This essay plans to focus on the corporate strategy of Microsoft, and show how Microsoft has used diversification successfully within their corporate strategy to gain a competitive advantage.
This essay will utilise the following structure. It will commence by providing the reader with a brief history about Microsoft and then go onto explaining what corporate strategy is. Following this will be Microsoft’s diversification strategy in parallel with the reasons why they choose to diversify. Within this section the author plans to explore Microsoft’s related diversification approach, their corporate rationale, alongside why skill transferring is essential to them sustaining a competitive advantage and also how they achieved and utilized economies of scope (EOS). In the section regarding reasons why Microsoft chooses to diversify will be notions of proactive and defensive reasons, along with the idea of increasing market power and spreading risk. Then finally, a conclusion will follow summing up Microsoft’s overall ability to sustain a competitive advantage.
Microsoft was originally created in 1975 by Bill Gates and Paul Allen. They first introduced their software package, Window 1.0 in 1983, the first package to consist of a mouse which helps navigate a PC. MS-DOS commands were previously used to operate computer systems, however people found these extremely hard to understand. This Windows 1.0 package was a key turning point in Microsoft emergence. As time progressed Microsoft created updated versions which consisted of advanced graphics, built-in internet support, dial-up networking and much more (Microsoft, 2011). Windows packages started from Window 1.0 to the current version whic...
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...ation moves by service firms seeking benefits from information asymmetry and economies of scope”. Stratgic Management Journal, 14: Pgs 569-591.
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