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Table of Contents
Microsoft has been in China for more than twenty years. Its founder Bill Gates foresaw opportunities in the country because the economy was booming, and the company invested in it fully. Most of its strategies were geared towards expansion through long-term investment and development. Microsoft was among the best performing companies in the China’s economy. It is committed to supporting its customers at all levels for them to succeed in their businesses, careers, and personal life. Microsoft has consistently given back to the local community by supporting education and healthcare, and providing many training initiatives to the youth. Thus, the company can attract and maintain its customers even in the face of stiff competition from Google and other Chinese operating systems. The VRIO framework is a technical strategy that helps a company to assess its uniqueness and to define its competitive advantage over its rivals. It is comprised of value, rareness, imitability and organization aspects in the analysis of its internal resources. This paper will analyze Microsoft’s major resources and capabilities in relation to the VRIO framework at the Chinese market. These include financial and technological tangible resources and intellectual property.
Most foreign companies that operate in China face difficulties in protecting their copyrights. They are prone to high requirements for piracy from organizations and individuals. There are many court cases where Microsoft alleges that its servers and windows are duplicated, installed and used without its authorization. However, most observers have argued that even though piracy makes it difficult to sell Windows in a rightful way, there are many Microsoft software services that can be bought. Some scholars have also argued that piracy has made the company popular among its customers hence creating a substantial market share that needs to be turned into revenue (Asay, 2015). The piracy of Microsoft’s Windows has enhanced healthy competition with other software producers like Linux.
To conquer piracy and stay in the market, the company can exploit this resource by introducing consulting, support and cloud services like Office 365, which can be charged and is difficult to pirate. Microsoft is urged to make Windows open-source sharing the source code with the government in order to create a market base for other cloud-ware services (Asay, 2015). Although piracy makes the intellectual property resource less valuable, the introduction of new cloud services can ensure that it is rare. However, imitation through duplication and substitution of Windows and other services has affected this resource.
Technological tangible resources include computers, servers, and telephones of the company. The available technological infrastructure determines Microsoft’s competitive advantage in the market. The corporation has managed to exploit this resource successfully through investing in technological servers, Windows and other software to capture the Chinese market. Even though there is piracy, Microsoft continuously upgrades its Windows for customers to find something new. The introduction of cloud services will make its technological resources rare and difficult to imitate (Waters, 2015). The company has innovative employees who can enable it to tackle challenges easily and create other services that will attract customers.
Microsoft has been considered a global leader in the provision of its services. In 2009, the company was worth the sum of its two competitors (Google and Apple) in terms of its hardware and software. However, Microsoft has continuously faced challenges for the last few years that have affected its financial performance. Google beefed up its resources by partnering with Facebook and using Yahoo’s technology and advertisement and Apple’s technological system and handsets. It affected the performance of Microsoft and its profits. The company has not managed to exploit its financial resource efficiently because of failing to consider changes in the consumer market and lacking innovations to create new businesses, which has affected its sales (Morillon, 2010). The company is spending more on court cases connected with the infringement of its copyrights. It leads to reduced profits. Therefore, since its value has been decreasing, and services have become common and are easy to copy and substitute, the company can lose its competitive advantage.
Even though Microsoft faces stiff competition and piracy challenges, its investment in technology and a continuous upgrade of its software give it some competitive advantage over its rivals. The company should protect its rare resources like technology to support other resources like finance. Indeed, there is a need for Microsoft to continue reviewing its resources and put appropriate strategies that will enable it to compete fairly in the market of China.