The world of business has a great oscillation around competition which forms a major portion of the decision making process. Every firm seeks to be the best in their area of specialization in order to match or even surpass the capabilities of their competitors. As a measure of strategy, every time there are changes of prices on the side of the competitors, there has to be an improvement on one's side to counter the impact lest customers are lost. Normally there are a number of reasons for the differences in prices among the prices offered by the various suppliers. Supply chain management entails internalization of intense relations between various aspects in order to strike a suitable agreement in the aims (Insights from the 2006 Supply Chain Executive Summit). It looks at the market trends and the performances of the various commodities being sold. The considerations are such as; costs, lead time, delivery performance and fulfillment of order. The above named aspects have to be improved by all means for the firm to be within the expected profit range. Inventory should be reduced yet the service levels should be within the specified service levels. The management is charged with the responsibility of striking the necessary balance in order to maintain the success levels of the organization. The case of Nokia and Motorola is more or less the same as what is described here. Nokia is in risk of losing out on the mobile phone market because of the reduction in the price of products of Motorola by about 10%. Nokia therefore needs quick readjustments to be able to come back to being at par with their major competitor to avoid losing out on their market grip. A number of recommendations had been previously made on the way to go for Nokia but there is need for fresh and improved considerations to get the best results especially with the current changes in the market structures and pricing by Motorola.Motorola and Nokia supply chain logisticsLogistics take a central position in the control of the way information and resources together with the commodities from the production area to the consumption in order to meet the needs of those consuming these commodities. It pulls together information, inventory, warehousing, materials, packaging, security and transportation. To analyze the resources and time available in the best possible way needs strategy for the purposes of great results.Motorola has capitalized on their expansive market at home for the flow of their products despite their per employee production which is much lower than that of Nokia. With major focus now on the international market, there is the point of getting to put together a way out for Nokia in order to compete Motorola effectively. As previously agued, there was the need of globalization as compared to domestic market dependency to reach a large number of customers (Love et. al. 2002). There was decentralization of management to ensure that there was ease of strategizing at less cost. For the purposes of ease of information dispatch, this worked well for Nokia as also there was an advice for them to seek partnership all through the world. This helps the company in managing to dispatch resources, commodities and information which was a good logistic as at then.A number of suggestions could be made to Nokia as an improvement to the strategy to come up with ways of avoiding the negative effects of the change in the prices of Motorola; the main competitor. First of all, there is the need by Nokia to make the distribution network efficient in order to ensure that loses associated with distribution are to a great level done away with. Also, with operation of in decentralization, there is ease getting to the roots with the necessary information. To trade off some costs, there it is important to use bulk in dispatch between the production and the various countries. The countries should be grouped in sections for ease of management where one management team will be in charge of a given section in order to reduce the costs that come with the various management activities. In other words, there is need to up the efficiency of the process. There should be improvement of ways of funds exchange within the series of stores to ensure that there are minimal costs associated with the process. Keeping of efficient and up to date inventory records is very much important to minimize the costs associated with unavailability of commodities to the customers and as well to minimize the costs of storage.
Available technological infrastructureFor the purpose of minimizing the cost of production, there is the pressing need to make maximum use of the available technologies in terms of the infrastructures offered in the host region/ country. Should this be utilized well by Nokia, there is bound to be a significant improvement in the profit levels which may allow the luxury of marching if not surpassing the price reduction on the products of their competitors. The infrastructural technologies serve to enhance the dispatch and reception of information, to enhance movement of commodity and as well work on efficiency of the distribution. Motorola has had a good utilization of the infrastructure at hand now that they utilize mainly local markets which are easily accessible.Some of these technological infrastructures highly recommended for Nokia are such as; direct shipment, cross docking, pool point shipping, closed loop shipping, DSD (Direct Store Delivery), closed loop shipment and the specific mode of transportation for example the use of motor carrier, including truckload (LTL, rail, road parcel), including TOFC (trailer on flatcar) and COFC (container on flatcar); airfreight; ocean freight; replenishment strategy (for example, pull, push or hybrid); together with control of transportation (e.g., owner-operated, private carrier, contract carrier, common carrier, or 3PL).Necessary changes to drop the price
