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Table of Contents
Introduction

Effect of Economic Changes on Nokia

Impact of Govt. Policies

Impact of Govt. Spending

Evaluation of Changes in Economic factors

Impact of Monetary & Fiscal Policy

Evaluation of changes in Monetary & Fiscal Policy

Impact of International Factor

Impact of Global & European Business

References

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Introduction
Nokia is world renowned mobile company which established standards in world. For
this case we selected Nokia. It is international communication Technology Company
which employed thousands of people for effective and successful working. When
going global nokia also started its working in Pakistan. It provides not only mobiles
but also different electronics products.

1.1 Effect of Economic changes on Nokia

Inflation
Inflation causes the price of the products to raise. Currently inflation in Pakistan is
prevailing in increasing trends. There are a lot of reasons behind this but this
inflation reduced the purchasing power of the consumer due to which people
started finding cheaper alternative. This affected Nokia in Pakistan in previous years
which also multiplied by other china companies offering lower rates. Due to this
consumers shifted from Nokia mobiles to other companies. Nokia to tackle this
situation also launched different mobiles but consumers preference changed
(theglobaleconomy, 2015).
Interest rates:
Interest rate causes to loan applicants to pay higher interest amount the sanctioned
loan. Businesses need huge loan so they have to pay more interest so they earn
more to pay this interest amount which declines their profits or it can also cause in
increased prices of the products. Nokia in Pakistan didnt launch any new mobile in
last year due to increasing and de-stable interest rates because there is tough

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competition in market and nokia cannot afford low price for better quality product
and so as low profit.

Balance of Payment:
Balance of payment shows the business progress of an economy. A positive balance
of payment means greater exports and less imports or vice versa. But when it goes
negative then Govt. uses it foreign exchange reserves or get loans from others due
to which currency devalues and hence operational cost and production cost
increases. In Pakistan trade balance of payment is running negative and currency is
devalued due to which business costs increased so as product price due to which
nokia also faced the same challenge so it could not launched new products for its
consumers and grabbing new consumers.

1.2 Govt. Policies

Government policies directly affect the business. Govt. annually launch new rule for
industrial sector like labor laws, rules and regulation and taxation etc. When talking
about the labor laws Govt asked companies to give minimum set wage to labor then
all companies including nokia has to fulfill that otherwise it can be fined.
Taxation policies like high tax rates causes nokia to raise price. Recent policies of
withholding taxes from any fund transfer above Rs. 50000 has to pay 0.6 percent
withholding tax. This causes every business including nokia to pay extra cost for the
daily routine work. Changes in interest rates like increasing interest rates causes the
high cost of borrowing which reduces the profit of organization.
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1.3 Impact of Govt. Spending

Govt. every year prepare budget for making development plan. This budget also
includes the amount Govt. planned to spend in different sector. By Govt. Spending is
the amount which is spent on provision of the merit goods and public goods. Profit is
not motive behind this spending by Govt as it is for public relief (Hussain, 2010).
Govt spending is usually subsidy oriented and towards the sector where public can
get more relief like agriculture, transportation, health and education. In recent as
well as previous years Govt. spent amount on transportation as well other including
communication sector. Due to this spending people businesses got some growth
and due to this people income increases and their demand for different goods
including mobiles increased in few years so nokia also got sale lead in market along
with others and in few previous years nokia launched new mobile in market like
nokia Lumia and other models.
Moreover Govt. spending on infrastructure also help large business group in
improving their operational costs which in turn created demands. Govt. spending on
technology sector and subsidies for this sector help companies like nokia to launch
innovative ideas and increase in productivity and profit increments (Economics,
2015).

1.4 Evaluation of change in Economic Policies in market where

nokia operates
Change in economic policies affect business all over the world. Multinational
companies like nokia get advantage in one countries and at the same time it can
get demerit of the economic policies. Like in Pakistan Govt policies like Govt
monetary policies can affect the business. Govt have added some additional taxed
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like value added tax in communication. Corporate taxation are also imposed. Due to
these type of policies companies cost of production increases and so prices which
can push the customers towards competitors. Custom duties also affect nokia in
Pakistan as it has to import the parts and mobiles as well from home country which
exposed to different duties and taxes which in turn increase the prices or can also
lower the profit of the organization. While discussing developed economies nokia
enjoys the benefit of economic factors like in Dubai and other European countries
people can easily avail its innovative and newly tech mobiles and other products
which help organization for healthy improvement.

