Strategy Management - Microsoft Nokia, Apple Incorporation - Case Study Example

Strategy Management Table of Contents Introduction 3 Overview of the Company 4 Microsoft Nokia 4 Apple Incorporation 5 Selection and Justification ofRelevant Analytical Processes 6 Applying Analytical Processes With Respect To Two Mobile Phone Manufacturers 8 Johnson’s Culture Web 8 Porter’s Diamond 12 Porter’s Generic Strategies 14 Critical Evaluation of the Selected Three Analytical Processes 15 Conclusion 16 References 18 Introduction The telecommunication industry is one of the rapidly growing industries across the world. Due to increasing opportunities and the growth prosperity, many new ventures are getting established into the industry driven with the objective of profit maximization. Nevertheless, extensive penetration by the new ventures has increased the managerial complexities within the context as well (Budde & Golonatchev, 2011). Continuous advancement in the technological aspects has further fueled dramatic changes in the telecommunication industry. Currently, telecommunication market is viewed as a ‘social-technological system’ (Damsgaard & Gao, 2004). Notably, the dramatic changes followed by continuous technological advancements have created a greater requirement for the companies in the telecommunication industry to foster innovation and creativity in their product development process. Besides sustaining continuous innovation, effective management of innovation and creativity has also emerged as a crucial aspect for the companies in the telecommunication industry in order to survive in the long run and to proactively deal with the challenges of fierce competition existing within the global telecommunication market (Damsgaard & Gao, 2004). In addition, mergers and acquisitions have become a common trend in the telecommunication industry worldwide. Contextually, telecommunication companies are viewing mergers and acquisitions as the ultimate solution to increase their competitiveness and revenue earning capacity. Despite the significant efforts exerted by many of the telecommunication companies, the strategies adopted by these companies have not been able to render fruitful results (Chambers & Honeycutt, 2009). Consequently, many telecommunication companies have been challenged with the state of total oblivion. Thus, based on this standpoint, the essay intends to select and justify relevant analytical processes, which are then applied to two prominent telecommunication companies, namely Microsoft Nokia and Apple for critically evaluating the effectiveness of the selected analytical processes. Overview of the Company Microsoft Nokia Mergers and acquisitions within the telecommunication industry have emerged as a common trend. In this regard, the most recent acquisition in the telecommunication industry can be related with merging of Nokia with Microsoft. It is worth mentioning that Nokia is a Finnish telecommunication company with global operations while Microsoft is a leading US based software company. Various reasons contributed towards the merger of these two companies. In this regard, one of the major reasons behind the decision to merge was associated with the continuously declining market share of Nokia. It has been observed that the emergence of the smartphone had posed significant challenges to the company, which forced it to merge with Microsoft. Besides, the vision of Microsoft to establish its strong foothold in the global telecommunication industry is another key factor contributing towards the merger of these two multinational companies. Notably, launching of windows phone by Nokia can be identified as an example of the combined efforts of Microsoft and Nokia (Sharma, 2014). In subsequence, both the companies have announced for a “broad strategic partnership”. Notably, Nokia has revealed its consent for adopting Microsoft’s Windows Phone platform as “principal smartphone strategy”. Besides, the partnership between Nokia and Microsoft agreed to “jointly create market-leading mobile products and services” (Microsoft Corporation., 2011). Apple Incorporation Apple Incorporation is a US based leading multinational company that deals with the designing, development and marketing of communication devices along with a variety of the other products and services. Over the years, the company has been successful in drawing the attention of large masses of customers towards its products and services. The company is well known for its ability to continuously innovate new products and services. Since its establishment, the company has been facing numerous challenges, despite which it has been able to reveal its resilient performances. The company, through continuous innovation and creativity has successfully been competing in the global telecommunication industry. The leaders within the company have been efficient enough to make informed corporate decisions and strategies to cater the needs of the diverse customers spread across the different geographical locations. Additionally, customer oriented strategies aligned with the goals of the business has facilitated the company with increased competitive tractions over its rivals, as the company offers a range of quality products including iPhone, iPad, Mac and iPod among others. The efficient business and corporate strategies undertaken by the company have facilitated it to acquire greater market share across the international markets and cement its position as one of the leading telecommunication company in the global context. Above all, the ability of the company to embrace continuous innovation and the creativity is considered to be the cornerstone of its success (APPLE INC., 2012). Selection and Justification of Relevant Analytical Processes The current business environment is highly challenging and dynamic in nature. As a consequence, the organizations operating in the contemporary business environment are facing significant challenges and the problems, which have the tendency to influence the ability of a company to remain competitive in the market place as well as adversely influence the profit earning capacity of an organization. In such circumstances, the organizations are required to frame appropriate