Managerial Economics Group-l Nokia

MBA (2009-2011) - 1st SEMESTER (A)

MANAGERIAL ECONOMICS TOPIC:- Demand Analysis of Various Nokia Products and Demand Forecasting of Nokia. PRODUCT:- NOKIA PREPARED BY GROUP – L

SUBMITTED TO SUBJECT INCHARGE

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INDEX 

HISTORY OF NOKIA…………….…………….....03

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RESEARCH AND DEVELOPMENT……………..04

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PRODUCT ANALYSING (SURVEY) …………….05 INTRODUCTION OF DEMAND FORECASTING…………………………………… 07 FORECASTING BENEFITS……………................08 METHODS OF DEMAND FORECASTING……...09 SWOT……………………………………................12 NOKIA’S FUTURE.. …………………….................15 2

HISTORY OF NOKIA Nokia's history spans more than a hundred years and contains many stories, events and milestones brought about by the many twists and turns of the world history and industrialization. Get ready to read about the varied development of the Nokia Group! In this presentation, Nokia's history is divided into five main areas: Timeline, Directors, Businesses, Milestones and Nokia in Figures. Nokia's history is a reflection of the development of Finnish industries from forestry-oriented basic production to high-tech prominence. Nokia's journey of over hundred years has had an abundance of choices. After several rounds of mergers and divestments, investments and downscaling, Nokia finally focused its resources on developing wireless telecommunications with an unparalleled success. During the early years, the directors were often the founders of the companies. The first decades were spent on growing and developing the companies in spite of the hardships of the Famine Years, World War I, the struggle for independence and many other problems.

2009: A new President and CEO – Nokia today Olli-Pekka Kallasvuo becomes Nokia’s President and CEO; Jorma Ollila 3

becomes Chairman of Nokia’s board. Nokia and Siemens announce plans for Nokia Siemens

RESEARCH & DEVELOPMENT After the merger of 1966-67, Nokia increased its investments in R&D. The new multi-industry group also facilitated better planning of corporate strategies and fields of business. An independent research center was established in 1986 to supplement the R&D work carried out at different businesses The new center was appointed the task of refining latest international information on new technologies and R&D processes for the business units' needs. In 1999, R&D activities were carried out in 44 centers and 12 different countries, in addition to the Nokia Research Center. While R&D costs in the early 80s amounted to 2-5% of Nokia's turnover, by 2002, this figure had increased to 10.2%, with 38% of Nokia's employees (approximately 20,000) working in R&D centers in 14 different countries. Investments in Education and Training In the 80s, CEO Kairamo paid much attention to issues related to international education policies as well as co-operation between the industry and universities. The need for a skilled workforce increased rapidly with the emerging telecommunications industry.

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DEMAND ANALYSIS OF NOKIA

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NOKIA MOBILE PHONES BY SERIES Nokia 1000 series

1011 · 1100/1101 · 1110/1110i · 1112 · 1200 · 1208 · 1600 · 1650

Nokia 2000 series

2110i · 2115i · 2310 · 2600 · 2600 classic · 2610 · 2626 · 2630 · 2650 · 2651 · 2700 classic · 2760

Nokia 3000 series

3100/3100b/3105 · 3110 · 3110 classic · 3120 · 3120 classic · 3155 · 3200/3200b/3205 · 3210 · 3220 · 3230 · 3250 · 3310 · 3315 · 3330 · 3410 · 3500 classic · 3510/3590/3595 · 3510i · 3600/3620/3650/3660 · 3600 slide · 3720 classic

Nokia 5000 series

5070 · 5100 · 5110 · 5130 · 5200 · 5210 · 5220 · 5300 · 5310 · 5320 · 5500 Sport · 5510 · 5610 · 5700 · 5800

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Nokia 6000 series

6010 · 6020/6021 · 6030 · 6070 · 6085 · 6100 · 6101 · 6103 · 6110/6120 · 6110 Navigator · 6111 · 6120/6121/6124 classic · 6131/6133 · 6136 · 6151 · 6170 · 6210 Navigator · 6220 · 6220 Classic · 6230 · 6233 · 6255i · 6260 Slide · 6265 · 6270 · 6275i · 6280/6288 · 6290 · 6300 · 6300i · 6301 · 6310i · 6315i · 6500 classic · 6500 slide · 6555 · 6600 · 6600 fold · 6600 slide · 6610i · 6620 · 6630 · 6650 · 6650 fold · 6670 · 6680 · 6681/6682 · 6730 · 6700 classic · 6720 Classic · 6800 · 6810 · 6820 · 6822

Nokia 7000 series

7110 · 7160 · 7210 Classic · 7250 · 7280 · 7360 · 7380 · 7390 · 7500 Prism · 7600 · 7610 · 7650 · 7700 · 7710 · 7900 Prism

