Generic and Intensive Strategies of Microsoft
21st century is an intensely competitive era where the companies are engaged in a fierce battle for market share. In such a situation for any company to build and maintain a strong market position, it is important to have one or the other competitive advantage. Companies that have managed to achieve the leadership position have done based on their competitive advantages. All the companies that are leading in their respective industries like Microsoft, Apple, Starbucks and Nike have one or the other source of competitive advantage that has helped them build and sustain a larger market share than their competitors.
However, there can be different sources of competitive advantages for different companies. For one company, it can be a piece of technology, for the other it can be skilled human resources or strong brand image. Michael E. Porter has highlighted three important generic strategies that can be used to build and sustain competitive advantage. These strategies are cost leadership, differentiation and focus. The last one is subdivided into two more categories that are cost focus and differentiation focus. Apart from these generic strategies, there are intensive strategies that can be used to expand market share and grow the customer base. This is a discussion of the generic and intensive strategies used by Microsoft to build competitive advantage and to expand its market share.
The generic strategy used by Microsoft to build a source of competitive advantage can be considered a mix of differentiation and cost leadership. It has adopted both. It makes software and operating system meant for the masses. It also makes their demo versions available for limited time periods for individual and collective use for businesses. The best thing is that these software are available at low prices because the mission of Microsoft is to make computing both affordable and accessible to masses. The windows operating system is found on most computers in this world. Similarly, there are Microsoft office and other software from the house of Microsoft that are available at affordable prices for both people and organizations.
Apart from it, Microsoft has also differentiated its products from competitors. Unlike Apple which has adopted a premium strategy, Microsoft has used a strategy that has helped it address the needs of a broader target market that is made up of both individuals and organizations From servers to developer tools and business solutions to other services, the business has differentiated its products and services from its competitors. Its products are differentiated on basis of product utility as well as affordability. This is a very important factor since it has helped the brand build a differentiated brand image.
There are four intensive strategies as outlined in the Ansoff matrix that can be used by any company for growing its market share and revenue. Companies generally use these strategies to expand their customer and market base. These strategies are market penetration, market development, product development and diversification.
Market penetration is the strategy of selling more to an existing customer base. Microsoft sells to both individuals and organizations. Since it has been selling affordable computing solutions, the brand has been able to build a large customer base. However, it has added a large series of products and services to its product line which it sells to its existing customer base too. Since it has a very large customer base already, the brand is able to sell the new products it makes to the individual and organizational customers.
Market development is the process of entering new markets and new regions to expand the customer base and to grow sales and profits. Overtime, Microsoft has expanded its market globally from Europe and Asia Pacific. This vast market base means high sales and revenue. Apart from market penetration, it is the other main strategy adopted by Microsoft to develop its market base and market share.
It is also an important strategy adopted by Microsoft to grow its market base and revenue. The brand has grown its sales worldwide and kept adding to its diverse array of products. Apart from software products, it makes a diverse array of products like servers, CRM and other business solutions, developer tools, PC games, other accessories etc. This product line has kept growing and adding to Microsoft’s revenue.
Microsoft has continued its diversification efforts to grow its sources of revenue and to build a larger customer base. However, its Nokia acquisition did not prove successful and was unable to provide any important value to the business or the organization. Still, Nokia has entered gaming business and personal technology too. All these diversification efforts are aimed at producing higher revenue and acquiring a larger customer base.