Microsoft Opens the Gates Case Analysis



Microsoft Opens the Gates Case Analysis

Introduction

Microsoft did a great effort for expanding its market share and make earnings in the mainland since entering into China. The setback it encountered was not with its brand, since Microsoft's Operating System (OS) was being used by everyone. Piracy was actually the main problem faced by Microsoft. Various ways were tried by Microsoft to get the government to clamp down on piracy, but Linux was rather supported by the government, the low-priced rival of Microsoft's Windows. Microsoft was left in a weak position in China because of the presence of Linux and the lack of Government support. This paper deals with case study of Microsoft highlighting diverse moves taken by Microsoft to make its position stronger in the growing software market of China. The measures taken by the company to develop strong relationships with the Chinese government are also focused in this paper.

Question # 1

Many macro risks were faced by Microsoft when operating in China. Software piracy, pressure of Chinese government for the transfer of technology, backing of products of other players by host government, prejudiced practices of procurement by sub-national establishment in China, and the firm and pressing encouragement for Microsoft to come into joint ventures with local firms were among some of those risks. In China, the most apparent and severe hindrance in successful operation of Microsoft was the widespread level of software piracy. According to figures from the Business Software Alliance, in Chin around 90 to 95 percent of the pirated software was used. Initially after joining of WTO, some actions were taken by Chinese government for its IPR, particularly for foreign firms, but there is not an adequate decline in the rate of piracy. The major risk encountered by Microsoft is to see to the government of China, for diminishing the rate of piracy of Microsoft business in China. Another risk faced by Microsoft is nationalism in China, i.e. companies and firms may be reluctant to purchase foreign products, and conduct business with foreign companies.

In the future, these risks are reducing. China has turn out to be a large global market for Microsoft. Another international company has already been initiated by Microsoft in Shanghai, and market of Windows XP, MSN, and Vista are also opened by Microsoft in China.

Question # 2

In 1992, an accord of U.S.-China on IPR goaded Microsoft to step up its tracking down of opportunities in China. A representative office was subsequently opened by Microsoft and with several PC producers of China; an agreement was signed to preload its software on their computers. Microsoft did not draw back from hard line actions to protect its interests. For instance, endeavors by the U.S. Trade Representative Office to acquire new IPR commitments from China were cheered by Microsoft. Microsoft has used more strong-growing strategies from time to time, for example lobbying the U.S. government for pressurizing China to increase its protection of IP rights (IPR) of foreign company, registering in Chinese courts ...