Nokia †Internal Analysis Essay

Financial performance We start our internal analysis by looking at Nokia’s sales and profitability. Strong sales and profitability results can indicate that the previous strategies were successful and changes in either can implicate a change in the market viability (Aaker, Mcloughlin, 2007). In 2007, Nokia realized total sales of about 435 million units and a net profit of â‚ ¬7,205 million. Although it has only a market share of 9.8% in the United States market, Nokia has a worldwide market share of 37,8%. This makes Nokia the market leader in the telecom industry and hereby a dominant player in the market. Nokia has 10 manufacturing facilities in 9 countries, and from these locations she distributes her products to more than 150 countries and different segments. With sales growing considerably compared to 2006, Nokia’s large customer base has only increased. Assuming new customers will create loyalty, future earnings are brought in. However, growth in the industry is declining, making it a difficult task for Nokia to keep their customers with the company. In 2007, Nokia’s total assets were â‚ ¬35,599 million (annual report Nokia, 2007), resulting in a Return On Assets (ROA) of â‚ ¬7,205/â‚ ¬35,599 = 20.24%. Nonfinancial performance Financial performance measures are primarily a reflection of the short-term business results. Because of this, nonfinancial performance measures must also be considered. Nonfinancial performance measures often provide better measures of long-term business health (Aaker, Mcloughlin, 2007). Relative costs Since 2004, Nokia is offering cheaper phones for the emerging markets. By using her economies of scale, Nokia was able to lower her costs, resulting in an average building price of only 69 euros per handset. This was giving Nokia a dominant position because it was very difficult for Nokia’s rivals to keep up with this cost reduction. However, Nokia’s produces most of its production volume in high-wage countries, leading to considerable extra costs in the manufacturing process. Brand/firm associations Over the years, Nokia has created a strong brand by listening to her customers and understanding customer needs. Nokia is often associated with high quality phones and this isn’t going unnoticed. In 2011, Superbrands, the world’s leading independent arbiter of brands, declared Nokia the leading brand in China. And in 2010, Nokia won the Economic Times award for most trusted brand in India (Nokia.com). Effective marketing campaigns helped creating a strong brand Nokia nowadays is. Customer Satisfaction With sales increasing year by year, Nokia managed to create a large customer base which is expanding every year. Nokia produces a wide range of phones with great differences in price, design and features. Because of this, Nokia can offer products that suits different customers desires and keep every customer satisfied. New product activity Nokia is developing new products year by year. In 2007, Nokia improved her research and development department and introduced some mobile-related services and software. She also went in some partnerships with companies like Vodafone and Orange and integrated its Internet services under one brand, named Ovi. However, Nokia’s is really affected by her competitors bringing innovative products to the market. Products of companies like Apple and Samsung are far ahead of Nokia in some fields, which weakens Nokia’s position in the market. In an industry with a declining growth, it is very hard for Nokia to keep up with these innovations.