Measures for sustaining competitive advantage

As the framework for this study diagnosed, taking measures to attain competitive advantage alone does not guarantee sustainability which is necessary to enjoying long run success in an industry. Therefore there is the need to look at measures taken by Nokia in contrast to Motorola and Samsung that is helping in its sustenance of its competitive advantage in the mobile phone industry.

4.7.1. Positional quality gaps

Nokia, unlike Motorola and Samsung took a risky decision in the early 1990’s to focus on mobile technology. Over the years this decision is paying off as it has enabled it to entrench itself in the mobile industry thereby making it difficult for its rivals to match its expertise in the industry, thus helping it to sustain its competitive advantage in the sector. Nokia was the first to realize in advance the mobile phone business opportunities in emerging markets.

This enabled it to take the lead among its rivals in locating its plants in fast growing markets such as China and India. (Ewing, 2007) repots that Nokia “has invested hundreds of millions of dollars building distribution systems and networks of retailers in developing countries, including vans that bump along the rural roads of India between stops for instruction on how to use mobile phones”. This has accordingly made it the number one handset supplier not only in those markets but the world over. In addition, Nokia strove to improve its competitiveness by leaving its rivals behind and dispersed its manufacturing facilities to low cost locations in Korea and Mexico. Also of strategic importance to Nokia’s sustenance of its competitive advantage over its rivals is that, it was the first in the industry to introduce market segmentation. This, it did at a time when its rivals focused on the high end of the market. Furthermore, Nokia was the first to take steps towards building strong image with its end users, thus leading to the establishment of a strong brand image with its consumers. (Adner, 2003.) The same can not be said of Motorola and Samsung.

This situation thwarts any effort by Motorola and Samsung to break Nokia’s dominance in mobile phone sales

4.7.2. Business system gaps

Nokia’s ability to use a few design that share components among devices and design phones with fewer parts than Motorola and Samsung solidifies its position as cost leader in the industry. (Ewing, 2007) Nokia’s efficient supply chain management which serves as key gap in its business processes and that of Motorola and Samsung is shown by its minimum days of raw material inventory and the exploitation of economies of scale

through combined shipment coupled with its global supply web connected electronically to its supplier’s production systems. Another important attribute of Nokia’s business processes that distinguishes it from that of Motorola and Samsung is its special relationship with its distributors. Such special is the relationship that Nokia finances some of its vendors whose activities have a direct impact on Nokia’s sales and market share. The existence of such gaps between Nokia’s business processes and that of Motorola and Samsung makes it difficult for them to erode Nokia’s competitive advantage thereby allowing Nokia to sustain its competitive position

4.7.3. Organizational quality gaps

Nokia’s corporate culture is one of the company’s strategic and competitive advantages. It believes in establishing standards and keeping them open to everyone to facilitate the growth of its mobile phone market. The basis of Nokia’s corporate culture is customer satisfaction, innovation, performance and employee recognition. This culture is enhanced by the creation of a flexible organization that strongly downplayed fixed hierarchies.

Unlike Motorola and Samsung, Nokia highly encourages the formation of cross business task force to address specific issues and keep transforming itself as products are developed.

There is no part of the value chain that Nokia’s distinctive organizational culture directly impacts on its product design and manufacturing process than R&D. Due to Nokia’s strong culture of innovation it structured its R&D in a manner that allows freedom of operation and spread it across the globe. This does not only allow Nokia to engage its R&D staff into new areas any where in the world but speeds up product development and allows the application of appropriate technology to a given market. (Adner, 2003.) Since innovation is the key to success in the fast dynamic mobile phone business, Nokia’s unique culture that has positively impacted its R&D set up and the entire organization relative to Motorola and Samsung does not only enhance its competitive advantage but guards against it.

4.7.4. Legal gaps

As noted by experts, the race to be on top in the dynamic mobile phone industry is dependent on a firm’s ability to innovate faster and continuous, in order to satisfy the ever changing preferences of the modern customer. Although Nokia and its competitors alike are owners of some intellectual rights in the industry, Nokia, unlike Motorola and Samsung have an edge in the industry as it owns intellectual right to the most competitive handset software in the market. - “The Series 60 platform” This is a comprehensive software platform for smart phones that Nokia licenses as a source code product to other mobile handset manufacturers. The Series 60 platform is designed for mobile phone users with easy-to-use; one-hand operated handsets characterized by high-quality colure displays, rich communications and enhanced applications.

In welcoming LG electronics to the Series 60 community which includes Samsung and other competitors, Nokia’s Vice President, Technology Marketing and Sales, Antti Vasara, commented that “LG Electronics' decision to license the Series 60 Platform further strengthens the platform's position as the most competitive handset software on the market…” Nokia Press Release: March 22, 2004

Nokia’s intellectual ownership among others, of the single most competitive handset software in the industry is a strong tool that Nokia can use to sustain its competitive advantage over its industry rivals