Strategy, Control and Design

Design Assignment- ALLIANCES

Response Group 05- Team 10
13:30 07.10.2015
Ka Keung Leung- 2567412
Adam Laczkovszki- 2575142
Enik Toth-2575143

Strategy- Why forming a joint

venture?
Cultural distance
The distance is relatively low therefore the JV (with shared team) can operate
smoothly
Real option
Because of the risks it makes more sense for Microsoft first to collaborate, get the
know Nokia before actual acquiring
Indigestibility of assets
The management costs of the alliance are way less costly in aspect of the
organizational change and culture then acquiring. Microsoft only needs the
knowledge of producing the hardware- mobile devices
The other products and services of Nokia are not relevant for Microsoft at the
moment
Govermental barriers: It depends on where they are forming the joint venture,
Europe is more strict
2

Strategy- Why forming a joint

venture?
Assimetrical information
The knowledge wich is required to produce a hardware is really
hard to assess, because it is intangible.
The value of the knowledge which will be used by the common
work is not known yet. After you get to know the partner, you are
able to asses its value and eliminate the assimetrical
information.
Complementary resources
Microsoft is producing the necessary software while Nokia is
producing the hardware
Both have and continue on developing alliance capabilities
3

Control- Level of opportunitsm

The level of opportunism is low in the perspective of Microsoft
Market overlap: low
Technological overlap: low
Both companies are laggard
Repeated ties: no
Distribution of value: based on the level of opportunism, equally profitsharing would be reasonable
High revenues are more important than trust for Microsoft
Through opportunitsm behaviour Nokia could not compete more efficient
against the rivals in the industry of mobile devices and achive higher
market share -> by sharing there is a higher chanche to increase the
profit
4

Control mechanism
Scope
Broad scope
There is a possibility to work on further projects
Wide range of exploitable opporunities (map, browser)
Contract
Coordination provision
Board involvement
Moderate
Delegating greater authority to the local management in
Finnland
5

Design Joint Venture

Board
of JV

Finance

HR

Sales &
Marketing
R&D

Operations

Manufacturi
ng
Design

Operatin
g system

Hardware
engineeri
ng
6

Xbox

Surface Tablet

Finance

R&D
Hardware

Business
Developmen
t

Micros
oft
Board

Alliance
manageme
nt

Joint
Ventur
e

Services

Operations

Software
HR
Microsoft
operating
system

Microsoft
Office

Internet
Explorer
7

Key points of explanation

Parent organization
Autonomy- hands off
Coordination
Business Development Business Unit
Alliance management- functional unit
developing alliance capability
Core resource units
R&D
Joint Venture