Merger, Acquisition, and International Strategies - Case Study Example

Introduction: This paper is an analysis of one company that has a history of Merger and acquisition, and another company that does not have an history of merger and acquisitions. The companies under consideration are Microsoft, and InteliCloud. These two companies belong to the mobile devices and computer industry. Microsoft is a manufacturer of computer packages and softwares; InteliCloud is also a manufacturer of computer softwares. Microsoft/Nokia Merger: The corporations that have been involved in a merger and acquisition are Microsoft and Nokia. Nokia is a company from Finland and it is involved in the production and sale of mobile gadgets. Currently, Nokia focuses on developing telecommunications infrastructures on a large scale, provision of online mapping services, and the development of mobile communication technologies (Slater, 2004). Nokia also played a great role in contributing to the development of the mobile phone industry in the early years of 2000 (Park, 2014). The company played a role in developing GSM standards, and for a considerable period of time, Nokia was one of the largest producers and sellers of mobile phone products, in the world. Nokia also entered the Smartphone industry, and this is through its platform referred to as Symbian. However, the dominance of this company, in the Smartphone industry was challenged by the emergence of Apples. This is through the production of its Android devices, and its iPhones. Furthermore, because of stiff competition from companies such as Samsung, Alcatel, etc, the market share of Nokia was beginning to fall, and it experienced a series of losses (Park, 2014). Microsoft on the other had is an American company, that specializes in the development of computer software. The headquarters of Nokia is in Redmond, the state of Washington. The company is able to develop, manufacture and sale personal computer gadgets, consumer electronics, and computer software (Slater, 2004). However, because of stiff competition from Apples, the company has also experienced a reduction in its market shares. Because of this stiff competition emanating from Apples, Nokia sought a strategic partner, who could help it, in the development of electronic and computer gadgets, that could help it achieve a competitive advantage over Apples and other companies such as Samsung. In the year 2011, Microsoft was able to enter into a pact with Nokia. Park (2014) explains that the method which Microsoft used in entering into a partnership with Nokia was through an acquisition. In 2013, the chief executive of Microsoft was able to announce that Microsoft had acquired the mobile phone business of Nokia. This was at a tune of 7.17 billion dollars. In this deal, the former employees of Nokia were to be integrated into the new subsidiary that was developed and acquired by Microsoft. This included Stephen Elop, the CEO of Nokia. There are a variety of reasons which emerge, seeking to explain the reason Nokia and Microsoft choose to enter into the partnership (Park, 2014). One of the major reasons is that their markets were under threat, because of the dominance of Apples, through its Android technology. Based on these facts, the two companies wanted to take advantage of the technological knowhow of each other, in order to come up with innovative products. Nokia had a desire of using the Windows phone technology, on its Smartphones, while Microsoft had the desire of using the Android technology that was developed and used by Nokia (Park, 2014). Furthermore, during the negations for the merger, the two companies were to retain their names. This is because the two companies had worked for a long period of time, to build their brand names, hence changing it, would negatively affect their business operations. It is important to understand that during the negotiations for the acquisition of Nokia, Microsoft was the dominant company. On the other hand, Nokia was experiencing losses (Park, 2014). To safeguard itself from being negatively affected, Microsoft was able to ensure that this merger will not have any impact on its Ms Office packages, Windows, Servers, and X-Box. These are the most profitable products issued by Microsoft, and their operations would go in, despite the merger. It is therefore important to denote that this was a good and a wise strategy by Microsoft (Park, 2014). By taking advantage of the Android technology by Nokia, Microsoft could get the ability of coming up with innovative products. The Business Level and Corporate Level Strategy: The business level strategy of Microsoft focuses on promotion of innovation, with the intention of satisfying the needs of its customers or target market. The strategies developed by the company whose aim is to achieve this objective is by working with highly motivated women, minority groups, business organizations operated by veterans, and people with disability. Furthermore, the company also seeks to work with small business organizations that normally purchase their products (Park, 2014). This is for purposes of finding the various needs of its customers, and coming up with innovative methods of satisfying those needs. Furthermore, Microsoft business level strategy is to develop technological innovations that are easier to use, hence serving all categories of people. Innovative products such as Windows 8 and XBOX are examples of new innovations developed by Microsoft. On the other hand, the corporate level strategy of Microsoft is based on division of labor. Microsoft is organized into various departments, and employs people into these departments, based on their capabilities and skills. Furthermore, each division focuses on the provision of a specific task or service (Price, 2004). The major divisions within the company are sales, research and development, and customer care service. The sales department is responsible for coming up with strategies aimed at ensuring that the products of the company are sold. This includes developing an advertisement and marketing campaigns, and identification of the needs