PEST HAVE INFLUENCED NOKIA] Nokia Nokia has exhibited laxity in competing in the current mobile telecoms to maintain its market share. Most of the company’s loyal customers have switched to products from competitors because other mobile telecoms companies have been updating their products frequently. The market share for Nokia in Europe and Finland, Nokia’s homeland has declined significantly, compared to the last ten years. Companies such Samsung and Sony Ericsson have manufactured stylish handsets that have posed stiff competition to Nokia in Finland. In the US, competition from Motorola and LG has led to a significant decline in Nokia’s market share.
This essay analyzes political, economic, socio-cultural and technological factors that might have led to the fall of Nokia. Political factors that affect mobile telecoms companies include property rights, rules and regulations, legislation and changes in taxation. As for Nokia’s case, neither Finland’s nor any other country’s political climate has contributed to the company’s decline in the mobile telecoms market. However, tax issues arose in India when Nokia received an order from Indian tax authorities, demanding unpaid taxes (Ewing & Mehrotra, 2013).
Nevertheless, Nokia defended its position that it complies with local laws and negotiated tax treaty between Finland and India governments. Given the good relations that Finland has with other countries and the European Union, Nokia has enjoyed a good political climate, free of any political barriers. In addition, Nokia has good reputation of protecting intellectual property rights. Therefore, Nokia’s demise did not result from political factors. Economic factors such as nature of exchange rates, globalization and stability of the economy have may affect an international company’s performance.
Nokia generated almost all of its revenue from foreign countries, outside Finland. The technology bubble burst led to a significant decline in Nokia’s stock price. Nokia faced stiff competition from other low-cost mobile phone manufacturers who seemed to dominate emerging economies (Steinbock, 2013). Mobile phone operators in emerging markets prefer products with a superior looks and feels, which sometimes may not be in the mind of the maker of handsets, and this has been Nokia’s weakness. It failed to focus on the customer while other companies did.
This has negatively affected Nokia. Secondly, competitors such as Apple and Samsung managed to introduce smart phones into the global market. Nokia had developed such smart phone, but it failed to commercialize them. Also, Nokia has neither defied its competitors by making its products exclusive nor embraced a co-branding strategy. The economic crisis had almost a similar effect to mobile phone manufacturers, but Nokia failed to provide intervention strategies to competition, which resulted from economic changes after the recession so as to secure the future. Socio-cultural factors such as lifestyle choices and generational shifts in attitude have contributed significantly to Nokia’s demise.
Initially, Nokia phones were considered fashionable because of their stylish features, compared to other existing brands. Earlier on, people used to prefer simple but reliable handsets whose batteries would last longer, but as time progressed, consumer preferences changed along with lifestyle, and this required a change in mobile phones’ designs and features. The generational shift among consumers called for development of trendy handsets, which would support multiple features for the modern consumer. Probably, a mobile phone was expected to be installed with software so as to support other functions.
As other mobile phone manufacturers responded to cater for new consumer preferences through their products, Nokia relaxed. Therefore, Nokia’s failure to introduce smart phones to the market in a timely manner contributed significantly to its demise. Technological factors contributed most to Nokia’s demise. Therefore, factors such as new technologies and competitors’ access to new technology have landed Nokia in its current position in the mobile phone market. New technology is very important to mobile phone manufacturing companies, if such companies transform that new technology to their products so as not to lose sales to competitors who may have adopted that technology.
As for Nokia, it delayed in starting off the CDMA market in India, though it is among the pioneers of this technology (Kazmi, 2007, p, 120). As a result, Nokia lost its market leadership in CDMA handsets to LG. Opening of a CDMA Research and Development centre in India and creation of new cooperation trends with operators came too late. Failure to be firmly tied to the technological hubs in East Asia and North America led to Nokia’s decline since 2008 (Yusuf & Nabeshima, 2012, p, 135).
Successful companies such as Apple and Samsung managed to capitalize on outsourcing so that their smart phones would be installed with software by other companies. They then effectively commercialized their products while Nokia took the path of developing its own software and failed (Pangarkar, 2011). This led to a major delay in introducing smart phones into the market, and consumers had already switched to other mobile manufacturer’s smart phones.
McDonald’s Corporation McDonald’s Corporation is the largest chain of hamburger fast food restaurants. However, the company is facing difficulties in competing in the fast food market. Risks such as fluctuation of foreign exchange rates, inflation, interest rates and regulations, as well as, the volatile financial markets have contributed towards McDonald’s market share competition troubles (Putilina, 2010, p, 1). Following, is a critical analysis of political, economic, socio-cultural and technological factors that have contributed to McDonald’s current status. The analysis incorporates how interplay of such factors affects McDonald’s market performance.
