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PESTEL analysis of mobile phone manufacturer Nokia

Nokia Corporation is a Finish communications based company which concentrates on mobile telephone technology. It focused on the key growth areas of wire line and wireless telecommunications. It has around 65,324 employees’ worldwide and sales network that spans about 150 nations. Nokia Corporation generated more than half of its sales in Europe, a quarter in the Americas, and about 22 percent in the Asia-Pacific region.

Nokia's history began in 1865 in Finland. In 1937, Verner Weckman was named President of one of Nokia Corporation’s founding companies.

In 1998, Nokia became the world’s largest mobile phone producer and

their market growth continues with new devices that enable high-speed Internet,

Mobile online gaming and multimedia functions.

When mobile phones first came out on the market, the models were very simple with the best technology being SMS messaging. The next technology advances were advances such as: MMS, Internet, camera phones and video recorders.

When Nokia phones were first introduced, they needed a lot of promoting and advertising because they were not recognized enough to sell based on their quality and offers to their consumers, so this is where Nokia spent the biggest quantity of money promoting their goods and establishing their brand as a leader in the communications market.

Since 2000, Nokia has effectively carried out the world’s first WAP service in China. Nokia’s success continues with Nokia 6650, the company’s first 3G mobile telephone and the start of new era in mobile gaming with the first N-gage device in the 2003.

In 2005, Nokia introduced the famous N-series and immediately sold a large number of phones.

In 2006, Olli-Pekka Kallasvuo became the new President and CEO of Nokia.

In 2008, Nokia’s three mobile device business groups and the supporting

horizontal groups were replaced by an integrated business segment, devices and

services.

There are numerous environmental factors which can affect the businesses in an economy. The external factors are events that occur outside of the company and are not under the control of the company. They include:

Competitors

Economic environment

Political environment

Social environment

Technological environment

Political environment:

These refer to government policies, regulations and legal issues in the country of operation. For example, employment laws, taxation policy and government stability. Political decisions can impact on many important areas for business such as the education of the workforce, the nation health and the quality of the economy infrastructure such as the road and rail system.

Economic environment:

Economic factors regard as how the economy impacts a business in terms of income, interest rate, inflation, tax policy, government spending, and general demand. For example:

•Higher interest rates may put off investment because it borrowing is more costly.

•A strong currency could make exporting harder because it could raise the price in terms of foreign currency.

•Inflation may affect higher wage demands from employees and increase costs.

•Higher national growth of income may increase demand for a firm's products.

Social environment:

Changes in social trends can affect on the demand of a firm's goods and the availability and keenness of individuals to work. It includes the standard of living, religion, fashion, civilization, education etc. For example; wine is illegal in some social, cultural and religious countries. Also, the ageing population has an affect on demand. For example, demand for sheltered accommodation and medication has raised where as demand for toys is decreasing.

Technological environment:

Technological factors consider how the fast the pace of change in production processes and product advance impact a business. Technology can minimize costs, improve quality and lead to improvement. These developments can help consumers as well as the organizations providing the goods. For example, new discoveries and inventions such as: MP3 players, laptops, online gambling and high definition TVs. Online shopping, bar coding and computer aided design are all technology advancements to the manner we do business as a result of better technology.

Competitors:

Competitors refer to challengers in business, as for customers or markets. It consists of brand competition for similar goods. For example, Pepsi and Coca Cola, Sony and Philips, etc. Also substitute products for example, petrol and CNG, tea and coffee etc.

These environmental factors affect the Nokia Corporation in the following ways:

Political environment:

Legal constraints, such as 3G, must be considered because many businesses plan to make a profit so they may be tempted to misinform their customers about pricing, products’ quality and the availability of their goods. Also, they may try to cut expenses by using lower quality materials in their products, such as weaker resources for Nokia cases and batteries. Also some companies may set out their waste in ways that harm the environment without ensuring high standards of hygiene and safety in the workplace. Including, outlet stores, which are illegal and can cause legal problems for companies.

