microsoft-nokia deal (1)
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Microsoft-Nokia Deal
Prepared By: Group-C10
12022 Akash T. K
12050 Sriraksha S.
12096 Rajyaguru Omkar
12121Abhishek Agarwalla12166 Pappu Yadav
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NOKIA
Founded by Frederick K Idestams in 1865 Mobile devices with services and software
Enable people to experience music, navigation,video, television, imaging, games, business mobilityand more.
By 1998 Nokia became the worlds biggest mobilemanufacturer
In 2005 Nokia reached the landmark of selling overone billion phone
In 2010 Smart phone competition hit the giant In 2013 Microsoft acquired Nokia phone business
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MICROSOFT
Founded by Bill Gates and Paul
Allen in Albuquerque in 1975
Develops, manufactures, licenses, and
supports a wide range of software products
for computing devices
Recent Activity
On May 10, 2011, It acquired Skype
Communications, for US $8.5 billion
Sept 3, 2013Microsoft acquires Nokia for
$7.2 billion
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Microsofts need to acquire Nokia
Nokia had plans of using the android operatingsystem for its Lumia
In order for the windows phone to see its survival inmarket, Microsoft had to ensure Nokias survival
Transaction cost
Eliminating duplication
Logistics, Manufacturing and Supply Chain
Talent acquisition
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Pre-NegotiationCurrent Resources
Nokia Largest distribution network
Strong brand image
Good R&D skills
Diversified business units.
Microsoft Financial strength
huge customer database from its diversified product portfolio
Goal
Both the companies share the common goal of increasing the
sales of their products and market share In the second quarter of 2013, Nokia shipped just 7.4 million
Windows Phones compared with 31.2 million iPhones and 185million Android smartphones
Increasing the sales of Windows smartphone from theefficiencies that should flow from the integration of hardware
and software
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Interest and needs
Microsoft Faster innovation
Increased synergies Unified branding and marketing.
Nokia Accretive earnings
Strengthening its financial position
A solid basis for future investment in its continuing businesses.
Alternatives
Microsoft has few alternatives given its almost completereliance on Nokia for Windows Phone devices. Other
possibilities for Microsoft could be:- Developing their own hardware devices. Approaching other hardware makers to sell windows platform
devices
Nokia can also explore other possibilities, including thepossibility selling all, or part, or itself to other interested
parties
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Negotiation Style
Collaborative as the deal will create a win-winsituation for both buyer and seller and is beneficialfor both the parties
Market share and profitability is expected to boost
up for both the companies Stephen Elop, Nokias chief executive, will step
down to become head of the mobile phonebusiness at Microsoft
Around 32,000 employees would transfer toMicrosoft, a new data centre servicing Microsoftconsumers would be built in Finland, with aninvestment of $250m over the next few years
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Key reason behind the deal: Nokiadeveloping Android smartphones
Why Nokia as a best choice?
Penetrating from software to hardware
Acquiring nonsmartphones unit
Synergies
Nokia will continue to be a company
Government Policies
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ZOPA
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ZOPA
It is known that Microsoft will makeavailable to Nokia about1.5 billion($1.97bn) in financing in the form ofthree payments of500 million ($659m)
from overseas resources. Nokia shareholders are expected to vote
on the deal in an extraordinary generalmeeting on November 19 this year.
Any further information from the Nokiaside can be known after that only. ThusZOPA can be known after furtherinformation is declared
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BATNA
BATNA is seen as a safety net for theMicrosoft in case of the deal with Nokiafails, we need to look at what are thebest alternatives available for the
Microsoft considering the currentsituation.
According to Bloomberg, Microsofts
operating systems unit head TerryMyerson approached HTC about usingthe Windows Phone OS as an alternativeoption on handsets that traditionally use
Google's Android.
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BATNA
In this case we can see may be HTCaltogether a new company in target forMicro
Very hard to know the true BATNA forthe company as the parameter of thecompany to choose the company to
buy or acquire requires considerationof lots of parameters. But this is highlyunlikely.