Nokia’s Porter’s Five Forces Model
Porter’s Five Forces model is defined as a competition position analysis model that was earlier introduced in 1979 by Michael E Porter a member at the Harvard Business School. Hence, the existence of the name for the model as Porter’s Five Forces model. Companies are involved in different activities such that the most threat that they face is the competitive form other companies that run the same line of business and operations. The Porter’s Five Forces model has been adopted by companies to aid them in ensuring that a simple framework is provided for the undertaking of assessing and evaluating the company competitive strength and the relevant position of the organization/ company business (Hanlon, 2013).
The model identifies five forces that are linked to the determination of the company competitive intensity and the attractiveness of the available market. In the case, the Porter’s Five Forces model is well applied in the identification of the position rather simply where the power lies in a company operation situation. The Nokia company is a telecommunication company which has identified the need for the Porter’s Five Forces model which will aid the company in having a better understanding of the strength of the Nokia company’s current competitive position and possible identifying the strength of the position that the Nokia company will look to get into. Therefore, Porter’s Five Forces model is defined with the power of enabling the Nokia Company to understand easily the available known and unknown factors that are affecting the profitability of the telecommunication industry. The understanding is linked with the provision of the sound decisions that the company managers will have to make prior either getting into a particular field of operation, increasing the capacity of a given industry/ operations of developing competitive strategies. Porter’s Five Forces model forces include the supplier power, buyer power, the competitive rivalry, threat of substitution and the threat of new entry (cgma.org, 2013).
Bargaining Power of Suppliers
The supplier power focuses on the services and products that suppliers within the Nokia Company articulate to deliver with the main concern on their prices. The power will get defined with the kind of product or service delivered to the company. The supplier concentration outlines how the Nokia Company no longer takes attention to the suppliers of the hardware components as the company can easily switch to other hardware. The Nokia Company Once More no longer depends on a single key component manufacturer thus experiencing high differentiation of the product inputs. There is also the low power in the bargaining of the suppliers. No matter the loose of marketing share the company remains in leading device manufacturer. Companies such as Microsoft are the one experiencing the high bargaining power when it comes to software. The Bargaining Power of Suppliers is moderate in reality for eth Nokia Company.
Bargaining Power of Buyers
The Nokia Company has identification of the need for the low bargaining leveraging such that Smartphone differentiation within the market is becoming difficult, and this demands fro the company focusing on the features of the Smartphone. There is the increase in the number of buyers globally to mention the Asia-Pacific market that is revealed in the developing countries. There is the power of sensitivity price increase with the price differentiation getting lower with the faster changing in products; Phones design technicality and data capabilities. There is the building of mobile phones by mobile operators’ thus low threat to backward integration. The copying of technology inventions proofs the low product differentiation as the competitors easily implement an innovated feature. Therefore, the bargaining power of buyers is high.
Competitive Rivalry within an Industry
The telecommunication industry gets the Nokia as a subset to operate in a competitive environment. The competition is very high as the Nokia has to compete with some other big organization in the global such as Apple, Blackberry, Sony Ericson, LG, HTC, and others. There is the existence of little differentiation between the Nokia competitors with the relative common features of the organization products. The competitive rivalry is very high, and this is a threat that at the company should always dream about.
Threat of New Entrants
The mobile industry is well established over time, and the introduction of new products won’t change the industry. The market is at its leveraged level. However, the barriers relating to the entry of entrants in the mobile industry is high regarding the demand of high investment in technology and market so as to compete with the existing well established mobile organization manufacturers. Therefore, the threat of new entrants is low.
Threat of Substitute products
Mobile phones have become essential in normal human life, therefore, being replaced is not possible as people have to communicate. The capability of the mobile phones grants no opportunity to the replacement of the mobile phones, and the Nokia company remains in the market to the manufacturer as many to meet the demand in developing countries. Therefore, the threat of substituting the Nokia company products especially the mobile handset is low.
The Nokia Porter’s Five Forces Model
MODERATE HIGH HIGH
cgma.org (2013). Porter’s Five Forces of Competitive Position Analysis . Retrieved from http://www.cgma.org/Resources/Tools/essential-tools/Pages/porters-five-forces.aspx?TestCookiesEnabled=redirect
Hanlon, A. (2013). How to use Porter’s five Forces. Retrieved from http://www.smartinsights.com/marketing-planning/marketing-models/porters-five-forces/