PESTE analysis (Case company - Nokia)

1. 

Pankaj Saharan
September 2012

2. 
Over the past 150 years, Nokia has evolved from a small paper mill in south-western
Finland to a global telecommunications leader connecting over 1.3 billion people.

Nokia has disrupted into various industries before becoming a telecommunications giant
from making rubber boots, car tyres, generated electricity, even manufactured TVs etc.

Nokia’s own mobile phones’ platforms included Symbian (60 & 40), MeeGo (open-source
Linux based platform) and Meltemi (low end Linux based platform)

Nokia announced a Broad Strategic Partnership with Microsoft to build a new Global
Mobile Ecosystem (with Windows Phone) in Feb 2011.

Currently, Nokia’s phones strategy focusses on Windows Phone platform (for
Smartphones) and Symbian 40 (for low-end feature phones segment).

Nokia has decided not to continue development of MeeGo and Meltemi along with
divesting from long time cash-cow Symbain 60 devices.

Main competitors (mobile phone manufacturers) are Samsung (took over Nokia as global
mobile phones market share leader in 1Q12), Apple, RIM, HTC.

3. Organization Structure
© 2012 Nokia

4. Net Sales
Operating Profit
Net sales per region
© 2012 Nokia

5. © arstechnica.com

7. Key elements of Nokia’s strategy:
 build a new winning mobile ecosystem in partnership
with Microsoft
 bring the next billion online in developing growth
markets
 invest in next-generation disruptive technologies
 increase our focus on speed, results and
accountability
© 2012 Nokia

8. 
The Political factors are the factors which the government can impact on the
operation of Nokia in the countries it operates.

Nokia is bound to follow rules and regulations of the local government of Finland
as well as foreign governments where it does business so that it operates as
efficiently as possible.

Needless to say that Nokia needs to keep an eye on the political stability of the
government of the countries it operates.

Nokia has production facilities located all over the world . The rules and
regulations vary per government of a country e.g. the minimum wage, the
maximum hours a week employees can work, the Health and Safety regulations
etc. which are vital for the reputation of Nokia both short term and long term.

Quotas (limit to goods imported), restrictions, tariffs, taxes, subsidies and
patents, copyrights over certain technology or equipment are decided by the
government. So Nokia works hand-to-hand with authorities to gain maximum
competitive advantage to the nation’s target market.

9. 
Nokia used to play pivotal role to the Economy in Finland by holding major portion of
market on the Helsinki stock exchange but the stock value has declined considerably
during since last year.

Mobile phone networks help in increasing the mobility on which businesses and commerce
thrive on.

Communities also benefit from the inward investment needed to build and maintain
networks. This helps in enhancing a nation’s economy by creating jobs, paying taxes,
leasing buildings for office space, establishing factories etc.

Nokia’s recent decision to shut down Salo factory has gross impact on the economic
situation of the city (and the country as well) leading the government to intervene and
support the city’s sudden unemployment level.

Nokia’s economic stability impacts other businesses as well e.g. Leasing car companies,
house renting, hotels, airlines, cleaning, maintenance etc. all being impacted in Finland due
Nokia’s economic downturn.

Nokia needs to consider external economic factors as well e.g. change in exchange rates,
inflation in particular countries, threat of recession, bank rates etc.

10. 
Mobile communications have an impact on day to day life of people. The majority of people need mobile phones more than just way of
communication. In many societies, both older and younger people enjoy the personal security, independence and peace of mind by
connecting with their friends, family and loved ones through the mobile technology. In addition, latest smartphones are transitioning as key
fashion icon and status symbol as well.

Mobile networks enable emergency services to respond faster and help people more effectively.

Nokia’s presence have positive impact on the local community - from providing rewarding employment opportunities to supporting worthy
causes, such as schools or hospitals.

Nokia claims that from devices it builds and the suppliers it chooses, to its mobile solutions that enhance people’s education, livelihoods
and health. (Source: nokia.com)

Nokia sees radio wave emission issues as important and that is why Nokia is focusing on EMF and health issues. Nokia participates in a
number of industry associations and scientific forums. Nokia aims to support the World Health Organization (WHO) by explaining the EMF
protection scheme behind the recommendations from WHO and ICNIRP (International Commission on Non Ionizing Radiation Protection)
to all interested individuals or groups.

