Research Proposal on "Microsoft's Diversification Strategy"

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[EXCERPT] . . . .

Microsoft Diversification Strategy

Define the competitive rivalry that Microsoft can anticipate in its business units.

Each of the three Microsoft divisions mentioned in the case study, the Platform Products and Service Division, the Business Division responsible for Microsoft Office and Business Solutions, and the Home and Entertainment Division, responsible for managing the Mobile and Embedded Devices and Entertainment Group all have significantly different competitive dynamics confronting their business models. For the Platform Products and Service Division there are competitive pressures both from large-scale enterprise competitors including IBM, Oracle and SAP, both of which through mergers and acquisitions are positioning themselves as the platforms of the future through their use of SOA-based architectures. IBM's WebSphere, Oracle's Fusion, and SAP's NetWeaver SOA architectures are squarely aimed at the Microsoft.NET architecture. The competitive focus of these enterprise software companies is on dominating the Fortune 1,000 purchasing cycles for Enterprise Resource Planning (ERP), Customer Relationship Management (CRM), Human Resources Management (HRM) applications. The SOA framework would allow for business processes across the many functional areas of an organization to share data, and once this is achieved there is a very high switching costs for companies to change. To win a given company's SOA business is to win them for a long time, hence the strong competition on this area of each company's competitive strategy. Converse to this, the Platform Products and Service Division is also being assailed by Red Hat and a host of other smaller competitors who deliver lice

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nsed versions of the Linux operating system. Many of these competitors are distributing Linux at little or no cost, looking to make money on maintenance over the long-term. Even more fundamental to this dynamic of Linux distributions being provided to customers at little if any charge, there is an egalitarian ethic that pervades open source software. As a quote attributed to George Colony in the case study indicates, CEO and Microsoft Founder Bill gates can compete with other companies who charge for software yet cannot compete with another company that delivers software for free. In that quote is the paradox Microsoft is facing in competing against Red Hat and the host of open source operating system vendors.

The Business Division which is the office automation, or as Microsoft calls it, the personal productivity segments, concentrates on Office and Business Solutions. The competitors that this division faces are coming from Google, Yahoo and other hosted application service providers who see Microsoft Office as a very significant installed base to capitalize on and gain incremental users from. In addition to the Web-based application providers including Google and Yahoo that are looking to extend their services by offering hosted office automation applications present a very formidable competitive threat to Microsoft. There are the open source vendors including Red Hat that have open source office automation applications that also form an entirely different type of competitive threat to Microsoft within this product division. Thirdly, the pervasiveness of Web 2.0 technologies and the advent of social computing also known of as social networking show the potential to re-order how communication and collaboration are achieved both individually and within groups. This presents an even more ominous competitive threat to all packaged applications including Microsoft Office and many others. The Great Plains acquisition in this division also opens it up to competition with enterprise software vendors who also sell enterprise applications as well. These include Oracle and SAP, who are transitioning from stand-alone enterprise applications into a broader SAO platform architecture.

The Home and Entertainment Division which includes the Mobile and Embedded Devices and Entertainment Group is also dealing with fundamental re-orderings of the technologies and industries that support their go-to-market strategies, future product development plans, and most importantly, expectations of customers. The convergence of digital, voice, entertainment and educational content within the context of home and work is a dynamic so large that not single vendor will be able to completely react to it. Competitors including Apple and Sony are challenging Microsoft in both sectors of this division and Yahoo with their focus on DRM on music is mentioned in the context of the case study of attempting to compete with Microsoft in this area as well. The Xbox 360 business model where the hardware platform is the basis for creating strong software sales-through for games is an area that needs more execution focus by Microsoft… READ MORE

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Quoted Instructions for "Microsoft's Diversification Strategy" Assignment:

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To consider the viability of Microsoft's new strategy, CEO of Microsoft has brought you in as a consultant. your task is to use the company's Competitive Analysis to predict potential competitor behavior. To do so, you have outlined the following steps:

1. Define the competitive rivalry that Microsoft can anticipate in its business units.

a. Determine the extent to which Microsoft competes with other companies in its industry by assessing the levels of market commonality and resources similarity for each major competitor.

b. Evaluate the drivers that will influence each of the competitors' actions and responses.

c. Consider the factors that impact the likelihood of attack and response from competitors, and discuss any relevant conditions that might influence Microsoft's competitive moves.

2. Discuss how its fast-cycle markets affect the competitive dynamics facing Microsoft.

In order to increase the company's top managers understanding of Microsoft's Corp Level Strategy, CEO has also asked you to prepare an overview of diversification practices that can help the company successfully implement its strategy in the various new markets where it has no proprietary advantage.

3. Define Microsoft's level of diversification and the type of diversification strategy it is using. Identify ways that the company can build upon or extend its resources to create value.

4. Based on the predictions and results of this study, how can Microsoft plan to build and sustain competitive advantages which are critical for creating value for shareholders?

Conduct an analysis and prepare a summary report to present to the CEO and team. Use only the attached case as reference.

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“Microsoft's Diversification Strategy.” A1-TermPaper.com, 2009, https://www.a1-termpaper.com/topics/essay/microsoft-diversification-strategy/971841. Accessed 5 Oct 2024.

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1. Microsoft's Diversification Strategy [Internet]. A1-TermPaper.com. 2009 [cited 5 October 2024]. Available from: https://www.a1-termpaper.com/topics/essay/microsoft-diversification-strategy/971841

1. Microsoft's Diversification Strategy. A1-TermPaper.com. https://www.a1-termpaper.com/topics/essay/microsoft-diversification-strategy/971841. Published 2009. Accessed October 5, 2024.

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