Microsoft-Nokia Deal

Prepared By: Group-C10

12022 Akash T. K 12050 Sriraksha S. 12096 Rajyaguru Omkar 12121 Abhishek Agarwalla 12166 Pappu Yadav

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 mobility and more. By 1998 Nokia became the worlds biggest mobile manufacturer In 2005 Nokia reached the landmark of selling over one billion phone In 2010 Smart phone competition hit the giant In 2013 Microsoft acquired Nokia phone business

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, 2013 Microsoft acquires Nokia for $7.2 billion

Microsofts need to acquire Nokia

Nokia had plans of using the android operating system for its Lumia In order for the windows phone to see its survival in market, Microsoft had to ensure Nokias survival

Transaction cost
Eliminating duplication Logistics, Manufacturing and Supply Chain Talent acquisition

Pre-Negotiation
Current 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 185 million Android smartphones Increasing the sales of Windows smartphone from the efficiencies that should flow from the integration of hardware and software

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 complete reliance 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 the possibility selling all, or part, or itself to other interested parties

Negotiation Style

Collaborative as the deal will create a win-win situation for both buyer and seller and is beneficial for 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 phone business at Microsoft
Around 32,000 employees would transfer to Microsoft, a new data centre servicing Microsoft consumers would be built in Finland, with an investment of $250m over the next few years

Key reason behind the deal: Nokia developing Android smartphones Why Nokia as a best choice?
Penetrating from software to hardware Acquiring non smartphones unit Synergies

Nokia will continue to be a company

Government Policies

ZOPA

ZOPA
It is known that Microsoft will make available to Nokia about 1.5 billion ($1.97bn) in financing in the form of three payments of 500 million ($659m) from overseas resources. Nokia shareholders are expected to vote on the deal in an extraordinary general meeting on November 19 this year. Any further information from the Nokia side can be known after that only. Thus ZOPA can be known after further information is declared

BATNA

BATNA is seen as a safety net for the Microsoft in case of the deal with Nokia fails, we need to look at what are the best alternatives available for the Microsoft considering the current situation. According to Bloomberg, Microsofts operating systems unit head Terry Myerson approached HTC about using the Windows Phone OS as an alternative option on handsets that traditionally use Google's Android.

BATNA
In this case we can see may be HTC altogether a new company in target for Micro Very hard to know the true BATNA for the company as the parameter of the company to choose the company to buy or acquire requires consideration of lots of parameters. But this is highly unlikely.