of customers. The research and development department has the responsibility of carrying out research, and coming up with new and innovative products. The customer care service is developed for purposes of interacting with the customer, and identifying their needs (Price, 2004). Another important corporate level strategy is global expansion and investments. Microsoft believes in expanding its business operations in new markets, and it aims at achieving this objective through acquisitions, and new investments. Microsoft also believes in engaging on corporate social responsibility programs, aimed at promoting its brand name. This includes giving out scholarships, protecting and conserving the environment, etc. Recommendations for Improvement: In as much as the encouragement of diversity is an important method of promoting innovation, Microsoft also needs to corporate with other large international organizations. This is by sharing technical ideas on how to develop gadgets that can carter for the needs of its target customers. However, the organizations under consideration should not be its direct competitors (Price, 2004). For purposes of improving its corporate level strategy, Microsoft should aim at partnering with the governments of third world countries, in order to sponsor technological initiatives or education (Slater, 2004). This would help the company to promote its brand image, as well as encourage innovation, which may be beneficial to it. InteliCloud: IntelCloud is an American company that has never been engaged in a merger or acquisition. The headquarters of the company is in California, and it is responsible for the creation of computer software, that can make it easy for HD video streaming. IntelCloud was formed in the year 2007, and its incorporation happened in the year 2008. Based on this fact, it is still a small company. During the first 18 months of its formation, IntelCloud was responsible for the development of InteliCloud 360 (Park, 2014). This is computer software that integrates key data software and hardware into a single chassis. The main concept behind the development of this computer software was based on the fact that its supplier, VIRCAS, asked the company to come up with a system that would make it possible for them to increase their growth through HD video streaming. This was in response to the demands of its target customers (Park, 2014). This was also a business level strategy, where the company had to first come up with a solution to the market needs, before developing a series of networks or software before the company business operations became viable (Park, 2014). That is when the company came up with IntelCloud 360, video streaming software. This software was a hit, and the company was able to achieve great success because of its adoption and development (Park, 2014). Based on these facts, it is therefore important to denote that the major business line of InteliCloud is developing software that can enable mobile service providers to efficiently deliver voice or video data to their clients. For purposes of improving its business operations and market share, the best company that InteliCloud can merge with is Blu Products. Blu Products is a mobile phone manufacturing company, with its headquarters in Florida. Blu Products manufactures affordable and attractive mobile phone devices, and it has offices in approximately 40 countries (Park, 2014). By partnering with Blu Products, the softwares of InteliCloud could be used in the mobile devices of Blu Products to help in improving sound, and video streaming in these devices. Through this action, the mobile devices produced by Blu Products will manage to achieve higher sales, resulting to the growth in the market share of InteliCloud. Furthermore, these two companies are still new, hence they need each other for purposes of competing with multinational corporations such as Microsoft, Apples, Samsung, etc. These companies also have their own software developers, who have produced video streaming software for their mobile devices. Business Level and Corporate Level Strategies: One business level strategy recommended for the company is the cost reduction strategy. Under this strategy, the company should seek at selling its softwares at an affordable price, when compared to the prices of alternative software. This strategy has made companies such as Wal-Mart to be market leaders in their industries (Price, 2004). Corporate level strategy that the company should engage in, is to be involved in the corporate social responsibility programs. The company should initiate measures aimed at conserving the environment, since this is one of the major social issues that affect the society. Through this action, chances are high that the company will manage to create a positive brand name. This is one of the major factors that determine the success or failure of the company. Conclusion: The acquisition of Nokia by Microsoft was a good deal. The two companies would benefit from the technological know-how that they possess. Nokia would benefit from the windows technology of Microsoft, while Microsoft would benefit from the Android technology of Nokia. Furthermore, the business level strategy that is pursued by Microsoft is that of division of labor. This is an effective and efficient strategy, mainly because talented employees would be posted in areas where they are skillful at. The corporate strategy of Microsoft is also beneficial, because it helps in promoting the growth and expansion of the company. InteliCloud on the other hand is a new company, and it needs to merge with Blu Products for purposes of penetrating the mobile devices and computer market. References: Park, J. (2014). Future Information Technology: FutureTech 2014. New York: Pearson. Top of Form Bottom of Form Price, R. (2004). Roadmap to entrepreneurial success powerful strategies for building a high-profit business. New York: American Management Association. Top of Form Bottom of Form Slater, R. (2004). Microsoft rebooted: How Bill Gates and Steve Ballmer reinvented their company. New York: Portfolio. Read More