determine Nokia’s marketing performance. Thirdly, it concentrates on the Nokia’s current financial position, and analyzing how it will affect the company’s future activities.

1.1 Background

Nokia is the world’s leading mobile phone manufacturer and one of the top suppliers of network infrastructure products. The company is headquartered in Espoo, Finland. Nokia’s business includes home networking and mobile displays for the global market (Datamonitor, 2002a). The history of Nokia can be traced back to over 100 years ago[1]. In 1865, Nokia was established in the forest industry as Nokia Mill, a paper and pulp manufacturer. Until 1979, Nokia began to produce Mobile Phone and engaged in telecommunication in 1981 (AMA, 2002). Nokia's position is Europe's largest and the world's second largest manufacturer of mobile phones (Zhang, 2002). Along with mobile telephones, the company’s other global operations include TV set-top boxes, Internet software and services. Nokia’s products have reached in 10 countries on three continents and have developed centers in 15 countries around the global (Datamonitor, 2002a). For further information on Nokia’s PEST analysis, see Appendix B.

2 SWOT Analysis

In this report, it uses SWOT analysis to show the internal and external factors motivate Nokia to use its strategy with its operations and marketing activities.

2.1 Strengths

2.1.1 Global Products and Image

Nokia is a global company in the world. It not only sells its products to 130 countries, but also sets up research and development departments in fifteen countries to produce its products in different culture and language needs (Nokia, 2002b), such as English, Dutch, German, and Chinese. In addition, Nokia uses its logo to build its brand image: ‘Nokia connecting People’, and translates its slogan in different languages.[2]

2.1.2 Designs for Fun

“Nokia has launched a new wireless game. It's an ambitious project, using SMS, TV, print media, radio and the Internet to provide clues to help players to solve a mystery” (Datamonitor, 2002a). Nokia designs games in order to attract customers to use its products. For further information on Nokia’s strengths, see Appendix D.

2.2 Weaknesses

2.2.1 New Product Develop Problems

Although Nokia provided colour screen mobile phones in September 2002, this was already late in the market that compared to its competitors, such as SonyEricsson, and Samsung (BBC NEWS, 2002). As Fahad (2002) mentioned that Nokia is not so successful in the market because it was too slow to introduce its colour screen mobile phones, and its global competitors produced more ‘new products’ in these years.

2.2.2 Old Design of Surface and Functions

Nokia has research and development departments in fifteen countries (Nokia, 2002b). However, its products still follow old design of surface and functions[3], whereas SonyEricsson and Samsung have the fashion designs and functions to attract young people (BBC NEWS, 2002).

2.3 Opportunities

2.3.1 New Software Market

Data traffic in mobile networks is growing at a tremendous rate. People around the world are using mobile networks, which is directly relevant to personal needs. In recent years, Nokia has added value through MMS[4] for messaging and e-mail, used Java[5] for downloading applications, and supplied HTML service for content search (Merriden, 2001). Hence, it may attract businessmen and young people who are interested in the new software market.

2.3.2 Joint Venture in Technology

Nokia has joined with Hewlett Packard in technology; it has had a good reputation about computer programs for many years. As a result of this, Nokia has a considerable opportunity to enlarge their market size into PC users who prefer mobile phones compatible with PC device (Merriden, 2001). For further information on Nokia’s opportunities see Appendix F.

2.4 Threats

2.4.1 Competitive Threats In PC Market

There are increasingly people that desire to use mobiles anywhere and desire to connect with the Internet at anytime. Therefore, owning or having the relationship with an Internet network service company is the opportunity to join into the new PC market. In this sharp competition, it is harder than in the past for Nokia to grasp customers’ attention and they have to focus on outstanding imagination and creativity in their marketing plans. A proper market segment is the basis of successful marketing strategy (Merriden, 2001).

