Microsoft's Diversification Strategy

2716 Words11 Pages
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
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Throughout Microsoft’s lifetime they have diversified into numerous other fields besides software for computers.
Microsoft breaks down their diverse business portfolio into 5 different areas:-
Online services divisions (i.e. MSN, Bing),
Server and tools business (i.e. Windows server) ,
Microsoft business solutions (i.e. Microsoft health solutions), Microsoft office division (i.e. SharePoint)
Interactive entertainment business (i.e. HTC, X-box, Skype)
(Microsoft, 2010)
Microsoft are situated within the top 20 largest companies functioning in the world, with turnover figures of 60-70 billion dollars a year (E-how, 2011).
From reviewing the history on Microsoft it is clear to see that Microsoft has a wide portfolio with strategic businesses units working in numerous related markets. The next section will identify what corporate strategy is and what type Microsoft are using.
What is Corporate Strategy?
Corporate Strategy has been defined by numerous authors. Grant (1995) claims corporate strategy deals with the way a corporation manages a number of different businesses. Lynch, R, in both his third and fourth edition books on corporate strategy refers to Penrose (1959) definition of corporate strategy as “the pattern of major objectives, purposes or goals and essential polices or plans for achieving those goals, stated in such a way as to define what business the company is in or to be in and the kind of company it is or to be”

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