Question

Please list 6 Core Competencies for Microsoft Corporation based off the RBV approach? and explain if they are rare, hard to imitate, not easily substitutable, valuable.

Answer 1

CORE COMPETENCIES FOR MICROSOFT CORPORATION BASED OFF THE RBV APPROACH:

1- Development, manufacturing and licensing

2- Implementing knowledge competencies in an online system.

3- Supporting software products (operating systems, server applications, business solution applications…)

4 - R&D resources focused on cloud computing services

5- Technology

6- Brand image

7- Patents licenses

8 - the Strategic vision of the well-known Bill Gates

9- Expertise in many ITbased innovations and technologies

10- Implementing knowledge competencies in an online system

11- Financial resources (high performances)

Microsoft has been trying for years to move beyond the PC, and into other devices such as mobile phones, television set-top boxes and games consoles. Finally, enjoying a virtual monopoly on PC operating systems, the company decided to enter the video game market in 2001 with the Xbox game machine (and peripherals) with the ambition of breaking Japanese firms’ monopoly. Videogames was an infant sector for Microsoft. The company still lacked experience in the video game field. In addition, it suffered from a fairly negative image linked to its monopoly on operating systems.

This diversification into videogames is finally very recent and fits in the framework of a rapid global revenue growth. The home console market is today a mass market and video games are today considered a pillar of the entertainment industry, along with movies and music. The video game industry is somewhere between the computer (software, components, peripherals…) and the audiovisual (contents, copyright…) sectors. Relations between the different players evolve rapidly, and so does negotiating power. The entry of Microsoft in this market was a surprise.

Since its entry, Microsoft has adopted a very aggressive strategy considering the Xbox as a long-term strategic investment. Microsoft spelled out its ambition right from the start overtake Sony the market leader (with its PS2 and PS3). The arrival of Microsoft on the market in 2001 did not until 2005 present any real threat to Sony. 2004 was, however, a turning point for Sony in this branch, which is under growing pressure from Microsoft.

With the Xbox, its objective is to create a new entry point in households: a “media center” defined as a central storage and distribution unit for digital content in the Home. Videogames are the sort of product which is based on multiple-purpose hardware and which should grow to its full extent once broadband is widely available. As early as 2002, Microsoft decided to be the « first mover » in the promising online game sector. Online games were and are still at the center of its strategy. In addition, Microsoft manages to apply its software engineering know-how (competence) to develop a specific OS for the Xbox 360. Finally, this strategy of diversification can be considered as a real success based on a powerful console, several strong games franchises and an impressive online-gaming service, Xbox Live leading to a prominent position in the marketplace.