BusinessStrategyRevision_Assessment2

Microsoft Business Strategies

Ashley Timberlake

Capella University- Flex Path

January 7th, 2021

INTRODUCTION

Microsoft Corporation is a giant American multinational technology firm that has its headquarters in Redmond, Washington. The company invests in licensing, sells, production, and support in computer software, personal computers, consumer electronics, and related services. The company was founded in 1975 by Bill Gates and Paul Allen to produce and distribute BASIC interpreters for the Altair 8800. Later on, it started developing personal computer operating system-MS-DOS in the 1980s, from where it rose to become the leading developer before advancing to make Microsoft Windows (Lawrence, 2017).

Microsoft Technology Company has a mission that seeks "to empower every person and every organization on the planet to achieve more". It aims to build the best-in-class boards and efficiency services for a mobile-first, cloud-first world. The company's vision is "to help people and businesses throughout the world realize their full potential"(Lawrence, 2017).

MICROSOFT CORPORATION DIFFERENTIATION GENERIC BUSINESS STRATEGIES

Microsoft Corporation applies broad differentiation as a business strategy to achieve competitive advantage (Lawrence, 2017). The Company uses this by manufacturing unique products that are meant for a wide variety of clients. The products may be designed for specific entities such as organizational use, individual, or home use, that purchase the hardware and software for appropriate use within their location. This has enabled it to attract a large market base that is not only within the US but also abroad. This generic technique aimed at creating a large market for the Company's products is in tandem with the Company's mission and vision which seeks to capture the global market.

Differentiation is also achieved through product innovation that has promoted long term success for the firm. Therefore, to achieve differentiation strategy, Microsoft employs four techniques which are market penetrations, product development, market development, and Diversification.

Market Penetration

This is the primary strategy that the business uses to get to the market and influence many of the customers interested in its products. Microsoft employs market penetration to grow the organization and expand to the entire world, thereby competes well with other companies dealing in the same products. Through this strategy, Microsoft ensures that it sells its products to markets that the Company has operations. An example is the increasing marketing strategies within the Asian market to woo more customers from the region and increase sales. The growth technique has catapulted Microsoft's international supremacy in the IBM PC-compatible operating system business (Lawrence, 2017).

Microsoft Corporation has successfully applied market penetration by engaging in a wide variety of market segments and producing different products. At this juncture, the strategy is to ensure that the Company's growth through aggressive marketing and sales.

Product Development

The secondary strategy that Microsoft uses to reach out to the market is product development. This rigorous strategy that the Company delves in enables growth founded on selling new products and expanding existing ones. This is evident in the Company's quest to continuously develop new software products that match the latest technology word requirement, thereby earning more profits. An example is Microsoft Office which has continually been advanced (Lawrence, 2017).

Through the new products and software, the Company can address the ever-changing needs of the market. It can also support the generic strategy that requires uniqueness of a product to gain a competitive advantage within the market effectively. Therefore, Microsoft achieves its growth objectives and more profits through product innovativeness nature that the companies possess.

Market Development

As a supporting strategy, Microsoft employs market development to grow, though not predictable because of its minimal but considerable effect. This development is achieved through the firm's entrance into new markets. At first, e.g. at first Microsoft applied the strategy by selling its computer software abroad, but this has changed since computer software products are already popular globally making the strategy to have minimal impact (Lawrence, 2017).

This strategy has empowered the Company to apply market development as a serious growth strategy, e.g. innovation of unique business-specific computer products. The software has enabled the Company to penetrate the global market. Microsoft is also fast trying to influence the sale of its products in new markets, such as entering the developing countries or regions and entering into business agreements with corporations and government departments within these countries (Lawrence, 2017).

Diversification

Microsoft Corporation also employs Diversification as a supporting strategy for growth. The Company has been developing new businesses to achieve its growth strategy. For example, recently, the firm diversified its products when it acquired Nokia's products and services division, thereby making an entry into the smartphone hardware industry (Lawrence, 2017).

The firm is appropriately employing this growth strategy by manufacturing new products and developing the existing ones or entering into new business entities that promise the broad differentiation generic approach. Diversification has also achieved Diversification through acquisitions and mergers that the Company enters into with other firms.

Diversification has also seen Microsoft invest in other ventures that increase its profits within the market. Initially, the Company started as a developer of software products for computers. The first product was Altair 8800, which was a programming language for computers. Later on, it invested into Xenix which would later develop Microsoft's first-word processor Multi-Tool Word. This had transformed into other software before the Company ventured into the manufacture of devices (Lawrence, 2017).

The invention of smartphones-Android and Apple motivated Microsoft to diversify further by innovating Apps that would compete with other companies that had entered into this market, such as Microsoft Windows for Android phones. Moreover, the firm has ventured in Games and entertainment, making it a household name since its products are used in everyday life by different people for various purposes (Lawrence, 2017).

MICROSOFT CORPORATION COST GENERIC BUSINESS STRATEGIES

The Company has realized that a product's cost is essential in reaching out to the market and increasing its sale. Therefore, the cost is applied as a marketing strategy by the Company to woo more clients for their products and services. The price of the products affects sales performance and attractiveness of the company goods. It must employ suitable pricing techniques to guarantee a large market. Microsoft has applied three strategies in this area: market-oriented, Freemium, and Buy Only What You Use pricing strategies (Lawrence, 2017).

In the market-oriented cost technique, the firm ensures that product prices are based on competitors' pricing, market factors, and consumer demand. It also employs a freemium pricing strategy to reach out to other customers within the market. This involves offering specific products to the customers for free and requiring payment of the same for additional features to be used. For example, e.g. devices with a screen size of fewer than 10 inches can access Office 365 cloud productivity suite for free, but on larger gadgets, payment is required. This strategy of determining the cost of products is advantageous since it allows clients to try Office 365 for free before deciding to purchase it if they find it attractive, promoting its sales in the long run (Lawrence, 2017).

The "buy only what you use" pricing technique is allowed for cloud services. In this strategy, the customer only pays for what he can use instead of charging per device. This strategy attracts more clients who may be reluctant to use certain products because of the extra charges applied when using multiple computing devices. Therefore, Microsoft has been continuously restructuring its products' cost to address changes in the computer software and hardware market, which is an effective strategy to address the increasing competition with other technology firms.

MICROSOFT CORPORATION FOCUS AND HYBRID INFORMATION GENERIC BUSINESS STRATEGIES

Microsoft employs both the focus and hybrid business strategy to reach out to the market. Using focus, the Company ensures that it develops, needs, and sells products within a niche market. This is because the company manufacturers products meant for specific use and specific people. Some products are useful for home, school, government departments, or even personal use. Therefore, the products are meant for a particular market that finds them useful for the intended purposes they purchase them for. This is intended to satisfy either the product line, type of consumer or a geographical area, e.g. computers meant for schools in developing countries.

In a hybrid strategy, Microsoft develops and tests new applications in the cloud before moving them back into private production or the on-premises environment. This is because the new application, software, and services are easily prototyped in cloud settings and then quickly measured and deployed for success. Through this strategy, Microsoft ensures that it uses data gravity whereby data is born in several various environments, e.g. AWS, Azure, or a data centre (Lawrence, 2017). Secondly, this can be carried out in control by choosing the right infrastructure environment for the job, and lastly, provide future proof.

Therefore, the two strategies-hybrid and focus aim to ensure that Microsoft can reach out to different customers and organizations depending on the clients' needs and the specific products they demand.

How Does Microsoft Make Money?