Nokia: Its Opportunities and Threats


Nokia is a Finnish multinational communications corporation, and it manufactures mobile electronic devices, mostly mobile telephones. In this article, we will look into the opportunities and threats of this company by analysing its external micro-environmental factors and internal drivers using PEST and SWOT model, and comparison with its competetors such as Sumsung, Motorola, and Apple.

PEST Analysis of NOKIA

PEST analysis stands for "Political, Economic, Social, and Technological analysis". It is a part of the external analysis when conducting a strategic analysis or doing market research, and gives an overview of the different macroenvironmental factors that the company has to take into consideration. It is a useful strategic tool for understanding market growth or decline, business position, potential and direction for operations. Here we try to obtain an overview of the Company Nokia by analysing PEST factors.

1. Political

Finland is small and its people are not many, and it will not and can not get involved in international political disputes. This can be seen that it has a good political environment. Finland keeps on good international relations and other countries in the world, which provide a strong guarantee to globalization of Nokia. In addition, in August 2008, former Prime Minister of Finland, Esko Aho announced that he will be join in Nokia in November 1, 2008, and on January 1, 2009 he became the Nokia Group Executive Committee members and as the head of corporate relations department, which provide a more powerful experience and protection to deal with international politics for Nokia. In addition, Finland is a member state of European Union, Nokia can get many political benefits from EU policy. Due to the creation of Single European Market, there is low barrier for Nokia trade and FDI to other European countries. Besides, the establishment of Euro is also a good thing for Nokia to reduce financial risk. In Chinese market, there is a stable political environment. It is a county with the largest population which joins WTO in 2001, and the government publishes many open-door policies to encourage foreign company to invest in. Totally, current political factor is an opportunity for Nokia.

2. Economic

In 2010, the economy has started to show signs of recovery, which means individual revenue will increase to somewhat. And European economic integration makes it become easier to have well recognition about foreign products more and more. These two factors can provide opportunities for Nokia’s products to achieve globalization. Over the past few years the global economy that greatly increase the level of purchasing power of people, which is the premise for Nokia's massively to occupy market; but in the second half of 2007, the outbreak of the U.S. sub-prime mortgage crisis in the United States in 2008 that made several large international investment banks have fallen to went bankrupt, which cast a shadow to the global economy and gave a negative impact on Nokia.

3. Technological

Because of the invention of single chip and the rapid progress of semiconductor’s technology, there is a fierce competitiveness for Nokia in technological environment. Besides, GPS can be built-in mobile phone, which is amazing. Fortunately, Nokia has developed these technologies successfully. Nokia control the heading position in the communications industry that mostly relies on the high speed development of telecommunications of Finland. Finland's well natural and geographical factors provide inborn technology environment for Nokia and telecommunications industry of Finland. In addition, the core technology of communications and mobile terminal chip is largely concentrated in the hands of a few large enterprises, of course, including Nokia. July 24, 2008 Nokia and Qualcomm announced that they have signed a new agreement. According to this agreement, Nokia in mobile phones and Nokia Siemens Networks infrastructure equipment can use all Qualcomm’s all patents, which provides technical support in the future development of Nokia.

4. Social

With the popularity of mobile phones, mobile phones have not just a simple communication tool, and become partners and work friends in the daily life. More and more the emergence of fashion phones, which make the mobile phone become a fashion element or decorations. Mobile phones have become personal identity and mutual communication. Today, it can be observed through the phone and display each person's life