After being in a partnership with Microsoft in 2011, Nokia is taking the opportunity to survive in the smartphone industry by selling the company to its partner, Microsoft, for the better good.

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The smartphone industry has been very competitive that it is crucial for companies operating in such industry to implement new strategies. Apple is a major brand that flourishes in the industry, as it continuously adopts product development for its iPhone. Hence, the degree of rivalry is high in the industry. As Nokia’s market and financial position is not looking good, it is reasonable to take the opportunity of integrating itself with Microsoft for a friendly takeover. By doing this, Nokia establishes a competitive advantage in partnering with Microsoft as its OS, competing with Apple and its iOS. This too, creates a high barrier of entry for other smartphone brands as Nokia is integrated with a credible software.

On the other hand, the takeover also allows Microsoft to gain from managerial economies of scale. With Nokia’s hardware employees joining the company, specialization occurs where Nokia’s employees focus on the hardware while Microsoft on the software, creating specialization, boosting efficiency. Hence, this helps Microsoft to gain a competitive advantage as well.

Article source: http://www.microsoft.com/en-us/news/press/2013/sep13/09-02announcementpr.aspx