Political factors that affect McDonald’s pertain to legislation, rule of law, legislation political stability of the company’s markets. As far political stability is concerned, McDonald’s has been affected adversely by cases of terrorism in some of the company’s markets. For instance, people were killed by bombers in a McDonald’s restaurant in Indonesia. This happened during the heat of protests against American policies in Iraq. This affected the company’s ability to open franchises in Asia and boost its sales. The United States’ policies about health have also affected McDonald’s performance in the market.
Food labeling is among the regulations that McDonald’s must adhere to (Haberberg & Rieple, 2007, p, 133). For instance, foods are required to be labeled and the amount of cholesterol, fats and sugar should be mentioned. The same case applies in some states in Europe. This requirement has lowered sales because the company has to comply with regulations, and in cases where such regulations are violated, legal suits may result, leading to further losses. Another political factor that has affected McDonald’s performance in the market pertains to government control on licensing of restaurants.
Various governments regulate how licensing of franchises is to be carried out and ensures that there is compliance with law. For instance, a legal dispute arose in India about McDonald’s franchise pertaining to infringement of rights and violation of religious laws of food contents. Most of McDonald’s products have beef as a content while according to Hinduism, which is practiced in India, recognizes consumption of meat as a religious offense. Therefore, McDonald’s found itself in problems by selling beef containing products in India.
Consequently, sales have reduced significantly. Government campaigns against consumption of fatty and sugary foods to cur obesity in America have also affected McDonald’s marketing adversely. This is because fast foods, which are the main products that McDonald’s Corporation sells, have been cited to contain excessive fats and sugars, hence discouraging people from purchasing and consuming such products. As for economic factors, aspects pertaining to stability of the economy, nature of exchange rates, nature of market and globalization have had a significant effect on McDonald’s.
Factors such inflation, which is higher in some of the states of the US has an effect on McDonald’s market performance. Marketing is made harder by different economic status in different countries. For instance China’s recent economic is much higher than other countries. Secondly, McDonald’s marketing has faced problems because recently, consumer demand softened in the US. Also, consumers became more cost-conscious in the US, and this led to a decrease in sales, hence the company’s higher priced Extra Value Menu did not do well (Gasparro, 2012).
Socio-cultural factors that have affected McDonald’s performance in the market include aspects pertaining to generational gaps and composition of the market in terms of age of the consumers. In some countries, the population consists of people who are more than forty years of age. Majority of McDonald’s customers are below forty years. Therefore, in such countries, the market performance of McDonald’s is adversely affected. Secondly, there are increased social concerns such as the levels of fat, sugar and salt in the burgers which have slowed McDonald’s sales in developing countries.
Technological factors affecting McDonald’s Corporation include new technologies. The introduction of inventory system technologies requires that McDonald’s Corporation has to adopt a point of sale system whereby the company will be able to make instant payments to its suppliers and facilitate instant payment for its clients. Given that adoption of such a system revolutionizes the fast food industry, McDonald’s Corporation should ensure that its key competitors do not install such systems before it does. References Ewing, A., & Mehrotra, K., 2013, March 28. Nokia Says Indian Court Grants Stay on Unpaid-Tax Demand.
Retrieved from http: //www. bloomberg. com/news/2013-03-28/nokia-says-indian-court-grants-stay-on-unpaid-tax-demand. html Gasparro, A., 2012, November 13. McDonalds Says Tough Economy Is New Normal. Retrieved from http: //online. wsj. com/news/articles/SB10001424127887324735104578117103850395288 Haberberg, A., & Rieple, A., 2007. Strategic Management: Theory and Application. Oxford: Oxford University Press. Kazmi, S., 2007. Marketing Management. New Delhi: Excel Books Press. Pangarkar, N., 2011. High Performance Companies: Successful Strategies from the Worlds Top Achievers. San Francisco: Jossey-Bass Press. Putilina, I., 2010. A Financial Analysis of McDonald ‘s Corporation. Economic Research Center, pp. 1-7. Steinbock, D., 2013, September 17. Nokias Failure: No flexibility in US, Emerging Markets. Retrieved from http: //www. cnbc. com/id/101040631 Yusuf, S., & Nabeshima, K., 2012.
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