2.4.2 Hacker Threats

There is a current and potential threat that the environment of Internet often harms the customers’ security. In fact, hackers, industrial spies have rocketed in the last few years. It is difficult for companies to quantify the harmfulness of these security threats. Each company must to protect its business and its computer systems and networks from abuse (Nokia, 2002f). Hence, marketing managers are faced with new challenge, which must require new thinking of this. For further information on Nokia’s threats, see Appendix G.

3 Nokia’s culture and values

3.1 The company’s culture and values

The Nokia corporate philosophy culture is based on four values that are customer satisfaction, respect for the individual, achievement, and learning continuously. These important values benefit both the members of individual staff and the integer of the company (Nokia , 2002h).

3.1.1 Customers satisfaction

The basic work of Nokia is to create customers satisfaction (Nokia, 2002h). Nokia respects and concerns for customers. Working in partnership is to satisfy their needs, and give them the best possible service (Nokia, 2002g). The major work of the Nokia staff is to concern with the quality of their solutions, products and services.

3.1.2 Respect for the individual

The strength of Nokia is that Nokia treats people as individuals whether they are employees, customers, or business partners (Nokia, 2002g). In fact, this means that trust, openness, fairness, and acceptance. Individuals have a responsibility and freedom to make independent decisions in Nokia (Nokia, 2002h). It enables the company to respond rapidly and to serve customers flexibly. The diversity of cultures and lifestyles of individuals working in Nokia is a main factor to better understand customers.

3.1.3 Achievement

Employees work to a solid strategy and well-defined business measures that can assist the employees in committing and inspiring in Nokia (Nokia, 2002h). Nokia’s leading position in the industry is based on individual courage, innovation, and a constant willingness to learn (Nokia, 2002g). It is used throughout the whole company that everyone will strive to excel at their job and a mediocrity will never be accepted (Nokia , 2002h).

3.1.4 Continuous learning

The employees of Nokia are continuously looking for ways to develop themselves and improve their performance. They are aware of the trap of complacency and strive to keep their minds wide (Nokia , 2002g). They aim at staying in the forefront of technological development, and share their experiences, studying and training. In addition, continuous learning means to collect new ideas and react quicker than others perform (Nokia, 2002h).

3.2 Four Factors of Impact on Nokia

There are four main factors that impact on Nokia’s overall performance. Firstly, Nokia has been impacted on its management and leadership (Chen, 2002). As the company’s management, Nokia’s teamwork is the main factor that the company has been successful (Chen, 2002). The management and communications of teamwork are important to the company. For example, Jorma Ollila and his four senior leaders are a seasoned team in Nokia since 1985. The other important factor that makes Nokia successful is the hand-off management approach (Chen, 2002). This means that people who have the best knowledge can make decisions (Chen, 2002). Therefore, teamwork and hand-off approach are the most important management methods in Nokia and this enable the company to stay at advanced market.

Secondly, Nokia has been impacted on its employee policy. The company’s ability is to attract and retain talents from the world (Chen, 2002). The reward for Nokia that has been named on the list is in the Fortune magazine’s 100 best companies to work for in America in 1999 (Nokia , 2002i). The company has received recognition of its benefits plan, which includes partial compensation for the fertility treatments and adoption as well as health benefits for workers’ unmarried partners (Chen, 2002).

Thirdly, Nokia has been impacted on individual’s growth and company’ development. In fact, Nokia have ‘invest in people’ seminar every year (ChinaHR, 2002). It provides opportunities for employees and managers to communicate with each other. When employees meet any barriers during their work, they can discuss the barriers with their managers in order to achieve. On the other hand, managers may consider employers’ new ideas and give feedback to them rapidly.

Fourthly, Nokia has been impacted on employees training. Nokia has its own Nokia institutions (ChinaHR, 2002). It provides technology skills and non-technology courses for employees (ChinaHR, 2002). In the company, employees continue to learn new knowledge while they are working. This can help the company to achieve its goals.

In short, Nokia’s culture is divided into four parts. All the parts present the different aspects that affect the value of Nokia.

