Vertu: Nokia's Luxury Mobile Phone for the Urban Rich SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study SWOT Analysis Solution
Case Study Description of Vertu: Nokia's Luxury Mobile Phone for the Urban Rich
Finland-headquartered Nokia was a global telecommunications equipment manufacturer. It operated a luxury mobile phone brand called Vertu, founded by Frank Nuovo in the late 1990s, which pioneered the luxury mobile phone market by using precious materials such as diamonds, sapphires, titanium and exotic leather for phone production. The company enjoyed impressive growth in almost 70 countries, and sold hundreds of thousands of phones in the eight years following its launch. On February 11, 2011, Stephen Elop, the new CEO who had been at the helm at Nokia for only five months, announced a new mobile strategy to adopt Microsoft's new but unproven Windows Phone as its primary smartphone operating system. The market reacted poorly, and the company's share price took a 14 per cent dive on the day of announcement. How should Vertu respond to this new Nokia mobile strategy? Was Vertu well positioned to take the brand forward under the new Nokia? Should this UK-based wholly owned subsidiary be left alone and continue to be managed at arm's length from Nokia? Changes to Vertu were inevitable-it was not a matter of if, but of when.
Swot Analysis of "Vertu: Nokia's Luxury Mobile Phone for the Urban Rich" written by Ken Kwong-Kay Wong includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Vertu Nokia facing as an external strategic factors. Some of the topics covered in Vertu: Nokia's Luxury Mobile Phone for the Urban Rich case study are - Strategic Management Strategies, and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Vertu: Nokia's Luxury Mobile Phone for the Urban Rich casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions, there is backlash against globalization, cloud computing is disrupting traditional business models, digital marketing is dominated by two big players Facebook and Google, increasing transportation and logistics costs, supply chains are disrupted by pandemic ,
increasing government debt because of Covid-19 spendings, technology disruption, etc
Introduction to SWOT Analysis of Vertu: Nokia's Luxury Mobile Phone for the Urban Rich
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Vertu: Nokia's Luxury Mobile Phone for the Urban Rich case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Vertu Nokia, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Vertu Nokia operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Vertu: Nokia's Luxury Mobile Phone for the Urban Rich can be done for the following purposes –
1. Strategic planning using facts provided in Vertu: Nokia's Luxury Mobile Phone for the Urban Rich case study
2. Improving business portfolio management of Vertu Nokia
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Vertu Nokia
Strengths Vertu: Nokia's Luxury Mobile Phone for the Urban Rich | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Vertu Nokia in Vertu: Nokia's Luxury Mobile Phone for the Urban Rich Harvard Business Review case study are -
Diverse revenue streams
– Vertu Nokia is present in almost all the verticals within the industry. This has provided firm in Vertu: Nokia's Luxury Mobile Phone for the Urban Rich case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Low bargaining power of suppliers
– Suppliers of Vertu Nokia in the sector have low bargaining power. Vertu: Nokia's Luxury Mobile Phone for the Urban Rich has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Vertu Nokia to manage not only supply disruptions but also source products at highly competitive prices.
Training and development
– Vertu Nokia has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Vertu: Nokia's Luxury Mobile Phone for the Urban Rich Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Innovation driven organization
– Vertu Nokia is one of the most innovative firm in sector. Manager in Vertu: Nokia's Luxury Mobile Phone for the Urban Rich Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Successful track record of launching new products
– Vertu Nokia has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Vertu Nokia has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Effective Research and Development (R&D)
– Vertu Nokia has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Vertu: Nokia's Luxury Mobile Phone for the Urban Rich - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Vertu Nokia digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Vertu Nokia has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Analytics focus
– Vertu Nokia is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Ken Kwong-Kay Wong can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
High switching costs
– The high switching costs that Vertu Nokia has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Highly skilled collaborators
– Vertu Nokia has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Vertu: Nokia's Luxury Mobile Phone for the Urban Rich HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Organizational Resilience of Vertu Nokia
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Vertu Nokia does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to recruit top talent
– Vertu Nokia is one of the leading recruiters in the industry. Managers in the Vertu: Nokia's Luxury Mobile Phone for the Urban Rich are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses Vertu: Nokia's Luxury Mobile Phone for the Urban Rich | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Vertu: Nokia's Luxury Mobile Phone for the Urban Rich are -
Capital Spending Reduction
– Even during the low interest decade, Vertu Nokia has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Interest costs
– Compare to the competition, Vertu Nokia has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Low market penetration in new markets
– Outside its home market of Vertu Nokia, firm in the HBR case study Vertu: Nokia's Luxury Mobile Phone for the Urban Rich needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Vertu Nokia is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Vertu: Nokia's Luxury Mobile Phone for the Urban Rich can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Skills based hiring
– The stress on hiring functional specialists at Vertu Nokia has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Increasing silos among functional specialists
– The organizational structure of Vertu Nokia is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Vertu Nokia needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Vertu Nokia to focus more on services rather than just following the product oriented approach.