strategies as well as evaluate these strategies to measure their effectiveness when dealing with the challenges faced. Correspondingly, the use of analytical processes serves as a remedy for these organizations by providing these with efficient tools, which they can implement to analyze the information gathered from inside and outside the organizations for the purpose of devising the most reliable strategies and decisions. Besides, the application of analytical tools facilitate in determining the most efficient strategies that would encourage reducing the operating costs while ensuring the optimum utilization of the available resources. In order to critically evaluate the strategies adopted by Microsoft Nokia and Apple incorporation three widely used analytical processes have been selected, which include Johnson’s Culture Web, Porter’s Diamond and Porter’s Generic Strategies. To be precise, the analytical process of Johnson’s Culture Web, has been selected for the purpose of critically evaluating the strategies of the chosen two companies. In this regard, the application of this analytical process is ascertained to render a rich understanding about the prevailing organizational culture. Besides, it has been observed that this process facilitates in establishing close linkage between the structural aspects of an organization and other factors such as political and symbolic. In general, it has been claimed that application of this process is extremely useful in acquiring considerable understanding about the organizational culture. Accordingly, Johnson’s Culture Web is identified as composed of seven elements, which include ‘rituals, and routines’, ‘symbols’, ‘power structures’, ‘organizational structures’, ‘control system’, ‘stories’ and ‘the paradigm’. Notably, considering these elements are considered to be extremely important for understanding as well as for building a successful organizational culture (Sun, 2008). At the same time, businesses operating in the diverse geographic locations are determined to be constantly struggling to attain greater competitive traction. Correspondingly, Porter’s Diamond is selected for exploring the strategies pertaining to competitive advantages of the chosen two multinational companies. The analytical process is selected, as it is claimed that the application of this process enables managers to outline the sources of competitive tractions. In addition, the four key elements have been identified as related with this analytical process, which includes, ‘factor conditions’, ‘demand conditions’, ‘related or supporting industries’, and ‘firm strategy, structure and rivalry’. Accordingly, these elements facilitate in determining the attributes of a country having positive or negative impacts on the creation of competitive position of a firm (Astarlioğlu, 2012). In addition, to the above selected analytical processes, Porter’s Generic Strategies has been considered for critically evaluating the strategies implemented by Microsoft Nokia and Apple. This analytical process involves three generic competitive strategies, which include ‘cost leadership strategy’, ‘differentiation strategy’ and ‘focus strategy’. However, it should be noted that the application to any of these strategies is observed to yield increased competitive traction (Astarlioğlu, 2012). Applying Analytical Processes With Respect To Two Mobile Phone Manufacturers Johnson’s Culture Web Stories Nokia, for a long time has been a market leader in the telecommunication industry. Over the years, it has achieved several milestones. Similarly, Microsoft is observed as the leading company in the global software sector and has been able to retain monopolistic advantages in the market place. Both Nokia and Microsoft have been involved in significant research and development activities. It is vital to mention that the amalgamation of these two companies or the emergence of Microsoft Nokia has recently occurred. Nevertheless, the leaders, namely CEO Steve Ballmer of Microsoft and Nokia’s CEO Stephen Elop are categorized as the heroes behind the partnership. Simplicity and teamwork are the core cultural values of Microsoft Nokia irrespective of the fact that the brand image of Microsoft Nokia varies across the different nations (Lam, 2013). Fundamentally, flexibility in decision making along with equal opportunity to all the participants within the company reflects the core assumptions and beliefs. To be noted in this context, leadership in Microsoft has always been a major attraction to global investors, wherein Steve Jobs has been recognized as the hero in Apple incorporation. He had set an example to all who lived simply and worked hard. Despite the demise of Steve Jobs, he has been perceived by the employees as an idealistic. The history of the company largely reflects the innovation and creativity as an essence for the success of the company. The core assumptions and values of the company rest on the pillars set by Steve Jobs, which include creativity, freethinking and hard work (Hurley-Hanson & Giannantonio, 2013). Routines and Rituals Microsoft Nokia strongly believes in catering the needs of its customers in an efficient manner. Besides, the partnership is also focused on its people and the workforce. There is no specific dress code for employees. Employees within the company dress informally and work in the relax business setting. Respect and equal opportunities for all individuals contributing towards the accomplishing the goals and objectives of the company are closely tied with its organizational culture. Since, the strategic partnership between Microsoft and Nokia is relatively new it is not much challenging to change routines and rituals (Microsoft, 2014). Similar to Microsoft Nokia, employees and their opinion are highly valued in Apple. Employees in Apple have no specific dress code too and the diversity at the workplace is highly recognized. The history of corporate culture of the company extends beyond its valuable workforce to its customers. The organizational culture ensued by the company believes in the mutual welfare of both employees and customers (Sinding & Bøllingtoft, 2012). Organizational Structure The organizational structure within Microsoft Nokia