Learning Through The Example of SWOT Analysis: Nokia
In “Encyclopedia of Management Theory” Eric Kessler wrote “companies that keep analyzing their strengths, weaknesses, opportunities, and threats on a regular basis have 60 percent more chances to survive than the companies that don’t”. Strengths, Weaknesses, Opportunities, and Threats (known by its abbreviation SWOT) is one of the most renowned and used analysis paradigm for marketers.
In this modern age of communication, promotion, and marketing, we still cannot defy the importance of SWOT analysis. We have seen digital brands conducting SWOT analysis on a whole new level. Only through the SWOT analysis did digital ad agencies realize the importance of a viral post versus old practices of email marketing and press releases. Granted, that is totally a different debate, in this post we will analyze how a SWOT analysis can help a company to devise its marketing plan according to its strengths and opportunities while tackling threats and weaknesses. So, first of all, let’s look at what makes up a SWOT analysis.
What is SWOT?
SWOT is the analysis of a company’s operations, assets, and performance under four major categories. These four major components are then used to help build a tactical advantage for the company.
- Strengths (S): Abilities and characteristics of a business or brand providing advantages over competitors.
- Weaknesses (W): Opposite to the above, abilities and characteristics of a business or brand resulting in disadvantages compared to its competitors.
- Opportunities (O): Elements and chances a business or brand can exploit to its advantage.
- Threats (T): Elements and situations in the environment which can cause trouble to the business or brand.
Before going digging deep into the steps of conducting SWOT analysis of a digital brand, let us see how beneficial it is for the companies.
Benefits of Using SWOT Analysis
What an organization does with each identified entry is largely determined by the commitment to the planning process or reasons why the SWOT was initiated. Whether the SWOT is used for long-term planning or short-term understanding of unrealized goals, the SWOT initiates a discovery process of organizational and external phenomena that could affect progress.
A rigorous SWOT analysis that includes feedback from numerous sources can be a very long process, but the benefits of discovering ideas and new information offer a very sobering result. There is a ore time effective option. All organizational processes, departments, and sites can initiate separate analyses and specific results can be channeled to upper management. This provides a bottom-up analysis of the organization and endows management with a detailed view of every organizational segment. By breaking down the organization and asking individual departments and managers to conduct a compartmentalized SWOT, precious time can be saved, yet still allow for a vigorous examination of the organization.
SWOT Analysis for Nokia
Nokia Corporation is world’s leading company providing mobile devices, telecom equipment, and mobile content services.
The first step to conduct a SWOT analysis is to know the numbers, and by numbers we mean revenues in a fiscal year. Search Yahoo Finance, Google Finance, and MSNBC for financial readings. You can also download company’s annual report from the company’s official website. When we search Nokia on these platforms we found the following information:
- Recorded Revenues (December 2012): $38.808.8 million
- Decrease (since 2011): 21.9%
- Operating loss (December 2012): $2,961.8 million
- Net loss (December 2012): $3,994.6 million (Statistical Data Source: Nokia Annual Report 2012)
Analysis: As we have learned through statistics that Nokia is facing losses, the next step is to search for probable reasons.
Now we use search engines like Google, Yahoo, Bing, and MSN with keywords like “Nokia decline reasons” and “Nokia decline” and set the time for “past month” in search tools. The results will yield several research papers and articles about the reasons behind Nokia’s decline. Skim through the articles and research paper summaries.
Analysis: Credible and authentic resources may include (but are not limited to) Harvard business review, Forbes, Inc, Time, Yahoo Finance, Google Finance, Hongkiat, and Techcrunch. Prepare a table like below and add points from your online research.
|Fairly spread business operations
Diversified geographic presence
|Legal proceedings may affect brand image
Lower margins as compared to peers
|Strategic acquisitions to boost top-line
Rising demand for high-bandwidth mobile communications
Positive outlook for smart phone and tablet market
|Weak economic outlook for the US and Europe
Intense competition in the devices and services segment
Declining average selling prices could impact profitability
Note: You can add as many points as you can for your digital brand in the table, however keep in mind that each point must be precise, specific, and fit in the column’s description. For example, we may replace in our weaknesses column “Weak economic outlook for the US and Europe” with “weak buying power” but in order to portray a true and precise picture to the reader of the SWOT analysis we prefer to mention US and Europe as the potential marketplace.
Once you are finished with the points, now it is time to elaborate each point in detail and back it up with data (financial and annual reports) and research reports.
Analysis: For the purpose of providing an example, we will take one point each from the above columns and elaborate with data and research findings.
Fairly spread business operations (Strength): Nokia has fairly spread business operations and presence in various industries. Nokia’s portfolio of smartphones covers price points ranging from around E140 ($180) to more than E500 ($643). In FY2012, Nokia’s smart devices unit shipped approximately 35 million smartphones. Nokia also offers mass market and affordable smartphones. In FY2012, Nokia shipped approximately 300 million mass market and affordable smart phone devices. (Statistical Data Source: Nokia Annual Report 2012)
Legal proceedings may affect brand image (Weakness): The company is involved in several legal and administrative proceedings which could affect brand image. For instance, in January 2013, InterDigital Technology and InterDigital Communications filed a new complaint against Nokia with the International Trade Commission (ITC) alleging infringement of a single declared essential UMTS and LTE patent, and also filed a parallel case asserting the same patent in the US District Court for the District of Delaware. Through this action, IDT is seeking to exclude certain Nokia devices from being imported and sold in the US.
Strategic acquisitions boost top-line growth (Opportunity): The company has completed a number of acquisitions in the recent past which will boost its product portfolio and provide top-line growth. For instance in June 2013, Nokia completed the acquisition of Siemens’ stake in Nokia Siemens Networks.
Intense competition in the devices and services segment (Threat): The company faces intense competition in the devices and services business. The increasing demand for wireless access to the internet has had a significant impact on the competitive landscape of the market for mobile products and digital content. Companies with roots in the mobile devices, computing, internet, and other industries are increasingly competing for market share across all mobile products and services.
It is essential and vital for businesses and companies to conduct SWOT on a regular basis, especially before launching a new product. Marketing professionals and students should master the art of conducting a SWOT analysis in order to be able to analyze marketing positions for their clients. Before you make definitive decisions regarding the future of a brand or company, it is essential to make sure you have all relevant information, which as SWOT analysis can provide.
Finally, a SWOT can assist an organization in devising creative problem solving and strategic planning solutions for both short- and long-term initiatives. It can provide insight to isolate a cause, identify a problem, provide additional support for existing processes, and lead to strategic pathways for new proposals, projects, and ideas.
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