A few years ago I was at an IT industry event and met a chap who worked for Ford in the UK. Specifically he worked for Ford’s retail operation, and chatting to him I was surprised to learn that over recent years the blue oval brand had been buying up a number of its car dealer franchisees. This wasn’t done on a strategic basis (akin to Coca Cola’s attempts to buy its bottlers over the years) but out of tactical expediency. Put simply, a lot of Ford’s dealers were having a really hard time, but Ford couldn’t afford for the last leg of its supply chain to customers to be going bust.

Having had a few days to cogitate the news about Microsoft’s acquisition of Nokia’s phone business, it strikes me that supply chain for devices is the imperative behind the deal: Nokia now contributes such a high proportion of the Windows Phone device share that the medium-term future of the platform depends on the Finnish companies design, production and distribution capability. It seems increasingly likely that the acquisition will also see the OEM (or should those be Original Device Manufacturers these days?) market for Windows Phone pretty much dry up.

Acquisitions are hard; when there is little overlap between the businesses of the acquirer and the acquiree the positives of growing out into a larger overall operation are set against the challenges of being able to use management techniques suited to one market in another (more on this in section three of this interesting if somewhat academic paper from Ashridge I stumbled across yesterday). Producing software is very different to producing physical objects, especially now that software is almost exclusively distributed as products or services over the Internet.

That so much now seems up in the air at Microsoft (new structure, new CEO, new major acquisition) makes for increasingly interesting times at the organisation. Seems I left just as a the fun was really starting!

One thought on “Supply chain acquisition

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