The company decided to focus on video games as opposed to other things as a way of gaining the trust of the clients. That is to first get into the video game industry, after which they can work on the other things. The company abruptly ceased the production of Xbox in favor of directing all its efforts towards the production of the next console. The company also focused on gaining customer loyalty as a way of increasing sales. The company knew that it was a challenge to unseat Sony from its leadership position, which made them give the system a loss to increase the install base, something that made them take up a significant market share. There are also several elements of Microsoft Strategy that have been identified in the case study. That is, the company was confronted with unexpected reactions from their fans, which made them reverse all the policies that were deemed unpopular that the company had planned to implement. The abandoned elements of the Microsoft strategy included the abandonment of the plan to give away the free systems in favor of a more traditional approach when they realized that the system would not be successful (Angert, 2019).
The strategic success by Microsoft in marketing the Xbox was giving systems for free with the aim of building a following. The strategic success of the company also came from is the ability to ensure synergy between the manufacturing department and the marking department, which made sure that the company puts in the market the products that have the features that the clients love. The company also shifted its attention from the gamers to the general public, which attracted the other clients in the market and a process they were able to convert various non-gamers to gamers. The strategy was useful because it increased sales and subsequently increasing the number of profits made by the company. Microsoft has reduced itself to being a copycat than a leader in the gaming industry, which is a strategic mistake. Microsoft seems to have copied a good portion of its marketing strategy from Nintendo. The problem with copying means that the company will always lag due to their failure to come up with the market changing inventions. It is, therefore, essential for the company to deal with the challenges in marketing and to come up with more measures that will increase the sales.
Groupthink played a significant role in Microsoft’s initial policy decisions because they seemingly thought of the ways to increase their market share without taking time to think about the critical assumptions and concerns hence causing some challenges to the company. Groupthink may have been caused by a group of people who were so keen on increasing the market share and profits without taking more time to assess the dangers that could have occurred in the process. The tendency of the people to be overly positive and ignoring the apparent dangers was also a reason why Groupthink took over. It would be mitigated by appointing professionals who understand the concept of expansion and the risks involved (Janis, 2008).
I think Microsoft altered its strategy because it realized that it was not going to enable them to achieve the goals that they had put in place. They could also have backtracked from their original strategy when they realized that it could lead to more losses because of the imminent risks. One specific factor that led to the company taking the strategic decision was possibly after analyzing the market and realizing that the strategy could cause more harm than good to the business. The decision was notably pegged on the desire to see the success of the company in the new product that they were bringing into the market.
The circumstances when a company should implement a strategic pivot include when everything is moving at a rapid pace, and the business is not an exception when the company needs to increase its revenue streams and when there is a need to be relevant in the market. The other circumstances under which the company should implement a strategic pivot include when various ideas have been tried in the market without precise results and when there is a need to reinvigorate the business. YouTube is one of the companies in the real world that implemented a pivot. The company started as a video dating service then changed to video streaming when the management of the company saw that they could make more money as a video streaming service. The pivot made the company to be a multi-million empire that Google acquire for $65 billion. Deliberate strategy elements taken by YouTube included choosing sharing dating videos as the original business plan. New strategy elements included allowing the clients to upload any video when the company could not get enough dating videos. The abandoned strategy elements included completely changing the business strategy. D+E-A=R, which means joining the deliberate strategy elements with the emergency strategy elements less than the abandoned strategy elements, leads to a realized strategy (Cunningham, Craig & Silver, 2016).
Microsoft’s policy reversals had an impact on the market performance of the Xbox One. The policy reversal played an important role in increasing the popularity of the gaming consoles among the clients and an increase in the sales of the games that were made by the company. Microsoft created a situation where the gaming industry would become digital. The policy reversal also made the company capture a significant portion of the market hence increased the number of profits that they made in the market. Microsoft also caused some changes in the gaming industry that are still in force to date. Some of the harms that were caused were the fact that the company had to spend more time and resources to design and implement the new strategy. It, therefore, means that the resources that were used in making the old strategy went to waste. On the positive side, the policy reversals were important because they promoted the performance of the company and made the company to take a significant portion of the market. The success of Xbox in the market has been attributed to Microsoft’s policy reversals. The policy reversals also lay a foundation for the future success of the company and have made it possible for the company to come up with more strategies.
If Microsoft had launched Xbox with the initial plans, there would be various challenges to the growth of the company, and that is why the management of the company saw it necessary to change the plans that they had put in place. Launching Xbox with the initial plans of the company intact would make Microsoft vulnerable to the competition in the market. The initial plan would not make the company compete favorably in the market. Microsoft could, therefore, fail to take a significant market share that could make them more profitable in the market. The strategy was also very predictable and not as sophisticated as it was supposed to be; hence the company would not make the significant amount of profit it ought to in the market. The other thing that could have happened if Microsoft decided to launch Xbox with the initial plan is that the company could fail to gain popularity among the clients.
I believe that Microsoft should revisit the approach that it had originally planned to adopt because it was focused on a traditional strategy that may not work in the present and in the future. It is important that the market is very dynamic, and it needs the companies in the market to come up with ways of increasing their sales. Such a plan may also not be feasible in the future because the markets are growing, and the dynamics are changing significantly. The companies are coming up with the necessary measures that will make them attract clients and make more sales. The traditional measures will, therefore, not work in the modern and in the post-modern markets. New strategies have to be used to deal with the competitors in the market, and companies have to conduct more research on how to deal with the growing number of competitors in the market.
There are many lessons that a student of strategic management can learn. One of the lessons is the fact that the same market strategy cannot be used over and over again, rather it is important to conduct research and come up with strategies of dealing with the competitors in the market. The other lesson is that it is always wise to change a strategy when it is clear that the one that has been adopted does not meet the needs of the clients in the market. The other lesson is that the market is always dynamic, and the managers need to understand the fact. I believe that Microsoft’s strategic leaders learned from the situation. One of the lessons is that it is not easy to get into the market. The other lesson is the fact that there is always possible to change a strategy that is not working. I believe that Microsoft’s strategic leaders should have learned that competitors can always be beaten through the use of a positive working strategy. The other lesson that they should have learned is that there are changes in the market that all the companies need to be aware of if they have to succeed in the market (Angert, 2019).
Microsoft should apply various learned principles as it prepares the 2020 launch of its next console, the Xbox series X. One of the principles is the fact that it is necessary to research the market before launching a product. They are supposed to assess the competitors and come up with ways of dealing with them. The other principle is that the clients are the key to any market promotion. The company can put in place various strategies that will lead to its success in the future. One of the strategies is that the company should be right for the market, a strategy that will allow the company to make more sales. The second strategy that the company should set goals that is supposed to be achieved by the company. The other strategy is to come up with a big event that will be used in launching the product. A significant event will give the company the necessary momentum to succeed in the market. The other strategies that can be used is planning for the unexpected and find ways of how to deal with the unexpected events. Finally, the company should test the product and make the necessary updates (Angert, 2019).
Angert, C. (2019). X-treme Makeover: A Case Study of Microsoft’s Dramatic Xbox 180 Strategy Reversal. Business Education Innovation Journal, 11(2).
Cunningham, S., Craig, D., & Silver, J. (2016). YouTube, multichannel networks and the accelerated evolution of the new screen ecology. Convergence, 22(4), 376-391.