CAMILLA CENCI

Microsoft’s Acquisition of Sendit (C)

Strategy and Development Modes

CASE MEMO

24.10.2018
After the offer of SEK 325 per share in cash delivered by Microsoft has successfully been accepted

by more than 90% of Sendit’s shareholders, the integration strategy for the two companies has to

be defined.

As an external consultant for Microsoft’s Board of Directors I think that the integration process

seems to be tender and a lot of challenges have to be undertaken in order to successfully Commented [AF1]: Intendi Tender offer? Perché è un tipo
di acquisition (nella fattispecie, un’offerta di takeover)…non
un aggettivo
integrate these two realities without obscuring and eventually destroying their potential and their

valuable skills.

Sendit, as a small start-up, operates in an intimate and open environment where managers have

plenty of autonomy in their jobs; while Microsoft, as a huge company, has a non-hierarchical

decision making process and a rigid bureaucracy.

Despite these diversities, the two companies join a high degree of complementarity: on one hand

Sendit has the opportunity to leverage Microsoft’s resources to establish their products as the

standard in its industry; on the other hand Microsoft needs Sendit’s technical knowledge and skills

to introduce itself in the mobile telecom world.

The acquisition of Sendit will take Microsoft one step closer to its vision of providing software and

services that deliver information to everyone anytime, anywhere and from any device. So, in order

to accomplish that there is the need of transferring skills from one organization to another.

Because of Microsoft’s lack of familiarity of the telecommunication business, it should grant a

discrete decision-making authority to Sendit’s managers that have highest experience and

technical knowledge in the mobile internet environment. In this way, with a substantial degree of

autonomy, Sendit’s employees will be more willing to cooperate in order to successfully

implement the integration strategy.

Reaching potential benefits in this case requires organizations to coordinate, interact and combine

their knowledge: to create value exploiting their technological complementarity they should also
integrate some activities in the value chain due to the fact that resources and know-how have to

be shared.

As it’s possible to see in Exhibit 1, the post-acquisition integration strategy that fits well with this

acquisition is symbiosis: there is high need for both autonomy and strategic interdependence

because Sendit capabilities need to be preserved in an organizational context that is different from

the one of Microsoft. This process requires some degree of change to various aspects of the

Microsoft’s and Sendit’s organizational design and processes, as both companies’ leading practices

should be gradually blended together.

In addition, with their autonomy Sendit’s managers at the R&D department will be encouraged to

maintain and increase their productivity and they will be also more motivated to share their

knowledge and ideas on how to combine their competencies with those of Microsoft.

So, the two organizations need to coordinate their activities in a way that will allow the effective

combination of their critical skills.

The three most important areas to consider for this integration are: R&D department; marketing

and sales department; and employee retention.

Due to the fact that Sendit’ R&D team is critical to continue to develop and refine the company’s

original software products, I should suggest that Sendit has to maintain its own R&D team. In

order to educate about and integrate the team into the meta-architecture of Microsoft’s products

one R&D manager from Microsoft should work together with them to re-organize the department

and integrate them within the Microsoft’s R&D strategy and overall infrastructure.

Likewise, in order to pool the complementary technological knowledge between the two

organizations and establish a joint technology platform to develop new products together,

continuous communication and joint action is required through teams of employees from both

companies.
The R&D team should also collaborate closely with the marketing and sales department during all

the development process in order to not delay product rollouts and to operate concurrently

developing opportunities together as they arose.

The marketing and sales departments of the two companies were extremely different and they

need to be coordinated: I suggest that the two departments should remain autonomous but they

need a strong communication and information system in order to collaborate and to constantly

exchange information. They could nominate a key manager figure who will work as a consultant

between the two departments in order that each of them will work independently without missing

the required cooperation. The marketing and sales manager of the subsidiary should present new

mobile internet solutions to Microsoft headquarters and coordinate decisions on global scales.

Therefore, Sendit should have its own marketing and sales department which will mainly account

the operations for European countries.

Due to the fact that Sendit’s assets are embedded in the code and in people’s talent and expertise,

retaining its employees is essential for achieving their economic and strategic objectives and for

the success of the acquisition.

In fact, the removal of autonomy can lead to a wide range of negative consequences, including the

departure of key executives who can feel marginalized, misunderstandings of local operational or

marketing conditions due to intercultural differences and operational inefficiencies resulting from

interrupted routines. To avoid problems such as employees’ dismissal or principal-agent problems

a clear incentive program, adequate salaries and options have to be implemented to ensure a

maximum retention of Sendit’s talents.

Moreover, the culture of Sendit should be retained in order to ease the operations of employees

since the company has a strong European culture, very different from the one of Microsoft.
Finally, due to relatedness of resources and complementarity of their technologies , I should

suggest that the acquirer company should permit to the target company to conserve its autonomy

while at the same time they should implement strategical communication and information

systems to coordinate and collaborate on key activities.

EXHIBIT 1

TABLE 1

PMI OUTCOMES SYMBIOSIS PMI STRATEGY

Autonomy of the acquired target High and strategic

Relationship power Symmetrical and Synergic

Interfirm trust High

Zaheer, A., Castañer, X., & Souder, D. (2013). Synergy sources, target autonomy, and integration in
acquisitions. Journal of Management, 39(3), 604-632.