Competing on Business Models:

Kate Bernadette T. MadayagBA 190 - Strategic Management

University of the PhilippinesProf. Mita Angela M. Dimalanta

Vision Statement:To help individuals and businesses realize their full potential.

MICROSOFT

Mission Statement:To organize the world’s information and make it universally accessible and useful.Vision Statement:

To provide access to the world’s information in one click.

GOOGLE

How is a strategy different from a business model? How is it similar?

• Business model defines basic structure and methods of the business to maximize revenues and profits while strategy addresses how a business engages competition to achieve its goals and objectives.

• Main purpose of business models and strategy is to offer value to customers and gain competitive advantage for the success of company operations.

Strategy and Business Model

According to Forbes, Microsoft is the new Google and Google is the old Microsoft. Both try to enter competitor territory because theyare looking for dominant positions in the Internet. They offer the same product and service portfolio.

Why are Microsoft and Google becoming increasingly direct competitors?

Annual Growth Rates

Annual Growth Rates

Growth Rates (Microsoft)

2009-2010

2010-2011 2011-2012

2009-2012

Windows and Windows Live Division 32.48 2.35 -3.47 24.88Server and Tools (Windows) 6.96 10.40 12.02 32.28Online Services Division -25.71 13.64 9.97 -7.16Microsoft Business Division 1.916 16.92 6.56 26.98Entertainment and Device Division -21.59 46.65 7.61 23.73Unallocated and Other 75.86 -23.92 9.793 46.90Total Consolidated Revenues 6.41 11.94 5.40 25.55

Growth Rates (Google) 2009-2010 2010-2011 2011-2012 2009-2012Google websites 23.67 34.46 19.41 98.57Google Network Member's Websites 22.69 18.13 20.02 73.95Total Advertising Revenues 23.36 29.38 19.59 90.86Other Revenues 42.39 26.64 71.32 208.92Total Google Revenues 23.97 29.28 21.46 94.6

What trend emerges? What conclusions can you draw?

• All business segments of Google are experiencing drastic growth which reflects Google’s good management in all of its business segments.

• Microsoft is experiencing slow growth rate in the last three years.

• Microsoft is suffering negative growth especially on its Online Services Division, Bing, over time.

Recommendations• Microsoft could• Drop its money-losing online business, Bing.• Find other ways to maximize their other

business segments to compete for the free-service offering of Google.

• Focus on innovation.

Recommendations• Google could • Improve their vision and mission statements to

incorporate all its business segments like operating systems, projects and other tangible products.

• Keep an eye on its core business while adding and improving other product and service offerings.

ReferencesBort, J. (2015). Google shares its plan to nab 80% of Microsoft’s Office business. Retrieved from: http://www.businessinsider.com/google-plan-to-beat-microsoft-office-2015-2

Brown, M. (2015). Microsoft Windows Is 30: A Short History Of One of the Most Iconic Tech Products Ever. Retrieved from: http://www.ibtimes.com/microsoft-windows-30-short-history-one-most-iconic-tech-products-ever-2194091

Ross, S. (2015). Apple Vs. Microsoft Vs. Google: How Their Business Models Compare (AAPL, MSFT) Retrieved from: http://www.investopedia.com/articles/markets/111015/apple-vs-microsoft-vs-google-how-their-business-models-compare.asp

Rothaermel, F. (2015). Strategic Management. McGraw-Hill Education.