Business Acquisition of Nokia by Microsoft Corporation - Case Study Example

Three Firms: Changes in Their Business Environment Summary This paper analyzes changes occurring in modern firms with respect to various macro and micro level variations in the business environment. In order to accomplish the research, the researcher has considered the changes adopted by Nokia, Google and Barclays bank. The articles are taken from national newspapers that are between Monday, 23rd December, 2013 and Monday, 3rd March, 2014. The three newspapers from where these articles are taken are China Times, The Guardian and The Telegraph. This paper will eventually suggest that a change in the external business environment generates significant alterations in macro and micro level commercial perspectives of a firm. In the recent years, international and domestic state of affairs of an economy substantially influences the growth perspectives of a firm; at the same time, firms’ growth positively influences progress of an economy. Thus, both multinational firms and contemporary economies exhibit symbiotic relation in the current epoch. Against each article, the researcher will first elaborate and describe series of events related to the concerned case of the article and then, under the framework of each analysis, the discussion on each topic would be extended by applying special theoretical concepts. Contents Contents 3 Business Acquisition of Nokia by Microsoft Corporation 4 Description and Explanation 4 Analysis 4 Barclays introduction of Job ‘Streamlining’ Programme 5 Description and Explanation 5 Analysis 5 Google Earns Higher Revenue with New Changes 6 Description and Explanation 6 Analysis 6 Conclusion 8 Reference List 9 Appendix 10 Business Acquisition of Nokia by Microsoft Corporation Description and Explanation The first article is taken from the national newspaper of China, China Times. The article explains merger of the business of Nokia and Microsoft Corporation. The report claims that the giant competitive firm of Nokia has decided to accept the offer of takeover from the organization of Microsoft Corporation. The report then stated that a sum of US $ 7.2 billion was invested by the organization in the process of takeover (China Times, 2013). However, according to the article, Ministry of China was keen to imbibe antitrust practices of the company of Microsoft Corporation in the market, following the merger. It was found that existing rivals in the market of China, like, Lenovo, ZTE and Xiaomi, are threatened after occurrence of this takeover. As per the belief of all these firms, Nokia would be able to exercise exclusive powers in the market after this takeover. In reaction to such claims, the company of Nokia announced that it would not practice any type of antitrust activities in the market. At the same time, Nokia also announced that after the takeover, it would only demand for certain extra licenses in business regarding technological innovations (Webster, 1995). Analysis In the present scenario, companies in the global industry face cut-throat competition in their respective markets. In such situations, organizations always seek to gain competencies in marketplaces. Mergers and acquisitions are always beneficial for companies that face severe losses in market demand at a significant rate. It was found that Nokia was experiencing decline in demand across all its markets, as competitors’ performances had significantly improved in the recent years (like, Apple and Samsung). The company was also facing several problems in technical products software. Given this situation, merger with the giant firm of Microsoft Corporation would allow the company to enjoy a wider base of finance and technical knowhow. With the help of such factors, it is likely that Nokia would experience better demand, soon in the long run. Even so, it is true that merger or acquisitions between two or more firms results in the formation of a strong monopolist giant organization in the industry. Such powerful organizations reduce the level of competition in the industry as well as take away a large part of the consumer’s surplus (figure 1in Appendix) through antitrust profit making practices. Barclays introduction of Job ‘Streamlining’ Programme Description and Explanation The second article deals with the business of a public limited banking corporation of U.K., Barclays. The article is from the Telegraph, which is another national newspaper. The context of the article states that the bank has cut down approximately 12000 jobs, as of 2014 (Wilson, 2014). The senior officials of the bank claimed that they undertook this decision in business for reducing its overall operational cost. The employees who had lost their jobs were senior as well as junior workers in the bank. The bankers termed this programme as the ‘streamlining’ agenda of the corporation. The chief executive of the bank, Antony Jenkins, stated that the company purposely took away jobs of the senior management officers, who were working in the investment banking division. Most of these employees, who had faced jobs losses, would anyhow retire in the near future. Antony Jenkins also said that this initiative was undertaken by him as he wanted to keep only a few young investment bankers in the institution, with adequate knowledge about current market conditions. Even so, the bank claimed to have increased