Case: Nokia's Strategy in India
One: Case Introduction
Abstract：This case describes the development and grows for Nokia in India market. Nokia,
as a manufacture of mobile communication devices, was succeeded in administrating marketing
strategies in India markets. The reason is that Nokia delivers better products which cater to the
needs and preferences of Indian consumers.
Nokia - Made in India
In April 2005, Nokia India, a subsidiary of Finland-based Nokia, announced that it was
setting up a manufacturing facility for mobile devices in Chennai, the state capital of Tamil Nadu
in southern India. Nokia planned to invest US$ 100-150 million in the facility, where the
production was expected to begin in the first half of 2006.
Pekka Ala-Pietilä, President and Head of Customer & Market Operations, Nokia Corporation
said, “Establishing a new factory in India is an important step in the continuous development of
our global manufacturing network.”4 India was ideal for Nokia's new production facility. Each
mobile handset has more than 400 parts and the average production capacity of each
manufacturing unit of Nokia is around 20 million units.
This level of manufacturing involves a total of 8 billion components per annum, requiring
strong logistical support. Nokia's manufacturing facility needed to be located close to a major
international airport or sea port for quick supply of components. India met all these requirements,
and also enjoyed cheap manpower costs and proximity to the rapidly growing Asia Pacific
markets.
Besides, Nokia was the market leader in mobile communication devices in India. The
company has been carrying out sales & marketing, customer care and research & development
activities in the country. Nokia considers India to be one of its most important markets. The
company's Code Division Multiple Access (CDMA)5 facility is located in Mumbai and provides
software and technical support to CDMA consumers in India and other Asia Pacific countries. In
2004, Nokia was chosen as ‘the most respected consumer durables company' by Businessworld6.
The magazine wrote, “This Finnish company's debut at the top of the heap says two things.
One, that its strategies - including ones like developing a phone specifically for India - are
respected. But, more importantly, Nokia's win is also an endorsement of the importance of the
ubiquitous cell phone as a durable in today's world. After all, unlike its competitors, most of which
offer a slew of durables, Nokia is mostly a cell phone company.”
In 2005, Nokia was recognized as the ‘Brand of the Year'by the Confederation of Indian
Industry, India's apex industry association. The company was chosen for this award because of its
high brand recall, well established distribution channels and being 'most preferred' by the
consumers.
Enamored of Nokia's success in the Indian market, Harvard University had invited Nokia
India to talk on ‘How Nokia cracked open the Indian market?'
The Indian Mobile Phones Industry
The mobile phones industry made a slow start in India in 1995. Several private players who
had entered the industry in 1995 exited in the next few years due to the unfriendly telecom
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policies of the Indian government, high licensing fees and absence of a proper telecom regulatory
body. The growth in the subscriber base of mobile phones remained sluggish initially, reaching the
1 million milestone in 1998. In 1999, the Government of India announced a new telecom policy.
This policy planned to provide telephones on demand by 2002.
Among other things, the policy allowed unrestricted private entry into almost all mobile
service sectors. The government allowed cellular mobile service providers to share infrastructure
with other operators. It also allowed existing operators to migrate from fixed license fee to
one-time entry fee with revenue sharing. This policy helped many private operators to break even
faster. By 2001, the demand for mobile services was growing well. The private companies
concentrated on providing basic telephone services to consumers. The number of mobile phones
crossed five million by 2001 and doubled to 10 million in 2002...
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper manufacturing company.
In 1920, Finnish Rubber Works became a part of the company, and later on in 1922, Finnish Cable
Works joined them. All the three companies were merged in 1967 to form the Nokia Group.
In the late 1970s, Nokia started taking an active interest in the power and electronics
businesses and by 1987, consumer electronics became Nokia's major business. Nokia created the
NMT mobile phone standard in 1981 and launched the first NMT phone, Mobira Cityman, in 1987.
The company delivered the first GSM network to Radkilinia, a Finnish company in 1991, and in
1992, Nokia 1011 - a precursor for all Nokia's current GSM phones - was introduced.
In the 1990s, Nokia provided GSM services to 90 operators across the world. Another
significant move of the company during this period was the divestment of its non-core operations
like IT. The company focused on two core businesses - mobile phones and telecommunications
networks. Between 1992 and 1996, the company exited from the rubber and cable businesses as
well...
Nokia entered the Indian market in 1994. The first ever GSM call in India was made on a
Nokia 2110 mobile phone on its own network in 1995. When Nokia entered India, the telecom
policies were not conducive to the growth of the mobile phone industry.
The tariffs levied on importing mobile phones were as high as 27%, usage charges were at
Rs.16 per minute and, at these high rates, consumers did not take to mobile phones. Nokia also
had to face tough competition from other powerful global players like Motorola, Sony, Siemens
and Ericsson...
Nokia was quick to learn from its mistakes and adopted strategies to regain its lost market
share. Globally, during the first quarter of 2005, the company's sales reached 7.4 billion euros,
with the company selling 54 million phones during the period. In India, Nokia continued its
leadership in GSM with a market share of 74% in March 2005. Nokia also surpassed Samsung in
color mobiles in the GSM segment, recording a share of 55% in the same month (Refer Table VIII
for share of major mobile phone brands in the GSM segment and their market shares).
Nokia reorganized itself at the global level in 2004. At this point, a multimedia division was
formed.
The division's Indian operations concentrated on promoting the concept of high-end
telephones in smaller towns while going in for higher volumes in larger cities. The marketing
division of the company concentrated on making distributors in small towns sell high-end
products. Though, the distributors were skeptical to start with, by the end of 2004, the process was
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streamlined and the results started to show...
The Future Prospects
According to industry analysts, by 2010, the mobile phones industry in India will be driven by
voice, multimedia and mobile services for organizations. The teledensity in India was estimated to
increase to 18.2% by March 2009, with mobile subscription rising to 148.77 million by that time.
In many instances, the cell phone has become the only basic telephone link of a
household/enterprise in India, rather than a landline phone. It was turning out to be more
economical and efficient than fixed line telephones. So, there was great scope for further
expansion with reduction in the cost of ownership...
Two: Explanation of employing the case
1、teaching purpose
The purpose of case analysis is to master how to make effective marketing strategies for
enterprises according to market surrounding in order to develop foreign markets.
2、case discussion
（1）What did Nokia make use of in this case?
（2）Why did Nokia acquire a leading brand in mobile communication devices industry in
India?
3、marketing theory and methods about case analysis
（1）marketing strategy theory
（2）Five Powers Model of Industry Competitive Analysis
（3）analysis methods of SWOT
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