1.5 Impact of Monetary and Fiscal Policy

Monetary policies are formed by the Govt to control money supply in the market of
respective country, It can reduce the money supply by increasing interest rates on
deposits and other saving certificates which enhance the saving habits in people
and when Govt think to increase the flow of money in market the n it lower interest
rate due to which people start withdrawing their deposits and people buying power
increases so there is demand creation in market. In Pakistan in few years interest
rates increased. This increase in interest rate reduced money supply but cost of
borrowing also increased due to which it become difficult for nokia to launch its
innovative new products in market. Moreover its also reduced companys profit. But
recently Govt has lower the interest rate from 6.5 percent to 6.00 percent.
Fiscal policy is a part of monetary policy which is designed by state bank. Fiscal
policy has components like Revenue receipts and expenditures. Revenues are
generated nu the direct and indirect tax collection. Whenever there is increase in

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tax rate it cause companies like nokia in terms of lower profit. Moreover whenever
there is budget deficit Govt try to recover the position and again raise taxes.

1.6 Evaluation of change in Monetary & Fiscal Policy in

market where nokia operates
Monetary and fiscal policy are designed by Govt and state bank respectively to
control the money supply. This policy can be in benefit for business or vice versa. If
interest rates will increase, it will lead to higher interest that can be cover by high
price which in turn make product less attractive and hence low sale and low profit or
vice versa. Similarly taxation also affect business. If a company has to pay double
tax means a tax on sale as well as corporate tax then it will lower the profit of
company so to pay that tax and maintaining profit level for shareholders it will be
necessary for company to raise prices so that tax can be paid easily but this will
make product again costly and less attractive or vice cersa.

1.7

Impact of International Factor

For checking the international factors we will conduct here PESTEL Analysis of nokia.
On account of Nokia, it can be delegated worldwide association. It fundamental for
worldwide brand, which is required to concentrate on full scale ecological variables,
for example, Nokia. Large scale ecological components contain Political, Economics,
Society, and Technology, viz, PEST Analysis. It is important power that Nokia needs
to concern and recognize what is occurring in alternate nations right now. Since
there are distinctive society and diverse outer variables between diverse nations,
Nokia needs to modify its key arrangement with a specific end goal to create global
business sector.

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Political
It is vital of an organization to gain assets from government, for example, monetary
approach, and science and innovation strategy. The accomplishment of Nokia has
obtained the assets from Finnish arrangements which help Nokia to propel its items.
The Finnish arrangements are the most imperative components of Nokia. To work
effectively,

an

advanced

learning

and

innovation

based

economy

that

is

exceptionally particular, internationalized and experiencing quick basic change

requires dynamic backing from the general population division. In its broadest sense
mechanical strategy and science and innovation (S&T) approach include every one
of those measures by which people in general division shapes the working
environment for business and along these lines cultivates open welfare. Both
approaches used by Finnish government and Parliament are vital for the
improvement both of the Finnish Economy and of national data society.
Finnish government best encourage the proficient directing so as to work of the
economy its assets to the lessening of business sector disappointments. The state
should likewise pursue a mechanical and financial strategy that gives a stable
macroeconomic environment to endeavors. General macroeconomic security, low
financing costs, stable money conditions and the worldwide aggressiveness of the
duty framework shape the establishment for the development of business a change
in vocation.
As the consequence of this Finnish Government as well as global organizations, for
example, Nokia, have assume imperative parts to add to their data society and
national innovation quality.
Economic
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As indicated by the way that Russian Federation was gave way in mid 1990s and it
struck with Finnish financial aspects (OECD, 1996). Nokia likewise confront with the
issue, and changed its capacities from single business sector and general items to
worldwide market and centering cell telephone market. Nokia experienced
vigorously the European downturn of late years. Monetary turmoil in Europe has
harmed it seriously by restricting purchasing force in its home markets.

