Business External and Micro Economic Environment

MAIN BODY

Internal Audit

Organizational Overview:

Nokia is one of the Finnish multinational telecommunication, consumer electronics as well as information technology companies that was founded by Eduard Polón, FredrikIdestam along with Leo Mechelin in the year 1865. the headquarters of the entity islocated at Espoo, Finland (Nokia, 2019). Nokia contributes greatly to the mobile telephone industry and is considered as largest worldwide vendor of smartphones as well as mobile phones. It continues its operations as a major patent licensor in the context of various mobile phone vendors. The company accounts for exporting 21% of mobile handsets and devices to other countries.

Internal Environment

It is also known as a micro environment whichh is composition of various elements that reside within the boundaries of the entity which can affect as well as can be affected through activities, choices along win decisions of management. The elements within the internal environment are work processes, management practices, corporate culture, stakeholders, internal resources, manpower, and business policies. All these elements directly or indirectlyimpact the working of the company. At the same time, organizational authorities have full control over all these factors. Institutions that do not consider elements of the internal environment while structuring strategies or plans endup with drastic circumstances. In the context of Nokia, internal environment elements are employees, suppliers, media, distribution channels, customers,, and resources.

Needs to Audit Internal Business Environment

Auditinthe g the internal business environment is very important for all companies as it helps in monitoring as well as assuring that all the assets havee been secured as well as safeguarded properly against threats (Boasson and Wettestad, 2016). In addition, auditing helps in verifying that all the processes reflect documented procedures with policies promptly. In the context of Nokia, internal auditing is needed to gain objective insights, identify strengths along with opportunities so that they can overcome pertaining threats and weaknesses, evaluate risks, assessng controls,, and ensure compliance with all the governed legislative regulations.

Tools for Auditing Internal Business Environment

To audit the internal business environment, various tools are provided by different practitioners. The more analysis as well as measurement tools used in incorporating audits, the more it helps in learning to make all organizational activities more successful. The internal environment of Nokia can be audited through SWOT Analysis.

SWOT Analysis

This type of analysis is a strategic tool thatevaluates the strengths, opportunities, threatss and weaknesses for assessing business along with developing plans to move forward. This concept plays an essential role in conducting effective auditing and developing awareness for factors that are residing internally. For Nokia SWOT Analysis is below:

External Audit

External Environment

It is also named as macro environment which is a composition of numerous factors that resides outside organizational reach but have huge impacts on the workings and operations of the company. It composes all outside factors which directly impact thee company and its operations to a great extent. By considering the external environment, owners of the company make suitable adjustment decisions for their policies and plans to make them adaptable to the influencing environment (Dopfer and Potts, 2015). In relevance to Nokia, elements within the external environment are legislation current economic situations, technological advancements, political systems, environmental frameworks a,,nd social demands.

Needs to Audit External Business Environment

Auditing the external environment of business is needed for observing, studying as well andd assessing factors of risks and controlling them at an accurate duration. In relevanctoth Nokia, external environment auditing is needed to understand dynamics within political systems, consumer perceptions, legislative governance, technological advancements, economic activities,, and environmental aspects. By auditing the external environment, managers of business gaingain credibilityyproves their internal systems as well andd control various errors soas as  to achieve goals successfully.

Tools for Auditing External Business Environment

For auditing external environment of company, professionals have devised certain frameworks or tools. Some of the strategic auditing tools are PESTLE analysis and Porters Five Force analyse that helps businessmen to properly analyse external factors and make decisions fro future in prompt manner. The managers of Nokia uses Porters five force and PESTLE analysis for auditing its external environment.

PESTLE Analysis

It is one of the strategic toolss that provides an understanding of market changes, the direction of operation, anthe the d scanning environment (Hillary, 2017). With this tool, the marketers of Noanalyseses and monitor all external thexternal e factors presenting externally which impact the business at a huge level. It includes six dimensions which providedetailed information about each factor. PESTLE Analysis of Nokia is as follows:

Political:

Factors concerned with the ways gothe vernment intervenes in business are political factors. It includes tariffs, political stability, taxation policies,and environmental legislation The political environment of Finland is good,, and political systems take less involvement in any international political disputes. The political system of such a country makes effective relations with other nations and invitesthem to make ininvestments mobile industry that impacts positively Nokia as the company can enjoy growth by pertaining industry. At the same time, political regulations associated with manufacturing, imports, and exports as well as trade barriare need to be fulfilled for setting up industrialized plantss through overseas entities that impact negatively on Nokia's practices and strategies for business expansion in distinct nations. Various new political domains that reside this contemporary world also impact directlyy or indirectly on the company in a distinct manner.

Economical:

The dimensions concerned witthe h the economy of a country are said to be economic factors. It covers dimensions like economic growth, business cycle changes, and interest rates in addition to exchange rates (Huggins, 2018). All these factors affect thee ways business operates within the economy and makes decisions. In context to Finland, ihas   a highly industrialized as well as free market economy. While operating activities in different nations, Nokia analyses the economic factors such as taxes, interest rates, demand, and buying power of the population that is targetted so that it can control production and improveits venture position that impact positively on its productivity as it manufacturers mobile phones after considering all the economic factors. The company has suffered a downfall of product values with increased turmoil within Europe due to which has great ramifications thatimpacted negatively on its operations.

Social:

It involves cultural aspects, population growth rate, safety emphasis, age distribution, health consciousness,and career attitudes. The preferences of the f the population of Finland change with the trends. Nokia bputsits best efforts into operating activities with pertaining trends to satisfy the emerging preferences about cellular products and devices that impactpositively on its sales volume and brand image in the market. On contrary, some companies are providing new facilities such as software applications in their mobile phones that shift customers'' preferences to other cellular companies which impacts negatively on Nokia. To gain a customer base, the company has to make various changes within its norms along with setting new benchmarks so that thitan achieve recognition from the population.

