The Battle for the Living Room: Microsoft and Xbox

Case study of Microsoft and Xbox (in 2012): The Battle for the Living Room

1-Analysis of the firm’s existing business model

The business model of Microsoft Company is the revenue model. Interestingly, it seems a new approach for the company to generate revenues by selling different services around the globe. The key strength of this company in terms of revenue generation is the licensing fee of Microsoft office suite and Microsoft operating system. However, with the passage of time, the company evolved. The company designed different competitive software to give a tough time to Google and Apple. The existing business model of this company is Freemium. The company provides its software for free and only charges for special features. It is an effective business model for these companies that helped in developing the huge customer base and gain the sustainable competitive advantage (Rubens, 2016).

a-Clearly articulates the firm’s business model

In this contemporary business era, Microsoft is looking to embrace this particular business model. It is a fact that the company targets special people through this business model. For Instance, the management of the company wants to push necessary to the right people to buy the premium or paid version of the product. Making trail version software is also a marketing strategy that attracts an immense range of customers. It has been observed that this strategy seems complex in the competitive market, as it is tough to imitate.  As compared to free products for customers, this business model looks complicated. The most prominent example of the Freemium business model is Skype. For Instance, it is a free product for customers around the globe. However, business people have to pay for some enterprise purposes. Another example of Freemium is Office 365 cloud productivity suite. Customers, using ten inches or less, can use the service for free. However, on laptops and desktop computers, the customer can explore additional features (Spence, 2015).

b-Explicates the value the business model is designed to capture

The Freemium business model offers ongoing value to customers. Interestingly, the Freemium business model contains fewer barriers in the product adaptation process. The customer can experience attractive and usable features of products. It increases the willingness of customers.  Through this business model, the company manages to create a good relation between price and perceived quality. Without any heavy marketing campaign, the Freemium business model can be used for better positioning. The company wants customers to create a perception regarding usability and high quality. The high quality and differentiation are two prominent factors, which create value for customers. Thus, it can be said that the Microsoft Company used the Freemium business model as a value creation strategy (Warren, 2015).

2-SWOT Analysis

a-SWOT Elaboration

 i-Articulation of SWOT Analysis

• Strengths

The biggest strength of the company is the brand image. It is a well-reputed brand in the competitive technology market. The brand image and reputation have been derived through high quality and differentiation. The strength of the company is technology. Technologically, it is an advanced company. Moreover, an extensive distribution system in different parts of the world is also a prominent strength. The operating system of Microsoft Company is also in the limelight. The company contains the leading operating system in the world that ensures the big revenue (Unifysquare.com, 2018).

• Weakness

Microsoft Company is integrated with many legal proceedings. From employment issues of intellectual property rights, these legal proceedings have become weaknesses of the firm. For many years, this company has been struggling regarding the illegal use of different operating systems and software, especially in Asian countries. It is tough to control counterfeit of product. Instead of integrating with some innovative and creative idea, the focus of the company is still on the product upgrade. It is the biggest weakness, as far as the actions of competitors in the competitive market are concerned.

ii-Corroborating the OT

• Opportunities

It is a great opportunity for this company to contain business diversification. Microsoft and Xbox are looking to diversify the business process, especially in developing countries to grab both, market, and customers. Mergers & acquisitions with local technology giants is a great opportunity for the company. Now, the company can also exploit the opportunity to improve cybercrime security (Marketwatch.com, 2014).

• Threats

There is an intense, competitive rivalry, and it seems a huge threat to this company. Competitors such as Apple, Google, and Yahoo are producing innovative products for customers. In the sluggish economic condition in different regions, it seems tough for the company to sustain the business. In the competitive technology market, rapid technological changes have become key threats from this company. Therefore, some immediate actions can be taken by the firm to exist strongly in the competitive market.

iii-Sufficient analysis of the results of the SWOT Analysis

Deriving insights from the SWOT analysis, it has been revealed that Microsoft is still a successful company. Through the emergence of high quality and differentiated products, it is tough for competitors to gain a sustainable competitive advantage. Customers or business enterprises are gaining benefits through the Freemium, business model. Thus, due to adequate finances, resources and brand image, the company can create some strategic alliances in different countries. The intense competitive rivalry can be evaded by focusing on innovation instead of upgrading software products. All opportunities should be exploited through integrating with the Freemium, business model.

b-Internal Factor Evaluation (IFE) Matrix

In the internal factor evaluation matrix, all strengths and weaknesses are evaluated through calculating weights and weighted scores.

c-External Factor Evaluation (EFE) Matrix

In the external factor evaluation (EFE) matrix all opportunities and threats are examined through calculating weights and weighted scores.

d-SWOT Bivariate Strategy Matrix

Based on the SWOT analysis, different strategies for Microsoft Company have been elaborated. Combining all SWOT elements is a good approach to derive better strategies.