Not at all like Apple, has Nokia experienced considerable difficulties into the quickly
developing Chinese market. Nokia likewise does not have the endless monetary
assets accessible to some of its rivals, for example, Google, Apple and Samsung.
Specifically, Nokia appears to do not have the innovative work abilities that have
empowered these organizations to grow new gadgets and tap new markets. One
motivation behind why it does not have those capacities is that Nokia basically does
not have the cash to back broad examination and improvements endeavors like its
rivals do.
Society and Technology
In the 1980s, individuals pattern to microcomputers and Nokia attempt to
coordinate the propensity to deliver its fundamental items, for example, PCs,
screens and TV sets. According to the adjustments in 1990s, Nokia likewise changes
its capacities to cell telephone market. These days, the worldwide business sector
patterns to associate PC and cell telephone, despite the fact that to consolidate
these two items together. The major social element that has harmed Nokia has been
the across the board selection of cell phones and the developing utilization of
applications. A significant number of the most prevalent applications, for example,
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WhatsApp, are intended for more mainstream working frameworks, for example,
Google's Android and Apple's restrictive iOS. Nokia's choice to use the Microsoft
Windows Phone rather than Android restricted its engage numerous clients.
The famous relationship of Apple with cell phones in a few nations, for example, the
United Stateshas cut profoundly into Nokia's business sector by making an era of
clients that just purchase one brand. In later years, Nokia has needed to manage
the mainstream misinterpretations that there are just two brands of cell phone in
the business sector, Apple and Samsung, and just two working frameworks: iOS and
Android. This has kept numerous clients from considering Nokia item.
The innovative difficulties influencing Nokia are at the base of the social variables
restricting its business. The improvement of publicly released working frameworks,
for example, Android and the development of applications profoundly changed the
cell telephone market. Cell telephones were changed from straightforward
specialized gadgets into handheld PCs.
This prompted a circumstance in which clients needed to perform a wide
assortment of undertakings with telephones, including taking photos, watching
gushing video and performing business capacities. The issue was exacerbated by
Nokia's choices to use the less prevalent Windows Phone working framework and to
stay with its own working framework. This constrained clients' decisions and made it
hard to offer Nokia items to more youthful buyers.
Nokia has not possessed the capacity to essentially tap the possibly lucrative
business sector for different sorts of cell phones, for example, tablets and wearable
innovation. This could extraordinarily diminish its focused edge later on.

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Then again, one imperative future test of Nokia is to establish its approach to catch
up the natural strategy and science and innovation arrangement of the Finnish
Government. As report:
Sustainable advancement and natural assurance effectively affect the operation of
the development framework. Advancement likewise makes new open doors for
advancing sustainable improvement. The business sectors for natural items are
required to become quickly sooner rather than later. The Finnish government offers
products offices for taking this open door. National and European changes emerging
from ecological destinations impact the prerequisites from development. [Nokia]
must be utilized to discover arrangement which actualize ecological targets and
additionally the destinations of advancement strategy in an adjusted way.
To total up, the primary reason of Nokia has accomplishment to propel its items are
the arrangements and innovation improvement. It cannot be partitioned between
Nokia's effective of development its item and Finnish Government's strategies, both
of Nokia and Finnish Government are the victor in the global business sector. Nokia
has acquire the accomplishment of cell telephone business sector, and Finnish
Government has built up its position of innovation improvement.
Legal Factors
Nokia's lawful surroundings is amazingly testing in light of the fact that it works
inside of the European Union. That body's controllers have been exploring Google's
utilization of Android for a conceivable antitrust case. EU activity against Google
could prompt radical changes in Nokia's business sector, for example, Android being
spun off into a different organization.

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It is not clear how precisely such activity would influence Nokia, yet it could make a
more level playing field and build Nokia's entrance to the European market. One
conceivable distinct advantage could be that well known Google arrangements, for
example, Gmail could be taken off of Android, which could constrain its prominence.

