Question

Can you name of the company either a Good or Bad acquisition? Please provide some detail.

Answer 1

A typical example of acquisition can be seen as Microsft acquired Nokia.

Nokia-Microsoft negotiation lasted for 2 years, which could be divided into two main

stages. During the first stage, Nokia and Microsoft were striving to form a solid partnership

with each other in order to promote Microsoft’s system and recover Nokia’s cellphone

business. However, after the first stage, the situation got worse as the competition in the same

industry was getting more and more intense. Under unfavorable circumstances, Nokia fell

down even further into a desperate situation, which pushed both parties to enter the second

stage of negotiation about merger and acquisition. The deal is split between the phone-making unit and Nokia's patents. Microsoft will spend $5 billion on the phone-making unit, and $2.17 billion on licensing Nokia's patents.

    The main advantages from the deal are bringing hardware and software under one roof, ranks of Microsoft in the segment of Smartphone, Microsoft and Nokia together have won praise for their quality, Microsoft is having vast financial resources which helps him to build mobile strategy that produces result.

Both sides had strong incentives to join forces. Nokia had lost significant ground in recent years to smartphone manufacturers, most notably Samsung and Apple, by failing to keep up with innovations such as touch screens. Having shed its underperforming handset business, Nokia planned to focus on telecommunications equipment, mapping business, and patent portfolio. On the other side, Microsoft had lost so much reputation because they have really been affected by the environmental changes in terms of technology, they didn’t adapt so easily to changes in technology.

    Focusing on interests, the deal is to secure the Windows Phone ecosystem, as well as accelerating Microsoft's phone market share. Microsoft said it wants to bring "one brand" through a "united voice", this definitely shows that Microsoft wanted to improve or at least not damage its relationship with Nokia, which is part of trying to have a successful negotiation, making themselves look as they are proud of making a deal with Nokia and that creates a certain images for them for maybe increase the possibilities of the negotiation to be made.

    An advantage for Microsoft is that Nokia chief executive Stephen Elop, who previously served as an executive at Microsoft, will once again join the software giant, heading up the phone-making division that Microsoft bought. This will be such an advantage for Microsoft because a person who already knows both Microsoft and Nokia will be easily able to understand and lead the environmental changes which are really risky for a company and for a product, and decisions having knowledge about many important skills and issues about Nokia to implement again in Microsoft.

    At first, we may think this negotiation as an Integrative Negotiation, because for one of the parties to win or gain something doesn’t necessarily means that the other one has to lose, it is actually not inversely related to that of another. As Microsoft gets all the resources to be able to make more efficient tech and smart devices and that many employees, Nokia gets that huge amount of money and will not necessarily mean that Nokia will lose in respect to what Microsoft will get.

    Despite what we see above, if we deeply analyze, we find out what kind of negotiation it really was, at least through this analysis and also through many reports that say this was definitely a Distributive Negotiation, because Nokia deal with Microsoft has been Nokia’s“worst nightmare”, it had a loss in the market share and it has been completely related to the deal it signed with Microsoft.

     What has been analysed, is that in the first place the deal was made equally for both sides and on that time there were not intentions from one of the parties to make the other lose. The expectations weren’t for Nokia to have troubles after the deal has been made, it isn’t directly Microsoft’s fault, although it has been that.