Nokia to Sustain Market Leadership

In the year 1998 and with the invent of the genealogy called GSM, Monika has leveraged its ability to introduce fashionable and cheap handsets with its strength in GSM Technology it becomes the global industry leader. After seeing the drastic growth and opportunity in the market, almost all the players in the consumer electronics industry and computer manufacturers have entered into the mobile phone market. This has increased huge competition and thus reduces the life cycle of the product, i. E. New models coming every three months which is a challenge to the supply chain team to satisfy the market demand. In the year 2007, the launch of Apple i-Phone eave rocked the mobile Industry, simultaneously Chinese producers such as ZIT aggressively entered into the Asian and African market with cheap low end handsets and Korean producer Samsung Electronics solidified its position as the number two player in the market. The intense competition on both high end and low end markets weakens the Ionians position as a Market leader.

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When Monika Corporation landed in a financial crisis in the year 1 991, they have made a strategic move of employing one-third of the total employees and 10% of its revenue in R&D, which has initiated them to become a market leader. According to inter brand Monika has been the 5th most value brand globally in 2000. Monika has the unique Supply Chain model which helps them to satisfy drastic customer demand and after sales services. Mobile Phone Industry: There are various improvements in the design and technology which has let mobile phones to be an essential instrument for every man’s life.

As a result of huge competition and at the same time, competition has yielded process improvements that have driven prices down to the point in which these phones are affordable to the masses which also has increased opportunity for the new entrants. Many new technologies have been the results of the high competition. Mobile phones have started with GO, which Motorola has introduced in the market in the early ass’s now it has grown to G which is the latest technology for communication. And the major mobile phone manufacturers are Monika, Apple, Samsung, LEG, Blackberry and ETC Corporation.

History of Monika: The eponymous telecommunication giant Monika was founded in 1865 by Freddie Ideates as a paper mill. The company would become a major industrial force between 1865 and 1967. Then it would merge with a cable company Finnish Cable Works) and a rubber firm (Finnish Rubber Works) to set the new Monika Corporation on the path to electronics. The newly formed Monika Corporation then decided to focus on telecommunication. The ground work for telecommunications was laid in the asses. N the late asses, the mobile phones and Telecommunications infrastructure products were developed for both domestic and international customers. [pick] Current Problem: Monika has lost the market share in the developed countries: the company only sold one in ten handsets in the US compared to one in three in 2002 and it had gently pulled out of Japanese market after twenty years of operation. Ionians revenue in Europe declined by 15% in the fourth quarter of 2009, and the overall market share has come down from 36% in 2007 to 30% in 2010.

Still Monika is the Market leader in the Mobile phone Manufacturing Industry. Monika was able to keep its cost low because of its hybrid manufacturing system which was the combination in house manufacturing and outsourcing. The company has the wide execution network which helped it to effectively reach the end customers. Internal Analysis: Brand Name: The Brand name is one of the most important strength for any company; Monika is the market leader in the Mobile industry since 1997 with a market share of 37-39% as of June, 2006.

Monika has reduced the cost of the mobile and which in turn has made the whole Mobile Industry to grow rapidly. User Friendly Operating: The main success factor for Ionians Success is the user friendly Operating system which they have introduced in the initial basic model. During the initial growing stages in the mobile industry Motorola was another dominant player but they lost market position to Monika because of the non-user friendly phones. I. E. Their design was not standardized and this made the downfall for Motorola.

Strong Manufacturing Facility: Monika is having a very strong manufacturing capability and their manufacturing facilities are spread worldwide to cater to the demand of the various regions. Monika has 10 manufacturing unit around the world to support the Demand worldwide. The various manufacturing facilities are: Monika Mexico catering to the North American Market. Monika Finland, Hungary and Romania cater to the European Market. Achaean supporting the Asian/ African and Australian Market. 2 Units at China ND South Korea supports the Achaean plant for Asian and African Markets.

Few models are being manufactured at a specific place in order to achieve higher economies of scale. Also all the MEMO and suppliers are present in the same region so that supply and demand can easily be satisfied. PORTER’S FIVE FORCE MODEL [pick Threat of Entry: New network operators can supply the customized, operator-specific handsets. Many new emerging competitors are from Asia. These have offered handsets with more specification with low costs. Bargaining power of Customers: Customers have comparative information about the product in terms of price ND features.