4 Nokia’s Current Financial Position

Figure 4.1 The Net Sales of Nokia

(Source: Nokia, 2002a)

Over the last four years, the amount of Nokia’s mobile phone sales has grown rapidly (Figure 4.1) and has exceeded other competitors’ sales volume. The operating profit for 2000 increased 48 percent that was almost EUR 5.8 billion. It was another historical high and above the industry average (Datamonitor, 2002a). As a result, Nokia’s financial figures have increased gradually. On the other hand the net sales of Nokia increased merely EUR 0.8 billion, and the net profit of Nokia reduced 1.7 billion in 2001[6]. It contains some elements that influenced and decreased the net profit of Nokia. One of the important elements is that “Nokia has made mistakes with regards to WAP, especially over its marketing, and has been late to market its GPRS mobile phones in the UK” (Datamonitor, 2002b). Nokia spent more expenses on R&D, but it did not take the first chance available to launch new products. In addition, the global economic contraction has been getting serious. For further information that affected the net sales of Nokia, see Appendix I.

Figure 4.2 Nokia’s Growth and Profitability

(Source: TBR, 2002)

Despite difficult economic and telecommunication industry conditions, Nokia continues to achieve a substantial profit every quarter (Figure 4.2). “The company’s strong balance sheet, cash flow and continued profitability clearly position Nokia as the leader in the wireless industry” (TBR, 2002). Nokia used its brand image and its high technology to create an amazing financial position. The financial position of Nokia surpassed its competitors that were Motorola, Ericsson, and Siemens in the field of the mobile telecommunication. In recent years, mobile companies have been increasingly difficult to meet targets in the market. Nevertheless, Nokia has managed to increase its leadership in the mobile phone market while there were increasingly being challenged in the mobile phone environment.

4.1 The Impact on Future Marketing Activities

In 2003, Nokia will invest 50 to 100 million devices that have a color display and an open application development platform in mobile phones (Yahoo Finance, 2002a). “Of these phones, [Nokia] expects roughly 10 million will be Series 60 based devices. The rest will be based on the Nokia operating systems and have the standard Open Mobile Alliance service enablers, including MMS, Java and browsing” (Yahoo Finance, 2002a). Nokia has enough assets to research and develop new technologies and invest new apparatuses, because it always keeps excellent margins of profits.

At the end of 2002, Nokia will launch 3510i that is Nokia’s first color-screen phone aimed at the segment market. During 2003, over half of the Nokia handsets will be enabled for mobile multimedia services that permit customers to send and receive photos (Yahoo Finance, 2002b). Since the pace of the world is increasingly rapid, technologies have to pursue the rate. Nokia is constantly innovating its products and is concerned about the changing needs of customers.

5 Conclusion

As a leading telecommunication in the global mobile phone market, Nokia’s success attributes to the next three factors. First, strengths and opportunities of Nokia suggest that high quality, advanced technology, worldwide service, and continuous new product are the essential factors for Nokia’s product development.

Second, Nokia concerns on its enterprise culture. In the company, the relationship between individuals is mutual trust, fair, and openness. In order to improve employees’ techniques, Nokia makes courses to train its employees regularly. This training may assist Nokia in achieving its higher goal.

Third, Nokia’s financial position shows, although the net sales decrease, Nokia still has a substantial profit margin. Therefore, this report proves that enough asset can invest to launch more new products, which will offer more marketing opportunities for Nokia.

At the same time, Nokia meets some problems of mobile market, which have been explained in a SWOT analysis. Hence, in the process of the Nokia way, the company should remind itself that the Nokia belongs to customers and considers on behalf of customers.

6 Recommendation

Nokia do an excellent job to make the mobile phone easy to use. In order to make Nokia maintain the leader position of mobile phone market, the company should closely focus on the tendency of marketing development.

In fact, it is a good advice for Nokia to make out specialized products for enterprise markets. These specialized products’ functions are to make the connection more quickly and handily than before. The objective enterprises are big companies, hospitals, government organizations, fire companies, etc.

