Strategy formulation: Case study 7.1 pg. 179 Case study 7.1 IBM's failure to appreciate Microsoft strategy The well-known company Microsoft was founded in New Mexico in 1975 by Bill Gates and Paul Allen to develop and sell BASIC interpreters for the Altair 8800. In the mid-1980s, IBM agreed to license that software for its PCs, turning down the opportunity to buy the product or the entire company. IBM believed that the future and its main interest lay with large main-frame computers. In effect, this strategic decision committed the world to using Microsoft Windows software for the foreseeable future. Microsoft has since dominated the home computer market with MS-DOS. Later, when the company was launched through an IPO, Bill Gates became one of the world's richest men and many of his colleagues became millionaires. Subsequently, Bill Gates has been able to donate vast sums to philanthropic causes. Discussion questions 1. With hindsight, it is easy to see IBM's strategic failing, but at the time why did it fail? 2. Do you think that Microsoft originally had a strategy to dominate the world's PC and laptop software? 33

Case study 7.1 IBM's failure to appreciate Microsoft strategy The well-known company Microsoft was founded in New Mexico in 1975 by Bill Gates and Paul Allen to develop and sell BASIC interpreters for the Altair 8800 . In the mid-1980s, IBM agreed to license that software for its PCs, turning down the opportunity to buy the product or the entire company. IBM believed that the future and its main interest lay with large main-frame computers. In effect, this strategic decision committed the world to using Microsoft Windows software for the foreseeable future. Microsoft has since dominated the home computer market with MS-DOS. Later, when the company was launched through an IPO, Bill Gates became one of the world's richest men and many of his colleagues became millionaires. Subsequently, Bill Gates has been able to donate vast sums to philanthropic causes. Discussion questions 1. With hindsight, it is easy to see IBM's strategic failing, but at the time why did it fail? 2. Do you think that Microsoft originally had a strategy to dominate the world's PC and laptop software