Business objectives sought by Microsoft by merging with NBC

Question 1: Business objectives sought by Microsoft by merging with NBC

Microsoft sought for a strategic partner in the media industry to enter a joint venture because the former wanted to increase its market through diversification of its products and services. Microsoft is a technology company, while NBC is a news corporation. Therefore, Microsoft would use the expertise of NBC in news business to convey to audience through its (Microsoft’s) extensive online network. Microsoft would also benefit from synergy effect from the joint venture between the two large companies. The main objective here was to utilize the resources of NBC to appeal to the wider audience and be able to convey its products and services through the MSNBC.com portal.

Question 2: Why a joint venture over straight acquisition

Microsoft chose a joint venture over a straight acquisition of the NBC News channel because of the benefits resented by the former mode of strategic expansion. Through a joint venture, Microsoft would share the key resources with NBC News without having to disrupt the operations of the company. Among the resources sought after were experience in the media industry, people skills, efficient tools and equipment in the media industry possessed by NBC and the customer base enjoyed by the target company. Microsoft considered NBC as a non-competitor business and thus a joint venture with the non-competitor would not only improve Microsoft’s existing markets, but it will also open new markets.

Question 3: Failure of the Joint Venture

Years after the joint venture between MSN and NBC, the former could hardly realize any profit from the operations. This is attributed to the drastic changes in the media business, the physical differences between the two companies and the strict joint venture binding clauses that prohibited either party from being flexible enough to adjust to the external changes. After the partnership, neither Microsoft, nor NBC could engage in operations with other players to improve the services and products offered to the customers amidst the changing technological climate and user preferences. From this perspective, Microsoft would be able to provide users with the products and services needed if it had acquired NBC out rightly. This is, in fact, what Microsoft is intending to do after the failure: meet user needs by liaising with other players in the industry.

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