Microsoft Corporation’s generic strategy for competitive advantage is aligned with the company’s intensive strategies for growth. Such alignment optimizes organizational performance. A company’s generic strategy indicates the general approach to ensure business competitiveness. Microsoft’s generic competitive strategy supports the attractiveness of its computer hardware and software products amid a wide variety of competitors. On the other hand, a company’s intensive strategies for growth present the approaches used to ensure business growth and development. In this case, Microsoft’s intensive growth strategies currently prioritize market penetration. Other intensive growth strategies have a supporting role in the information technology and online service business.
Microsoft Corporation’s generic strategy creates competitive advantage while enabling the business to maintain a broad market scope. On the other hand, market penetration is used as the main intensive growth strategy to support the company’s growth in a highly competitive global market for information technology, artificial intelligence, digital advertising services, consumer electronics, cloud-based services, and related products. In this market, Microsoft competes with Apple, Amazon, Google (Alphabet), Sony, IBM, Samsung, Netflix, Disney, Facebook (Meta), and Intel.
Microsoft’s Generic Strategy (Porter’s Model)
Microsoft Corporation uses broad differentiation as its generic strategy for competitive advantage. Broad differentiation involves unique products sold to a wide variety of customers. In this case, the company’s products are unique in terms of features, such as software products specifically designed for business organizations. Also, this generic competitive strategy is broad in the sense that the company sells its products to various market segments. For example, individuals, households, and organizations buy Microsoft’s consumer electronics and cloud-based storage products. Through the broad differentiation generic strategy, the company builds its competitive advantage to attract a large population of customers globally. This generic strategy also aligns with Microsoft’s corporate mission statement and corporate vision statement, which emphasize capturing a global market.
A strategic objective applicable under Microsoft’s broad differentiation generic strategy is to develop business competitive advantages through continuous product innovation. This strategic objective is crucial to long-term success, considering that Microsoft operates in a rapidly changing and highly dynamic industry. The uniqueness of product design is another strategic objective linked to the broad differentiation generic strategy. This strategic objective highlights the importance of tangible and intangible attributes of products as considerations in building the competitive advantages and business strengths enumerated in the SWOT analysis of Microsoft Corporation. For example, aesthetic design and effective branding can strengthen computer hardware products against imitation. Specificity to the Windows operating system can also help reduce the problem of product imitation.
Microsoft’s Intensive Strategies (Intensive Growth Strategies)
Market Penetration (Primary Strategy). Market penetration is the primary intensive strategy that Microsoft uses to grow its business. This intensive growth strategy involves selling more products to the markets where the company currently has operations. For example, the company grows by intensifying its marketing and sales in its current markets in Asia. This intensive growth strategy is responsible for Microsoft’s global dominance in the IBM PC-compatible operating system market. The company effectively applies market penetration through the broad differentiation generic strategy, which uses product uniqueness to attract more customers from various market segments. A strategic objective based on this intensive strategy is to ensure business growth through Microsoft’s marketing mix (4Ps), involving aggressive sales and marketing strategies and tactics.
Product Development (Secondary Strategy). Microsoft Corporation uses product development as a secondary intensive growth strategy. This intensive strategy facilitates growth based on the development and sale of new products. For example, the company continually develops new software products to generate higher revenues. Through new products that address market needs, the business supports its generic strategy, which requires product uniqueness as a competitive advantage. This intensive strategy of product development points to the strategic objective of enabling Microsoft’s growth through product innovation.
Market Development (Supporting Strategy). Market development is a supporting intensive growth strategy that has considerable but minimal impact on Microsoft’s current business performance. Market development supports business growth through the firm’s entry into new markets. For example, in its early years, Microsoft applied this intensive strategy to sell its computer software products outside the United States. However, considering that these products are already globally popular, market development is no longer as significant in the company’s growth. The generic strategy of broad differentiation empowers Microsoft in applying market development as an intensive growth strategy. For instance, through unique business-specific computer products, the company initially entered overseas markets. A strategic objective linked to this intensive strategy is to grow the information technology business by entering new markets, likely in developing countries or regions.
Diversification (Supporting Strategy). Microsoft Corporation considers diversification as a supporting intensive growth strategy. In this intensive strategy, the company grows by developing or acquiring new businesses. For example, the company diversified its business when it acquired Nokia’s devices and services division to re-enter the smartphone hardware market. Microsoft can effectively apply this intensive growth strategy through new product development in new business ventures, based on the broad differentiation generic strategy. A strategic objective based on the intensive strategy of diversification is to facilitate the information technology company’s growth through mergers and acquisitions. These mergers and acquisitions typically come with changes in Microsoft’s organizational structure or corporate structure.
References
- Ali, B. J., & Anwar, G. (2021). Porter’s Generic Competitive Strategies and its influence on the Competitive Advantage. International Journal of Advanced Engineering, Management and Science, 7(6), 42-51.
- López, D., & Oliver, M. (2023). Integrating innovation into business strategy: Perspectives from innovation managers. Sustainability, 15(8), 6503.
- Microsoft Corporation – Acquisition History.
- Microsoft Corporation – Facts.
- Microsoft Corporation – Form 10-K.
- U.S. Department of Commerce – International Trade Administration – Software and Information Technology Industry.