麥肯錫三星戰(zhàn)略2nokia

SAMSUNG010605BJ-kickoff2CONFIDENTIALMobile

Handset

Competitor

Analysis:

NokiaSAMSUNGELECTRONICSCHINA(SECChina)August20,2001Thisreportissolelyfortheuseofclientpersonnel.

Nopartofitmaybecirculated,quoted,orreproducedfordistributionoutsidetheclientorganizationwithoutpriorwrittenapprovalfromMcKinsey&Company.ThismaterialwasusedbyMcKinsey&Companyduringanoralpresentation;itisnotacompleterecordofthediscussion.SAMSUNG010605BJ-kickoff2OVERVIEW

OF

COMPETITOR

ANALYSIS

FRAMEWORK1.

Background

information4.

Value

chain

strategy?

Location?

Registeredcapital?

Management

?team?

Equity??FocusonStartingyearNumberofemployees?

Marketing,advertisingandpromotion?

Distribution(channelandsalesforce)Eraanalysisstructure2.

Strategy5.

Organization

and

ownership?

Mission?

Vision?

Organizationstructure?

Ownershipstructure?

Corporatestrategy?

Marketposition3.

Product/market6.

Financial

performance?

Keyproductofferings?

Keycustomers?

Valueproposition?

Geographicfocus?

Pricing?

Sales?

Profit2SAMSUNG010605BJ-kickoff2KEY

ISSUES

TO

PROBE

-

NOKIA?

HowdoesNokiapositionitselfnowandin2005??

WhatareNokia’sproductandvaluedeliverysystemstrategiesthatStrategydifferentiateitselffromitscompetitors??

Howdoesitscurrentmarketpositionhelpachieveitsgoal??

WhatisNokia’skeyproductofferingsandhowdoesNokiadifferentiateitsproductsfromitscompetitors’??

WhatcustomersegmentsisNokiatargetingat??

InwhichgeographicareasisNokiastrongorweak??

HowdoesNokia’sproductdevelopmentmeetcustomerrequirement??

HowdoNokia’sdistributionchannelsdifferfromitscompetitors’??

WhydoesNokialaunchexclusivespecialistshops??

HowdoesNokiaprovidecustomerservices??

HowmuchdoesNokiainvestinJVsandWOFEsinChina,andwhatarethemaindrivers?Product/marketValuechainstrategyOrganization&ownership?

HowdoesNokiaorganizetoenabletheJVsandWOFEstoworktogether??

HowstrongisNokia’sperformanceandwhatarethemajorcontributors??

WhatisNokia’sperformancetrend?Financialperformance3SAMSUNG010605BJ-kickoff2BACKGROUND

INFORMATION1.

Background

information4.

Value

chain

strategy?

Location?

Registeredcapital?

Management

?team?

Equity???

FocusonStartingyear–

Marketing,NumberofemployeesEraanalysisadvertisingandpromotion–

Distribution(channelandsalesforce)structure2.

Strategy5.

Organization

and

ownership?

Mission?

Vision?

Organizationstructure?

Ownershipstructure?

Corporatestrategy?

Marketposition3.

Product/market6.

Financial

performance?

Keyproductofferings?

Keycustomers?

Valueproposition?

Geographicfocus?

Pricing?

Sales?

Profit4SAMSUNG010605BJ-kickoff2NOKIA

IS

RELATIVELY

A

LATE-COMER

TO

CHINA;

HOWEVERIT

HAS

GROWN

RAPIDLY

TO

BECOME

A

MARKET

LEADER

INMOBILE

COMMUNICATIONBackgroundLocationImplication?

BasedatFinland,withofficesinChina,e.g.Beijing?

ChinaisNokia'sstrategiclocationbecauseitisNokia'ssecondlargestmarket,secondonlytoUS?

LeaderinmobilecommunicationgloballyandinChina?

Althougharelativelylater-comertoChina,hasinvestedheavilyinitsChinesebusiness?

InvestedmorethanUSD1.7billioninChinaInvestmentBusinessStarting?

Twomainbusinessunits:

NokianetworkandNokiamobile?

