Microsoft Acquires Nokia

Having shed its underperforming handset business, Nokia planned to focus on telecommunications equipment, mapping business, and patent portfolio. Ballmer first approached Nokia CEO Stephen

However that in 2007 the market of Nokia Company started to decrease and the reasons for that is the new competitions like IPhone from Apple that introduced smartphones, along with Android by Google, and Samsung. Even though Nokia Company results for 2012 were pre much good by having 101982 workers across 120 countries along with sales in more than 150 countries, and the reports for revenue were around 30€ billion. Nokia was announced to be the second largest world for mobiles phone makers in terms of unit sales after Samsung, with having world wide market share 18.0%. However that Nokia Company for current days has 3.2% in smartphones and they lost 40% of their revenue in mobile phone in Q2 for 2013. Nokia was listed in fortune global 500 to be world’s 274 largest companies for 2013 from revenue sides. So Nokia Company has good products, services, and reputations. Knowing that their products are good and have nice services, yet comparing to others like Samsung and Apple they are weak because those provide an outstanding products and services which consist of smartphones. So Nokia want instead of providing a good services and products to become like their competition and provide an outstanding products and

An example of how the iceberg has come into play with the Microsoft - Nokia negotiation is that a key challenge of the deal was that Nokia was a huge source of Finnish pride and selling the brand’s best known division would hugely diminish that pride (Moen, 2011). This presented a challenge for Microsoft to overcome because Microsoft is an American company and America is a country that places less value on patriotism than Finland (Thompson, 2014). If Microsoft had undervalued Nokia’s Finnish routes and the importance of Finland to Nokia, then the Nokia board may not have agreed to sell the company to Microsoft. This is one of the reasons why Microsoft agreed to make Finland a research hub for the company and keep a significant portion of Microsoft’s mobile development work in that country. Having a company like Microsoft invest in Finland provided to be a large boon for the country and was one of the considerations of the deal. This deep sense of Finnish pride was also one of the reasons that Microsoft committed to keep using Nokia name even after the merger (Telegraph Reporters, 2016).

In terms of power for each company we should note that both companies have different resource powers that can be used. Microsoft has the money portion of power covered in order to purchase the supplies and resources needed to produce the phones. On the other hand, Nokia has power in regard to human capital who has extensive knowledge on their hardware as well as the critical services, which includes maintenance, repair and technical support.

Nokia was once a global leader in the mobile phone market, reaching an enormous customer base and successfully bestowed barriers for any new players. Unfortunately, Nokia’s market share showed a huge decline in the past couple of years. Hoping to reclaim its leadership position Nokia entered into a partnership with Microsoft, creating a series of smartphones called the Nokia Lumia. However, the company was unable to meet their objective and is still threatened by the rapid loss of market share. Nokia’s threats are not just coming from rivals in the industry but from the company itself. Nokia is having difficulties positioning products, thus the customers are unable to recognize which products suits them better.

The main reason leading to the bankruptcy of Nokia is Symbian software. As smartphones Apple has changed the lives of the technology market, introducing IOS and Android OS, Symbian outdated (Singhal, 2013).

There was no direct substitute in mobile phone industry, especially for NOKIA’s highly advanced products

The Lumia 800 and Lumia 710 were the first Nokia Windows Phone announced in October, 2011. The big step was taken to compete with android and iOS which have already occupied a large share of market share once owned by Nokia.

Nokia failed to seize and transform the opportunity to dominate the smartphone era due to top management team homogeneity which led to identity trap and made them unable to adapt to changing environment from the period of 2006 to 2013 and was sold off to Microsoft by 2014.

From Nokia’s vision and mission statement it can be inferred that Nokia wants to be known for its credibility and to be a market leader again as it was before the year 2007 (Kess, 2014). Nokia understands that the company has to use innovation to offer products that are not yet

Microsoft is the most established software giant and Nokia is the company that is the icon for electronic and communication equipments. Microsoft had a partnership with the computer manufacturer IBM that made the software of Microsoft from DOS to modern Windows 8 famous and most used. The same underlying principle of symbiosis has been used inn this alliance. There are many reasons why Microsoft had to enter the cell phone industry. Arch Rival Apple came out with the iPhone and revolutionized the mobile world. Though the gadget was not a direct competitor, Microsoft was out of a huge potential market, namely the mobile segment.

As illustrated, failing to capitalize on the growing demand for smartphones, Nokia’s smartphone market share has been on a steady decline for the past 4 years in the smartphone-hungry North American market (Strategy Analytics, 2012).

Stephen Elop said Nokia is surrounded by a 'fire of competition ', according to a company memo:

Nokia’s current CEO Steven Elop admitted that Nokia was not able to respond fast enough to the changing market and that had resulted in significant decline in its market share. The technology moves very quickly and it is difficult to predict market trends.

Nokia must self-questioning to know what is it place in the mobile phone market. Indeed, Nokia should actualise its knowledge in mobile market to be able to be a serious competitor. The company has to use application its strategy about innovating and become a leader of the market. This can pass also in the use of its capable workfore which is on of its assets too. Nokia has to applicate its key success factor in term of innovate activities especially but also in using the capacity of its workforce.