Network operators are relatively concentrated and large service provider such as Orange, Reliance and Avoidance have high bargaining power. Individual buyers have low switching costs and are price or feature sensitive. Low degree of product differentiation and any new features or technology is quickly imitated. Bargaining power of Suppliers: There are large numbers of suppliers for the components and sub-Assemblies. Companies could able to switch the suppliers for their components if they didn’t provide a quality product. Suppliers do not pose any credible threat of integration even though they are outsourced.

Competitive Rivalry: Device are becoming more complex and getting features (pictures, audio, and video) that are outside the core competencies of traditional manufacturer’s. The major players are Motorola, Samsung, ETC, Apple and Ben-Q Siemens. These companies are having high stake because of huge investment into the business. Threat of substitute products: Now a days there are many substitute products are in the market for mobile i. E. , PC based application such as IP Telephony. Mobile costs are escalating due to technological regression. There are Convergence between PAD’S and Mobile industry.

SOOT Analysis: The below analysis is done using the various Internal and External analysis. From the Internal Analysis: Strengths Having the advanced technology over the competitors in the mobile phone industry. Decentralized company structure, innovative and creative employees. The market leadership in the mobile industry. Innovative supply chain model and global network. Strong brand name and company image in the global market man picturing facility. Product innovation. Economy of scale Weaknesses Complacency and arrogance. Has its own Very few market share in the high end mobile market. Few alliances, many sticks to its standing in the market, do not want to cooperate with the operators. From the External analysis Opportunities The emerging market in developing countries, such as China, India and other south East Asian countries. The emerging market for high-end mobile phone such as business user phone. Threats Facing more new competitors, especially from Asia. Stronger buyer power from the network operators. Lost market share due to Samsung and Apple. Strong competition in mobile industry. Technological changes required. Recommendations for Sustaining and increasing the market share: On analysis of the internal and external factors we here by recommend the following strategic Initiatives to Monika Corporation to sustain its Leadership in the Mobile Industry. The below discussion will emphasis on the problems that will evolve when implementing these strategies and also the ways to overcome the same. 1 . Alliances/Partnerships for Technology: Technology The main issues with any Mobile Manufacturer are Technology and Manufacturing Capability.

Monika has a very fine Manufacturing Facility and that too spread all over the world. The problem with the Monika is that they have not fore-castes the market demand i. . , they have not concentrated properly on the smart mobile phone segment compared to the other range of Mobile phones manufacturer. Many new technologies were introduced by Monika to the various markets but this improper forecast has resulted in the loss of market share. The Smart phone segment is one of the niche markets where the profit margins are very high due to the involvement of high technology.

The evolution of Apple’s SO 4 and Google’s Android are constantly picking up the market and recently Monika has understood this and had joined hands with Microsoft for Windows Mobile Operating System. Apart from the operating system Monika can acquire the niche players like RIM, Canada or ETC Corporation, Taiwan who are very good in the smart phone Segment. This will help Monika to fill the Gap in the market and Increase the market share. Network: 2. Having a Centralized Research and development Centre: Ionians Research centre was started in the year 1 986 and Monika has a scattered R&D facility around the world for each markets.

The below diagram shows the various research and development centre. In the current situation we can have a centralized research and development center instead of a scattered research and development center. As all of us know the difference in the Mobile phones in the various markets are due to the Software instead of Hardware. So we can have a centralized facility for the hard ware part and have a regional R&D facility for the Software part. In the future there won’t be any basic Models instead all customers will prefer the Smart phone segment. 3.

Diversification or Expansion into Adjacent Markets The main reason for Monika to get stagnated in one particular market (i. E. , Telecommunication Industry) is because of one dimensional thinking and lack of awareness or lack of ability to foresee the future. Because of that Monika fell Enid its Competitors, they missed big trends, and they lost big time. Think about APPLE. What they were doing some ten years back and where they are now. Apple’s emergence and rise in a decade is an astonishing example of how a company can grow by expanding into adjacent market.

