International Business Negotiations

NOKIA-MICROSOFT DEAL
International negotiation brings on more challenges than most. On September 3, 2013,
Microsoft announced a deal to acquire Finnish mobile phone company Nokia’s handset and
services business for $7.2 billion, the New York Times reported.

The agreement marked a belated but bold move by Microsoft to upgrade its presence in
handheld devices and signals an end to Nokia’s long struggle to enter the hyper-competitive
(and extremely lucrative) smartphone market.

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.

Ballmer first approached Nokia CEO Stephen Elop about a possible acquisition during the
Mobile World Congress industry conference in Barcelona. Ballmer and Nokia chairman
Riisto Siilasmaa conducted methodical, discreet negotiations across the globe in 2013.

As with any large merger or acquisition, this one faced even more complexity after the ink
dried on the contract—namely, the challenges of integrating employees from different
cultures.

Merging distinct cultures can be a confusing, lengthy process – even without the added
complexity of joining together two of the world’s largest companies, each of which is
emblematic of its mother country in its own way.

It often makes sense to maintain each organization’s unique identity and borrow from the
best of both. Moreover, because national culture is just one facet of our identities, it pays to
view negotiating counterparts as unique individuals rather than as cultural ambassadors.
Keeping this in mind, it never hurts to infer strategies based on expected cultural norms so
long as this acknowledgement is part of a holistic bargaining process aimed at creating value
and forging workable, sustainable agreements.

Ultimately, Microsoft did acquire Nokia, but according to Computerworld, Ballmer called it
a ‘monumental mistake’ and ended up writing off billions of dollars, calling it an
“impairment charge” of $7.6 billion, which was close to how much it paid for Nokia and its
patents.