Nokia is one of the main actors on cellular market, with its product being known worldwide. Thus, it is important to conduct its value chain analysis, which will done in accordance with Tim Stobierski’s article and consist of three parts: presenting The Value Chain Activities of Nokia, discussing the costs and values of its activities, and identifying opportunities for competitive advantage (Stobierski, 2020). This will allow gaining an overview, of the company’s recent successes.
The Value Chain Activities of Nokia are marketing and sales, including pricing, marketing, sales force management, advertising and promotion. Its other services include post sales maintenance, installation services, training, product forward and backend alignment of software, and part supply. Finally, these activities require operations and logistics, including scheduling, distribution network, processing, and warehousing. All of these activities are generally common for many large business organizations, so it would be surprising if Nokia neglected them.
The costs and values of Nokia’s activities are currently undergoing a change. Since early 2021, Nokia has been planning to reduce the Cost of Activities, planning a reduction of 600 million euros by late 2023 (Nokia Corporation, 2022). While this reduction is realized on a slower rate than usual, the company still expects to achieve sufficient cost savings. Thus, the costs of activities are considered too high. The value has been recently reduced as well, due to value losses on a legacy IPR fund, compensated by a gain from the settlement of legal disputes as well as the sale of fixed assets (Nokia Corporation, 2022). Nokia has several Opportunities for competition, such as exploring generic commodity market and using Value chain to manage its risks. Considering Nokia’s own report, it mainly sees opportunities in expanding its 5G coverage, especially in China, where both 5G conversion rate and the 4G + 5G market share are lower than worldwide in general.
A Portfolio and performance analysis is done in three measures: Treynor Measure, Sharpe Ratio, and Jensen Measure, which are formulas created for investors to measure risks and rates of return. According to available statistics, both Nokia’s Treynor measure and Sharpe ratio are 0.0236, while its Jensen measure is 0.1025 (Analysis of Nokia, 2022). Thus, the risk-adjusted returns and the risk-return tradeoff are positive, and Nokia is reliable.
A customer analysis of Nokia shows that in the past, Nokia was not able to compete in innovations against rival organizations such as Samsung by not adapting with the tastes of buyers, losing its lead in the process. Nokia has earned its lesson since then, adopting different concepts and approaches related with consumer behavior. For example, it commonly studies the consumer behavior. These results in altering their products and services offered according to the customers’ tastes. Nokia’s methodology for it includes various consumer behavior related concepts and theories, the main of which is Psycho-Analytical Model. Nokia’s target audience are consumers aged 19-39 years old looking for entertainment and able to handle the technology. Nokia targets this audience in return to attract the younger generations into buying their products and hence enjoy growth rate sales as a result.
Thus, Nokia is a reliable organization which has learned from its past mistakes and utilizes modern solutions to its problems such as market research, 5G expansion, and costs reduction. Its performance analysis shows in multiple measures that it is trustworthy and has a positive dynamic. Thus, it would be beneficiary if the current tendency continued into the future, and Nokia expanded its market into foreign countries.
References
Analysis of Nokia Stock Technical Indicators – (NYSE:NOK). (2022). Macroaxis.
How risky is Nokia Stock? (NYSE:NOK). (2022). Macroaxis.
Nokia Corporation. (2022). Nokia Corporation Financial Report for Q4 and full year 2021. Nokia.
Stobierski, T. (2020). What Is a Value Chain Analysis? 3 Steps | HBS Online. Business Insights Blog.