3-BCG Matrix

The BCG matrix shows the actual market share position in this company in the appendix.

a-Developing a thorough matrix by SBU and analysis

In the CBM matrix, the company is comparatively analyzed regarding rating and weighed score. Apple and IBM are the two main competitors.

References

Marketwatch.com. (2014, April 5). 10 Threats To Microsoft’s Success. Retrieved from https://www.marketwatch.com/story/10-threats-to-microsofts-success-2014-04-05

Rubens, P. (2016, February 3). Why Microsoft continues to embrace the freemium model. Retrieved from https://www.cio.com/article/3029322/software/why-Microsoft-continues-to-embrace-the-freemium-model.html

Spence, E. (2015, March 23). Microsoft Goes Freemium With Its Smartphone Software Strategy. Retrieved from https://www.forbes.com/sites/ewanspence/2015/03/23/microsoft-goes-freemium-with-smartphone-software-strategy/

Unifysquare.com. (2018, January 11). 6 KEY STRENGTHS TO MICROSOFT’S TEAMS SUCCESS. Retrieved from https://www.unifysquare.com/blog/6-key-strengths-Microsoft-Teams-Success

Warren, T. (2015, March 16). Microsoft reveals how it will make money giving away software. Retrieved from https://www.theverge.com/2015/3/16/8227847/how-microsoft-makes-money

Appendix

Internal Factor Evaluation (IFE) Matrix

	Strengths	Weight	Rating	Weighted Score
1	Brand Image	0.05	4	0.20
2	High Quality	0.05	4	0.20
3	Differentiation	0.05	3	0.15
4	Technology	0.05	3	0.15
5	Extensive Distribution System	0.05	4	0.20
6	Operating System	0.05	3	0.15
7	Higher Revenue	0.05	3	0.15
8	Competitive Edge	0.05	4	0.20
9	Well-Reputed	0.05	3	0.15
10	Talent	0.05	3	0.15

 

	Weaknesses	Weight	Rating	Weighted Score
1	Legal Cases	0.05	2	0.10
2	Employment Issues	0.05	2	0.10
3	Intellectual Property Rights	0.05	1	0.05
4	Poor Investments	0.05	1	0.05
5	Criticism on flaws in security	0.05	1	0.05
6	Counterfeit	0.05	2	0.10
7	Lack of Innovation	0.05	2	0.10
8	Mature markets for PC	0.05	2	0.10
9	Focus on Product Upgrade only	0.05	2	0.10
10	Dependence on Manufacturers of hardware	0.05	2	0.10
	Total IFE Score	1.00		2.55

 

External Factor Evaluation (EFE) Matrix

	Opportunities	Weight	Rating	Weighted Score
1	Business Diversification	0.05	2	0.1
2	Market Expansion	0.05	1	0.05
3	Mergers & Acquisitions	0.05	3	0.15
4	Improvement in Cybercrime Security	0.05	1	0.05
5	Cloud-based Services	0.05	2	0.1
6	Mobile device industry	0.05	2	0.1
7	Mobile advertising	0.05	2	0.1
8	New Trends	0.05	2	0.1
9	Emerging Markets	0.05	3	0.15
10	Innovation	0.05	1	0.05

 

	Threats	Weight	Rating	Weighted Score
1	Competitive Rivalry	0.05	3	0.15
2	Innovative Products of Competitors	0.05	2	0.10
3	Sluggish Economic Conditions	0.05	3	0.15
4	Competitive Technology Market	0.05	3	0.15
5	Changes in Technology	0.05	3	0.15
6	Changing needs of Consumers	0.05	3	0.15
7	Changing Habits of Consumers	0.05	2	0.10
8	Potential Lawsuits	0.05	2	0.10
9	Counterfeiting of Products	0.05	2	0.10
10	Open-Source Projects	0.05	1	0.05
	Total EFE Score	1.00		2.15

 

SWOT Bivariate Strategy Matrix

BCG Matrix

Develops a thorough matrix by SBU and analysis

CPM Matrix