Syneft And Nokia Case Study

1071 Words5 Pages
Consolidation of Microsoft and Nokia took place with an estimated total value of synergy as $8.396 Billion USD. However due to the integration costs which are $3.095 Billion USD, the value of net synergy turns out to $5.301 Billion USD (as given below in Table 1 below). Table 1: Value of Synergies Value of Synergy (in Millions $) % of Total Synergies Revenue Synergies : Windows & Windows Live Division 952 11% Nokia Siemens Networks 882 10.50% Total 1,884 22.50% Cost Synergies : Cost of Revenues 3,578 42.50% Sales and Marketing 1,572 19.00% Research & Development 1,362 16% Total 6,512 77.50% Total Value of Synergies 8,396 100% Integration Costs 3,095 Total Net Synergies 5,301 When companies consolidate/integrate or merge, two types of synergies exist- cost synergy and revenue synergy; however, cost synergies are the most reliable source of synergy. In the case under consideration, cost synergies constitute 77.5% of total net synergies, while the revenue synergies make up for the rest 22.5%. Concerning to the Integration costs represent around 58% of total net synergies, thus, reflecting high need to invest in the internal market in order to avoid the damage of employees’ motivation when they misunderstand their function within the new merged enterprise. MICROSOFT’S STRATEGY BEHIND NOKIA’S ACQUISITION From the point-of-view of Microsoft Corporation, there are two main reasons for the acquisition: i. to consolidate its mobile position; ii. to expand its presence in

    More about Syneft And Nokia Case Study

      Open Document