Technological:

Factors part of technological aspects include technological incentives, technological changing rates,, and automation (Na, 2016). Finland has an advanced technological environment in which new technologies are welcomed and more investmentss are made to develop the existing technologies within the mobile industry. Nokia manufactures mobile phones that have the highest innovation level and focuses more on adopting new state-of-the-art technologies toattract huge customers across the world thwhichmpacts positively on its workings. At the same time, the latest technological advancement trends as well as bringing technological revolution needs more investment which results in decreasing profit reserves of the company.

Legal:

Dimensions of legal frameworks like employment law, discrimination act, electronic transaction act,, and intellectual property acts are legal factors (Tarp, 2017). The political authorities of Finland have governed various laws in a mobile sector that are mandatory to be followed by all companies sotoccomplish operations. Nokia while performing manufacturing, distribution, and selling its products protecprotectsights by implementing laws related to ttrademarkspatent,s, and copyright so that its designs and innovations are not taken by competitors that iimpactpositively on the company. At the same time, while setting up manufacturing plants in distinct nations, Nokia abides by all set regulations by different political systems.

Environmental:

Aspects of ecological addition to standards are part of environmental factors. A country like Finland believes in facilitating nature conservation and for this the political parties of such country haa a ve banned various commodities that are used while manufacturing mobile and smartphones For instance, resources like brominated flame retardants, calcium as well as lead that releases toxins and pollute environment are banned in Finland. As Nokia manufactures mobile phones and other devices restricting utilisation of the banned resources impacts in a positive manner on its image. Through this, it provides ecological products that helpin gaining recognition from political authorities of distinct nations through it gains subsidies also to install manufacturing plants adin dition to promoting business internationally.

Porters Five Force Tool

The strategic tool is primarily used for identification addition to analysis of forces that play ka ey role in shaping all the companies and industry (Nowakowska-Grunt and Brzozowska, 2016). By using the tool, companies understand the strength of existing positioning as well as the strength of future strategy. It assists managers in looking towardd strengths of the five forcesthaaffectsss competition. At Nokia, Porter's five force tool is used for auditing the industry structure to determine corporate strategies. Porter's five forces in context to Nokia aree audited underneath:

New Entrant Threat:

Within the mobile industry, the threat of new entrants is quite high due to ample reasons. One of the reasons is that the technology required for producing the latest mobile phone generation is very advancedthat creates hurdles for new entrants to differentiate them. The other reason is to enter the mobile industry, a company has to spend money on research, development, marketing,  nd technology to become an established player. As Nokia is among the established entities that have captured major market shares it makeit it difficultes for the new entrants to grab the attention of existing customers. In the present era, this threat is quite high for Nokia as the market is developing and companies gain financial resources from various available sources that increases the threat for the entity.

Bargaining Power of Suppliers:

The whole mobile industry relies on suppliers to get raw materials in terms of hardware and software (Orford, 2017). Huge suppliers are present in such an industry that willingly supply the required parts and components to manufacture a smartphone In context to Nokia, it makes relationships with multiple typess of suppliero to get products at low rates. In case, when one supplier enhances their pricing structure then the company shifts to other suppliers to get the desired resources. The company holds significant shares within the mobile industry which makes it more attractive for suppliers. Due to this, no hardware suppliers bargain with Nokis to maintain the relationship with such purchasers. For software requirements, the company has made an alliance with Microsoft that puts bargaining power at the end. Hence, the bargaining power of suppliers for Nokia is moderate and it helps in grabbing resources at low prices.

Bargaining Power of Buyer:

Growth and development in the mobile industry arequite extensive and provides buyers with wide choices. Within such an industry, there are wide choices available to buyers that providethem more powers. ThVarious entities offersimilar products as Nokia offers in the market whichh depicts that the bargaining power with buyers is high as customers seeks best valuables for the money they pay. The company do not provide its mobiles directly to the customers as it relies on intermediaries, carrier stores along with electronic shops that also offers wide options to customers as per their interest that makes difficulty for selected company to influence its sales (Rabellotti, 2016).

Threat of Substitute:

Smartphones and mobiles are everyday essentials in present era that customers find hard to replace with other substitute as they needs mobiles to constantly contact with their family and others while away from homes. The only substitute available in place of mobile phones of Nokia are home telephones which cannot be carried by consumers at all places. Hence, threat of substitution is very low for mobile phones of Nokia.

Competitive Rivalry:

The competition level is extremely high in mobile industry as huge players are present that have invested heavily to retain market shares. Nokia has kept slow move within smart phone market due to which it is expected that its shares will fall. Key players in this industry are Apple, HTC, Motorola and many more. Existence of all these players creates competition for Nokia. Although, no such differences are found in mobile phones and devices that are manufactured by all the companies, yet differences are made in context to applications addition to services offers (Rodríguez-Gutiérrez, Moreno and Tejada, 2015). Nokia competes with all the players and always work for innovations an uniqueness among the mobile phones.

How They Can Gain Insights Into Micro Economic Environment

Micro Economic environment includes factors like distribution chains, market size, demand, competitors and suppliers associated in specific industry. Nokia works in consumer electronic industry that is also known as mobile industry or telecommunication industry that generates turnover of 3.5 billion euros.

For gaining insights for micro economic industry, Administrative of Nokia can use various research methods, observational tools addition to survey techniques. In addition, they can also use statistics, journals together with magazines that include relevant information concerned with micro economic industry of pertaining sector (Storey 2016). Other than this, various private universities or institutions conducts primary research so to analyse information for business strategies, suppliers activities, demand-supply of mobile phones and market preferences can also help Nokia to gain insights for micro economic en

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