There are some advantages for Nokia focusing on these groups market, which have mentioned above. Firstly, group market is a long-run market. The enterprise wouldn’t change these products easily, and they may require updating after a period of time. Secondly, this group market may get further marginal profits than the individual market, and the rate of return over cost will be improved as well. This is because the fact that the competitors are less in the group market than in the individual market.

In a world, any kinds of marketing strategies of Nokia need to be used correctly by the company itself.

7 Bibliography

Book

Merriden, T., (2001). Business the Nokia Way. UK: Capstone Publishing Limited.

Journals

Casse, P., (1994). ‘People Are Not Resources’. Journal of European Industrial Training. 18, (5), p23-24.

Thesis

Cheng, W.P., (2000). A Strategic Approach of Building National Technology Strength – Finland as Case Study. Master, National Sun Yat-Sen University, School of Business Management.

Websites

AMA. (2002). ‘Milestones in the strategic evolution of Nokia’. [online]. Available from: http://www.amanet.org/books/catalog/081440636X_History.htm [Accessed 12^th November 2002].

Asiaone careers. (2002). ‘The Massage Is The Medium’. [online]. 5 November. Available from: http://careers.asia1.com.sg/st_recruit/r20021105.html [Accessed 19^th November 2002].

BBC News. (2002). ‘Declan's week: executive toys’. [online]. 26 October. Available from: http://news.bbc.co.uk/1/hi/programmes/breakfast/2364767.stm [Accessed 20^th November 2002].

Chen, E., (2002). ‘Managing intangibles in the telecommunications industry’. Center for Business Innovation. [online]. Available from: http://www.cbi.cgey.com/journal/issue7/managing.html [Accessed 17^th November 2002].

ChinaHR. (2002). ‘Nokia: People are the most important resource of companies’. [online]. Available from: http://campus.chinahr.com/jobguide/mingqi/nokia.asp [Accessed 19^th November 2002].

Datamonitor. (2002a). ‘Nokia Corporation Company Profile’. [online]. 25 February. Available from: http://www.datamonitor.com/~3adebd80f6b044648ecbb52c7b4e4923~/all/capsules/companies/product.asp?pid=68875A1E-6946-4660-A49A-A0854BB82DCA [Accessed 8^th November 2002].

Datamonitor. (2002b). ‘Competitive Landscape’. [online]. Available from: http://www.datamonitor.com/~17b691e8b4154d858ac03a73b1c2090d~/all/capsules/markets/product.asp?pid=FB9BBB40-D7A9-41CF-AD99-EEA0963D477D&url=-SECTION2.HTM&free=free&menu=1&li=False [Accessed 13^th November 2002].

DengLongMen. (2002). ‘Nokia wins the human investment’. [online]. Available from: http://www.denglongmen.com/information/article_show.php?ArticleID=2606 [Accessed 19^th November 2002].

Enterprise culture. (2002). ‘Innovation in management’. [online]. Available from: http://www.7158.com.cn/qmzjiu2.htm [Accessed 19^th November 2002].

Fang, J.P., (2001). ‘Strategy-based on human being’. ChinaByte. [online]. 19 September. Available from: http://www.chinabyte.com/20010919/1419073_1.shtml [Accessed 19^th November 2002].

Google. (2002). ‘Nokia Employee Commitment’. [online]. Available from: http://216.239.51.100/search?q=cache:xoVdYm2tkYcC:www.nokia.co.uk/html/about/main3.asp+customer+satisfaction+achievement+respect+individual+continuous+learning+nokia&hl=en&ie=UTF-8 [Accessed 19^th November 2002].

Lynn, G., (2002). ‘Samsung mobile aims to tempt buyers’. BBC NEWS. [online]. 19 September. Available from: http://news.bbc.co.uk/1/hi/technology/2268270.stm [Accessed 20^th November 2002].

MWorld. (2001). ‘Nokia-Jorma Ollila’. [online]. Available from: http://www.mworld.org/visitor.nsf/channel4/4241 [Accessed 19^th November 2002].