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To compete globally there are demands that have to be met in order to meet the expectation of customers and as well stay within the specified expenditure so as to avoid excessively high prices or reduced profit for the firm. "Price and quality are competitive priorities that focus organizational resources to compete on the basis of either low price or quality leadership" (Premus and Sanders, 2002).The first thing to be done by Nokia to drop the prices by up to 10% is to be able to put together an efficient distribution coupled with attractive product offers. Discipline among the employees will be important especially after receiving communication about needs and the plans of the firm. Equally important, there is the point of having precision in the format of commodity delivery in relation with the demands of the customers as well as keeping clear and up dated inventory records in the areas that have their distribution centers. To eventually actuate the stability of the profit made from the sales, there is the need of optimizing the sales as the production costs are slowly suppressed to eventually build the minimal use of the expensive pathway. This way the cost pay for the customer will not need to have so many inclusions which will result in price reduction.It is important also to emphasize the use of prioritizing in the production by the company to ensure the result in terms customer friendliness is well and clearly met. Investing in some technologies would result in eventual settling on the way of production that has less costs and that demands less time. The surplus from this could be used elsewhere in terms of free time or that extra resource for new development or improvement. The ability to maintain the same standards throughout the organization regardless of location helps to keep the employees on an equal platform concerning the needs and the urgency towards the development of profit generating strategies. The above mentioned strategies coupled with the basic ones like globalization, competitive strategy and decentralization will together go a long a way in improvement the price situation of Nokia.Current production and distribution dataPreviously there was no provision of satisfactory data on the production and distribution of the products of Nokia and Motorola. As at now, there are a number of comparisons between the production as well as the distribution between Nokia and Motorola. A report issued by in the recent past showed that Nokia sold close to 100.8 million mobile phones during the second quarter of the year. The statistics also continues to state that Nokia managed to ship some 103.2 units in the same period which was an 11% increase in shipment from the previous quarter of the year. Nokia also claimed to be in charge of about 38% of the world market.Motorola has been in charge of the main part of the population to where they have even claimed to make sales of about 100,000 units in just a weekend. Nokia could lose out on its status should there be a delay in price adjustment. The information pertaining to the production and distribution of Nokia and Motorola products was not easy to obtain as most companies do not freely avail information concerning them because of they fear giving advantage to their competitors.Regional and international transportation regulationsIt is true that the costs associated with general logistics and overall coasts of such things as transportation are major contributors to the high prices of commodities. There are always charges when ferrying commodities across various boundaries which is of great impact to the company at hand. Nokia has equally not been spared in this. The way out to improve the prices in relation to this is to be able to do away with them or reduce them to a great extent. There are some trade zones which can be referred to by the name 'free trade zones' which do not involve intense charging. This could help Nokia much more greatly in the overall reduction of their marketing costs and eventually the cost of their products to help match those by their biggest competitor; Motorola.There are also rights accorded to senior or major operational companies within given boundaries which might not be there for all the other countries. Should Nokia get the opportunity to claim such service, it will be very important in the cutting down of the general cost of production per unit. These types of rights are referred to as 'grandfather's rights' courtesy of the fact that they apply to most important companies which has an impact on the lives of the countries citizens.In some ports, there is the development 'no-fee docking' which could be capitalized on in a great way to build the necessary profit margins without necessarily having to increase the prices. These should be capitalized on by Nokia to be able to catch up with Motorola by reducing the prices of their products in relation to the subsidies they receive from countries that seek to host them for the purposes of employment of citizens and technological advancement.Steeper price reductionThe discussion throughout this paper has been the reduction of the production cost with a key view to reduce as much as possible the prices of Nokia products in relation to those from a rival company Motorola. While this may be achieved thus far, there is still the need to make the reduction in prices steeper without necessarily having to reduce the profit to the organization.One of the best ways of making the price fall steeper is by changing on the model types in order to get the models that consume fewer components for the same level of capabilities. This cuts down by a great magnitude the production costs of the company. The changes could include the sizes. Also, for much fast price fall, there is the need to bring down the amount spent on the employees. This can be done most effectively by laying off all the extra staff members should there arise any such opportunity. By doing this, there is always the chance of reducing excessive reliance on the returns of the sales of the commodities. Finally, Nokia should improve on the partnering approach with electronic distribution firms to ease distribution pressure and increase returns.Much as there are many challenges that Nokia is facing in relation with the price fall of Motorola product, the firm still has the chance to maintain their grip on the market by adjusting their budget management to accommodate some price reduction. This will counter the fall in the competitor's prices without necessarily reducing the profit. The implementable ones have included partnering with foreign suppliers, keeping accurate inventory records and demanding subsidies where possible to cater for this.