Microsoft's Business Model Analysis

This assignment requires an in-depth analysis of Microsoft's business model. Students must examine key aspects such as the company's reliance on cloud-based services like Azure and OneDrive, its expansion into consumer markets with products like HoloLens and Surface Pro, continuous software updates for Windows and other products, data collection strategies through acquisitions like Skype and LinkedIn, and the application of the CAGE framework to assess international market opportunities.

Running head: COMPETITIVE POLICY 0
Competitive Strategy

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Table of Contents
Netflix, Inc.................................................................................................................................2
Netflix’s Strategy...................................................................................................................2
Business Model......................................................................................................................2
CAGE framework..................................................................................................................3
Microsoft Corporation................................................................................................................4
Microsoft’s Strategy...............................................................................................................4
Business Model......................................................................................................................4
CAGE framework..................................................................................................................5
References..................................................................................................................................6

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Netflix, Inc.
It is an American entertainment corporation established in 1997 and operates in the
entertainment industry. They specialised in providing streaming media service and DVD by
mail service. The organisations operate in more than 180 companies and generated revenue of
US$8.83 billion in 2016 financial year. In their beginning, the company focused on providing
DVD on mail facility, but their operations expanded with the introduction of streaming media
facility, which gained Netflix an international spot. The reason for selecting Netflix is that
company has a monopolistic advantage over its competitors such as HBO Now, Apple
iTunes, hula or Amazon Prime Video. At their peak time, the company’s internet traffic data
amount to 37 percent in North America, which is higher than every other competitor
combined, and they had more than 89 million active subscribers.
Netflix’s Strategy
Netflix has updated their strategy to expand their stream media service over different
countries. The company provides original as well as other source’s content, to their
subscribers. As of March 2016, the firm offers more than 1197 TV shows and 4335 movies to
their users. The company is focusing on enhancing their services worldwide; they already
have their operations in more than 180 countries. With the popularity of the home internet,
Netflix has become an essential part of people’s life. Many video stores or DVD retail stores
have closed due to the popularity of Netflix. In North America, the giant video rental service
Blockbuster has been closed due to the popularity of Netflix (Adhikari et.al. 2012).
As per Jenner (2016), in order to increase the number of users, Netflix focuses on improving
their services before their competitors, like high-quality content (4K resolution), simple UI
design, licensing more content and producing more original services. The company focus
their resources on analysing the watching habits of their users and recommend content based
on their preferences. They also analyse illegally downloaded TV shows and movies from
torrents to learn about customer’s behavior in most European countries. This assists Netflix in
enhancing their user’s base which is more than 89 million subscribers.
Business Model
Following are the key principles of Netflix business model which provide them a competitive
advantage over its competitors:

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 The company provide their services at an affordable price and also offer a large
number of original and secondary content which gives them a competitive advantage.
 The original server produced by Netflix such as ‘House of Cards’ and ‘Stranger
things’ are award winning and popular series, which attract a large number of their
subscribers since their competitors cannot provide such shows.
 According to Abraham (2013), the video in demand facility provided by Netflix is
more popular than television because users can watch anything they want at any time,
unlike television shows.
 Netflix analyses their users watching habits are provided recommendations based on
such preferences, which increase the watch time of users (Gomez-Uribe and Hunt
2016).
CAGE framework
To enhance international operations, a company is required to analyse various cultural,
administrative, geographic and economic factors of countries. As per Allen, Feils and
Disbrow (2014), since Netflix provide internet streaming services, it is easier for them to
provide facilities in different countries. Netflix has launched their services in India, Russia,
Singapore and many others. They also manufacture domestic original content to attract
customers in a particular country.

