Microsoft in China Int

Introduction: Making a Buck in the PRC

The PRC is in the throes of making the transition from a command economy to an economy more driven by consumer needs. In the meantime the tendency for government ministries to make managerial and marketing decisions rather than letting private industry make these decisions continues (Khannna, 1995, 34).

In order for Microsoft to make a profit in this situation, they must strip their marketing and service aspects to the bare bones. Within Porter's Five Forces Model the entry point for a competitive market is the perceived customer base, followed closely by the suppliers. In the PRC there is a continued tendency for governmental bodies, like the Ministry of Machines and Electronics Industry (MEI), to act somewhat as quasiprivate suppliers (Khannna, 1995, 34). This creates a roadblock in presenting product options to manufacturers and end users. In order for Microsoft to profit in the PRC, they must follow the example of Lotus, which has wasted little time trying to accommodate the PRC service sector. Lotus has relied on the ability of the Chinese to adapt their product (Khannna, 1995, 1213).

Within an industry, bench marking or standardization of processes and procedures are necessary for competition and therefore for profit to be derived. The largest difficulty for Microsoft to overcome in the PRC, was how to address not one, but two rather l

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fold, a more 'flexible' method of doing business will evolve. At the top of each sector of economic activity in the PRC there is typically a state owned enterprise (SOE) answerable to the national government. SOEs, like MEI, have a societal mandate, including the provision of education, housing, and health care. SOEs also have little autonomy in the command economy, where the state tends to dictate the prices of raw materials, finished products, and the quantities that a SOE has to produce (Khannna, 1995, 6). Gaining some autonomy in the early 80s, the SOEs and provincial governments were able to create some independent business enterprises and thus spurred the entry of multinationals and the need for computers and requisite software. But selling software is still complicated. Different departments in a Chinese company might have more allegiance to their counterparts in the government bureaucracy than they have to departments in their own company (Khannna, 1995, 7). In order to capture a significant segment of the growing software market in the PRC, Microsoft has seen fit to spend considerable time and money trying to capture the Products/Services aspect of Porter's Model. In this regard, Microsoft has used the techn
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Approximate Word count = 1263
Approximate Pages = 5 (250 words per page)

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