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Case Study for Nokia-Microsoft Merger...

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MKTG 755 – Case Study – MICROSOFT & NOKIA DEAL In your view what type of negotiation occurred between Nokia and Microsoft? Would it have been Distributive or Intergrative? Why? Initially in 2011, when entering the arena for negotiation, Nokia had the price of the deal and it’s HERE platform firmly in hand ready to maximize on both while Microsoft was looking to establish itself in the handset industry and already had Samsung, HTC and Huawei as potential BATNAs, implying it was looking for the perfect fit to grow its Windows eco-system. For me, company wise, Nokia adopted a distributive approach and Microsoft an integrative one. As a whole it was supposed to be an integrative negotiation. Based on the fact that each firm’s resources meeting the other’s needs led to believe so, but time showed otherwise. The fact that the negotiation took years and when we see the collateral damage of the deal on the long run for both companies in terms of employment loss, market share amongst other barometers for that segment does lead to say it was more of a distributive negotiation as a whole.

How would Nokia’s position in the mobile phone industry have affected its negotiation strategy? As early as 2007 with the introduction of IPhone and later devices from Samsung and Google amongst others, Nokia market share has been on the decline. When negotiations started in 2011, Nokia had 15% market share in the industry, that may seem a lot but coming from as high as 40% market share once, 15 is an alarming percentage. The negotiation was the result of the failure of the Symbian platform which Nokia developed. When the negotiation was concluded and an agreement reached, Nokia’s market share was 3%. Adopting only one negotiation strategy when market share is decreasing and uncertain is likely to be insane. In my view, Nokia’s decreasing sales over the years have negatively affected the negotiation strategy, also being the market leader in the phone industry during 2000s did play against them in the negotiation strategy since Nokia was seen as an innovative and visionary. The market value of the company dropped by 5 times if they came to an agreement in 2011 itself the value of the deal would have been way more. Easier said than done considering Nokia was equivalent to a national symbol in Finland at that time. However positioning itself as the best hardware for handset did contribute in its negotiation strategy.

KISSOON Doorvesh - 301091172 Marketing – Corporate Account Management E: [email protected]

As both companies originated from different cultures, how would that have impacted their tactics and goals?

Americans being stereotypically confident and outgoing while Finns are considerably more reserved, both the short term and long term objectives of the venture had to take into account the difference in working style of both organizations. Merging cultures following an acquisition often proves to be difficult if not impossible as time has shown. Things would have been different if from the start Nokia adopted a more integrative mindset to its tactics and goals. By using a less complex tactic and disclosing more information at the initial phase of negotiation, with common integrative goals for both companies, Nokia would have had a different standing.

What lessons would each company have drawn from the negotiation?

Although Nokia managed to sell a division of its business that was becoming increasingly challenging to generate profits, it still did it at a loss! For, if it has acted earlier the results would have been better. Another lesson would be, it could have continued investment in the Symbian OS and in the long run maybe it would have paid off. This negotiation confirms the hardship of working cultural barriers when running a business from another part of the world. Microsoft, despite having the choice, moved forward with Nokia which later turned to be a sour choice. Writing off USD 7.2B for the Nokia deal less than 2 years after signature. Microsoft was the major loser in the transaction wiser investment strategies combined with better market knowledge combine with a fast action oriented team for the fast changing hand device industry is the major lesson for Microsoft.

KISSOON Doorvesh - 301091172 Marketing – Corporate Account Management E: [email protected]

Reference; -

The Strategic Decisions That Caused Nokia’s Failure https://knowledge.insead.edu/strategy/the-strategic-decisions-that-caused-nokias-failure-7766

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Microsoft-Nokia deal: Analyst reaction - https://www.bbc.com/news/business-23945652

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Behind Microsoft Deal, the Specter of a Nokia Android Phone https://bits.blogs.nytimes.com/2013/09/13/behind-microsoft-deal-the-specter-of-a-nokiaandroid-phone/?_r=2

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Microsoft-Nokia culture clash will be tough to overcome http://theconversation.com/microsoft-nokia-culture-clash-will-be-tough-to-overcome-17798

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Nokia had to weed out a culture of fear to embrace a future without smartphones https://phys.org/news/2018-05-nokia-weed-culture-embrace-future.html

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Global market share held by Nokia smartphones Q1 2007-Q2 2013 https://www.statista.com/statistics/263438/market-share-held-by-nokia-smartphones-since2007/

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Microsoft and Nokia: A marriage of necessity https://money.cnn.com/2013/09/03/technology/mobile/microsoft-nokiasmartphones/index.html

KISSOON Doorvesh - 301091172 Marketing – Corporate Account Management E: [email protected]...