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Documente Cultură
Introduction ............................................................................................................................................ 2
1.
Objectives................................................................................................................................ 4
1.1.1
1.1.2
1.2
1.3
1.4
1.5
1.6
1.6.1
1.6.2
1.6.3
1.6.4
1.7
1.7.1
1.7.2
Nokias strategy............................................................................................................. 13
1.8
2 Problems with predicting how the market and the competition will change over the next few
years and its implications for strategy development ........................................................................... 15
2.1
2.1.1
2.1.2
2.1.3
2.1.4
2.2
3
3.2
3.3
3.4
References .................................................................................................................................... 20
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Introduction
The recent trends in the increasing competitiveness of the global market place with its
accompanying threats to the survival of many industries has forced several managers to
rethink the way they do business. There has been a paradigm shift from the yester years
philosophy where by apart from the recurring operational level planning for finances and
basic forecasting, strategic management was relegated to the bench on most corporate
level discussions on growth and success to a modern thinking where most managers now
consider strategic management as an effective weapon in their arsenal for securing
sustainable competitive advantage in their operational markets. The rise and fall of many
businesses either through very good effective strategies or through a deficiency in
sustainable strategy only go to reiterate this point further. In order to fully comprehend the
many benefits of strategic management it is necessary that we understand what the
concept means.
Strategic management in its basic form comprises of the many intended and emergent
initiatives taken by the management of a company involving the usage of its resources to
enhance the performance of the company in its external environment (Nag, et al., 2007). It
involves a careful study of an organisations internal environment and its interactions with
its external environment (customers, competitors, suppliers, macro environment) all with
the aim of maximizing the positive influences of its environments whilst minimizing their
negative effects. Central to the theme of strategic management is the need for business
leaders to be in touch with their business environments so as to be in a better position to
respond to varying stimuli. This need for greater environmental awareness can be as a result
of a deliberate plot by the business to shape its future through a series of well thought out
initiatives for the realisation of a specific end or as a means of continuous survival evolution
without a concrete end (the end of one journey begins another).
Irrespective of the approach that a business takes to realising its strategic potential, all
strategic planning initiatives consist of three distinct stages namely strategic analysis of the
businesss environment, strategic development of options and the strategic implementation
of one or a combination of the developed options. Strategic analysis of the businesss
environment is concerned with identifying the impact on strategy of the environment, an
organisations strategic capability (resources and competences) and the expectations and
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influence of stake holders (Johnson, et al., 2008). The strategic development of options
helps a company assess varying paths to accomplishing its aims and objectives in relation to
the identified capabilities of the organisation in the strategic analysis phase (Lynch, 2011).
Strategic Implementation the final member of the trio is concerned with all the activities
performed by the business to ensure the chosen strategy not just works but pays off as
intended.
Subsequent chapters in this report will further explore the concepts in strategic
management through a competitive analysis of some of the businesses presented in the
case study notably Apple and Nokia as well as assess the problems with predicting the
future state of external environments. Also the lessons from Apples strategies throughout
its history as presented by the case will also be examined.
1.1.
Objectives
At the heart of every strategy lies its motive. An organisations motives are formed after an
introspective assessment of its current position, its past and where it wants to go. The result
of this is the formulation of its vision and mission statements which epitomizes its values,
culture and philosophy. Time bound realistic objectives are then set based on this vision
with specific, measurable targets for the business to attain. This gives the business a sense
of purpose and direction in its operations.
Its apparent therefore that an assessment of any organisations competitive strategies
should begin with an understanding of what that organisation stands for.
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Its mission statement was however seen to vary as per the strategic direction of the
company at any point in time. Although Apples mission statement varies with its strategy
the central theme of all the variations is as presented below:
Apple is committed to bringing the best personal computing experience to students,
educators, creative professionals and consumers around the world through its innovative
hardware, software and internet offerings (Apple Inc., 2004).
Nokia on the other hand had a clearly defined vision with an accompanying mission
statement reproduced below:
Our vision is a world where everyone can be connected. Everyone has a need to
communicate and share. Nokia helps people to fulfil this need and we help people feel close
to what matters to them. We focus on providing consumers with very human technology
technology that is intuitive, a joy to use, and beautiful. We are living in an era where
connectivity is becoming truly ubiquitous. The communications industry continues to
change and the internet is at the centre of this transformation. Today, the internet is Nokia's
quest. Nokia's strategy relies on growing, transforming, and building the Nokia business to
ensure its future success (CEMS, 2012).
Apple
Nokia
Slogan
Think Different
Connecting
People
Products or services
communication
products,
internet
services
markets
Global
Global
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Mission components
Apple
Nokia
customers
Everyone
Technology
with a human
touch
technology).
