Month: October 2016

Years ago, Nokia dominated the smart phone market in China. There was a time that almost every one around me was using Nokia. Since its bankruptcy in 2011, Microsoft bought Nokia in 2013 and Nokia gradually sank away from sight. However, Nokia announced its comeback in March 2016. In Eleanor Pan’s blog, she discussed Nokia ‘s reasons of failure and predicted that Nokia would fail again. I agree with her point of having another failure, however, I have slightly different opinions on the cause of it.

First of all, I don’t think that Nokia have advanced technology and penetrations in mobile phone market. Nokia decided to continue using its Windows system instead of Android, which was a huge mistake. Windows system could not satisfy customer needs and the launching of Nokia N9 was one of the key reasons of the bankruptcy. Nokia was lack of long-term strategy and had no vision, and the not-so-good operating system was not advanced enough to steal customers from larger firms such as Samsung and Apple.

In order to make a more comprehends analysis on Nokia, I choose to conduct a PEST analysis and will discuss under the political, economic, social and technological perspectives.

• Political

Nokia is based in Finland, which is a very small country. The government can hardly provide any support. But at the same time, Nokia doesn’t have the risk of having country-based rivals.

• Economic

Nokia suffered from the European downturn. The poor economic environment in Europe limited the purchasing power in its home markets.

Also, since Nokia doesn’t have money to finance extensive research and developments as its competitors do, it is lack of research and development capabilities. This disadvantage hurt it badly because Nokia have little access to what customer wants.

• Social

The growing use of apps hurts Nokia deeply. The most popular apps are made exclusively for IOS and Android users, and the decision to utilize the Windows system limits the appeal to customers.

• Technological

The Microsoft Windows system limits customers’ choices so that young people prefer Apple and Samsung products. Also, despite smart phones, Nokia doesn’t have any other representative products to make it more competitive in the long run.

Nokia’s return in 2016 is risky and is not looked upon favorably. If Nokia still wants a place in the smart phone market, the first thing to do is to start using Android system.

In Jinzhe Jiang’s blog titled “What is Apple’s magic”, she listed several reasons of Apple’s success and analyzed this firm using Business Model Canvas. In her opinion, Apple’s success is because it knows how to fresh customer segment by continually updating useful functions and have advantages over competitors by using a unique operating system (IOS). Having its value proposition, which is to make customers’ life much easier, and customer segment working correspondingly, Apple is now the dominant force in electric industry.

I agree with the reasons she talked about, but what I essentially wish to add, is that Apple is successful also because it defines itself into the right category, realizes the point of parity and point of difference, and make products based on customer needs. Apple’s point of parity, as other competitors, is that it makes electric devises. In order to beat its competitors, Apple enlarges the point of difference and amplifies its influence: it has a unique operating system called IOS, a linked connection among all apple products through ITunes (which is easier for backup), an easy-to-remember name and logo, and comprehends after-sale services. The strong hold on consumers is another highlight of this brand. People buy why you do it, not how you do it. With the value proposition of making life easier, Apple launches products with useful functions, such as waterproof and 3D Touch. As customer segments find convenient using Apple products, they feel the value proposition and stick to such brand.

Another reason for the possibly increasing Apple demand is the failure of its competitors. Samsung Galaxy Note7 had exploded and caused fire for more than thirty times within one month after launching. On October 14, the U.S. Federal Aviation Administration announced that it would ban this particular type of phones from all flights. Such action will severely affect the demand of Samsung and people will shift to Apple for alternative. Sometimes success or failure just happens by luck.

Walmart is planning to invest up to $1 billion in Flipkart, one of the biggest Indian e-commerce firms. Though it failed to enter the Indian market in 2013 due to the way-too-strict government regulations on Foreign Direct Investment (FDI), Walmart is now re-entering India because of the rapid growth of the market and Amazon’s domination threat.

If the cooperation is finalized, Walmart’s business model canvas may alter and thus generates more advantages and profits. Flipkart is now becoming Walmart’s Key Partner and the customer base will potentially increase 1.3 billion since Walmart faces to all Indian residents and offers good price. In the Customer Relationship part, with the help of the Flipkart, it can learn how local Indians shop in such a developing market and create trust using Flipkart’s reputation. The Channels focus mainly on online shopping: having ambition in global e-commerce field, Walmart has purchased the US Jet and collaborated with the China JD, and this onward e-expansion with Flipkart would influence the current domination of Amazon in India.

The India Entry is a win-win action for both Walmart and Flipkart. Since Walmart doesn’t have much development in e-commerce, the investment in Flipkart can find a firm footing in India online market. The trust that Flipkart has created can be used to attract more locals and Walmart can build new distribution channel by selling products through Flipkart. Nevertheless, by enlarging the influence on Indian market, Walmart can have competiveness challenging Amazon. On the other side, Flipkart is suffering from the weak financing environment in India. Through selling stocks to Walmart, Flipkart could get massive amount of money for self-developing.

Accompanied by the expanding market, maturing consumption habits and upgrading infrastructures, Indian government has stimulated the inflow velocity of foreign enterprises by introducing a series of encouraging policies such as allowing 100% investment from overseas in e-commerce platform. The biggest competitor Amazon had launched a program on signing up small owners as online firms and investing $5 billions in India market. Up till now, the negotiation is at early stages, however, Walmart does need Indian market with the consideration both in overall retail and e-commerce channel performance.

Source: CNN