Nokia 8000 series

8110 · 8210 · 8250 · 8310 · 8600 Luna · 8800 · 8850 · 8910

Nokia Communicator

9000/9110/9110i · 9210/9290 · 9210i · 9300/9300i · 9500

Nokia Eseries

E50 · E51 · E52 · E55 · E60 · E61/E61i · E62 · E63 · E65 · E66 · E70 · E71 · E72 · E75 · E90 Communicator

Nokia Nseries

N70 · N71 · N72 · N73 · N75 · N76 · N78 · N79 · N80 (Internet Edition) · N81 (N81 8GB) · N82 · N85 · N86 8MP · N90 · N91 (N91 8GB) · N92 · N93 · N93i · N95 · N95 8GB · N96 · N97 · N97 mini

Nokia Xseries

X3 · X6

Internet Tablet

770 · N800 · N810 (WiMAX Edition) · N900

Other

N-Gage (Classic · QD · QD Silver Edition) · Vertu luxury phones

Concept

Nokia Morph · Nokia Eco Sensor · S60

INTRODUCTION TO DEMAND FORECASTING The concept of matching supply with demand is straightforward. Just strike the right balance between what your customers want and the inventory investment required to meet that demand. Of course, it's not that easy. Buying too much wastes time, money and space —and exposes you to potential losses from liquidating overstocks. Underestimating demand leads to backorders, cancellations and unsatisfied customers who turn to your competitors. 7

Manhattan Associates' Demand Forecasting manages the balancing act between minimizing inventory investment and optimizing revenue opportunities. It provides a sophisticated, yet easy to use solution to the forecasting challenges that overwhelm many companies. Consider the complications the forecaster faces in anticipating demand, accurately and efficiently:  Seemingly infinite combinations of locations, products and forecasting models  The differing time horizons and forecasting methods for assortment planning, financial planning and replenishment planning  The cleansing of historical demand  Seasonal profiling  Forecast exceptions Demand Forecasting overcomes these challenges by providing a single source for statistical demand forecasting throughout the enterprise. Demand Forecasting does the heavy statistical lifting to provide the best trended, seasonally adjusted forecast possible. This frees planners and buyers to concentrate their time on the fine points of merchandise planning and inventory optimization to make profit for the company. And use it to generate and maintain appropriate forecasts at different levels of product and location. Demand Forecasting is synchronized with Financial Planning, Item Planning, Assortment Planning and Inventory Optimization.

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The better a company can assess future demand, the better it can plan its resources. Each company is exposed to three types of factors influencing demand: company, competitive and macroeconomic factors. Company factors include market share trends, changes in strategy and implementation, changes in brand value. Competitive factors include competitor advertising, competitor product offerings, market share. Macroeconomic changes include income, economic growth and shocks. There are several methods to assess and forecast demand. None yields demand numbers that are a 100% guaranteed. However, using more than one method improves accuracy and confidence levels. Most companies use Simple Sales Analysis and Forecasting. Most companies also use Market Size and Market Share Research. One of the most accurate method used today is the combination of Market Size Research and Mind Share Research. Forecasting is the process of estimation in unknown situations. Prediction is a similar, but more general term, and usually refers to estimation of time series, cross-sectional or longitudinal data. Risk and uncertainty are central to forecasting and prediction. In more recent years, Forecasting has evolved into the practice of Demand Planning in every day business forecasting for manufacturing companies. The discipline of demand planning, also sometimes referred to as supply chain forecasting, embraces both statistical forecasting and consensus process. Forecasting is commonly used in discussion of time-series data.

FORECASTING BENEFITS

Save time, money, and effort with:

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Reduced inventory  Increased sales and capacity 

METHODS OF DEMAND FORECASTING

1. CONSUMER SURVEY METHOD: The consumer survey method, as the name suggests involves questioning the consumers with regard to his buying plans for the future time period. This method is also known as survey of buyers intention and opinion survey method. According to this method, the consumers are either directly interviewed or questionnaires are mailed to them. So as to elicit their future interviewed or questionnaires are mailed to them. So as to elicit their future intentions to buy. Generally, households plans their future purchases of consumer durable’s such as CTVs, refrigerators, designer furniture, kids furniture, etc.

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Consumer surveys are also conducted to find out the level of satisfaction derived from the existing range of given product and these substitutes so that appropriate changes are made in the product designer, Usefulness and quantity. Similarly, when new products are launched, samples are distributed amongst the consumers. This is particularly true about consumers non-durables such as shampoo, toilet soaps, toothpaste’s and detergents. After distribution of such products, the reaction of the consumers are documented and studied to estimate the extent of future demand for the product.