FocusedproductlineswithNokianetworkofferingmobile,broadbandandIPnetworkinfra-structure,andNokiamobileofferingmobilehandsets?

FirstofficeinChinain1985,firstJVinChinain1994?

60,000staffin130countries?

Morethan20officesinChina,7JVs,1WOFEand1R&Dcenterwithover5500staffEmployees?

StartedbusinessinChinasince1950s?

1985sawfirstofficeinBeijing,supplyingfixedlinenetworksHistory?

SuppliedanalogNMT450systemandterminalin1986?

Suppliedtransmissionsystem,opticalcableandelectriccablesinlater1980s?

SuppliedanalogETACSsystemandterminalsin1989?

SuppliedGSMsystemandterminalsin1990sSource:NokiaPressRelease5SAMSUNG010605BJ-kickoff2STRATEGY1.

Background

information4.

Value

chain

strategy?

Location?

Registeredcapital?

Management

?team?

Equity???

FocusonStartingyearNumberofemployees–

Marketing,advertisingandpromotion–

Distribution(channelandsalesforce)Eraanalysisstructure2.

Strategy5.

Organization

and

ownership?

Mission?

Vision?

Organizationstructure?

Ownershipstructure?

Corporatestrategy?

Marketposition3.

Product

/market6.

Financial

performance?

Keyproductofferings?

Keycustomers?

Valueproposition?

Geographicfocus?

Pricing?

Sales?

Profit6SAMSUNG010605BJ-kickoff2NOKIA

POSITIONS

ITSELF

AS

A

LEADING

PRODUCT

AND

SYSTEMSUPPLIER

IN

THE

FAST

GROWING

MOBILE

COMMUNICATION

INDUSTRYStrategy?

FocusesonmobilecommunicationProductproductsandaimstobeatotalsolutionproviderinmobilecommunication?

Regularlyintroducesconsumer-orientedproductswithemphasisondesignsandfunctionsVisionToleadmobilecommunicationthroughtheintegrationofmobilitywithinternetandtheinnovationofnewservicemodels?

BuildsstronglocalalliancethroughJVswithChinesepartnersandR&DcenterswithChineseuniversities?

Buildsexclusivespecialistshopstobringone-stepsolutionstoendusers?

BuildsfixedandmobileservicestationswithwidegeographiccoverageincludingruralareasValuedeliverysystemSource:NokiapressRelease7SAMSUNG010605BJ-kickoff2NOKIA

HAS

CAUGHT

UP

WITH

MOTOROLA

AS

MARKET

LEADERS

INMOBILE

HANDSETS

SINCE

1999Monthly

market

share

development(Percent

of

market

in

units

sold)NokiaMotorolaSiemensEricsson9899Jan‘00Dec‘00Source:IDC,McKinseyAnalysis8SAMSUNG010605BJ-kickoff2UNLIKE

ITS

COMPETITORS,

NOKIA’S

MARKET

SHARE

IS

THE

SAMEAMONGST

NEW

AND

REPURCHASE

BUYERSPercentofunitssold,20004QDefinition:?

Newbuyer:neverboughtmobilephonebefore?

Repurchasebuyer:boughtmobilephonebeforeOthersEricssonSiemensMotorolaNokiaRepurchaseBuyersNewBuyers75%Totalmarket100%%

of

Market25%Source:IDC,McKinseyanalysis9SAMSUNG010605BJ-kickoff2AMONG

REPURCHASERS,

NOKIA’S

CHURN

RATE

IS

HIGH,

BUT

AT

PARWITH

MOTOROLAPercent,2000Brand

bought

by

previousNokia

ownersBrand

bought

by

previousMotorola

ownersOthersOthersNokiaAlcatelAlcatelSiemensSamsungNokiaSiemensSamsungEricssonEricssonMotorolaMotorolaSource:McKinseyanalysis10SAMSUNG010605BJ-kickoff2PRODUCT/MARKET1.

Background

information4.

Value

chain

strategy?

Location?

Registeredcapital?

Management

?team?

Equity???

FocusonStartingyear–

Marketing,NumberofemployeesEraanalysisadvertisingandpromotion–

Distribution(channelandsalesforce)structure2.