In 2000, the UK Government started to accept bids from thirteen companies who wanted to run a licence to sell next-generation mobile phones. It raised £22.47, a neat sum to anybody.

However, the companies began to refuse paying the huge amount of money for the licences. The UK auction was structured so that each challenger bid was planned to be a certain percentage higher than the previous bid.  This unexpectedly resulted in the size of bids strengthening sky high at a rate of over 150 rounds of bidding. 

Environmental and ethical factors:

Some businesses see profits as more valuable than a strong ethical code and this can run behavior and business conduct. Some unethical practices are illegal and companies can not become involved in them. However there are also some practices that are legal by law but are considered highly unethical by the consuming public. Companies who take on in these practices can lose a lot of market share if they are caught. For example, cosmetic testing on animals is legal, but some of the general public aren’t happy about it and boycott. Because of this companies, companies must be very cautious about how they conduct themselves.

Nokia have managed to be pretty environmentally friendly and have not offended the general public in any way. They have been very cautious about this and thus, this is one of the many reasons they are a popular brand of mobile phones.

Technological environment:

In the communications market, technology is most probably the most important factor that companies like Nokia have to take into account. They must keep up to date with all the newest technological advances, such as camera and video phones, if they intend to obtain the biggest market share and keep ahead of their competitors, such as Sony and Panasonic.

Now, the next generation of mobile telephony (3G) known globally as IMT, has been exclusively designed to carry packet data. Speech is simply treated as a particular data application. 3G systems will enable the end user flexibility in the traffic channel, deliver multiple services with differing bandwidth requests, and simultaneously if needed. Bluetooth will support enhanced 2nd generation as well as 3G systems in the deliverance of a wide range of services.  With the development of such broad capabilities, it will be rather tempting to make use of the 2.5 and 3G systems to support every new application and even some of the old ones too.

Economic environment:

Nokia accounted for ninety one percent of GSM camera phone sales globally in 2002 while Samsung accounted for twenty four percent of CDMA camera phone sales worldwide in 2002.

While noting the extremely limited visibility, Nokia expected 2009 industry mobile device volumes to decline 5% or more from 2008 levels, which they were right about.

Nokia has modified its Internet services market focus to the areas of music, maps, media, messaging and gaming. Nokia estimates these targeted portions of the Internet services market will be more or less 40 billion Euros in 2011. In December 2007, Nokia estimated that the total Internet services market would be approximately 100 billion Euros in 2010.

Social environment

About fifty million mobile phones have now been registered in the UK, according to the latest statistics making the mobile the most successful consumer product ever existed.

Unfortunately, although mobile phones are used for great purpose, they have also triggered a rise in crime.

However, the good news is that the service providers have at span managed to apply methods preventing stolen phones from being used ever again. This should lead to a high drop in the crime figures.

In terms of the percentage of households reporting having a mobile phone for

personal use, wireless access reached 71% in 2006 in the US. This rose from 59% in 2004, with the greatest increases concentrated in the lower and middle income

quintiles.

Competition:

With all this technology available in the communications market, it is

clear that Nokia will have lots of competition, these competitions include:

Sony Ericsson, Samsung, Motorola, Siemens, and Panasonic.

With all of these competitions in the market Nokia must stay ahead of

the competition by operating successful marketing strategies. To do this, Nokia

must concentrate on marketing strategies. At present, Nokia are the

world's best selling phone company. Nokia strengthened its lead as the Number 1 seller in the market during 2000 with shipments rising sixty percent over 1999. Some of the company's success was accredited to a strong second half in 2000 when fifty nine percent of sales occurred.

For example, Virgin Mobile entered the Canadian market using the Bell Mobility network. The market has grown and continues growing strongly, and the well-known willingness of consumers to change service providers means that a new entrant offering competitive prices or service features could be successful.

In conclusion, Nokia mobile phones work as an excellent channel for consumer

response. With mobile phones as the response channel, brands can create a relationship with new customer and current customers. Mobile phones have benefited business and individuals by providing needed information by reducing cost, transactions and time for marketers.

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