Nokia Competencies Essay

Every house comprises of competences, non all possess nucleus competences, these are important for a fight. This study examines the nucleus competences that contribute most significantly to Nokia ‘s competitory advantage. These consist of organizational civilization and research and development. Nokia ‘s competitory advantage will be analysed based on corporate trade name and merchandises and services base, so personal analysis reported.

2.0 Theoretical thought of nucleus competences

Firms possess competences through efficient usage of resources and are required for houses to vie. ‘Core competences are attributes that an administration possesses which in bend allows it to accomplish competitory advantage ‘ ( Prahalad & A ; Hamel, 1990 cited Henry. A, 2008 ).

There is differential public presentation between companies in the same industry, due to single nucleus competences since the environment is changeless. In 2008, Dell had the largest market portion in UK Personal computer market ( Datamonitor, 2009 ) , with nucleus competences in its value concatenation giving competitory advantage ( Henry. A, 2008 ). Core competences should be appropriable so those who provide the properties for the competitory advantage should harvest benefits ( Kay. J, 1993 cited Open University, 2009 ).

The key is non to concentrate on all competences merely 1s that add most value and competitory advantage. Collis and Montgomery ( 1997 ) identified some properties within the administration are more utile for deriving sustainable competitory advantage ( Henry, 2008 ). The characteristics of utile properties are that they help supply value to clients, are alone and hard to copy ( Collis & A ; Montgomery, 1997, cited Hooley. G et Al, 2008 ) as seen in figure 1.

Other theoreticians support this designation, Prahalad and Hamel ( 1990 ) identified three trials for nucleus competences:

1. A nucleus competency should supply entree to a broad assortment of markets.

2. A nucleus competency should do a important part to perceived client benefits of terminal merchandises.

3. A nucleus competency should be hard for rivals to copy.

( Prahalad cited The Free Library, 2002 ).

Hamel and Prahalad ( The Free Library, 2002 ) identified nucleus competences should non stay inactive whilst the environment alterations. Core competences enable production of new merchandises and services and increase client relationship direction, they should be envied by rivals but hard to retroflex ( Hooley. G et Al, 2008 ).

Shangri La Hotels have a stronger client relationship than their rivals ( Datamonitor, 2009 ) their mission ‘Delighting clients each and every clip ‘ ( Shangri-La Hotels and Resorts, 2009 ).

2.1 Nokia ‘s nucleus competences

Nokia has many competences but due to recent success appears to concentrate on the right nucleus competences to derive competitory advantage. The two important 1s are organizational civilization ( Blau. J, 2003 ) and investing in research and development ( Nokia, 2009 ). Organizational civilization is a nucleus competency and beginning of sustainable competitory advantage ( Barney, 1986b, cited Hamel. G & A ; Heene. A,1994 ).

2.1.1 Nokia ‘s organizational civilization

Nokia, unlike rivals, is advanced and entrepreneurial by following the right civilization ( Blau. J, 2003 ). Within the administration entrepreneurship is encouraged by directors unfastened to employee suggestions for new merchandises and services, this allows uninterrupted acquisition, there is besides a feedback procedure for employees prosecuting in new thoughts ( Blau. J, 2003 ).

VP Niitamo, Chair of European Living Labs Portfolio, “ Some of Nokia ‘s success, is from continuously conveying in immature, gifted people, without forcing them down one peculiar calling way ” ( Blau. J, 2003 ). For this to take topographic point they must hold shared vision to guarantee full committedness from employees ( Kanter, 1983 cited Henry. A, 2008 ).

2.1.2 Nokia ‘s research and development

Another nucleus competence is Nokia ‘s research and development. Nokia employs 51,750 people, over one tierce is made up of people in research and development. The company employs about 1,000 new people in research and development each twelvemonth, taking for those who have new accomplishments ( Blau. J, 2003 ). Nokia ‘s extended research and development enables it to make ‘trusted consumer relationships‘, the ‘best nomadic devices everyplace ‘ and ‘context enriched services ‘ ( Nokia, 2009 ).

3.0 Theoretical thought of competitory advantage

Competitive advantage “ consequences from fiting nucleus competences to chances ” ( Business Dictionary, 2009 ). Many 2000 failures were companies placing the chance but non holding competences to accomplish competitory advantage ( Hooley. G et Al, 2008 ).

Companies can accomplish competitory advantage by bear downing higher monetary values for increased value merchandises and services or offering the same merchandises and services as rivals at lower monetary values ( Porter. M. E, 1985 ).

Differences between rival merchandises and services have become narrow, so companies need to happen new ways of separating themselves in clients ‘ heads. Companies can utilize trade names to be typical compared with rivals, and make a relationship with clients for competitory advantage ( Chailan. C, 2008 ).

In 2008, the air hose industry saw JetBlue ‘s new experience based distinction after they created T5 terminus at JFK. T5 added trade name value by augmenting the service with extra and complementary characteristics ( DDB, 2009 ).

