Ryan Gallagher
In this week’s reading of “Seven Ways to Fail Big” by Carrol
and Mui, we are presented seven types of strategies which when not evaluated
thoroughly have hurt (and bankrupted) even very-well established companies. Although
these strategies have plenty of success stories, when a proper evaluation isn’t
done to determine the viability for a specific company, there’s a larger risk
that the strategy may not prove to be effective. The strategy which stuck out
to me as being one of the most common is that of a merger/acquisition, or as
Carrol and Mui put it “The Synergy Mirage”.
One of the more recent failed attempts that immediately came
to mind was that of Microsoft and Nokia in 2013. At the time, Microsoft for the most part was
known for their products like Microsoft Windows, Microsoft Office and other software
offerings. Nokia, on the other hand was
well established for their hardware as a mobile phone manufacturer. In 2011,
the two companies announced that they would be entering a strategic partnership.
Analysts predicted that this partnership would ultimately be very beneficial
for both companies as the smartphone trend was really starting to take hold due
to companies like Apple and Samsung. Nokia
(at this time still their own company) would go on to release their own smartphones
paired with Microsoft’s mobile operating system however they were unable to penetrate
the market like Apple and Samsung[1].
Then in 2013, Microsoft bought Nokia’s mobile business for over $7 billion.[2]
Microsoft had hoped that by taking over Nokia’s mobile phone division, they
would be able to compete with smartphone companies directly instead of
relying on another companies hardware and ultimate strategies. They theorized that by absorbing Nokia's talented product team and manufacturing capabilities into their already well established ecosystem that they would be a front runner in the smartphone marketplace. However after the launch of a handful
of ultimately unsuccessful smartphones over the next few years, Microsoft wrote
off the deal and sold the resulting hardware off for a huge loss in 2016. One
source cites that national culture was one of the main reasons that the acquisition
ultimately failed.[3] The
strategy developed to merge the two companies failed to successfully unify the
cultures between Nokia – a Finnish company, and Microsoft – an American
company.
Carrol and Mui reference a clash in culture as one of the
many roadblocks that can prevent any merger from working. Based on their main
product offerings alone (software and hardware) it would seem to the naked eye
that this sort of acquisition would be a no-brainer. However, as we saw in this week’s readings
and throughout the course, there are many different areas outside of just a company’s
offerings that need to be considered when developing any strategy.
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