VERTU: NOKIA’S LUXURY MOBILE PHONE FOR THE URBAN RICH

Introduction

Nokia Company, with its headquarters in Finland, remained to be the leading telecommunication equipment manufacture in the world. This is because of the Vertu luxury phone it manufactured in the late 1990s through the use of precious material for example sapphires, exotic leather, titanium and diamond (Kwong-Kay, 2012).  The company continued to enjoy its impressive growth in the market because this smart phone had unique qualities and one of a kind for at that period. Despite that, unfortunately the phone lost its popularity hence making the company to loss its leadership in the market.

This case study basically explains the ways through which Nokia Company managed to become the leading manufacturer and distributor of this luxury mobile phone, what made it to loss its market leadership as well as how it managed to stay afloat in this contemporary constant changing market.

Summary of the situation

Stephen Elop, as Nokia’s managing director, had allowed the company’s chief designer to also run at arm’s length in the manufacturing of Vertu luxury phones in England. The manufacturing of Vertu luxury phones ended up showing a considerable growth in at least seventy sates selling mobile pnones. With respect to this case, there a number of key issues which are related to its luxury phone market dominance and consequently the loss of that leadership;

First and foremost, regardless of the fact that the company managed to be the leading market supplier of luxury phones for rich peoples for a number of years that have passed, the company finally lost its leadership through Android which was eventually developed by Goggle in 2010.  In connection to that, since there was need of maintaining it competitive advantage in the market, its management authority resolved coming up with newer mobile technologies since technology had already grown the rate at which Vertu could not cope up with (Kwong-Kay, 2012). Unfortunately, they ended up spending millions of money on the multiple researches as well as development without producing more competitive smart phones in the market.

Similarly, the reason as to why they lost their leadership is because of their investment community. As their situation worsened, the investment community also started reacting poorly and was further downgraded by their financial analysts. This is to say that their potential investors lost the morale of continuing to invest in it because of the fear of losing their funds or not making adequate profit at the end of the trading period because the market itself continued to act poorly. Finally, resorting creating other luxury phones was the only option the company remained with.

Definition of the problem

The strategy which was developed by Elop the managing director of Nokia might have not been an effective one. The reason for failing to convert to Windows operating system was because of the 14% drop of the share prices of Nokia which was encountered during the time of closing their partnership (Kwong-Kay, 2012). Thus there are a number of questions that arises from this are; did the company could have managed to keep Vertu at arm’s length or pull it closer and closer to joint manufacturing in Finland? What could have been the reaction of Vertu to Nokia’s new mobile strategy? Was it well positioned in taking the brand forward under the new Nokia?

Alternative solutions

Regardless of the failure of their partnership, still there are some alternative solutions the company could have considered. One of the very best alternatives that could have been taken is that Vertu could have stood on its own completely by breaking away from Nokia. The reason for this is because, as much as the market shares of Nokia continued to drop drastically, it was still going to be impossible to market this luxury phones in case Nokia did not manage to recover it (Kwong-Kay, 2012).

Select a solution

By considering the views of Kwong-Kay, (2012) as means of reviving its market leadership or just ensuring that it is competing favorably in the current telecommunication market, the management of the company should consider manufacturing multiple product choices in the market. Conversely, as a means of covering the manufacturing cost associated with the provision of multiple choices of telecommunication products in the market, they will have to come up with high pricing so as to cater for the cost of its products.

Implementation

According to Kwong-Kay, (2012), we can say that still the market platform of Nokia can be perceived as being promising. Therefore, its management authority should consider expanding its markets. This is to say that it should choose to cater for more than one market. Nevertheless, they should ensure that it had come up with extensive promotions which will be aimed at promoting its brand in more areas.

Recommendations

There management should find other ways of bringing their product to new areas or markets. This is to say that it should not be restricted to already established markets. The U.K based wholly owned subsidiary should not be left alone. They need to align the goals of their establishment as well as managing it at arm’s length from Nokia Company. Realistic and extensive research should be undertaken so as to ensure the incorporation of newer technology in manufacturing communication products is efficient. The reason for this is because the changes Vertu incurred with time were inevitable.

 

 

 

 

 

 

 

 

 

 

 

 

Reference

Kwong-Kay W.K (2012). Vertu: Nokia’s luxury mobile phone for the urban rich. (Report No. W11208). Watertorn, MA: Harvard Business Publishing