Strategy5.

Organization

and

ownership?

Mission?

Vision?

Organizationstructure?

Ownershipstructure?

Corporatestrategy?

Marketposition3.

Product

/market6.

Financial

performance?

Keyproductofferings?

Keycustomers?

Valueproposition?

Geographicfocus?

Pricing?

Sales?

Profit11SAMSUNG010605BJ-kickoff2KEY

MESSAGES

-

PRODUCT/MARKET?

Nokiahasanarrowproductportfoliofocusingonmobilecommunicationproducts,andmobilehandsetisNokia’skeyproductoffering?

Nokiaoffersconsumer-orientedhandsetswithemphasisondesignsandfunctions,targetingmediumandlowendcustomers.Itsmaincustomersegmentsaretheyoungandfashionable?

Nokia’sfashionphonesarerelativelystronginmajorcitiesandthesouthregion;howeverNokiaisrelativelyweakinthefourth-tiercities12SAMSUNG010605BJ-kickoff2MOBILE

HANDSET

IS

NOKIA's

BIGGEST

PRODUCT

OFFERING

AND

ITSESSENTIAL

PART

OF

TOTAL

SOLUTIONS

IN

MOBILE

COMMUNICATIONProductsNow

and

future?

Nokia3310foryoungpeople?

Nokia8210forfashionchaser?

Nokia6210WAPforbusinessprofessional?

Nokia7110WAPwithfullChineseinterface?

Nokia9210aspersonnelcommunicator?

Largestmobilehandsetsupplierintheworldwithaboveaveragegrowthinsalesandmorethan30%globalmarketshare?

Viewsmobilehandsetasadigitalconvergencepointformultimediaservices?

SupportsbluetoothbetweenmobilehandsetandPCinNokia6310formobileprofessionalNokiamobilehandsets?

DevelopWCDMAhandsetswithDoCoMo?

DevelopshomenetproductssuchasmultimediaterminalsinNokiaZhongxinNokiaproductofferings?

Nokia8310,6310forGPRSandWAP?

Mobilenetwork?

Broadbandnetwork?

IPnetwork?

ProvidesmultimediaservicenetworksolutionsforoperatorsandISPenteringthemobilecommunicationfields?

NokianetworkcoversmanycitiesandareasinChinaincludingBeijing,NokianetworkShanghai,HongKongandTaiwanetc.?

Aimstobeatotalsolutionproviderformobilecommunication13SAMSUNG010605BJ-kickoff2NOKIA

EMPHASIZES

ON

CONSUMER-ORIENTED

DESIGNS

AND

FUNCTIONSKeyDifferencesFashion8210Classic6210V998++P7689L2000L2000WWWFashion?

Changeable

cover?

Sub-100gBusiness?

Voice-dial?

Recording?

Vibration?

Tri-band?

WAP?

Built-inmodem?

IR-portBasic?

Chineseinput?

Li-Ionbattery?

SMSmessagingFun?

Games?

Composable/downloadableringertone26522878236918001435*1452PriceinChina(RMB)Equivalentfeatures,Nokiamorefun/fashionvs.MotorolamorefunctionsMotorolaofferslowerpricemodelswithsimilarfeatures,tri-bandandWAP14*Nov.2000priceSAMSUNG010605BJ-kickoff2WITHIN

CHINA,

NOKIA's

FASHION

PHONES

PERFORM

BETTER

IN

SOUTHCHINA

AND

LARGE

CITIESPercent,2000Market

shareNorthregionEastregionSouthregionChinaaverageBeijingShanghaiShenzhenGuangzhouSource:McKinseyAnalysis15SAMSUNG010605BJ-kickoff2NOKIA

IS

RELATIVELY

WEAK

IN

THE

IMPORTANT

4TH

TIER

CITY

MARKETPercentmarketshare,2000100%=Others6.77.08.514.8MillionunitsEricssonSiemensMotorolaNokiaTier118%Tier219%Tier3Tier440%Tier

size

as

%

of

total23%Source:McKinseyAnalysis16SAMSUNG010605BJ-kickoff2AND

THIS

WEAKNESS

IN

4TH

TIER

CITIES

SPANS

MOST

PROVINCESTier1/2/3cityPercentmarketshare,NokiaTier4cityProvinceSource:RetailAudit,McKinseyanalysis17SAMSUNG010605BJ-kickoff2VALUE

CHAIN

STRATEGY1.

