INTRODUCTION

Microsoft is a multinational corporation from the United States of America, specialized in producing

computer softwares, personal computers, household electronics and other related services (Microsoft,

n.d.). Microsoft is ranked second in the list of the world’s largest tech companies in Global 2000 2023

conducted by Forbes with a market value of $2.3 trillion (Forbes, 2023). In 2016, Microsoft’s

intention to acquire LinkedIn – a professional networking site was declared, the firm intended to

merge with all-cash valued $26.2 billion (Microsoft News Center, 2016). The report will analyze the

management problem faced by this combination and provide recommendations for how the company

should solve it.

ANALYSIS

Microsoft’s internal and external environment analysis for the combination:

Microsoft’s attempt to acquire LinkedIn in order to access the enormous user base of LinkedIn and

merge it into the mother company’s software, specifically Microsoft Office 365 and be able to

compete with other firms with similar cloud services such as Salesforce.com Inc. (Microsoft News

Center, 2016). The SWOT model analysis of this merger can be described as below:

· Strengths: Microsoft has a strong market power with plenty of resources to promote this contract.

LinkedIn's large user base can be the key element to compete with other rivals in Customer

relationship management (CRM) with Salesforce holding 19,7% of market share, Microsoft was

behind with 4,3%. In 2014, Microsoft failed in an attempt to buy Salesforce with the price of $55

billion, this means buying LinkedIn with the price of $26,2 could be considered as a beneficial

contract (Statt, 2015). After Microsoft’s declaration of the integration, Salesforce also tried to buy

LinkedIn but failed to exceed Microsoft’s budget (CNBC Newsletter, 2016).

· Weaknesses: The acquisition helped LinkedIn gain about $10 billion revenue after five years but the

real profits still remain unclear (Todd Bishop, 2021). Another risk Microsoft might concern about is
 the high acquisition cost that can possibly higher than returns it can create, the example of Microsoft

buying Nokia is a costly miscalculation when it cost nearly the entire volume in the final quarter of

2015 according to Jessi (2017), “Now We Know Why Microsoft Bought LinkedIn”.

· Opportunities: The integration could make Microsoft’s enterprise software such as Office 365,

Dynamics 365 and the new Microsoft Viva employee experiences network to have a greater

advantage as customers can easily switch between two networking sites thanks to the cloud services

that Microsoft provides. The cloud service would also expand the capabilities of LinkedIn and its user

base.

· Threats: LinkedIn’s competitors might increase their advantages to deal with this acquisition and its

user base or revenue could be affected. LinkedIn can lose its independence and core value after the

acquisition. A great layoff or the effects of COVID-19 pandemic may occur which can move the

skillful laborers to other rivals (Donald Thomas, 2019).

ANALYSIS

Identifying several key challenges:

One of many key challenges this merger could face is maintaining the culture and the interdependence

of LinkedIn when integrated into Microsoft authority. The moment Microsoft published the contract,

there were a high volume of comments and cites showing their concerns and doubt whether LinkedIn

could develop in the Microsoft empire system, especially Nokia was a recently terrible deal Microsoft

had made (Jon Erlichman, 2019). In 2016, Bulger Partners Corporate Finance manager - Douglas

Melsheimer had quoted to Bloomberg News that he was highly concerned about the separate culture

and doubtfully thought that they couldn’t handle this large-scale acquisition or maintain independence

between them, he predicted this combination would fail to acquire (Jon Erlichman, 2019).

Another major challenge for Microsoft to deal with is integrating LinkedIn with Microsoft’s business

application software while keeping its unique brand and functions. The execution requires a precious
planning and evaluation in order to make sure the interruptions and customers’ satisfaction are both

achievable.

RECOMMENDATION

Implementation & Evaluation (process, potential outcomes etc.)

It is recommended that Microsoft adopt a participative approach to managing change by involving

employees from both companies in the integration process. This approach promotes participation

from individuals at various levels within the organization in managing the company. Companies

that utilize this approach usually have formal management roles, but those managers prioritize

obtaining feedback and soliciting input from other employees. By involving employees from both

companies in the integration process, Microsoft can ensure that the changes are well-received and

that the integration is successful.

