Scribd Logo
Upload

Welcome to Scribd!

  • 82 views

    Competitive Strategy Group Assignment

    Uploaded by

    Amritansha Sinha
    Evaluate Microsoft’s decision to enter the video games/console business in 2001 : was it a good decision or not, and why?

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd

    Competitive Strategy Group Assignment

    Uploaded by

    Amritansha Sinha
    82 views2 pages
    Evaluate Microsoft’s decision to enter the video games/console business in 2001 : was it a good decision or not, and why?

    Original Title

    XBOX

    Copyright

    © © All Rights Reserved

    Available Formats

    PPTX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Evaluate Microsoft’s decision to enter the video games/console business in 2001 : was it a good decision or not, and why?

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    82 views2 pages

    Competitive Strategy Group Assignment

    Uploaded by

    Amritansha Sinha
    Evaluate Microsoft’s decision to enter the video games/console business in 2001 : was it a good decision or not, and why?

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 2

    Competitive Strategy Group Assignment

    Evaluate Microsoft’s decision to enter the video


    games/console business in 2001 : was it a good
    decision or not, and why?
    Microsoft Xbox – Microsoft’s decision to enter the video games/console business

    Decision It was a good decision to enter the video game market given the
    high industry attractiveness but the execution was strategically Strategy
    challenged
    Execution

    Industry Attractiveness Assessment – Porter’s Five Forces

    Threat of new entrants


     High capital requirement (~$2.0 billion Competitive Rivalry
    in R&D) to enter console market (–)  Software market is highly
     High marketing costs (~$500 – 750 fragmented (–)
    million) (–)  Significant organic growth in
     Economies of scale enjoyed by the industry (–)
    incumbent players (–)  Suppliers are also competitors (–)
     High brand loyalty among end customers  Console market consolidated with
    (–) 70% catered by Sony and Nintendo,
     Rapidly growing market expected to worldwide (+)
    reach $40.0 billion by 2003 from 18.7
    billion in 2001 (+) High

    Competition
    Low New
    Entrants
    Buyers

    Substitutes Bargaining Power of Buyer


    End-customers
    Threat of Substitutes
     High switching costs: Customers
     Others forms of entertainment – have to pay a high purchase price and
    such as movies, TV and sports – Video Game cross compatibility between
    command lower preference (–) Industry – platforms was low (–)
     PC games pose a serious threat Attractiveness  End gamers had primarily 3 console
    to console games – 89% gamers Assessment makers to choose from (–)
    prefer to pay nothing; online  Strong alternatives to console games,
    gaming primarily on PCs (+) enabling customers to play free – 9
    of 10 customers did not want to pay
    Medium (+)

    Suppliers
    Retailers
    Bargaining Power of Supplier1  Highly consolidated console supply
    market (–)
     Multiple software vendors in the market  No threat of backward integration (–)
    (–)
     Major retailers were growing
     Console manufacturers also developed influence and demanded higher
    games for own brand consoles (–) margins (+)
     Some console manufacturers entered into
    exclusive contracts (+) End users – Low
    Retailers - Low
    Low 1

    1) No comments have been made regarding bargaining power of hardware suppliers, as information was not available in the case

    You might also like