MBA 713: Global Corporate Diversification Strategy
Cycle 10, Module 8
Director: Ellen Weisbord
Feb. 19 – May 7
Project Description
Project Scenario
The Board of Directors of Microsoft Corp. (MSFT) has hired your consulting firm to assess its
global strategy and identify global markets for strategic growth. You will present to the
subcommittee your analysis of MSFT vis-à-vis its competitors in strategic product markets and
you will recommend viable opportunities for diversification into new global product markets.
Microsoft Corporation
Microsoft develops and markets software and services for businesses and individuals. Microsoft
consists of the following five divisions1:
1. Windows & Windows Live Division: Includes the Windows product family and is responsible
for relationships with personal computer manufacturers as well as online software and
services through Windows Live. (Operating systems market, mobile operating systems)
2. Server and Tools Division: Software server products, services and solutions, and Microsoft
Consulting Services. (Global server market, software development tools market)
3. Online Services Division: Consists of an online advertising platform with offerings for
publishers and advertisers, and online information offerings such as Bing and the MSN
portals and channels. (Online advertising industry)
4. Microsoft Business Division: Includes Microsoft Office suites, desktop programs, servers, and
services and solutions; Microsoft Dynamics; and Unified Communications business solutions.
(Enterprise software industry)
5. Entertainment and Devices Division: Consists of the Xbox video game system, Mediaroom,
mobile and embedded device platforms, Surface computing platform, and Windows
Automotive. (Global gaming industry)
1
http://www.microsoft.com/investor/CompanyInfo/Overview/default.aspx
Diversification2
Diversification can be either related or unrelated.
 In related diversification, new businesses share resources or activities with current
businesses, i.e., there is synergy among the business divisions.
 In unrelated diversification, new businesses have no relationship (excluding financial)
with the firm’s current businesses, i.e., there is no sharing of resources or activities.
Diversification can be either domestic or global expansion.
 In domestic diversification, operations of new businesses are based in the home country.
 In global diversification, at least one operational area of a new business (sales,
production, etc.) is based in a foreign country.
These choices result in the following four types of diversification:
Domestic Expansion
Global Expansion
Related Product Markets
Unrelated Product Markets
1. Related Domestic
Diversification
3. Related Global
Diversification
2. Unrelated Domestic
Diversification
4. Unrelated Global
Diversification
For this project, you will concentrate on related global diversification.
Deliverables
1. A resource analysis of MSFT Corp. This section should include:
o Tangible resources
o Intangible resources
o Human resources
o Capabilities
o Weaknesses
o Implications
2. A market analysis of each of MSFT’s 5 major divisions. For each division, provide:
o Industry overview, e.g., market size and scope, market segmentation, key success
factors
o Macro analysis
o Industry (5 forces) analysis (It is up to you to identify industries appropriately. You may
choose to define markets differently than I have done below.)
 Windows and Windows Live: operating and mobile operating systems markets
 Server and Tools: global server market; software development tools market
 Online Services: online advertising industry
 Microsoft Business: enterprise software industry
 Entertainment and Devices: global gaming industry
2
Diversification can be accomplished in several ways: through internal (organic) development,
merger/acquisition, joint venture, etc. In large firms, mergers/acquisition is the means for much, if not
most, diversification. As a result, the terms “diversification” and “acquisition” are often used
interchangeably. This linguistic shortcut works under some circumstances, but bear in mind that they are
different activities.
3. A competitor analysis, to include:
o Products and markets
o Strengths and weaknesses
o Recent actions, e.g., capital investments, strategic partnerships, pricing changes
o Areas of multimarket activity between MSFT and the competitor
o Implications for MSFT
4. For each division, a multipoint competitor chart and/or strategic group map that provides a
visual demonstration of the areas of multimarket activity between MSFT and competitors.
5. Two or three recommended global product markets into which MSFT should consider
diversifying. Your rationale should include industry attractiveness, MSFT’s potential for
competitive advantage, strategic benefit to MSFT (e.g., synergies, control of value chain),
competitor considerations, profit potential and any other strategic issues you have
uncovered in your analyses.
6. Discussion of the mode of diversification MSFT should use to enter the product/market, e.g.,
organic growth, acquisition, equity alliance/joint venture, nonequity alliance. Defend your
recommended mode of entry by addressing
o Characteristics of new business venture
o Past successes/failures
7. Accounting implications (without calculations) of your global market strategy.
A. Discuss whether your recommended target markets use IFRS or local GAAP, and address
whether IFRS will affect MSFT’s financial statements based on your recommendations.
B. Consider how your financial statements will be affected by foreign tax rates and
currency translations.
Presentation
 Begin with an Executive Summary
 Slide titles must indicate the main point of the slide. Read in a series, they should tell your
story.
 Conclusions and recommendations must be supported by issues addressed in the main body
of the presentation
Presentation Slides
At the beginning of your presentation, distribute a copy of your PowerPoint slides to each
reviewer and professor. These copies can be in monochrome.
Briefing Book
 Provide Jim Parker and me with a briefing book (on a CD-ROM) that contains your
presentation slides and the supporting documentation for your deliverables.
 Do not include full-text copies of materials you reviewed unless there is a reason for MSFT
top management to read an original document (unlikely).
 Properly cite your sources. There is a citation style guide in Course Documents. I should be
able to easily find your source from the information in the citation.