The market is likely to grow exponentially in the coming years and hence all competitors in cellular industry have their eyes on the developing markets such as Latin America, India and China. This is where Nokia is not as far ahead of its close competitors as it is in some developed countries. Secondly in these countries local cell phone manufacturers have also posed a serious threat to the dominance of Nokia. For example in China, Nokias sales went down in past few years because of the presence of local manufacturers.
Nokia needs to decide what it will do to improve its market share and maintain its dominance in the cellular industry. The one important thing is to find new economies of scale. Since the company began focusing on cell phones as its main business in 1980s, Nokia has managed to stay at the top due to economies of scale. With competition getting tougher, it needs to find new economies of scale which means it needs to find new ways to manufacturer low cost cell phones while still expanding its customer base and its market share. This would play the key in maintaining its advantage over other competitors.
But Nokia cannot solely depend on this one strategy. It also needs to bring in new phone designs that would revolutionize the way people use cell phones. This is because with Apple coming up with iPhone and Motorola introducing the Driod, there is a no reason why Nokia cannot do the same. It needs to develop new models that would change the way people view cell phones and cell phone usage.
Outsourcing is another strategy that Nokia must use more often. This is because production is far more expensive in Europe and the U.S. “In 2003, Nokia outsourced 25% of its handset business. In the future, according to CEO Jorma Ollila, outsourcing is an area where the company may consider trying to save as much as possible. Nokia already has several joint ventures in China, which provides substantially lower costs of manufacturing than in Europe and the U.S. China have emerged as a strategic market and important manufacturing base for Nokia.”
New designs, better technology, lower cost alternatives and outsourcing are thus some of the strategies that Nokia needs to consider seriously in order to make profits in the competitive cellular market and also to maintain its edge. Nokia must not forget that despite the presence of local manufacturers in the developing countries, it can stay enjoy massive consumer support by focusing on why Nokia is a better and more dependable choice. We all know that local manufacturers in China may copy Nokia designs or other designs for that matter, but the quality would always be an issue with these manufacturers. Nokia can play that trump card and win back the customers it may have lost to local manufacturers.
Case Study: The Future of.