Background

information4.

Value

chain

strategy?

Location?

Registeredcapital?

Management

?team?

Equity???

FocusonStartingyearNumberofemployees–

Marketing,advertisingandpromotion–

Distribution(channelandsalesforce)Eraanalysisstructure2.

Strategy5.

Organization

and

ownership?

Mission?

Vision?

Organizationstructure?

Ownershipstructure?

Corporatestrategy?

Marketposition3.

Product/market6.

Financial

performance?

Keyproductofferings?

Keycustomers?

Valueproposition?

Geographicfocus?

Pricing?

Sales?

Profit18SAMSUNG010605BJ-kickoff2KEY

MESSAGES

-

VALUE

CHAIN

STRATEGY?

Nokiaisnotregardedasatechnologyleader,ascomparedwithMotorola;however,itspendsagreatamountofeffortinunderstandingcustomerrequirementsandtailorsitsproducttomeettheserequirements.?

NokiaemploysPTAC,CellStar,BeijingTelecommunicationEquipmentFactory,BrightPoint,ExpressFortune,andTechGloryasthefirst-tierresellerstodistributehandsetsthroughauthorizedstoresandcounters.Thedistributionchannelsarerelativelyflat.?

Whileitsretailshopsaregrowingrapidlytoapproximately900aroundthecountry,Nokiaalsodevelopsexclusivespecialistshopsinordertoprovide“one-step”solutionstoendusers?

Nokiaimplementsahighlyefficientcustomerservicesystemwith250servicestationsandmobileservicestationsforruralareas.Itprovidesgoodpre-andaftersalesservice19SAMSUNG010605BJ-kickoff2NOKIA

IS

STRONG

AT

MARKETING,

SALES

AND

SERVICE,

BUT

WEAK

ATTECHNOLOGYManufac-turing

andsupply

chain

brandingMarketingandSales

anddistributionR&DService?

Highlyefficientcustomerservicesystemwith250servicestationsandmobileservicestationsforruralareas?

Goodpre-andaftersales?

EstablishedR&D

?

Scalablelocal

?

Strongbrand?

Country-widedistributionStrengthscenterin98/99in

productionBeijingforChina

?

Optimizedawarenessandpreference?

Promoteschannelsandstrongchannelmarket,with150logistics“technologybased

managementresearchstaff?

Highretailers?

Stronginlowenddevelopmentonpeople”preference?

Goodproductqualityanddesignservice,e.g.

“onehourrepair”service?

Awarenessand

?

Lowerratingofpreferencelower

retailsupportLevers

for?

Weakerpositioninimprovement

highendsegmentandhighend?

RetailerthanMotorola?

Brandinyoungmarketunderattackpreferencenottranslatingintohighermarketsharetechnology?

Positioninlowendunderattack?

Lowtechnologyimage20SAMSUNG010605BJ-kickoff2NOKIA

HAS

REPUTATION

GAP

AS

TECHNOLOGY

LEADER,

AND

TARGETDIFFERENT

CUSTOMER

SEGMENTS

FROM

MOTOROLA……on

Motorola….on

NokiaMotorolaalwaysintroducesnewtechnologytothemarketfirst….ontechnologyleadershipandinnovationNokiaissecondtoupgradeproductsNokiahasgoodproductdesigns….ondesignMotorolaproductsaremoreformal…ontypicalloyalusersNokiaphonesareforfemaleoryoungerpeopleLoyaluseriswhite-collarworker21SAMSUNG010605BJ-kickoff2NOKIA

DISTRIBUTES

THROUGH

SIX

FIRST-TIER

RESELLERS

ANDDEVELOPS

EXCLUSIVE

SPECIALIST

SHOPSNokia

Channel

StructureRationalesVendor?

NokiaemploysPTAC,CellStar,BeijingTelecommunication58%1st-tierresellersEquipmentFactory,BrightPoint,ExpressFortune,andTechGloryasits6first-tierresellers33%6%2nd-tierresellers?

