Nokia Oyj: Financing the Wp Strategic Plan

 
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BUFN 751: Financial Strategy for Corporations

Case Report

Case 2

NOKIA OYJ: FINANCING THE WP STRATEGIC PLAN

Team 5 MFIN

Group Members:

Jingyueyi Li 113700989

Yun Lin 113700606

Yue Ji 113710339

Xueying Hong 113421815

Rui He 113246142

Now Nokia is standing on a burning platform. The situation it is currently facing is listed below.

Strength: (1) Strong brand name around the world and high customer brand loyalty. 

(2) High reputation of hardware quality and strong R&D teams making innovations happens. 

(3) Leading position in entry-level phones in most developed and emerging markets

Weakness: (1) Provide limited price and product options for customers of smartphones

(2) The Windows Phone is too new and it’s very difficult to gain awareness and adoption from customers compared with Android and IOS operated smartphones.

(3) Nokia Windows Phones has long product development cycles and take long time to market.  

Opportunities: (1) Investing in emerging market in developing countries. 

(2) Expand to make devices on other platform besides mobile phones for NAVTEQ.

Threats: (1) Competitive threats from new rivals. 

(2) Losing market share due to people’s preference for smartphones and Nokia’s non-innovative product features.

Nokia has the strategic partnership with Microsoft to make a global mobile ecosystem, which targets at creating innovative products with unrivalled scale and brand identity. We think it will work. First, Nokia will use its expertise on hardware optimization, software customization and scale on Windows Phone smartphone platform. For example, Nokia delivers mapping and navigation capabilities to the WP ecosystem and Microsoft brings Bing search, apps, advertising and social media to Nokia devices. Second, Nokia will combine with Microsoft to drive innovation on WP platform. Both companies combine forces to develop apps and content for the WP platform and Nokia’s Ovi Store merges with Windows Marketplace. In this way, Microsoft will provide developer tools to help application developers to leverage Nokia’s global scale. Also, Nokia will gain from materially reduced R&D expenses and Microsoft’s expected support for sales and marketing though it will lose gross margins due to royalty payments paid to Microsoft.