Concern for
growing,
survival/growth/profits
transforming,
contribution
and building
the Nokia
business to
ensure its
future success
Philosophy
Products
should be
intuitive,
to development,
Self-Concept
helpful
Not clearly
stated
Not clearly
stated
A convergence in their operations is in the products they offer and the markets they operate
in. Both companies see great potential in the market of providing internet services and
consumer telephony devices and as such have included it in their product portfolio. They
also envision the global market place to be their operational turf.
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Apart from these similarities Apple and Nokia are very different in their beliefs and
purposes. These differences span the areas of defining key customers, approach to
technology development and the companys philosophies amongst many others. Apple
clearly defines its key customers whilst Nokia is content in providing services to satisfy a
wider market base. Their differences also show in their approach to technology
development with Apple preferring to look in house for all its technological needs with
Nokia choosing to emphasise on the kind of technology it prefers rather than the source.
Their differences become even more profound through a comparison of their philosophies.
Nokia believes that their garnered competitive advantage comes through the development
of intuitive products with the ability to appeal to the senses of their customers. Apple on the
other hand believes that by making their products more innovative albeit simple, they stand
the chance to appeal much more to their intended customers.
These differences and similarities should show in their choice of strategies. Assessing their
vision and mission alone will only provide the analyst with a summary of what to expect in
terms of a companys outlook and as such would not be the only determinant of a
companys strategy. A companys vision and mission may be or may not be enshrined in its
operations thus there is the possibility of a company having a very beautiful vision and
mission statement on paper but with contradictions in its actions. Companies with a
formalised vision and mission statement tend to gain an advantage in terms of an increased
familiarity with the companys purpose amongst its entire working populace although this
does not necessarily translate to it having a competitive advantage over its competitors that
do not have formalised vision and mission statements.
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Past history
Industry trends
Regional factors
Leadership in the PC hardware and software for the creative arts consumer market
through its reputation as being the developer of the worlds first desktop
publishing software (Page Maker).
Leadership in the digital music purchasing market through its online music store
ITunes.
Nokia in comparison to Apple with its core business being in the production of
communication related products and services sees itself as the leader in the mobile
telephone market.
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Apple started off as a maker of PC products having picked up ideas from a visit of it soon to
be founders to the research laboratories of Xerox. This visit inspired them in the
development of its first wave of innovative easy to use PCs that were applauded market
over. The sway its first generation products had on the market was short lived once
competitors were able to imitate them. Learning from this experience, Apple has since tried
to be on the front foot of which ever market it do decide to participate in. Its hallmark has
been to bring positive disruptions through innovation and thinking differently. Apple over
the years has learnt that products and technologies can be copied once they are launched
and whatever first mover advantage they possess at product launch will erode as the
product matures. Constant product innovation to them is the only way they can stay ahead
of their competition.
Nokia has grown from a small company in Finland to a global giant in telecommunication
products and services. This growth has come on the back of its leadership in the mobile
telephone market with the development of intuitive, simple to use handsets its hallmark.
Often challenged but never overtaken by its competitors, Nokia has grown comfortable in
its position as the brand of choice in its operating market.
Both companies possess an abundance in rich history from which to draw from when
developing current and future strategies. Apples experience through its participation in
different markets gives it the edge over Nokia who throughout its history had have to
contend with only competitors from the telecommunications industry. Nokia however can
count on its vast experience in dealing with the threats from past competitors such as
Siemens and Sony Ericson as it seeks to consolidate its hold on the mobile telephone market
as Apple plans entry.
that offer similar functions and the intensity of the rivalry between existing competitors. In
an industry where the odds have always been against new entrants will see existing market
players placing very little emphasis on the threat from a new entrant. A companys held
views about the industry in which it belongs can be its advantage as well as its demise.
Correct views held by an organisation about its market may help determine where the
companys efforts should be channelled to gain advantage whilst an organisation with a
wrong perception about its market may be blind to possible threats which can affect its
survival.
Apples perceptions about the PC industry in its initial foray into business led to its loss to
Microsoft, with the latter growing to become the market leader in Personal Computing
software. Apple has since moved on from its initial setbacks in becoming a force to reckon
with in varying markets. Nokia as a market leader had always seen itself as insulated from
the threats of new entrants in the mobile telephone market, after all, existing competitors
were already struggling to compete in the market. This oversight allowed Apple to foresee a
strategic gap in Nokias product offering and take advantage of that.
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A SWOT analysis of both Apple and Nokia should reveal their strengths and Weaknesses
which together determines their strategic capabilities.