Nokia. (2002a). ‘Financial Statements’. [online]. Available from: http://www.nokia.com/cda1/0,1080,2205,00.html [Accessed 10^th November 2002].

Nokia. (2002b). ‘In Brief’. [online]. Available from: http://www.nokia.com/cda1/0,1080,1096,00.html [Accessed 20^th November 2002].

Nokia. (2002c). ‘Nokia’. [online]. Available from: http://www.nokia.com.tw/nokia_apac/taiwan/nokia_insight_taiwan?qt=branch&la=en [Accessed 20^th November 2002].

Nokia. (2002d). ‘Nokia’. [online]. Available from: http://www.nokia.com.cn/intro/jv_2.html [Accessed 20^th November 2002].

Nokia. (2002e). ‘Environmental Policy’. [online]. Available from: http://www.nokia.com/nokia/0,5184,1143,00.html [Accessed 20^th November 2002].

Nokia. (2002f). ‘Security Solutions’. [online]. Available from: http://www.nokia.com/securitysolutions/pdf/nokia_ISS_brochure.pdf [Accessed 26^th August 2002].

Nokia. (2002g). ‘The Nokia Way’. [online]. Available from: http://www.nokia.com/nokia/0,1522,,00.html?orig=/aboutnokia/downloads/social_info.html [Accessed 19^th November 2002].

Nokia. (2002h). ‘The Nokia Values’. [online]. Available from: http://www.nokia.be/jobs/values.html [Accessed 19^th November 2002].

Nokia. (2002i). ‘Nokia named to U.S. “100 Best Companies to Work For” list’. [online]. 23 December. Available from: http://press.nokia.com/PR/199912/775183_5.html [Accessed 19^th November 2002].

OECD. (2002). ‘OECD Economic Outlook No. 72- Finland’. [online]. 21 November. Available from: http://www.oecd.org/pdf/M00036000/M00036701.pdf. [Accessed 20^th November 2002].

Optimize. (2002). ‘The New Darwinism’. CMP United Business Media. [online]. April. Available from: http://www.optimizemag.com/issue/006/management3.htm [Accessed 20^th November 2002].

TalentPartners. (2002). ‘Nokia Global Competitiveness (HC 1/96)’. [online]. Available from: http://www.talentpartners.fi/document.asp?docID=102 [Accessed 19^th November 2002].

TBR. (2002). ‘NBQ Nokia Corp. Report’. [online]. 15 August. Available from: http://www.tbri.com/News/Highlights/020815/rh020815.htm [Accessed 13^th November 2002].

Trade Union News. (2002). ‘SAK President Lauri Ihalainen calls attention to the connection between taxation and welfare state’. [online]. Available from: http://www.kaapeli.fi/unions/2002/20020202.htm [Accessed 20^th November 2002].

WHP in Europe. (2000). ‘Wellbeing is part of Nokia way’. [online]. 27 April. Available from: http://www.occuphealth.fi/ttl/projekti/whp/nokia.html [Accessed 19^th November 2002].

Yahoo Finance. (2002a). ‘Nokia Sees Future in Multimedia and Color with 15 MMS Phones Already Launched’. [online]. 5 November. Available from: http://biz.yahoo.com/bw/021105/52178_1.html [Accessed 10^th November 2002].

Yahoo Finance. (2002b). ‘Nokia CEO Says Company Exploring Share Buyback’. [online]. 7 November. Available from: http://biz.yahoo.com/djus/021107/1215000910_1.html [Accessed 10^th November 2002].

Zhang, D.W., (2002). ‘Nokia’. [online]. Available from: http://www.tml.hut.fi/Studies/Tik-110.300/1997/Mobile/nokia_6.html [Accessed 12^th November 2002].

