Microsoft Xbox: Changing the Game? SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Microsoft Xbox: Changing the Game?
In September 1999, the Microsoft Xbox team was wondering which strategic choices would give it the best chance against the upcoming Sony PlayStation 2. Initially called "Project Midway" within Microsoft, the console project was intended to counter the perceived threat to the Windows franchise posed by Sony expanding the original PlayStation into a broad entertainment platform with the PlayStation 2. Seamus Blackley--the chief instigator for the Xbox within Microsoft--and some of his colleagues were on a flight to Austin, Texas, where they had an appointment with Michael Dell, CEO of Dell Computer. The purpose of the visit was to convince Dell to manufacture Xbox videogame consoles running Microsoft software. Indeed, the team intended to produce a machine somewhere between a standalone videogame console and a PC tailored to play videogames. It remained unclear, however, where along the spectrum from dedicated console to PC Microsoft should position the Xbox. Would it be an open platform like the PC in the sense that independent developers could publish games on it with no restrictions and without having to pay royalties? Who would produce consoles and under what arrangements? What features should the console include, and how would it be priced to consumers? The home videogame industry had been born in the 1970s during the Atari "golden age", then collapsed suddenly in 1983. It was reborn at the end of the 1980s under Nintento's leadership, which was then challenged for a few years by Sega, only to be conquered by Sony's original PlayStation. And along the way, some companies such as 3DO had tried unsuccessfully to change the prevalent business models. This tumultuous 25-year history might provide Blackley and his colleagues with some useful tips on how best to enter the market.
Swot Analysis of "Microsoft Xbox: Changing the Game?" written by Andrei Hagiu includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Xbox Playstation facing as an external strategic factors. Some of the topics covered in Microsoft Xbox: Changing the Game? case study are - Strategic Management Strategies, Marketing, Mergers & acquisitions, Pricing, Technology and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Microsoft Xbox: Changing the Game? casestudy better are - – wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions, supply chains are disrupted by pandemic , customer relationship management is fast transforming because of increasing concerns over data privacy, there is increasing trade war between United States & China, increasing commodity prices,
cloud computing is disrupting traditional business models, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of Microsoft Xbox: Changing the Game?
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Microsoft Xbox: Changing the Game? case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Xbox Playstation, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Xbox Playstation operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Microsoft Xbox: Changing the Game? can be done for the following purposes –
1. Strategic planning using facts provided in Microsoft Xbox: Changing the Game? case study
2. Improving business portfolio management of Xbox Playstation
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Xbox Playstation
Strengths Microsoft Xbox: Changing the Game? | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Xbox Playstation in Microsoft Xbox: Changing the Game? Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Xbox Playstation are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Analytics focus
– Xbox Playstation is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Andrei Hagiu can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Ability to recruit top talent
– Xbox Playstation is one of the leading recruiters in the industry. Managers in the Microsoft Xbox: Changing the Game? are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Successful track record of launching new products
– Xbox Playstation has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Xbox Playstation has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Low bargaining power of suppliers
– Suppliers of Xbox Playstation in the sector have low bargaining power. Microsoft Xbox: Changing the Game? has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Xbox Playstation to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Xbox Playstation is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Xbox Playstation is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Microsoft Xbox: Changing the Game? Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Operational resilience
– The operational resilience strategy in the Microsoft Xbox: Changing the Game? Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
High switching costs
– The high switching costs that Xbox Playstation has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Diverse revenue streams
– Xbox Playstation is present in almost all the verticals within the industry. This has provided firm in Microsoft Xbox: Changing the Game? case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Sustainable margins compare to other players in Strategy & Execution industry
– Microsoft Xbox: Changing the Game? firm has clearly differentiated products in the market place. This has enabled Xbox Playstation to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Xbox Playstation to invest into research and development (R&D) and innovation.
Strong track record of project management
– Xbox Playstation is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Highly skilled collaborators
– Xbox Playstation has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Microsoft Xbox: Changing the Game? HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Microsoft Xbox: Changing the Game? | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Microsoft Xbox: Changing the Game? are -
Products dominated business model
– Even though Xbox Playstation has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Microsoft Xbox: Changing the Game? should strive to include more intangible value offerings along with its core products and services.
Need for greater diversity
– Xbox Playstation has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Interest costs
– Compare to the competition, Xbox Playstation has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Low market penetration in new markets
– Outside its home market of Xbox Playstation, firm in the HBR case study Microsoft Xbox: Changing the Game? needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Microsoft Xbox: Changing the Game?, it seems that the employees of Xbox Playstation don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Microsoft Xbox: Changing the Game?, in the dynamic environment Xbox Playstation has struggled to respond to the nimble upstart competition. Xbox Playstation has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Increasing silos among functional specialists
– The organizational structure of Xbox Playstation is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Xbox Playstation needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Xbox Playstation to focus more on services rather than just following the product oriented approach.
Workers concerns about automation
– As automation is fast increasing in the segment, Xbox Playstation needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Xbox Playstation supply chain. Even after few cautionary changes mentioned in the HBR case study - Microsoft Xbox: Changing the Game?, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Xbox Playstation vulnerable to further global disruptions in South East Asia.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Microsoft Xbox: Changing the Game?, is just above the industry average. Xbox Playstation needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Capital Spending Reduction
– Even during the low interest decade, Xbox Playstation has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Opportunities Microsoft Xbox: Changing the Game? | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Microsoft Xbox: Changing the Game? are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Xbox Playstation can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Loyalty marketing
– Xbox Playstation has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Buying journey improvements
– Xbox Playstation can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Microsoft Xbox: Changing the Game? suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Using analytics as competitive advantage
– Xbox Playstation has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Microsoft Xbox: Changing the Game? - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Xbox Playstation to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Xbox Playstation can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Leveraging digital technologies
– Xbox Playstation can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Xbox Playstation to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Xbox Playstation to hire the very best people irrespective of their geographical location.
Developing new processes and practices
– Xbox Playstation can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Xbox Playstation in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Xbox Playstation can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Xbox Playstation can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Creating value in data economy
– The success of analytics program of Xbox Playstation has opened avenues for new revenue streams for the organization in the industry. This can help Xbox Playstation to build a more holistic ecosystem as suggested in the Microsoft Xbox: Changing the Game? case study. Xbox Playstation can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Xbox Playstation can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Xbox Playstation can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats Microsoft Xbox: Changing the Game? External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Microsoft Xbox: Changing the Game? are -
High dependence on third party suppliers
– Xbox Playstation high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Stagnating economy with rate increase
– Xbox Playstation can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Xbox Playstation with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Xbox Playstation.
Increasing wage structure of Xbox Playstation
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Xbox Playstation.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Xbox Playstation business can come under increasing regulations regarding data privacy, data security, etc.
Environmental challenges
– Xbox Playstation needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Xbox Playstation can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Xbox Playstation can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Microsoft Xbox: Changing the Game? .
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Xbox Playstation will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Microsoft Xbox: Changing the Game?, Xbox Playstation may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Consumer confidence and its impact on Xbox Playstation demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Xbox Playstation can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of Microsoft Xbox: Changing the Game? Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Microsoft Xbox: Changing the Game? needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Microsoft Xbox: Changing the Game? is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Microsoft Xbox: Changing the Game? is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Microsoft Xbox: Changing the Game? is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Xbox Playstation needs to make to build a sustainable competitive advantage.