1.8 Impact of changes in Global and European Business

Environment
In today's opposition inside of the cell telephone industry the key issue is to have a
stage for designers and to include new applications.
This is so in light of the fact that the cellular telephone has separated from
correspondence additionally turn into a gadget for managing an account, gaming,
instruction, music and the rundown goes on.
Apple and Google's versatile stages draw in today designers from everywhere
throughout the world and these engineers constitute a worldwide eco-arrangement
of

business

visionaries and

for development of

new

applications.

Nokia's

administration obviously fizzled for a really long time to comprehend these

amusement changes going ahead inside of the portable business and neglected to
introduce a feeling of desperation for change all through the association. The
administration stuck for a really long time inside of its 'usual range of familiarity' of
outline and predominant portable cameras. Also, it appears that Nokia relinquished
an association with versatile programming engineers and along these lines passed
up a major opportunity for the chances of getting new applications from worldwide
co-creation among business people and advancement eco-frameworks. By chance,
the best application for i-Phone is the diversion 'Irate Birds' produced by a Finnish
organization. (Andersen, 2015)
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A partnership in the middle of Nokia and Microsoft will have the capacity to
consolidate Nokia's worldwide business sector with Microsoft's effective working
framework and biological system that are now utilized as a part of the business and
endeavor. What's more, it was additionally shown that a lion's share of engineers
are beginning to consider Apple to be excessively controlling; by giving cell phones
that are devoted to big business and in addition an all-around diagramed stage,
Nokia will have the capacity to draw in countless. The Nokia Siemens Networks
division should be able to sell more infrastructures around the globe supporting 4G
due to the increasing need for speed and better networks; this will result in stronger
financial results for Nokia (REVUZ, 2014).
Nokia was at one time the biggest cellular telephone producer universally. On the
other hand, the organization moved its center and rebuilt subsequent to auctioning
off its handset business to Microsoft a year ago. Nokia presently has practical
experience in giving remote telecom framework hardware and administrations and
also area administrations over the world through its Nokia Networks and HERE Maps
business divisions, individually. The organization additionally licenses its licenses to
handset makers, acquiring repeating and consistent high-edge incomes through its
Nokia Technologies division.

In 2014, the organization's general incomes were about level year-over-year (y-o-y)
at 12.7 billion ($13.99 billion) inferable from slow Nokia Networks deals which were
balance by solid exhibitions by HERE Maps and Nokia Technologies. Systems is the
biggest business division for Nokia, contributing around 90% of the organization's
deals and around 54% of the organization's quality, as indicated by our appraisals.

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We trust that Nokia Networks picking up offer in the worldwide remote foundation
business sector and the organization enhancing its Networks EBITDA (Earnings
before Interest, Tax, Depreciation, Amortization) edge will be most accretive to
Nokia's worth going ahead. In our present valuation of the organization, we figure
its remote piece of the pie to increment from an expected 18.3% in 2014 to just
about 19% before the end of our gauge period. We additionally gauge its Networks
EBITDA edge to stay level at around 15-16% going ahead.
Be that as it may, if Nokia can't handle expanding rivalry from greater players, for
example, Ericsson and Huawei or on the off chance that it neglects to adjust to
mechanical advances in the remote base space, its piece of the overall industry and
edges are prone to be affected, in this way essentially affecting its valuation. Nokia
additionally

confronts

the

danger

of

diminished

capital

uses

by

versatile

administrators and telecom suppliers, for example, Verizon, AT&T and Sprint by
virtue of worries over gainfulness or because of their reception of new
advancements, for example, programming characterized organizing. In this article,
we talk about how such situations could affect our $8 value estimate for Nokia
(Team, 2015).

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References

Andersen, J. B. (2015). Article Library. Retrieved from Innovation

Management.se.

Economics, T. (2015). Trading Economics. Retrieved from Pakistan:

http://www.tradingeconomics.com/

Hussain, M. I. (2010). Fiscal Discretion and its Impact on Pakistan Economy.

REVUZ, S. (2014). Competitve Intelligence. Slide Share.

Team, T. (2015). Investing. Retrieved from Forbes: http://www.forbes.com/

theglobaleconomy. (2015). The Global Economy. Retrieved from

Pakistan/Inflation.

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