8 Appendices

Appendix A

“Fredrik Idestam founded Nokia in 1865. Initially the company operated in the paper and rubber market, and only began to grow rapidly in the 1960s when it attempted to become a regional conglomerate and entered the growing electronics market. The modern Nokia Corporation was established in 1967 when Nokia merged with Finnish Rubber Works and Finnish Cable Works” (Datamonitor, 2002a). “Nokia established its reputation as a leading telecommunications company in 1969 when it became the first company to introduce Pulse Code Modulation (PCM) transmission equipment that conformed to CCITT (Consultative Committee on International Telegraphy and Telephony) standards. Transmission systems based on PCM were the newest innovation in telecommunications at the time and substantially increased the capacity of telephone cables” (Datamonitor, 2002a). “By August 1997, Nokia had supplied GSM systems to 59 operators in 31 countries” (Datamonitor, 2002a).

Appendix B

PEST Analysis

In the case of Nokia, it can be classified as international organization. It base on global brand, which is required to focus on macro environmental factors, such as Nokia. Macro environmental factors comprise Political, Economics, Society, and Technology, viz, PEST analysis. It is necessary force that Nokia has to concern and know what is happening in the other countries at the moment. Because there are different culture and different external factors between different countries, Nokia has to adjust its strategic plan in order to develop international market.

l Political

It is important of a company to acquire resources from government, such as economic policy, and science and technology policy. The success of Nokia has obtaine the resources from Finnish policies which assist Nokia to advance its products. As Cheng (2000) has observed:

The Finnish policies are the most important factors of Nokia. To operate efficiently, a modern knowledge- and technology-based economy that is highly specialized, internationalized and undergoing rapid structural change requires active support from the public sector. In its widest sense industrial policy and science and technology (S&T) policy comprise all those measures by which the public sector shapes the operating environment for business and thus fosters public welfare. Both policies ursued by Finnish government and Parliament are crucial for the development bothe of the Finnish Economy and of national information society.

As the result of this, not only Finnish Government but also international companies, such as Nokia, have play very important roles to develop their information society and national technology strength.

l Economic

According to the fact that Russian Federation was collapsed in early 1990s and it assaulted with Finnish economics (OECD, 2002). Nokia also face with the problem, and changed its functions from single market and overall products to global market and focusing mobile phone market.

l Society and Technology

In the 1980s, people trend to microcomputers and Nokia try to match the tendency to produce its main products, such as computers, monitors and TV sets (Merriden, 2001). According to the changes in 1990s, Nokia also changs its functions to mobile phone market. Nowadays, the global market trends to connect PC and mobile phone, even though to combine these two products together.

On the other hand, one important future challenge of Nokia is to estblished its policy to follow up the environmental policy and science and technology policy of the Finnish Government. As Cheng (2000) has report:

Substainable development and environmental protection have various effects on the operation of the innovation system. Innovation also creates new opportunities for promoting sustaainable development. The markets for environmental products are expected to grow rapidly in the near future. The Finnish government offers goods facilities for taking this opportunity. National and European reforms arising from environmental objectives influence the perequisites from innovation. [Nokia] must be used to find solution which help to implement environmental objectives as well as the objectives of innovation policy in a balanced way.

To sum up, the main reason of Nokia has success to advance its products are the policies and technology development of Finnish Government. It can not be separate between Nokia’s successful of advance its product and Finnish Government’s policies, both of Nokia and Finnish Government are the winner in the international market. Nokia has obtain the success of mobile phone market, and Finnish Government has establish its position of technology development.

Appendix C

The slogons of Nokia use on its websites:

English: Nokia Connecting People

Trandional Chines: 科技始終來自於人性 (Nokia, 2000c)

Simple Chinese: 科技以人为本 (Nokia, 2000d)

Appendix D

Strengths

l Wide Range Of Product

Based on the contemporary data[7], it can be determined that Nokia has the highest number of product line compared to its competitors that provides more than ten models in the market. Accordingly; it coveres every class of consumers from basic functions to variable functions. Comparing data with Ericsson, Motorola, Sony, Samsung, siemens and other companies, it illustrates that other brands have narrow product lines.

l Environment Policy

The slogon of Nokia is “Nokia Connecting People”, which is explained that Nokia respecte humen’s needs. Nokia is dedicating to follow environment policy, including environmental design, supply for network management, systems of environmental management, and recycle practices. This has became an important part of Nokia’s corporate culture. Indeed, Nokia had guarantee to improve in environmental issues and had been published in 1994 (Nokia, 2002e).

