Nokia Vs

Microsoft Deal
Case analysis on Negotiation
1. Pradeepa Dhanushka Eswaran
2. T. P.D.S.Gunasekera
3. Mohamed Nazlan Shamil Jaleel
4. Kavindra Dasaanayaka
5. M.M.G.A.Pathiranalage
6. S.T. Yohan Romesh
Case
Introduction
• This acquisition is a strategic move from
both Microsoft and Nokia in the year 2013
• This Deal came through at a later stage
when all markets were captured by Google’s
Android and Samsung
• It was Microsoft’s intention to capture the
smart phone segment in the market, in
order to establish Windows as a leading
brand
• The acquisition by Microsoft is to take over
all Nokia owned mobile devices and services
including business units to become the
mobile industry’s leading design team

Pradeepa
About Nokia
• Nokia’s history started in 1865 when mining engineer Fredrik
Idestam established a groundwood pulp mill on the banks of the
Tammerkoski rapids in the town of Tampere, in southwestern
Finland in the Russian Empire and started manufacturing paper.

• Nokia is a Finnish multinational corporation founded on the 12

May.

• In 2014, Nokia's mobile phone business was sold to Micosoft.

 Rumblings about a Microsoft-Nokia acquisition have been around for
months.Microsoft made the news a reality Tuesday and announced a $7.2 billion deal for
the company's devices division. Talks between the two companies started as far back as
February, but took off in earnest in July.

Microsoft It was going to be the deal that would secure Microsoft’s rightful place as a mobile
superpower. This time five years ago, Microsoftbought Nokia’s mobile business (and a

Merge Nokia meaty patent portfolio to boot) for a cool $7.6 billion. A steal, when you consider the
Finnish icon once controlled 41 percent of the global handset market.

incident Just two years later, Microsoft declared that it had written off the deal, laying off nearly
8,000 jobs in the process.

Where did it all go wrong? Well, you could argue that the the venture was doomed from
the beginning. By that point, the tide had well and truly turned against Windows Mobile.
Microsoft had hemorrhaged apps and manufacturers prepared to build devices running its
software.

Microsoft thought that its deep pockets, paired with Nokia’s near universal brand
recognition, could withstand the forces of Appleand Google. It hoped it could carve a self-
sustaining niche in the highly competitive smartphone world. It was sorely mistaken.
 An American multinational technology Company , Found
April 4, 1975

It develops, manufactures, licenses, supports and sells

computer software, consumer electronics, personal

About computers, and services

Microsoft best known for Microsoft Windows OS

Founders- Bill Gates & Paul Allen

Revenue US$89.95 billion in 2017
Economical Facts Operating income US$22.27 billion in
2017
Net income US$21.20 billion
 Lack of uptake momentum of the new Windows Phone -the sales of tablet and
smartphone devices had exceeded global PC sales and need to change the model

Rapid decline of Nokia device market share - Needed real innovations into large-
scale profitable products.

Reasons for
Collaboration fulfils each other’s core business needs

acquisition of to build a new global mobile ecosystem for smartphones through the Windows
Phone

Nokia The Low End Theory- attracting first-time smartphone users.

Halo effect - judge an individual based on our overall impression rather than
specific actions.

targeting 'the next billion'; developing the Windows ecosystem - make Microsoft's
acquisition of Nokia more than a 'smart move
Pre Acquisition
 Strength
Win - Win situation for both
companies
Strong platform to Microsoft
Microsoft can enjoy leading in
smart phone market
Able to better integrate its
Software and Hardware
Making handsome money
Post Acquisition of DEAL
Weakness
Deal is too late as Google’s Android OS
already captured the market
Companies came with (Samsung)
better option targeting young
population and user friendly
No advanced Apps developers
many of Windows phone Bluetooth
option was not their E.g Nokia Lumia
Opportunity Threats
Opportunity to become Losing their market share
second largest market to Market Leader
leader in OS & Smart Samsung
phones
Different competitor
Develop new app and comes with user friendly
attract more in Indian Apps Micromax,
Market (Largest market Samsung, Apple
Own by Nokia 27%)
Price sensitive market as
better services with
lower prices
 Deal - Iceberg theory
• Dr. Chester L. Karrass, in his writing states
that one will get what they negotiate
and not what is deserved.
• The iceberg emphasise on the needs and
motivators of the negotiation
counterpart.
• Although certain needs are directly
expressed a majority of the intentions
are unspoken such as;
• to be identified as competent.
Ex: Microsoft - Universal Windows
Platform
Nokia – Original Equipment
Manufacturer
• to maintain the jobs security
Ex: Microsoft acquiring most of Nokia’s
assets in Finland including
production arm with 24,000
employees.
• To minimize risks of losing the market share
• To maintain relationship
• Ex: Cultural barrier between American and Finnish.
 Game Theory
Minimax - to minimize the maximum
loss(defensive)
or
Maximum - to maximize the minimum
gain(offensive)