is simplified in nature. In general, the organizational structure espoused by Microsoft Nokia involves functional management structure, as the organizational structure of the partnership is aimed at increasing the productivity. It is evident from the fact that the formation of Microsoft Nokia is a result of strategic alliance, thus collaboration and teamwork is highly valued in the company (Foley, 2014). The organizational structure of Apple is functional in nature and the management within the company is segregated based on the different functions. Apple tends to place considerable focus on teamwork and collaboration to achieve its defined goals and objectives (Hendrix, 2014). Control Systems The control system within Microsoft Nokia is embedded with the objectives of providing quality mobile device to its customers. Microsoft places direct control on the production and marketing of the brand under Microsoft Nokia. The company believes in rewarding employees for their outstanding performance. The control system practices within the company can be related to past strategies (Musil, 2013). Apple incorporates strong quality control measures as the company has established code of conduct for its suppliers to ensure quality of its devices. Employees within the company are rewarded handsomely for their innovative and creative ideas. The rewards scheme in the company is related with the performance of the employees (Apple Inc., 2014). Power Structures Under the partnership terms of the agreement between Microsoft and Nokia, Microsoft will have direct control over the ‘Nokia’s Devices and Services’ business unit of Nokia. This will include control of Microsoft over production facilities sales and marketing activities associated with this unit. The power generally resides in the hand of top-level managers and leaders who are accountable for the performance of the company. The leaders within the company are mutually responsible for making adjustments and changes in the company (aMicrosoft, 2014). The managers within Apple incorporation are provided with legitimate authority and power to control their respective business units or functions. Nevertheless, the role of brand manager within the company is ascertained to be extremely crucial. The power primarily rest in the hand of company’s CEO who is responsible for making necessary changes that would facilitate in improving the overall performance of the company (Hendrix, 2014). Symbols The partnership between the two leading multinational companies has brought significant changes not only in the organizational structure, but also in the symbol used on the product. Correspondingly, windows phone symbol of Microsoft is used as a logo in the products jointly produced by Microsoft Nokia. The symbol used by the company largely depicts the success history of Microsoft and the trust that the consumers have placed on this brand (Warren, 2014). The corporate identity of Apple is conveyed through its logo of bitten apple. The logo was designed in the year 1977 and since then it is recognized as an official logo of Apple. The participants within the company views this symbol not only as logo defining the corporate identity but it is also perceived as symbolic to the vision of Steve Jobs, “Think Different” (Mittan, 2010). The Paradigm Prior to the establishment of partnership between Nokia and Microsoft, Nokia was struggling to develop and sustain the culture of innovation. Correspondingly, the partnership between Nokia and Microsoft firmly believes in developing and sustaining a culture of innovation. The value of Microsoft Nokia, focused on innovation, is particularly driven with the goal of catering the needs of its customers with infusing creativity and innovation in its product design and marketing while remaining competitive at the market place. Besides, ‘drive change’, ‘make a difference’, and ‘do their best work’ form an integral part of the partnership between the two (Warren, 2014). Since, the inception of Apple, the company has faced with numerous challenges. Particularly in the early 1990s, the company was at the verge of complete oblivion. The then CEO, Mr. Steve Jobs, through his visions, aligned with the objectives of business and embraced the changed structure and espoused innovation, which facilitated the company to evolve as one of the leading competitor in the global telecommunication industry (Hendrix, 2014). Porter’s Diamond Factor Conditions Nokia, in the recent past years, has been losing its competitive advantage across all the locations of its operations. The partnership between Microsoft and Nokia is anticipated to aid Nokia with increased level of competitive advantages. Contextually, the fusion of innovative ability of Microsoft and the strong presence of Nokia in the market, particularly in developing countries, would contribute towards attaining greater competitive tractions for Microsoft Nokia. In addition, the adoption of window platform equipped with other advanced apps is anticipated to render Microsoft Nokia with augmented competitive advantages (aMicrosoft, 2014). Correspondingly, numerous factors can be attributed with the success of Apple in the current time. The skilled and highly talented workforce, along with the ability to innovate and adapt to the changing technological advancement are few major factors (Linden & et. al., n.d.). Demand Conditions The demand factor is one of the major aspects of Porter’s Diamond model. Despite rapid fall in the market share of Nokia in developed countries, the demand for its devices has been relatively favorable in the emerging markets, such as in India and in China. Correspondingly, the devices produced and marketed by Microsoft Nokia is estimated to acquire increased customer base in the emerging market, which would contribute gradually towards strengthening its market position in developed countries as well (Razman, 2011). Apple has seen significant boost in the demand of its product wherein the increasing demand of iPhones, across all its areas of operations has contributed towards its increasing sales revenue (Warman, 2013). Related or Supporting Industries Another major factor related to Microsoft Nokia’s competitive advantage is attributed to