Alliance between

Nokia and Microsoft

Alliance and Acquisition

between Nokia and Microsoft
To build a new global mobile
ecosystem for smartphones through the
Windows Phone platform :

Alliance and Acquisition between

Nokia and Microsoft
Increasing manufacturing capacity
Driving global customer demand of the
Windows Phone devices
Further integrating products and services of
Nokia and Microsoft
The ultimate objectives :
To growing the market share
To secure and increase the portion of
sustainable revenue

Dunning s OLI Model

The OLI or eclectic approach to the study of
foreign direct investment (FDI) was developed
by John Dunning
Three potential sources of advantage

Ownership Advantage
Firms investing abroad own an asset that gives
them competitive advantages
Some of competitive factors are monopolist
advantages that the company has in form of
privileged
Ex : access to scarce natural resources, patent
rights, brand name
On the other hand, some advantages come from
innovation activities, as for example, technology,
knowledge broadly

Location Advantage
Firms seek a production location that
offers them advatage
Three type of location factors : Economic ,
Political , Social , Culture Advantage

Location Advantage
Economic advantages: the quantities and qualities of
the factors of production, transport and
telecommunications costs, scope and size of the
market, etc
Political advantages: the common and specific
government policies that influence inwards Foreign
Direct Investment flows, intra-firm trade and
international production.
Social, cultural advantages: psychic distance
between the home and host country, language and
cultural diversities, general attitude towards foreigner
ant the overall position towards free enterprise.

Internalization Advantage
Firms try to internally capture the advantage
of foreign asset ownership
Reduce in transaction cost
Control over operations
Avoidance of tariff's and other barrier

Dunning OLI
(Ownership Advantage)
Strong brand name in the global market
Nokias highly qualified personnel have teamed up with
Microsofts experts
Strong finance position (Net revenue of EUR 41 billion and
operating profit of EUR 1.2 billion)
Sale products in more than 160 countries
Using Microsoft's software for its smartphones

Dunning OLI (Location Advantage)

Low-cost highly-skilled in Viet Nam

Location Advantage

Political stability

Cheaper production costs

Government policies, aims
at 30% of the domestic
industrial production of
high-tech segment

The success of the Nokia/Microsoft

alliance from the Nokia perspective

Providing strong platform to Microsoft for it's OS

Saving deal for Nokia
Making stronger supply chain for shipment
Bring better integrate Software and Hardware

The success of the Nokia/Microsoft

alliance from the Microsoft perspective
Dunnings OLI model - Ownership Advantage
Famous brand name
Nokia Maps, Nokia devices and services
Human resource from more than 50 countries of
Nokia

Dunnings OLI model - Location Advantage

Factory, design department, production development
department, marketing and sale department of Nokia
Market segments (mid-range mobile phone market)
Geographies includes 130 areas in 50 countries

Dunnings OLI model - Internalization

Advantage
Reduce promotion cost for Microsoft
Reduce the cost of implementing invention
copyright, inventions

The success of the Nokia/Microsoft

alliance from the Microsoft perspective
Windows phone 7
Merger Nokia and Microsoft
Increased competitiveness of Microsoft
Expanding the smartphone market