Companies should look for sustainability ; competitory advantage that rivals are unable to copy ( Barney, 1991 cited Henry. A, 2008 ). Tesco uses seller managed stock list and physiques relationships with providers such as Nestle and Coca Cola to better handiness, supplying competitory advantage for those involved, nevertheless unsustainable ( William Reed Business Media Ltd, 2009 ).

Figure 2 identifies the relationship between nucleus competences and competitory advantage. Although nucleus competences lead to competitory advantages this may be indirect by developing nucleus merchandises or services.

3.1 Nokia ‘s competitory advantage

Nokia is presently worldwide largest nomadic phone shaper, therefore they must hold important nucleus competences to derive competitory advantage ( Yahoo Finance, 2009 ).

Nokia ‘s competitory advantage “ is based on graduated table, trade name and services ” ( Nokia, 2008 ).

3.1.1 Nokia ‘s trade name value

After hesitating in 2004, Nokia came back to construct an outstanding repute through a 12 % addition in trade name value and became 5th top trade name ( Kiley. D, 2007 ). Nokia presently has figure one trade name in many markets worldwide ( Temporal. P & A ; Davies. R, 2009 ).

Nokia ‘s organizational civilization contributed to its corporate trade name since employees and procedures are reflected in the trade name ( Temporal. P, 2009 ).

Nokia ‘s research and development assisted in making trade name value by maintaining up to day of the month with germinating consumer demands and is recognised as a company that provides consumers with the coveted merchandises and services. NRC, Nokia ‘s inventions hub invests at least 5 % of the one-year research and development budget. Inventions are created for commercial intents after three to five old ages development ( Samuels. M, 2006 ).

3.1.2 Nokia ‘s merchandises and services

Ideas need to aline with organizational civilization, hence this must be right to bring forth coveted merchandises and services ( Henry. A, 2008 ). Organizational civilization is reflected in merchandises and services through procedures and processs, this led to sustainable competitory advantage. The cognition possessed by employees can non be easy transferred, groups of employees would be required for a fraction of the cognition ( Argote. L & A ; Ingram. P, 2000 ).

Nokia ‘s research and development continuously improves and generates new merchandises, this is indispensable as Nokia ‘s markets became extremely competitory over the last decennary with entrants such as Apple iPhone ( Ward. A, 2009 ). In 2002 Nokia received the Frost and Sullivan market technology award for its secure entree system invention which was ‘an exceptionally evolved merchandise ‘ ( BNET,2003 & A ; Calif. S. J, 2002 ).

4.0 Critical analysis

I conclude that Nokia has efficaciously developed competences into nucleus competences to develop sustainable competitory advantage.

I consider Nokia to hold nucleus competences in peculiar organizational civilization and research and development, lending most to Nokia ‘s competitory advantage. The organizational civilization is rather alone among rivals, yet as industry leader so they must be making the right things internally in relation to the external industry. Other companies should maneuver away from the negative image that advanced administrations are merely effectual in little administrations and implement some of Nokia ‘s techniques to cut down differential public presentation between them. However, I realise this will merely be effectual if there are shared values and committedness from the full administration as with Nokia. Organizational civilization can non be easy learned so this must make sustainable competitory advantage until rivals have developed their civilization more efficaciously.

Nokia invests to a great extent in research and development which is reflected in its merchandise and service offering which is outstanding, hence I see it as a worthwhile investing. I have identified that Nokia does n’t merely use people for research and development, it supports them and develops their cognition base to profit the company.

I identified Nokia ‘s chief competitory advantage being trade name value and merchandise and service offering. I recognise that Nokia successfully achieved competitory advantage of its trade name organizational civilization and the beliefs and patterns adopted by the company. Nokia must go on to make the right things such as ethical behavior in the work topographic point or the trade name will be tarnished and will be hard to reconstruct unless its loyal client base sticks by regardless which I find dubious.

Nokia ‘s other competitory advantage consists developing latest merchandise designs and surpassing challengers through services. I do non see this sustainable, despite Nokia ‘s investings in research and development. Product invention in the nomadic phone industry is the chief subscriber to growing, through replacing gross revenues ( Cassell. J, 2004 ). This is likely to stay the instance as the market is already saturated, hence I feel Nokia wo n’t keep this degree of competition as rival companies would put more into research and development to vie.

Overall, I find Nokia doing best usage of its nucleus competences to derive competitory advantage but do n’t believe it will go on to be industry leader without heightening its nucleus competences to run into evolving demands.

5.0 Decision

In decision it has been analysed that Nokia has several nucleus competences, the most important being organizational civilization and investing in research and development. These nucleus competences led to competitory advantage in the signifier of strong trade name image and exceeding merchandise and service offerings. Although this is presently the instance for Nokia within the nomadic phone industry, they may non be sustainable as will be identified over clip.