It needs to grow into an innovative company if its to survive which its history has yet to
prove. The indifference of Nokia in assessing the strategic gaps provided in similar markets
in order to take advantage as Apple did in the consumer electronics and music downloads
market shows as a weakness of the company to develop alternate streams of revenue there
by shielding it against the shocks of a faltering market.
products exist. By developing products that can be integrated in a way although for different
markets, apple capitalise on the potential to cross sell existing products to buyers of the
new products. This strategy falls in line with Apples strategic direction of not just
developing standalone products but rather an ecosystem of functionally related consumer
products which work in harmony to the ultimate satisfaction of the customer.
Apples core strategic principles in its business endeavours can be summarised to be:
1. Focused strategy to market development through product differentiation.
2. Related diversification taking advantage of strategic gaps in surrounding markets.
3. Vertical integration taking control of its up and down stream supply networks.
4. Achieving cost efficiency so as to increase profit margins.
5. Form strategic alliance when beneficial.
6. Seek first mover advantage where possible.
The fuel behind apples strategies is its ability to rapidly innovate to match the requirements
of the competitive markets in which the company operates in. its in-house technological
know-how working in tandem with its strong product design skills have enabled Apple to
churn out market defining products time and time again.
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Nokias response to Apples foray into the mobile phone market in a bid to quell Apples
ambitions was to launch its own line of products similar in design and function to Apples
IPhone offering a lower price advantage. Subsequent actions included attacking Apples
strong hold, the online music download market, through diversifying into the provision of
such services.
Nokias change in strategic direction takes into consideration the need to protect the value
accrued to its stakeholders by diversifying into other sources of income hitherto ignored.
As to whos stronger? Both companies are relatively comfortable with their profit margins
and can count on a solid financial base. Apples strategy have failed it before in the past but
it quickly recovered to gain new ground. As to whether it will fail it again cannot be decided
within the context of the case study. Nokia has altered its strategic direction in relation to
changing market conditions. As to whether this change in strategic direction will pay off in
the long run cannot also be decided within the context of the case study. In conclusion, both
companies are strategically strong in their own right although Apple may have a slight
advantage due to its ability to innovate rapidly.
2 Problems with predicting how the market and the competition will
change over the next few years and its implications for strategy
development
Most markets consist of a complex relationship between sellers competing for buyers, their
suppliers and the macro environment in which they operate. The many variables in the
market mix increases the permutations of possible market behaviour and performance at
any point in time. This presents a source of worry to many businesses as the many market
variables behave differently under different stress as such makes near to impossible
predicting long term market behaviour in order to lock in their market strategy.
areas of business such as the level of education of the workforce, the infrastructural quality
of the country such as the road and rail system and the overall health of its citizens. The
uncertainty in predicting what a change in government will bring makes it very difficult to
plan effectively. This situation becomes worst in highly volatile areas where the political
climate is very unstable.
strategy is one where the objective has been defined in advance and the main elements
have been developed before the strategy commences (Lynch, 2011). This is what some
managers will call long term planning whereby a company decides on a strategic direction
and puts in measures for that. This approach will require a degree of certainty as to know
the future behaviour of the market in which the organisation participates in. However
events in the real world like the global financial meltdown proves that this is not always
possible. Most companies can control their micro environment which may include their
industry competitors, suppliers, competencies and to some extent their customers. They
however are faced with the challenge of the impact of their macro environment, which is
out of their control, on their operations. How do they predict what the Government will do
next or whether the economy in their operational markets will decline or grow? These are
some of the difficult questions managers are faced with day by day. An alternative to the
deliberate approach to strategy development is the emergent way. An emergent corporate
strategy is a strategy whose final objective is unclear and whose elements are developed
during the course of its life, as the strategy proceeds (Lynch, 2011). The emergent approach
to strategy development sees strategy as a continuous process taking into consideration
actual environmental factors at any point in time so as to maximise the companys
advantage. The advantages of the process include its consistency with actual practice in
organisations; it takes account of people issues such as motivation; it allows
experimentation about the strategy to take place; it provides an opportunity to include the
culture and politics of the organisation; it delivers flexibility to respond to market changes
(Lynch, 2011).
based on to signal the end of them. However being gracious in defeat, Apple saw its lost as
an opportunity to learn. The company went back to the drawing board recooked its
strategies and its subsequent products were hits. Irrespective of its new found success,
some of its products like the Newton personal assistant still struggled to make an impact on
the market and was hence dropped. This tells us that even very good companies do fail
sometimes and there is no golden rule to strategy but learning.
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4 References
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