Microsoft Corporation’s generic strategy for competitive advantage aligns with the company’s intensive strategies for growth. This 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 the strong competitors discussed in the Five Forces analysis of Microsoft. On the other hand, a company’s intensive growth strategies present approaches for ensuring 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, consumer electronics, and online service business.
Microsoft’s generic competitive strategy enables the business to maintain a broad market scope. On the other hand, the company’s intensive growth strategies support business growth in the global market for information technology, artificial intelligence, consumer electronics, cloud-based services, and related products. With its generic competitive strategy, Microsoft competes with Apple, Google (Alphabet), Amazon, IBM, and Samsung in the market for IT, consumer electronics, and online services. Microsoft also uses this competitive strategy against Xbox competitors, like the Sony PlayStation. In addition, Microsoft’s competitiveness against the video streaming services of Disney, Netflix, and Facebook (Meta Platforms) is supported through this generic competitive strategy. Moreover, this competitive strategy ensures the effectiveness of Microsoft’s own chips for servers and Surface laptops and tablets, against Intel chips.
Microsoft’s Generic Competitive Strategies (Porter’s Model)
Microsoft uses broad differentiation as a 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 specialized tools available on Windows, as well as software products for business organizations. This generic competitive strategy is broad because Microsoft sells its products to various market segments. For example, individuals, households, and organizations buy the company’s consumer electronics and cloud-based storage products. Through this generic competitive strategy of broad differentiation, Microsoft builds its competitive advantages to attract a large population of customers. One of the objectives of broad differentiation is to develop competitive advantages through product innovation, which is a critical success factor in the rapidly changing and highly dynamic information technology industry. This generic competitive strategy also aligns with Microsoft’s corporate mission statement and corporate vision statement, whose long-term strategic goals emphasize capturing a global market.
Microsoft also uses cost leadership as a generic competitive strategy. The objective of this strategy is to minimize business costs to support the company’s competitiveness. For example, cost leadership supports the competitive pricing of Microsoft OneDrive. This generic competitive strategy also helps limit costs to ensure the profitability of Surface laptops and tablets. Business opportunities, like the ones enumerated in the SWOT analysis of Microsoft, are available with support from the cost advantages that come with this generic competitive strategy of cost leadership.
Microsoft’s Intensive Growth Strategies (Ansoff Matrix)
Market Penetration (Primary Strategy). Microsoft’s primary intensive growth strategy is market penetration. This 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 with support from the generic competitive strategy of differentiation, 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 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 develops new software products and new models of Surface laptops and tablets to generate higher revenues. Through new products that address market demand, the business supports its generic competitive strategy of differentiation, which requires product uniqueness as a competitive advantage. This intensive growth strategy of product development points to the strategic objective of enabling business growth through product innovation, with support from Microsoft’s operations management for the design of goods and services, quality management, and other areas. Industry factors, such as the technological and social trends discussed in the PESTEL/PESTLE analysis of Microsoft, shape strategic decisions and the product specifications for this intensive growth strategy.
Market Development (Supporting Strategy). Market development is a supporting growth strategy that has considerable but limited impact on Microsoft’s current business performance. Market development supports business growth through the firm’s entry into new markets or market segments. For example, in its early years, Microsoft applied this intensive growth 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 competitive strategy of broad differentiation empowers Microsoft in implementing market development as an intensive growth strategy. For instance, unique software functions help the company enter new markets or market segments. A strategic objective linked to this intensive strategy is to grow the information technology business by entering new markets or market segments involving new applications of the company’s products.
Diversification (Supporting Strategy). Microsoft uses diversification as a supporting growth strategy. With this intensive strategy, the company grows by developing or acquiring new businesses. For example, Microsoft diversified its business when it acquired Nokia’s devices and services division to re-enter the smartphone hardware market. Through the Xbox, the company also diversified to enter the gaming console market. However, this intensive growth strategy is currently not as significant as market penetration and product development in growing the IT and consumer electronics business. Diversification also applies Microsoft’s competitive strategy of broad differentiation, as well as the generic competitive strategy of cost leadership, to ensure effective and profitable operations. A strategic objective for this 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 corporate structure (business structure).
References
- Aggarwal, A., Baker, H. K., & Joshi, N. A. (2024). Organizational innovation as business strategy: A review and bibliometric analysis. Journal of the Knowledge Economy, 1-27.
- 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.