High operating costs
– Compare to the competitors, firm in the HBR case study Vertu: Nokia's Luxury Mobile Phone for the Urban Rich has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Vertu Nokia 's lucrative customers.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Vertu: Nokia's Luxury Mobile Phone for the Urban Rich, it seems that the employees of Vertu Nokia don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Lack of clear differentiation of Vertu Nokia products
– To increase the profitability and margins on the products, Vertu Nokia needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow decision making process
– As mentioned earlier in the report, Vertu Nokia has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Vertu Nokia even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Slow to strategic competitive environment developments
– As Vertu: Nokia's Luxury Mobile Phone for the Urban Rich HBR case study mentions - Vertu Nokia takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Opportunities Vertu: Nokia's Luxury Mobile Phone for the Urban Rich | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Vertu: Nokia's Luxury Mobile Phone for the Urban Rich are -
Building a culture of innovation
– managers at Vertu Nokia can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Vertu Nokia in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Vertu Nokia is facing challenges because of the dominance of functional experts in the organization. Vertu: Nokia's Luxury Mobile Phone for the Urban Rich case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Better consumer reach
– The expansion of the 5G network will help Vertu Nokia to increase its market reach. Vertu Nokia will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Vertu Nokia can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Vertu Nokia can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Vertu Nokia can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Creating value in data economy
– The success of analytics program of Vertu Nokia has opened avenues for new revenue streams for the organization in the industry. This can help Vertu Nokia to build a more holistic ecosystem as suggested in the Vertu: Nokia's Luxury Mobile Phone for the Urban Rich case study. Vertu Nokia can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Vertu Nokia in the consumer business. Now Vertu Nokia can target international markets with far fewer capital restrictions requirements than the existing system.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Vertu Nokia can use these opportunities to build new business models that can help the communities that Vertu Nokia operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Manufacturing automation
– Vertu Nokia can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Developing new processes and practices
– Vertu Nokia can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Vertu Nokia can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Buying journey improvements
– Vertu Nokia can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Vertu: Nokia's Luxury Mobile Phone for the Urban Rich suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Threats Vertu: Nokia's Luxury Mobile Phone for the Urban Rich External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Vertu: Nokia's Luxury Mobile Phone for the Urban Rich are -
Consumer confidence and its impact on Vertu Nokia demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Shortening product life cycle
– it is one of the major threat that Vertu Nokia is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Vertu Nokia will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Environmental challenges
– Vertu Nokia needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Vertu Nokia can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Vertu Nokia in the Strategy & Execution sector and impact the bottomline of the organization.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Vertu Nokia can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Vertu: Nokia's Luxury Mobile Phone for the Urban Rich, Vertu Nokia may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Vertu Nokia business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of Vertu Nokia
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Vertu Nokia.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Vertu Nokia.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Vertu Nokia can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Vertu: Nokia's Luxury Mobile Phone for the Urban Rich .
Regulatory challenges
– Vertu Nokia needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Weighted SWOT Analysis of Vertu: Nokia's Luxury Mobile Phone for the Urban Rich Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Vertu: Nokia's Luxury Mobile Phone for the Urban Rich needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Vertu: Nokia's Luxury Mobile Phone for the Urban Rich is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Vertu: Nokia's Luxury Mobile Phone for the Urban Rich is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Vertu: Nokia's Luxury Mobile Phone for the Urban Rich is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Vertu Nokia needs to make to build a sustainable competitive advantage.