related and supporting industries such as consumer electronics. The presence of these competitors is ascertained to facilitate Microsoft Nokia with technological know-how (Husso, 2011). Similar to Microsoft Nokia, Apple’s competitive advantage is closely tied to its related and supporting industries that can again be observed the consumer electronics sector, which deciphers high degree of inclusion of advanced technologies and effective communication channels (Husso, 2011). Firm Strategy Structure and Rivalry Strategy: The strategies of both the multinational companies in the past, prior to the partnerships, have been driven with increased customer orientation. The low cost strategy of Nokia has also facilitated it to acquire increased portion of market across its network of operations, while Microsoft with its continuous innovation has been able to draw the attention of worldwide customers. The innovation strategy of Apple, supplemented with premium pricing strategy, has facilitated the company with high level of competitive traction (Hendrix, 2014). Structure: The structure of a company is an important determinant of competitive advantage regardless of its location of operation. Observably, the structure of both the companies, Microsoft and Nokia in the past has been simple and clear. Akin to Microsoft Nokia, the structure of Apple is simple and clear while at the same time little emphasis is laid on bureaucracy (Hendrix, 2014). Rivalry: The major rivals of Microsoft Nokia include Apple, Samsung and LG. Nevertheless, these rivals allow Microsoft Nokia to be a better international challenger owing to the fact that the partnership runs the business globally (Husso, 2011). Notably, since Apple and Microsoft Nokia belong to same industries they have common rivals too (Husso, 2011). Porter’s Generic Strategies Microsoft Nokia can be identified to embrace differentiation strategy as a means to attain competitive traction in the global market. In this regard, it can be determined that the products developed and marketed by Microsoft Nokia vary from other competitors’ products such as Apple and Samsung. For instance, Lumia smartphones produced by Microsoft Nokia runs on windows platform while the products manufactured by Apple runs on iOS and the products of Samsung runs on Googles Android. Besides, Microsoft Nokia can be seen to cater the needs of its diverse customers by offering high end smartphones at reasonable price. In other words, the partnership between the two has undertaken low cost strategy to attract substantial customers and attain competitive advantages. The primary goal of adopting low cost strategy by Microsoft Nokia is therefore concentrated on satisfying customers’ needs of different demographic groups, including both low and high income, professional and gaming, as well as premium customers (Sharma, 2014). In contrast, Apple has been able to create sizable value in the current highly competitive and dynamic telecommunication industry by pursuing continuous innovation and successfully differentiating the devices offered by it. The company has differentiated its devices through constant innovation and by adopting premium pricing strategy accordingly (Warman, 2013). Critical Evaluation of the Selected Three Analytical Processes As can be observed from the above application of Cultural Web analytical process, adopting this model offers potential research benefits. In this regard, the use of Cultural Web framework facilitated in effectively summarizing the organizational culture. In addition, the use of this analytical process enabled effective comparison of the companies’ culture. Nevertheless, it has been observed that the implementation of this analytical process inherits certain challenges as well. To be specific, adoption of this analytical process is quite difficult and complex (Seonaidh & Foster, 2013). Again, the application of analytical process of Porter’s Diamond in the above context provided valuable insights and knowledge regarding country’s advantages. Nevertheless, certain criticisms can be made with regard to this analytical framework. Notably, the analytical process can be observed as lacking in formal analytical modeling. At the same time, it is quite challenging for the managers using this analytical process to determine and analyze the factors that can possibly lead to increased or dwindling competitive advantages. Besides, the variables included in this analytical model fail to determine the precise impact of each variable on the competitiveness of an organization (Astarlioğlu, 2012). Similarly, the application of Porter’s Generic Strategies in the case of Microsoft Nokia and Apple provided a rich understanding regarding the sources of competitive advantages enjoyed by these firms. Nevertheless, the elements included in the analytical process can be identified as surrounded with few serious limitations. In this regard, there are other factors as well, such as value chain strategy and core competencies, which act as a strong determinant for an organization to achieve competitive advantages. Correspondingly, these factors can be seen as absent in Porter’s Generic Strategies analytical framework (Astarlioğlu, 2012). Conclusion The above discussion revealed that the application of the analytical processes, such as Cultural Web, Porter’s Diamond and Porter’s Generic Strategies, facilitates in delivering rich understanding and knowledge regarding the strategies adopted by the firms in the globalized era. However, certain limitations are identified as inherited with these analytical processes. Accordingly, the application of Cultural Web can be criticized grounded on the fact that its application is quite difficult and complex. At the same time, the application of Porter’s Diamond fails to clearly decipher the factors that can possibly lead to increase or dwindling competitive advantages. Similarly, the application of Porter’s Generic Strategies can be criticized based on the fact that its application fails to take into account certain imperative factors having the ability to shape the competitive advantages such as value chain strategy and core competencies of an organization. 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