Appendix E

Comparison Chart

Source: Carephone Warehouse, 2002, 1^st October-31^st October

Appendix F

Opportunities

l Product Launch Continuously

In this report it has determined that Nokia uses Total Quality Management, which mentions more about training worker program, and makes the higher product quality. All employees are well-trained and motivated consecutively afterward production processes also developed as well. In addition, as Merriden (2001) claims that Nokia established Research and Development department where develops its product line into modern modification as well quality as the existing products.

l Users Availability

Nowadays, the business has steadily recovered during this period so that there are so many retail stores where it grew up continuously in London. Especially mobile phone retailers, such as, The Link, Phone4U and Carphonewarehouse, which is spread around London in every street. And, of course, every store has not missed the opportunity to choose Nokia as their product line. Consequently, all the customers can be guaranteed that any damaged or loss of mobile phone will be service through those retail shops. Likewise, in opportunity aspect, Nokia has an opportunity to convince the prospects to buy Nokia in those plenty of stores around the town (Nokia, 2002g).

Appendix G

Threat

l High Taxation In Finland

It is generally believed that Finland’s tax rate is among the highest in the world. The tax rate reached a peak of 47.1% in 1996 (Trade Union News, 2002). Because Nokia’s business model was based on expensive fixed assets, and it had already acquired the corporate DNA for high tech from its electronics business, and that helped prepare the company for its transition into cell phones (Optimize, 2002). All above these need a large number of costs. Finnish taxation is one kind of direct threats that probably make Nokia to consider the total cost. It has been said that Nokia may leave due to Finnish high taxation. As known that the finial aim for every company is to make more profit than before. In some sense, it is the key of the market. However, there is a very difficult problem for Nokia to consider weather leave or not. Everything has two results in deed, and the company must undertake the hazard of their choosing of solving this problem by-and-by.

Appendix H

Consolidated Profit and Loss Account, IAS

Financial year ended December 31	2001 EURm	2000 EURm
Net sales	31,191	30,376
Cost of sales	-19,787	-19,072
Research and development expenses	-2,985	-2,584
Selling, general and administrative expenses	-3,443	-2,804
One-time customer finance charges	-714	-
Impairment of minority investments	-80	-
Impairment of goodwill	-518	-
Amortization of goodwill	-302	-140
Operating profit	3,362	5,776
Share of results of associated companies	-12	-16
Financial income and expenses	125	220
Profit before tax and minority interests	3,475	5,862
Tax	-1,192	-1,784
Minority interests	-83	-140
Net profit	2,200	3,938

(Source: Nokia, 2002)

According to the table, there were some elements that influenced and decreased the net profit of Nokia. Firstly, the research and development expenses increased one percent. Secondly, the selling, general, and administrative expenses increased two percent. Finally, there were some new expenses for 2001 that were onetime customer finance charges (714 million), impairment of minority investments (80 million), and impairment of goodwill (518 million).

Appendix I

In addition, there are some factors that affected the net sales of Nokia. They are the weakened economic conditions, pricing pressures; intensity of competition, and fluctuations in exchange rates, in particular, the fluctuation in the euro exchange rate (Nokia, 2002a). Firstly, the global economic contraction has been getting serious, and every company is facing economic risk during the period of economic recession. Secondly, the joint venture between Sony and Ericsson gives the company a good chance to increase its market share. Nokia has to adjust its product price and initiate a new segment of the mobile market. Finally, most European countries have joined to The European Union. The fluctuation in the euro exchange rate has continued, and it can occur the profit or the loss in finance.

Hit Counter

2001 EURm