2. EXPERT OPINION OR DELPHI METHOD: Expert opinion methods as a name suggests is a method whereby opinions of the experts in the field of demand forecasting is sought by firms who are planning to launch a new product or increase the production of an exiting product. Such experts may be in – house or services may be hired from outside experts consultancy firm and market research organization. The veracity of such an expert opinion can be confirmed by a number of methods. One such method is known as a Delphi method. It is macroeconomic method of forecasting.

3. MARKET EXPERIMENTS : Market experiments refer to the market studies and market experiments in the field of consumer behavior conducted under real but controlled marked conditions. Representative sub markets with homogeneous feature in terms of population, income levels, social and cultural composition, occupational distribution, task and preference, etc. are chosen. Variables such as price, advertisement outlays are controlled and introduced in the sub market to measure their impact on total demand. On the basis of information collected, the elasticity of demand is computed and the future demand for the given product is estimated.

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Market studies and experiments can be classified into two types, namely: test marketing and controlled experiments. In case of test marketing a representative sub market is chosen where the given product is introduced. More than one test area can also be chosen, if more varieties of given product are to be introduced in the sub-market. By doing so, the firm can study the impact of different demand determinants in different sub-markets and chose the more effective market strategy. Controlled experiments and conducted to find out the demand for a new product and its varieties under different brand names.

4. TIMES SERIES ANALYSIS: Times series analysis is the study of movements of variables through time. The effective use of time series analysis in forecasting demand requires a reliable time-series data base. It is assumed that the factors responsible for the past trends in the variable to be projected will continue to hold good in future in a similar manner. As the data available to firm relates to a time period, there are bound to be fluctuations which can be attributed to a general tendency. Such data is known to reveal a secular trend. If the fluctuation in the data are on account of weather or climatic changes, they are known to be a seasonal variations. Business fluctuations or trade cycle are caused fluctuations in the data and they are known as cyclic variations. Changes on account of natural intervention such as earthquakes, famines, floods, etc are known as random variations. However, in the time series analysis, only secular trend is analysis as an authentic quantitative method is available to analyze non-secular trends.

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MICROECONOMIC STATISTICAL TIME-SERIES ANALYSIS Sales numbers from several time periods are correlated to one or several factors such as price, advertising, market share, competitor price demographics, product life stage, etc. Regression analysis and curve fitting is then used to predict future demand. The advantage of this method is that it includes relevant strategy as well as competitor and macroeconomic trends. The disadvantage is that the outcome may be biased because of important variables being left out, variables not being completely independent, new competitive actions not being included.

MACROECONOMIC STATISTICAL TIME-SERIES ANALYSIS This method is a macroeconomic statistical time-series analysis and purely quantitative in nature. It fits linear and nonlinear curves into time series and then extrapolating future values. Time series may be correlated to identify leading and lagging indicators. The advantage of this method is that recurring trends can be captured and extrapolated easily.

SWOT ANALYSIS STRENGTHS

 Versatility: your ability to adapt to an ever changing environment.  Growth: your ability to maintain a continuing growth.

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 Markets: your ability to penetrate or create new markets.  With the help of consumer survey method, we are able to make

survey for Nokia and we get the positive feedback.  Nokia as product for demand forecasting help to do better forecasting due to name and fame.

WEAKNESS:

 Correction of an identified defect.  Protection through cover-up and prevention strategies to reduce the exposure of your weaknesses.  Aggression to divert the attention from your weaknesses.  We had chance consumer survey method to help, it is very time

consuming.

OPPORTUNITIES:

 We get the opportunity to analyze the product, its demand and various 14

comment on the product.  To know detail about the demand including forecasting techniques.  Marketing warfare: attacking the weak leader's position and focusing

all your efforts at that point, or making a surprise move into an uncontested area.  Collaboration: you can use your complementary strengths to establish a strategic alliance with your competitor.

THREATS

 From our survey report we found that Nokia has high level

competition with Sony Ericsson.  Nokia is not only facing the competition with Sony Ericsson but also

facing the Reliance, Motorola, other mobile companies also.

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NOKIA’S FUTURE As mobile usage grows in the world’s emerging markets, Nokia will continue to develop affordable mobile devices that can contribute to increased economic growth and quality of life. At the same time, mobile communications is converging with computing, digital imaging and the internet, making it possible for people to use handheld devices for filming video, listening to music, playing games, surfing the web and more. Nokia is shaping this converging industry, pushing it forward with cutting-edge products and the development of open standards. Nokia’s success story is built on constant innovation. Our very human technology is all about enhancing communication and exploring new ways to exchange information. That’s why Nokia will never stop finding new ways of connecting people.

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