Apple used its Macintosh platform to kick-start the tunes music store, and after that they established the pod business on top of that. The two new products tunes and the pod made Apple to get connected with young people who now comprises the main users of all the Apple products and still attracts billions and billions of Windows users not becoming a part of Apple’s Family. With the huge market created by Apple using Macintosh and pod, phone was successfully introduced to its customer base . Let was known in a survey that most of the phone customers were already a pod owners, and they also use Macintosh computers.

With these large loyal and already established customers, any of Apple’s products that will be introduced in future will also be a grand success for the company. The strategies that Apple teaches to Monika is that satisfying customers is about a lot more than just selling them upgrades of what they already have today. If taken care properly, he already established loyal customers can also act as a catalyst for creating new businesses and new market. 4. Reduction of Inventory using Manufacturing Clusters: Designing and managing the supply chain of mobile phone industry is particularly challenging.

Short product life cycles, rapidly evolving technology, globally linked distribution networks, increasing product variability and high levels of demand and supply uncertainty all create problems for those managing these supply chains. At the same time, rapidly increasing global demand and increasing market segmentation forces players to ship high volumes of increasingly specialized phones. The result is a supply chain that links dozens of suppliers to multiple manufacturing facilities and distribution channels across many continents, and which is constantly being changed to accommodate next generation phones.

As fierce competition drives down the price of these phones, the relative cost of managing such a complex supply chain increases, particularly as mobile phones gain popularity in the price sensitive emerging markets. The stakes are high: history has shown that missteps in the management of the supply chain can result in a major drop in the performance of the organization s a whole’. Although this level of complexity represents significant challenges for those designing the supply chain, it also represents an opportunity for firms to gain competitive advantage from them.

By improving flexibility in the supply chain, it may be possible to quickly adapt to the changing demands and preferences of consumers. By improving efficiency in the supply chain, it may be possible to offer lower priced phones than competitors. By protecting against systemic shortages of components from suppliers, it may be possible to continue to produce while competitors are unable to meet market demand. The value of a high performing supply chain has been recognized in industry, and as a result many studies have been performed to help identify different ways in which companies can improve their supply chain.

At present Monika is having a Cluster system where major suppliers are present in and around Ionians premises and at present Monika is having the raw material (partially assembled units) inventory in their warehouse for a period of time. The amount of Inventory can be reduced from the current level by implementing the SIT production system. Also Mobile Manufacturing is not as complicated as an Automobile industry. And SIT for all the parts cannot be introduced, lets us list down the part in the mobile phones and their supplier’s.

On analysis the same we have found out that the following parts are being shipped from overseas. 5. Need to Focus on Replacement Market In fact in countries which are considered as mass market like India, China, it’s increasingly getting difficult for Monika to sell additional handset and sustain growth. As the market already got saturated, the only area for growth is the replacement market. Therefore, Monika should concentrate to convince the existing users of the need to purchase the next generation of handsets from hem. Two segments of customers in replacement market are young people and professional people.

For the youth segment, the Monika should enhance the entertainment quotient. (Egg . Music, movie player, messaging, chatting, and gaming). Monika should also concentrate on the trendy design that can attract the young generation. For professionals, ability to remotely access their data is the top most priority. (Egg. Conference appointments, e-mails, Powering presentations, spreadsheet, and word documents should be at their finger tips. CONCLUSIONS We already know that Monika has started to rethink it strategies. This was evident from the recent partnership agreement of Monika with Microsoft on windows phone.

Because of the economic downturn with market saturation and the demand for high tech functionality handsets there is a dramatic change in the handset market. Monika should take firm action to resist contamination in order to grow. Already its brand name is a proven has assets, and Monika should continue building it. Monika should also Analyze customer needs and make necessary action to maintain brand differentiation. It should also form strategic partnership with industry and service providers like the case of recent readership agreement of Monika with Microsoft on windows phone . Y this way Monika can ensure and differentiate itself from other mobile brands to the end- user. Monika also needs to bring new high tech gadgets to market, and, as the market is showing signs of saturation, Monika should target the replacement market. Monika should create a scenario where there is a necessity for existing handset owners to purchase a new Monika handset. As the whole industry is undergoing a massive changeover, Monika is not doomed yet. As long as Monika is open to accepting changes, it will hold a dominant position in handset market and hence muster large revenues.