the pay rolls and bonuses of the existing workers in there by almost 10%, since early 2013. Analysis It is true that scale and scope of operations in a business firm are substantially affected by changes in the external environment. The decision adopted by the company of Barclays can be examined with the help of PEST analysis. Factors Implication Political After the financial meltdown, political authorities of U.K. have indirectly encouraged the banks to undertake contractionary policies in business operations. Economical Recessionary trails in the market have lowered the level of deposit and lending thresholds in the banks of U.K. This has reduced profits of the banks and has ultimately forced them to undertake special cost cut programs. Social The social changes in marketplaces are observed and analyzed more efficiently by young employees in a bank than the older ones. Technological Developments in the overall level of technology used in various banking operational activities have remarkably reduced the requirement of workers in banks. Google Earns Higher Revenue with New Changes Description and Explanation The third article relates to the business of Google. The article is taken from a national newspaper, named The Guardian. The article states that the company of Google has augmented its revenue by $200 million through a change, which was incorporated in its advertisement links on internet media. The company has, in reality, changed the long-existing blue shade that was used in its commercial links (Hern, 2014). The programme was initiated by Google with an active support from the company’s executive, Marissa Meyer. She had claimed that this initiative was undertaken by the company in order to check the impact on consumers demand, arising from any change in advertisements of the firm. Nonetheless, the firm stated that after the experimental event, its business was highly benefited. Dan Cobley, the managing director of Google, also claimed that the firm has changed its approach towards data, as opposed to the existing traditional notion, "highest paid persons opinion". Analysis Google exists in a market where firms face high degree of market competition among themselves. The business industry where the company operates is that of Information Technology. It should be noted that the industry is subjected to strong monopolistic competitive pressures in business. The potential competitors of Google are Amazon and Yahoo (Bose, 2002). All the firms in this type of a market structure produce products or services, which are qualitatively different from one another. Each firm faces highly elastic demand in the market. In order to lead in the competitive industry, firms always incorporate large number of changes in their advertisement segment. In the long run, all these firms experience supernormal profits or losses. The business of Google can be studied through Porter’s five force analysis. Factors Implication Bargaining powers of buyers High Bargaining powers of supplies Moderate Threat of new entrants Low Threat of substitutes Moderate Existing Rivalry High Conclusion The degree of complexity in the scale and scope of commercial activities has turned out high in the current epoch. The paper successfully analyzes this present scenario, where the operations of a business firm are subjected to changes in both macro and micro environments. Here, the three articles concern the companies of Nokia, Barclays bank and Google, separately. The context of the first analysis claims that merger between the business of Nokia and Microsoft Corporation would be highly beneficial for the company in future. However, it is also true that such deals would increase the market power of Nokia significantly in the business world. The context of the second article claimed that recessionary trails in the industry have ultimately reduced the pool of finance in Barclays bank and forced the organization to cut down its recruits. Finally, the third article stated that Google undertakes strategic changes in its marketing division in business for excelling through its competences and enhancing its revenue (Mankiw, 2011). Even so, it should be noted that contemporary firms strongly react to changes in the external environment in business. So, changes in the external business environment generate noteworthy transformations in macro and micro level commercial standpoints of a firm. In the recent years, global and household state of affairs in an economy considerably influences the growth perspectives of corporate firms. At the same time, a firm’s growth successfully paves the path of progress for an economy. Reference List Bose, C. D., 2002. Principles of management and administration. New Delhi: PHI Learning Pvt. Ltd. China Times, 2013. Regulator cautious on Microsofts Nokia takeover in China. The China Times, 24 December. Hern, A., 2014. Why Google has 200m reasons to put engineers over designers. The Guardian, 5 February. Mankiw, G. N. and Taylor, M. P., 2006. Microeconomics. Connecticut: Cengage Learning EMEA. Mankiw, G. N., 2011. Principles of Economics. Connecticut: Cengage Learning. Webster, F. E., 1995. Industrial marketing strategy. New Jersey: John Wiley & Sons. Wilson, H., 2014. Barclays to axe up to 12,000 jobs. The Telegraph, 11 February Appendix Figure 1: Giant Monopolistic Firms Reducing Consumer Surplus (Source: Mankiw and Taylor, 2006) Read More