Finance Essay

558 Words3 Pages
Chapter 6 Case Study: Nokia Moves to Establish Industry Standards 1. What are the key assumptions implicit Nokia’s business strategy? Are they reasonable? Answer: Key assumptions include the belief that Nokia can establish an industry standard by giving away Symbian software. The strategy is reminiscent of the Microsoft strategy of licensing its operating system to anyone in order to establish a large user base to encourage software developers to design software for Windows-based computers. Once established, Nokia is expecting to be able to provide online content for smart phone users. The strategy requires Nokia to expand its handset market share to provide a platform on which the Symbian software can be used. The strategy requires that Nokia competitors, such as Google’s Android and Apple’s I-phone, will be unable to establish standards before Nokia can. The strategy also presumes that Symbian software is superior to competing technologies and that they can earn enough money from collecting fees for providing handset based services to recover the cost of the acquisition of Symbian and earn Nokia’s cost of capital. Nokia also is assuming that the market for such content will continue to increase rapidly. The strategy probably is unrealistic since it is not in their competitors’ interests to do so (See the answer to question 2). Furthermore, it is unclear if Symbian software is indeed superior to competing software. 2. What are the key assumptions implicit in Nokia’s implementation strategy? Are they reasonable? Answer: The successful implementation of the Nokia business strategy of establishing Symbian software as the standard operating system for all wireless handsets rests on Nokia’s ability to recruit other handset manufacturers, service providers, and consumers faster than competing platforms such as Android and

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