Microsoft reached an agreement to acquire Nokia on September, 2013. The acquisition cost Microsoft U.S $7.2 billion. 32,000 Nokia employees were set to join Microsoft and this would bring talent capabilities over to Microsoft. This move was based on the fact that Nokia has lost its leading position due to the current smartphone trend which is dominated by Samsung and Apple. Nokia’s market share has dropped drastically. In Asia its shares dropped from 64% to 1%. Initially Microsoft and Nokia were allies as they had agreed to standardize the software company’s Windows Phone operating system. Some of the analysts viewed the deal as a way to help the two companies respond more quickly to dynamism in the industry. Microsoft also moved to acquire Nokia before it became an acquiring option for another company. However, this move has been met with some criticism. This is because it is quite similar to the agreement between Google and Motorola where Google acquired Motorola for U.S $ 12.5 billion. Motorola is yet to flourish under Google’s ownership.

Many acquisitions and alliances often fail due a number of factors. Many organizations usually have an assumption that the two are the same aspects that lead to growth (Dyer & Kale, 111). Organizations seeking to ally or acquire should have a thorough evaluation on the market factors, collaboration capabilities, resources and synergies (Dyer & Kale, 112). The market factors help to analyse the degree of uncertainty within the organization. It is not only internal but also analyses the external forces of competition. The company should also evaluate their collaboration capability that is if it can be able to manage an alliance or an acquisition. Finally companies should analyse their resources and the corresponding synergies that they are anticipating to accrue.

The above factors would help organizations understand whether to engage in an acquisition or remain as allies. The acquisition of Nokia by Microsoft was not a very good move given the fact that the acquisition between Google and Motorola has not proven to be very successful. It is also costly and time consuming to integrate to companies into one whole. Nokia and Microsoft could have remained as allies. The same applies to Google and Motorola.

Works Cited

Dyer Jeffrey H. & Kale Prashant. When to Ally and When to Acquire. Harvard Business School (2004): 108-115