Innovation, Competition, and Microsoft's Strategic Challenges Explored

This case study examines Microsoft's competitive advantage from the 1980s to the present, focusing on its initial dominance in personal computer operating systems and the subsequent threats from innovation and global market changes. It discusses the concept of "Segment Zero," where technology improves faster than customer demands, and how Microsoft's failure to adapt led to its market share decline. The report evaluates the importance of continuous innovation and strategic adaptation for maintaining a competitive edge, referencing examples like Apple and Google in the smartphone industry. It concludes that successful innovation management requires understanding innovation patterns and implementing changes to meet evolving customer demands, highlighting the need for organizations to transform and utilize resources wisely to outclass competitors.

Running head: MANAGEMENT
Management
Name of the student
Name of the university
Author Note:

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Table of Contents
Introduction......................................................................................................................................3
Thesis Statement..........................................................................................................................3
Purpose of Paper..........................................................................................................................3
Background and History of the Concept.........................................................................................3
Discussion of current issues, innovation and future........................................................................4
Conclusion.......................................................................................................................................5
References........................................................................................................................................6

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Introduction
Thesis Statement
The following study is totally based on the discussion of the competitive advantage of
Microsoft in the market in the earlier times and its present threats due to sudden changes and
drastic developmental measures of the other companies in the market. The Thesis statement
for the study is,”The rise of Microsoft and the threats to Microsoft from Innovation and Global
market challenges”.
Purpose of Paper
The purpose of the following paper is to get a detailed idea on innovation and competitive
advantage by taking the example of Microsoft. Apart from the discussion of the innovative
process in the companies, the different patterns of innovation along with the changes with the
technological perspectives. The implementation of the technological advancements and the use
of the business organization’s rationalist strategies for innovation have also been discussed
accordingly. The following paper has thus served the purpose of getting a proper idea of
innovation process that over exceeds the demand of the customers of the business enterprise.
Background and History of the Concept
The “Theory in action” has been the main discussion point in this particular report on
Microsoft Company. Personalizing the experience of the customer is a challenge for each and
every marketer (Dorn, Hanson Pisano & Shu, 2016). The traditional way of attracting people
was to create different kinds of customer segments that was capable of accomplishing the
marketing needs of the companies. The companies in the modern days need to generalize the
demographic segments in order to successfully focus on the type of their messaging (Cardinale,
2018). However, there are different cases when the traditional marketing does not work and
are surely supposed to fail. As there is an increase in the volume of the data and also a speed in
the increase of business activities, the management of the companies needs to ensure speed
and implementation of a solid and effective transformation process that helps to ensure the

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future success and sustainability for the business (Schumpeter, 2017). The example of
Computer giants Microsoft cited in the case is one of the best in this regards as because not
adapting the change has turned out against the Company and it now faces grave threat from
other competitors in the market to deliver high end products that can easily meet the demands
of the consumers in the market.
According to, Cardinale (2018) beyond the automation of segmentation, the brands need
to be more aware of context, cadence and different kinds of activity on the digital properties.
The Customer “Hub” Approach can make sure that the brand can be ready to react with the
right information, offer or message that is needed to meet the different kinds of touch points.
Therefore the theory suggests the development of the organization constantly like that of the
other similar organizations like Apple and Google that have left their mark in the Smartphone
industry. These kinds of approach help the organization to meet the demands of the customers
and also meet the goals and objectives of the Company (Dorn, Hanson Pisano & Shu, 2016).
Discussion of current issues, innovation and future
The paper has discussed the “Theory in Action” considering the case of Microsoft Company
that rose to prominence in the 1980’s and was able to keep a competitive advantage in the
market as a producer of the best personal computers and operating systems for a long period
of time. However, after 2013 its dominance in the following market came under real threat with
the growth and advent of other similar as well as technologically advanced companies that had
the distinction of inventing new technologies that are more than the expectations of the people
and also outclasses the thoughts of the people (Dorn, Hanson Pisano & Shu, 2016). The theory
in action that was implemented by the management of Microsoft gradually became obsolete as
because it was not able to change and restructure itself according to the demands of the
customers. The use of the term “Segment Zero” is often seen to be used in the following case.
The transformation of the different kinds of the business organizations and innovation of new
technologies like microprocessors, electric vehicles and many other similar items have been the
characteristic of the new generation.

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The development of new technologies have led to the rise of the high end products and led
to the rise of the sales and development of high tier products in the market. The “Theory of
Action” is thus totally based on the concept of changes in the types of the product and a wise
utilization of the resources to innovate new and much better products that easily outclasses the
expectations of the consumers. According to, Schumpeter, (2017) the concept thus clearly
states about the need for regular changes in the set up of the organizations in order to meet
the demands of the customers and make the necessary changes accordingly. Considering the
case of the Smartphone’s it has been seen that both iOS of Apple and Android produced by
Google has been the major shareholders of the market as they have more than 60% of the
segment. On the other hand, Microsoft has not been able to make an impact in the following
industry with little more than 10% of the market share in providing the platform to operate
Smart phones.
Conclusion
The following report has tried to evaluate the innovation and competitive advantage
that helps to determine the strategies and process to outshine the other competitors in the
business market. The successful innovation management includes the likelihood of the
innovation and the patterns of innovation. The report starts with the introduction chapter
where the thesis statement and the purpose for conducting the report has been provided in a
proper and efficient manner. The discussion of “Theory of Action “along with the term
“Segment Zero” has described the main way innovation has transformed the modern world.
The changes in the approach of marketing have helped both small and medium sized
companies to ensure their success in the business market.

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References
Cardinale, I. (2018). Microfoundations of institutions and the theory of action. Academy of
Management Review, (ja).
Dorn, D., Hanson, G. H., Pisano, G., & Shu, P. (2016). Foreign competition and domestic
innovation: Evidence from US patents (No. w22879). National Bureau of Economic Research.
Johnson, S. (2015). How we got to now: Six innovations that made the modern world. Riverhead
Books (Hardcover).
Mendi, P. (2015). Competitive pressure and innovation in vertically differentiated
markets. Economics Bulletin, 35(4), 2309-2316.
Ringberg, T., Reihlen, M., & Rydén, P. (2018). The technology-mindset interactions: Leading to
incremental, radical or revolutionary innovations. Industrial Marketing Management.
Schumpeter, J. A. (2017). Essays: on entrepreneurs, innovations, business cycles and the
evolution of capitalism. Routledge.