The Nokia-Microsoft Alliance in the Global Smartphone Industry

Nokia-Microsoft Alliance
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Nokia-Microsoft Alliance
Strategic Alliance
In the year 2011, Nokia’s CEO Steven Elop and Microsoft’s CEO Steve Ballmer made a strategic alliance to collaborate in the development of a new third ecosystem for smartphones. In this regard, Nokia would use Microsoft’s WP7 OS with its Nokia Devices. The strategic alliances, Nokia-Microsoft resulted in the creation of a vertical strategic alliance and engaged in the market transactions. Besides, Nokia and Microsoft alliance meant that the firms remained mutual, independent, cooperative and share information. These factors could lead in an uncertain behavior; thus, possibly result in opportunism. Nonetheless, a strategic alliance is loose, evolving and it needs much trust, things, which are often hard to maintain in the business field (Anwar, 2012).
Lessons from Alliance
Strategic alliances are characterized by instability, suboptimal performance and the possibility of breakups, which suggest a high failure rate of the Nokia-Microsoft alliance. In the same context, cooperation is paramount; thus, the Nokia-Microsoft alliance may encounter issues with cooperation. Nonetheless, the incentive to take opportunism is advantageous as it will help in maximizing the gains of each company; thus, resulting in cost of the agency. For the two firms to win and achieve profitability, then, they must cooperate voluntarily. On the other hand, for the two companies to be successful in terms of cooperation, the companies must focus on costs of the economy.
Similarly, if the companies remain genuine and committed to the alliance, then, it means that, they must interact frequently and share information. Failure of observing commitment is likely to plunge the alliance into chaos and a possible breakup. A strategic alliance is time-bound and in this case, the companies promise to deliver within a period of two years. Well, the action to provide a timeline is one of the commendable moves, and possibly, failure to deliver in that period may affect the strategic alliance. As a sign of commitment, Microsoft paid $1 billion to Nokia, which is a non- recoverable investment from the part of Microsoft (Anwar, 2012).
The action promoted congruence between the companies, and perhaps, the alliance would evolve into a soft cooperation, which would avoid the issue of opportunism. Still, partnerships do not last forever; therefore, partners should plan, comprehensively, so that they can remain effective after the p...