Nokia Life and the Cherie Blair Foundation for Women in Nigeria launched Business Women which will offer essential tips and
practical advice on starting and running a successful business to female entrepreneurs in Nigeria on their mobile phones.

The Nokia Code of Conduct sets the approach to ethical and sustainable business practice and is based on the highest ethical
standards. It outlines Nokia’s commitment to respect and promote human rights and fair workplace practices, equal
opportunities, environmentally sustainable business, and its zero-tolerance policy on bribery and corruption. First introduced in 1997, the
Nokia Code of Conduct had its latest renewal in 2009. (Source: Nokia.com)

Nokia applies the Code of Conduct globally in its operations and require the same standards from its suppliers. All Nokia employees
understand and comply with the Code of Conduct.

BridgeIT, which is Nokia’s first project on Mobiles for Social Good in India, has won the highest recognition at the mBillionth Awards 2012.
(Source: nokia.com)

11. 
Traditionally, Nokia was looked upon by many as innovation giant and even criticized for focussing too much on technology
than consumer needs. There are some great examples where many felt that Nokia failed to capitalize e.g. touchscreen
implementation by Nokia in late ninetess but unable to sell the technological advancement in a way that Apple could do
many years later.

In the past Nokia was the market leaders in innovation in the mobile phone industry, however in recent times they have
seemed well off the mark and struggle to compete with their rivals.

As the competition is rising with low differentiation factors, Nokia is trying to ensure that their Smartphones are at the highest
level of innovation.

Nokia still is focusing heavily in innovation by investing in technical advancements and still filing large number of patents.
Many analysts have believed that Nokia’s current value is mainly because of Intellectual Property Rights (IPRs).

Partnership with Microsoft brings key technological advantages like Windows Phone mobile platform (which has shown
promise to threat the position of Android and iOS), developer tools and support, application ecosytem, application store
(Marketplace), integration with Windows and Mac operating systems, 3rd party developer offering etc.

Reports expect Microsoft to increase its share of smartphone sales from 5% in 2010 to 20% by 2016. The advent of
Windows 8 may also improve volume. (Source: Informa Telecoms & Media)

Latest innovations in camera technology (PureView) and location & commerce (L&C) platform has enabled Nokia to keep an
edge on the rivals to get competitive advantage.

Nokia has very weak hardware components differentiation (except for camera). Nokia is taking steps in right direction e.g.
with recent announcement of Windows Phone 8 phones with dual-core processors, sleek hardware design, LTE support etc.
But to gain competitive advantage, Nokia needs to focus a bit more in this area to gain an edge over already existing
competitor devices in the market.

12. 
Nokia cautiously tries to reduce its energy consumption and ensures materials are ethically sourced.

Nokia is one of the world’s top 10 companies when it comes to climate change disclosure and performance, says a
new report from the Carbon Disclosure Project (CDP), and Nokia has also been included on the Dow Jones
Sustainability indexes for 2012/2013. (Source: nokia.com)

Each and every Nokia device is created with the environment in mind. Nokia does not make one-off eco-friendly
devices – all the handsets and accessories it produces fulfill strict environmental criteria. This means Nokia:
o
o
o
o
use approved, tested and sustainable materials
continually improve energy efficiency for all products
develop smaller, lighter, recyclable packaging
offer a range of Green Channel apps and services at Nokia Store

Every Nokia product comes with an Eco profile, which tells about its materials, energy
efficiency, packaging, environmental impact and recycling.

Each mobile phone emits radio wave emissions, a measurement is made to determine how much electromagnetic
energy is absorbed by body tissue. Governmental and regulatory agencies have established SAR (specific absorption
rate) limits under which cell phone use has been determined by them to be safe and Nokia is adhering to the
acceptable level of SAR values.

Nokia provides Nokia Store Green Channel in its application store which collects all the green-minded apps in one
place.

Nokia also provides multiple applications that focus on environment e.g. Nokia Energy Profiler, WWF
EcoGuru, Climate Mission 3D etc.