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Microsoft Corporation
It is an American international technology corporation founded in 1975. It operates in
software, hardware and customers electronics industry. The company serves their customers
worldwide and had more than 114,000 employees. It had revenue of US$85.32 billion in
2016 financial year. The reason for choosing Microsoft is that more than 90 percent of
world’s computer runs on windows, which is an operating system provided by Microsoft.
Microsoft’s decision of acquiring LinkedIn for $26.2 billion dollars has been a significant
step towards company’s future growth by using LinkedIn’s data.
Microsoft’s Strategy
Microsoft provides various software, hardware, cloud based and electronics products to their
customers. Apple and Google give a huge competition to Microsoft with their smartphone
and other software services. The company has updated their strategies in the leadership of
Satya Nadella, to increase their position in consumer electronics market. The intelligent cloud
services of Microsoft provided them a competitive advantage over other companies since
more than 70 percent of Fortune 500 organisations use Microsoft’s cloud based services
(Wonglimpiyarat 2012).
The company also give emphasis to merger and acquisition with popular acquisitions such as
Nokia, Mojang Synergies, Skype, LinkedIn and many others. They merger their cloud
services with acquisition company’s services to improve their customer's experience. They
are also focusing on virtual reality and virtual personal assistant technology with products
such as Cortana and HoloLens (Pellegrin-Boucher, Le Roy and Gurau 2013).
Business Model
Even with high competition from Apple and Google, Microsoft has secured its place in the
market. The company has introduced new policies in their business model to provide better
competition. Following are the main features of Microsoft’s business model:
 Using the cloud based networks to provide services to companies and customers, such
as Microsoft One Drive, Azure, and Outlook (DaSilva and Trkman 2014).
 Entering into new markets with consumer products such as Cortana, HoloLens and
Surface Pro, which allow the company to gain competitive advantage.

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 Microsoft is providing constant updates to windows and other software’s to add new
features and improving the quality of software (Amit and Zott 2012).
 Collection of large consumer data resources from acquisitions such as Skype and
LinkedIn, which allow them to formulate their future strategies according to
consumer’s requirements.
CAGE framework
For improving their worldwide services and resources, Microsoft evaluates different
economic, cultural, administrative and geographic aspects of countries which assist them in
formulating international policies. They acquire domestic companies to increase their
operations, and they also provide their services to local companies. This strategy allows them
to easily operate in various international markets (Chor and Manova 2012).

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References
Abraham, S., 2013. Will business model innovation replace strategic analysis?. Strategy &
Leadership, 41(2), pp.31-38.
Adhikari, V.K., Guo, Y., Hao, F., Varvello, M., Hilt, V., Steiner, M. and Zhang, Z.L., 2012,
March. Unreeling netflix: Understanding and improving multi-cdn movie delivery.
In INFOCOM, 2012 Proceedings IEEE (pp. 1620-1628). IEEE.
Allen, G., Feils, D. and Disbrow, H., 2014. The rise and fall of Netflix: what happened and
where will it go from here?. Journal of the International Academy for Case Studies, 20(1),
p.135.
Amit, R. and Zott, C., 2012. Creating value through business model innovation. MIT Sloan
Management Review, 53(3), p.41.
Chor, D. and Manova, K., 2012. Off the cliff and back? Credit conditions and international
trade during the global financial crisis. Journal of international economics, 87(1), pp.117-
133.
DaSilva, C.M. and Trkman, P., 2014. Business model: what it is and what it is not. Long
range planning, 47(6), pp.379-389.
Gomez-Uribe, C.A. and Hunt, N., 2016. The netflix recommender system: Algorithms,
business value, and innovation. ACM Transactions on Management Information Systems
(TMIS), 6(4), p.13.
Jenner, M., 2016. Is this TVIV? On Netflix, TVIII and binge-watching. new media &
society, 18(2), pp.257-273.
Pellegrin-Boucher, E., Le Roy, F. and Gurău, C., 2013. Coopetitive strategies in the ICT
sector: typology and stability. Technology Analysis & Strategic Management, 25(1), pp.71-
89.
Wonglimpiyarat, J., 2012. Technology strategies and standard competition—Comparative
innovation cases of Apple and Microsoft. The Journal of High Technology Management
Research, 23(2), pp.90-102.

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