• Nokia adopting the maximin strategy;

• Changing to Windows from ‘Symbian’ plat form
• Creating new synergies that can improve the market share
• Secure Nokia’s financial position.

• Microsoft from the perspective of minimax

strategy;
• $ 7.2 billion for the acquisition of Nokia was a great bargain
• Mr. Stephen Elop formerly operating Microsoft’s business
division
REASONS
FOR MERGE
FAILURE OF • Operating system And Apps
MICROSOFT • Domination Blindness
& NOKIA • Poor Leadership
• Delay in giving up Symbian
REASONS FOR MERGE FAILURE
OF MICROSOFT & NOKIA

• Stiff Project Management

• Nokia failed in the race with Samsung
• Hurt on the lower end and also by local
vendors

More Over,

• Loosing Talents
• Staff Demotivation
• Reduce Productivity
Best Recommendations on scenario for
negotiation

SUFFICIENT LEVEL OF DIFFERENT LEVEL OF ASYMMETRIC CONSIDERING EMPLOYEE ANALYZE ,UNDERSTAND

MUTUAL TRUST, MANAGEMENT BARGAINING POWER MORALE, RE STAFFING AND EXECUTION THE
COMMITMENT AND AND SHAREHOLDER PLAN OF
TRUST OF BOTH COLLABORATION,
COMPANIES MANAGEMENT CHANGE
& RESOURCES
ASSESSMENT

COULD GET MANLY FOCUS ON CORE UNDERSTANDING THE

CONSULTATION FROM BUSINESS INSTEAD OF CULTURE OF BOTH
PREVIOUS SUCCEED “LET IT GO” CONCEPT COMPANIES
MERGERS
Best Recommendations on scenario for
negotiation

Considering best practices when implementing Retain the CEO of acquiring and acquired entity
new process or change to the business at least for some time period
Learnings

NEGOTIATION SHOULD BE CORE BUSINESS AREA MUST BE USE OF BATANAS IN THE FOCUS ON ENVIRONMENTAL
STRATEGICALLY PLANNED FOCUSED WHEN THE NEGATION NEGOTIATIONS FACTORS
TOWARDS BENEFITS OF BOTH TAKE PLACE BY ANALYZING
COMPANIES MARKET
 References
PON Staff, 2019. Harvard Law School. [Online]
Available at: https://www.pon.harvard.edu/daily/international-negotiation-daily/top-10-international-negotiations-of-2013-the-
microsoft-nokia-deal/
[Accessed 16 06 2019].
ZDNet Editors, 2016. ZDNet. [Online]
Available at: https://www.zdnet.com/article/worst-tech-mergers-and-acquisitions-nokia-and-microsoft-aol-and-time-warner/
[Accessed 22 06 2019].
Bizshifts-trends, 2016. Bizshifts-trends. [Online]
Available at: https://bizshifts-trends.com/iceberg-theory-of-negotiation-negotiate-like-a-master-clock-maker-with-patience-and-
skill-never-gloat/
[Accessed 15 06 2019].
Karrass, 2009. Karrass. [Online]
Available at: https://www.karrass.com/en/blog/iceberg-concept-of-negotiating/
[Accessed 21 06 2019].
Mark Young, J. R. J. R., 2014. Ivey business journal. [Online]
Available at: https://iveybusinessjournal.com/publication/playing-with-icebergs-negotiating-improvisationally/
[Accessed 16 06 2019].
Nerney, C., 2011. PC World. [Online]
Available at: https://www.pcworld.com/article/220186/microsoft_nokia_deal_behind_the_scenes.html
[Accessed 17 06 2019].
Pattak, D. C., 2016. An investigation into Nokia- Microsoft Strategic Alliance: Joining forces in the global Smartphone Industry.
International Journal of Scientific & Engineering Research, 07(08), pp. 780-786.
Thank you..