Nokiarequiresresellerstoreportthepromotionplanandproduct33%36%orderingplansaquarterinadvance,andsincethedemandforhandsetstendstofluctuateacrosspromotionalprograms,thisinflexiblestrategygenerallylimitsthepotentialgainwhenmarketdemandchangesacrosspromotionsR

e

tailers/retailchainstores3%

6%91%Consumers?

Closeto900retailshopsandcounterscountry-wide,with50%growthfrom1999?LateentrytotheChinamarketwithlesshistoricoverhead?Flatdistributionchannels?Developsexclusivespecialistshops?

Formexclusivespecialistshoptoprovideone-stepsolutiontoendusers?Providesafter-saleservicesSource:ChinaComputerJournal22SAMSUNG010605BJ-kickoff2ORGANIZATION

AND

OWNERSHIP1.

Background

information4.

Value

chain

strategy?

Location?

Registeredcapital?

Management

?team?

Equity???

FocusonStartingyear–

Marketing,NumberofemployeesEraanalysisadvertisingandpromotion–

Distribution(channelandsalesforce)structure2.

Strategy5.

Organization

and

ownership?

Mission?

Vision?

Organizationstructure?

Ownershipstructure?

Corporatestrategy?

Marketposition3.

Product

/market6.

Financial

performance?

Keyproductofferings?

Keycustomers?

Valueproposition?

Geographicfocus?

Pricing?

Sales?

Profit23SAMSUNG010605BJ-kickoff2KEY

MESSAGES

-

ORGANIZATION

AND

OWNERSHIP?

Nokiahas7JVand1WOFEinChina,amongwhichNokiaBeijingandNokiaDongguanaremanufacturingmobilehandsets.NokiaBeijinghasannualproductioncapacityof30millionunitsin2001.?

ThemaindriversforNokiatosetupJVsandWOFEsinChinaincludebuildinglocalalliances,localizingmanufacturingtomeetdomesticmarketdemandandincreaseexports,andtechnologytransferencouragedbytheChinesegovernment?

Withanarrowproductportfolio,Nokia’sorganizationisproductfocusedwithcoordinatedsalesandmarketingeffortacrossJVsthatmanufacturethesameproducts24SAMSUNG010605BJ-kickoff2NOKIA

HAS

7

JVs

AND

1

WOFE

IN

CHINA,

AMONG

WHICH

2

JVs

AREDEVOTED

TO

MOBILE

HANDSETSMain

driversNokiainternational?

BuildssuccessfulalliancewithChinesepartners?

Localizesmanu-facturingformajorproducts?

Meetsdomesticmarketdemandandincreasesexports50%withShouxin70%WithDongguanWanxinWithFujianmobileWithBeijingHangxingWithDongruanWithZhongxinandbroadcastingscienceinstitute100%?

Realizestechnologyandskilltransferindevelopment,manufacturingandmanagementNokiaBeijingmobileNokiaFujianmobilecommunicationtechnologyNokiaZhongxindigital?

HelpsChinesepartnersimprovecompetitivenessinChinaandgloballyNokiaDongguanmobilephoneNokiaBeijing,HangxingtelecomNokiaDongdatelecomtechnologyNokiaChongqintelecomNokiaSuzhoutelecomcommu-nicationtechnologyEstablished

yearProduct

offering1995199519971994200019991998?

GSM?

Mobilehandsets?

GSM900/1800networkservices?

Mobileswitches?

Wirelessapplicationssolutions?

Digital?

GSMbasestation?

Cellularnetworksystemandequipment?

Mobilehandsetsmultimediaterminalsandservicestransmissionproducts25SAMSUNG010605BJ-kickoff2NOKIA's

ORGANIZATION

IS

MAINLY

PRODUCT

FOCUSED

WITHA

NARROW

PRODUCT

PORTFOLIO

AND

COORDINATED

SALESAND

MARKETINGNokiainternationalNokiaNokiaFujianmobilecommunic-ationNokiaBeijingmobilecommuni-cationChinaNokiaDongguanmobil