Microsoft Case Notes - Microsoft's Diversification Strategy...

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Microsoft's Diversification Strategy CASE ASSIGNMENT To consider the viability of Microsoft's new strategy, Steven Ballmer, 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 resource 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 Corporate- Level Strategy, Ballmer 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? You have one week to conduct your analysis and to prepare a summary report to present your findings to Ballmer and his management team. 7
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Microsoft's Diversification Strategy STRATEGIC ACTIONS: STRATEGY FORMULATION 1. Competitive Rivalry a. Determine the extent to which Microsoft competes with other companies in its industry by assessing the levels of Market Commonality and Resource Similarity for each major competitor. Firms operating in the same market, offering similar products, and targeting similar customers are competitors . The decisions firms make about their interactions with their competitors significantly affect their ability to earn above-average returns. Competitive rivalry is the ongoing set of competitive actions and competitive responses that occur among firms as they maneuver for an advantageous market position. Especially in highly competitive industries, firms constantly jockey for advantages as they launch strategic actions and respond or react to rivals’ moves. It is important for Microsoft to understand competitive rivalry and its influence on the company's ability to gain and sustain a competitive advantage.
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