Competitive Strategy of Microsoft Inc and Tesla Company - Sample

Question: Discuss about theCompetitive Strategy of Microsoft Inc and Tesla Company. Answer: Microsoft Inc. Microsoft is worlds largest software and hardware producing company. It is an American multinational technological corporation having the headquarter in Washington. The company was found by Bill Gates and Paul Allen in the year 1975. Initially the company used to sell basic interpreters for the Altair 8800. Further, the company emerged in selling software for increasing efficiency of computer system. The reason for choosing Microsoft for the analysis is that the company emerged into a multinational corporation within a short period of time. This transformation led a change to the whole technological environment. Also it led to innovation by increasing the efficiency of computers and cellphones (Teece 2010). (Source: Thurrott 2014) In the current scenario Microsoft generate $85.3 billion of profit with its core business activities. Thus it is clearly known that the company is growing with a great speed. The growth of any company is due to itsstrategic management of internal process. So, the internal process of the company is really strong due to which the company is constantly gaining profits in the international markets. The company Microsoft applies the razor and blade technique to increase its sale volume. Razor and blade refers to innovative business model used by the companies to increase its sales. Under this model the company sells one of the complementary good at a lower margin to the customer and the other good at a very high margin to gain profit. Like the company Microsoft uses this model to upgrade its sales. It sells Xbox at a lower margin and gains less profit in it. But the complementary good of Xbox which are the gaming software, are sold at a very high margin. Such software incurs low cost and sold at a high margin to gain profit. Thus in this way the customer gets the benefit to receive the product (which is Xbox) at a lower price and the producer gets the advantage to gain high margin (DaSilva, Trkman 2014). So with the aid of the razor and blade technique the company ears market capitalization and trust of the customers. When the customers receives the products at relatively lower rate from the market, then instantly buys the product. Further to make use of products they need to buy softwares from the company as well, so these software have low manufacturing cost and high selling cost due to which the company earns the profit of two products from one product only. Also the company provides hardware services to its customers; initially the software is pre-installed in the system. But it expiries the customer need to install it by purchasing. The cost of software is not very high and is easily affordable by all, thus the customer also dont hesitate in buying the software. Till now it is one of the best business model used by the business to earn profit. Also this system is hard to operate as interdependence of every department is required in this model, and then only the process will work . Also it is not mandatory for all the departments to earn profit, but the organization should be in surplus. Thus it is difficult for other companies to imitate the model and gain profit (Koen, Bertels, Elsum 2011). Tesla Company Tesla Inc., formerly known as Tesla motors is energy storage and automotive manufacturing company specialized in creating electric cars and other automobiles using natural energy. The company was originated in the year 2003 by Elon Musk, JB Straubel, Martin Eberhard, Marc Tarpenning and Ian Wright. The company focuses on selling efficient automotive models at an inexpensive rate. The company crossed the limit of selling 200,000 cars in March 2017 and became second largest e-car producer company worldwide. (Source: Zach 2015) The purpose of choosing tesla motors for the competitive analysis is that the company has creatively changed the automobile industry by using models having eco-friendly characteristics and low price points as well. The fact shall also be noted that the company is repeatedly growing terms of sales which shows that the organization structure of the company is efficient due to which the company is gaining the competitive edge in the market (Zach 2015). Further the strategy used by the company to achieve market capitalization is discussed below: The strategy which helped the company in gaining the share in the market is creative innovation. As it is known that tesla strategically used the natural resources available and innovated them to recreate the products desired by the customers. This led the company to gain goodwill in the market in a short span of time; leading them differentiates from other competitors present in the market (Kelty, Tarpenning, and Kohn, Tesla Motors, Inc. 2010). The company specifically focused on providing cars with low cost batteries. As it is known that purchasing car is one time expense whereas using batteries to charge the cars is the expense which the customers have to incur till the life of automobile expires. Concerning the issue the company initiated to sell batteries at a very low rate in comparison to other companies prevailing in the market. Like, the Panasonic sold the batteries at higher prices due to which the tesla batteries were highly demanded (Paryani, Tesla Motors, Inc. 2013). Adding to it the company also provided service to the customers on their footstep which gained the faith of employee on the company leading them increase the sales. The company initiated efficient supercharger network stations which helped the customers in better optimization of the product. The company used all the resources available to them and drives them in generating sales for the company (Zach 2015) Due to increasing competition in the market the company in company also stepped into ecommerce business by providing software to the prospective customers with the help of which they can analyses all the specifications of the product and compare them with other companys products as well. As the mission of the company suggest that they believe in disclosing all the relevant information the customers along with gaining their satisfaction in direct and honest way. This approach helped the company in achieving success in long run (Mangram 2012). Thus summarizing the above statements it can be said that company stepped into the field of technology and efficiently used all the resources available to them in order to drive maximum satisfaction of the customers. References DaSilva, C.M. Trkman, P., 2014. Business model: what it is and what it is not. Long range planning, 47(6), pp.379-389. Kelty, K., Tarpenning, M. and Kohn, S., Tesla Motors, Inc., 2010. Electric vehicle communication interface. U.S. Patent 7,698,078. Koen, P.A., Bertels, H.M. Elsum, I.R., 2011. The three faces of business model innovation: Challenges for established firms. Research-Technology Management, 54(3), pp.52-59. Mangram, M.E., 2012. The globalization of Tesla Motors: a strategic marketing plan analysis. Journal of Strategic Marketing, 20(4), pp.289-312. Paryani, A., Tesla Motors, Inc., 2013. Low temperature charging of Li-ion cells. U.S. Patent 8,552,693. Teece, D.J., 2010. Business models, business strategy and innovation. Long range planning, 43(2), pp.172-194. Thurrott, P., 2014, Looking for Strategy as Microsoft Enters FY15, Viewed on August 13, 2017 from https://winsupersite.com/windows/looking-strategy-microsoft-enters-fy15 Zach, 2015, Teslas Competitive Advantages 5 Big Ones, Viewed on august 24, 2017 from https://evobsession.com/tesla-competitive-advantage-5-big-ones/