The cost leadership helps in making profit as well as gaining competitive advantages (D. Banker, Mashruwala & Tripathy, 2014). The company is a global leader in services, software and solutions therefore it uses cost leadership strategies beside their competitor Apple.Inc. the company has been able to offer 5 divisions business through personal software, business software and entertainment to its customers through Xbox games.
The CEO Nadella has outlined the company’s shift from services and devices to platform and productivity. The company’s productivity begins with its Office Apps like Word, PowerPoint, Excel OneNote and Lync, which goes beyond including Bing, Outlook, Skype, OneDrive and Office Mobile. It targets the dual users whose home and work are intertwined. Chief Operating Officer Kevin Turner has forecasted that the company’s ‘zero dollar’ pricing for Window’s devices, will be resulting something new. The company mixes both the strategies therefore able to make more profit and more market penetration (Hill, Jones & Schilling, 2014).
Microsoft company uses the merger and acquisitions strategy to gain more competitive advantages. In this strategy, the company is combining with another corporations and become one business entity. This helps Microsoft to achieve more efficiencies and productivity. Acquisition helps Microsoft to purchase another company along with its assets and shares. The company encourages more technology merging and acquisitions to strengthen the corporation. Since 1994 the company has applied acquisition strategy each year. It purchases small companies to gain massive growth as well as market share. Microsoft has purchased 18 small firms in 2006 that includes Onfolio, ProClarity, Lionhead Studios, Colloquis, Massive Incorporated and Winternals Software. Microsoft has purchased nine companies worth over one billion dollars that are Visio Corporation (2000), Navision (2002), aQuantive (2007), Skype (2011), Fast Search & Transfer (2008), Nokia (2013), Yammer (2012), Mojang (2014) and in 2016 LinkedIn. For improving the capacity utilization, and better usage of sales force, Microsoft has decided to continue with this strategy.
Microsoft is a global company that competes in international level. It operates in more than six hundred countries of the world and has foreign direct investment in some of these countries. As a global company Microsoft uses centralized approach that is the major decisions are taken in the headquarters of Microsoft. To maintain the product quality all over the world, the company offers same software program only adjusting the programs matching local dialects (Chen & Miller, 2015).
Microsoft follows diversified strategies. Basically it is a service, solutions and software provider. Microsoft’s corporate level activities include broad based marketing and sales, product support, legal, information technology, finance, human resource, corporate development, research development and legal settlement and contingencies (Andrevski et al., 2014). The Windows division and Microsoft business divisions are the most profitable sections for the company where as the entertainment devices and products such as OneDrive are under the company’s sub-segment diversification strategy. The server tools division and online service divisions have lower market share as well as lower growth. The company’s idea is to provide collaboration in diversification. Therefore, all of its software are designed to work collaboratively.
Microsoft’s maintains evolving responsibility strategy that ensures the company’s corresponding programs to satisfy its stakeholders. Microsoft emphasizes on human rights, business transparency and environmental sustainability (Saeidi et al., 2015). As a player of international market the company enhances brand as well as corporate image by improving social responsibility strategies continuously and dedicates itself in prioritizing accessibility in product development to empower everyone. Supplier Code of Conduct of the company has prescribed human rights, health, labour, safety, environmental and ethics practices holding its suppliers accountable for these. The corporate citizenship programs are arranged based on global guidelines and standards.
Being a diversified corporation Microsoft offers various products and services therefore it faces tough competition in the technology sector. The major competitors of Microsoft include Apple, Google, IBM and Oracle. Macintosh OS of Apple is superior than Windows but is limited to Macintosh computers just as IBM’s OS/2. Microsoft’s operating system can be handled easily and provide better accessibility.
Andrevski, G., Richard, O. C., Shaw, J. D., & Ferrier, W. J. (2014). Racial diversity and firm performance: The mediating role of competitive intensity. Journal of Management, 40(3), 820-844.
Chen, M. J., & Miller, D. (2015). Reconceptualizing competitive dynamics: A multidimensional framework. Strategic Management Journal, 36(5), 758-775.
Banker, R., Mashruwala, R., & Tripathy, A. (2014). Does a differentiation strategy lead to more sustainable financial performance than a cost leadership strategy?. Management Decision, 52(5), 872-896.
Hill, C. W., Jones, G. R., & Schilling, M. A. (2014). Strategic management: theory: an integrated approach. Cengage Learning.
Saeidi, S. P., Sofian, S., Saeidi, P., Saeidi, S. P., & Saaeidi, S. A. (2015). How does corporate social responsibility contribute to firm financial performance? The mediating role of competitive advantage, reputation, and customer satisfaction. Journal of Business Research, 68(2),341-350.
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