The paper "Mergers and Acquisitions - Microsoft and Nokia " is a perfect example of a business case study. According to Que and Zhou (2007), mergers and acquisition decisions are stimulated by a solitary motive of cutting down on expenses, enhancing market power and minimizing unpredictability of earnings, thereby realizing economies of scale and scope. Such has been the case of Microsoft’ s acquisition of Nokia. One of the underlying reasons behind Microsoft acquiring Nokia was to take advantage of the opportunity to minimize cost by avoiding overlying activities and amalgamating back-end operations, so as to achieve economies of scale and scope (Campa and Hernando, 2006; Pedro and Marques, 2014).
In addition to that, Nokia also has the economy of scale required to meet the rising global demand for mobile phones as well as to ground network infrastructure through its Nokia network division, so as to enter new markets, gain competitive advantage and make mobile phones usable seamlessly in any market. Microsoft, on one hand, wanted to diversify its product portfolio by gaining entry into the mobile phone manufacturing market and utilize the best of Nokia’ s resources (Moeller, Schlingemann and Stulz, 2003; Martynova and Renneboog, 2008; Liao and Williams, 2008).
On the other hand, Nokia can utilize the strong brand name of Microsoft and continue its process of bringing upon developments in its feature phones. It is widely known that M& A decisions are taken in order to adhesive synergy and this is very prominent in this mega-deal between Microsoft and Nokia (Mitra, 2013). Economies of vertical integrationIn a competitive market like, the one that exists presently, it is very apparent that vertical integration is a way forward for a company to ensure its success and sustainability (Ando and Rigby, 2013; Lai, Chine and Chang, 2010 Nikolaosa and Yiannis, 2013; Yoo, Lee and Heo, 2013; Quinn and Hilmer, 1994).
Now is the pivotal moment for Microsoft, which earns a significant proportion of its revenues from the Windows operating system, office suite business software as well as the XBOX gaming console.
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