Another recommendation is for Microsoft to communicate openly and transparently with

employees about the changes and their impact on the organization. This can help to establish trust

and reduce uncertainty among employees. By providing regular updates and addressing employee

concerns, Microsoft can ensure that its employees are well-informed and engaged in the change

process.

A third recommendation is for Microsoft to offer training and support to employees to help them

adapt to the changes. This can include training on new systems or processes, as well as support

for employees who may be experiencing stress or uncertainty as a result of the changes. By

offering training and support, Microsoft can assist its employees in successfully navigating the

changes and continuing to perform at their best.

To evaluate the success of this approach, Microsoft could clearly control and analyze the on-

going process and co-operation of LinkedIn and the revenue, profit growth for both of the
companies. If these details and numbers show a positive outcome overtime, this means that the

acquisition is successfully operated.

CONCLUSION

In summary, the acquisition of LinkedIn by Microsoft presented a management challenge, as

Microsoft had to integrate LinkedIn into its existing business while maintaining LinkedIn’s

unique brand and culture. To address this challenge, it is suggested that Microsoft adopt a

participative approach to managing change by including employees from both companies in the

integration process. This approach encourages participation from individuals at various levels

within the organization in managing the company. Additionally, it is suggested that Microsoft

communicate openly and transparently with employees about the changes and their impact on the

organization, as well as provide training and support to help employees adapt to the changes. By

following these suggestions, Microsoft can successfully address the management challenge

presented by its acquisition of LinkedIn.

REFERENCES

Microsoft. (n.d.) ‘About Microsoft’, Microsoft. Available at:

https://www.microsoft.com/en-us/about (Accessed: 15 July 2023).

Ponciano, J. (2023) ‘The World’s Largest Technology Companies In 2023: A New Leader

Emerges’, Forbes, 8 June. Available at:

https://www.forbes.com/sites/jonathanponciano/2023/06/08/the-worlds-largest-technology-

companies-in-2023-a-new-leader-emerges/?sh=78e666f65d1d (Accessed: 14 July 2023).

Microsoft News Center. (2016) ‘Microsoft to acquire LinkedIn’, Microsoft News Center.

Available at: https://news.microsoft.com/2016/06/13/microsoft-to-acquire-linkedin/ (Accessed: 14

July 2023).

Statt, N. (2015) ‘Microsoft tried to buy Salesforce for $55B, report says’, CNET, 22 May.

Available at: https://www.cnet.com/tech/tech-industry/microsoft-tried-to-buy-salesforce-com-for-

55b-report-says/ (Accessed: 14 July 2023).

Levy, A. (2016) ‘Why Microsoft beat Salesforce to acquire LinkedIn’, CNBC, 15 November.

Available at: https://www.cnbc.com/2016/11/15/why-microsoft-beat-salesforce-to-acquire-

linkedin.html (Accessed: 15 July 2023).

Bishop, T. (2021) ‘LinkedIn posts first $10 billion year, 5 years after Microsoft deal, but profits

remain a mystery’, GeekWire, 27 July. Available at: https://www.geekwire.com/2021/linkedin-

posts-first-10-billion-year-5-years-microsoft-deal-profits-remain-mystery/ (Accessed: 15 July

2023).

Hempel, J. (2017) ‘Now We Know Why Microsoft Bought LinkedIn’, WIRED, 14 March.

Available at: https://www.wired.com/2017/03/now-we-know-why-microsoft-bought-linkedin/

(Accessed: 15 July 2023).

Thomas, D. (2019) ‘Dealing with Job Loss After Merger & Acquisitions’, LinkedIn. Available at:

https://www.linkedin.com/pulse/dealing-job-loss-after-merger-acquisitions-don-thomas

(Accessed: 15 July 2023).

Erlichman, J. (2019) ‘Three years after Microsoft acquisition, LinkedIn keeps quietly climbing’,

LinkedIn, 23 October. Available at: https://www.linkedin.com/pulse/three-years-after-microsoft-

acquisition-linkedin-keeps-jon-erlichman (Accessed: 15 July 2023).

Novet, J. (2019) ‘LinkedIn CEO Jeff Weiner is OK with Microsoft’s hands-off approach’, CNBC,

27 December. Available at: https://www.cnbc.com/2019/12/27/linkedin-ceo-jeff-weiner-is-ok-

with-microsofts-hands-off-approach.html (Accessed: 15 July 2023)

APPENDIX