Technology industry companies are required to work with both related and unrelated firms and companies because of how technology can change with innovation. Microsoft has succeeded in cooperating and collaborating while also making the right strategic alliances with various companies within their diversified industries. Not all of their acquisitions resulted in gain of large market share or a return on their investment, but it does provide them with an expanded portfolio to utilize in the future. This allows the company to introduce a new product into a new market more smoothly and less time consuming. Microsoft has used compatibility issues and licensing as a competitive advantage tool to fend away other competitors from vying for market shares. Through signaling, Microsoft has been able to lead competitors in a particular direction or make a competitor into thinking they would perform a certain action.

2.2 Internal development

As we examined the evolution of growth strategies by Microsoft in the previous subchapter, we can follow the trend of internal development being dominant in the early stage of the company. Initially, the technology industry was not broad, in terms of products, as it is now. Microsoft started with producing operating systems then they used internal development and organic growth to further broaden their product. Eventually, the decision to enter the gaming counsel was made and internal development of Xbox helped Microsoft gain enough market share to compete with Nintendo and Sony. Internal development was driven by the market and new competitors. Number of competitors was not as big and internal development was enough to execute their growth.

Competition in the technology industry in Microsoft has increased at an alarmingly fast rate. Increase was the result of innovation and broadening of the industry. Internet opened the way for new opportunities in the industry thus making internal development strategy not as effective. Developing a product internally for Microsoft was not a problem since they had enough capital invest in R&D. If we are going to look at industries spending on R&D, the technology industry only trails Healthcare and Pharma industry in terms of revenue growth and percentage of it being spent on research and development (Appendix 2) 10 Year Revenue Growth vs. R&D Spend by Industry (KPMG 2015). Microsoft has a respectable brand name among the customers but developing and launching a new product took time. New competitors were able to take advantage and launch their own product and instantly gain market share. New competitors which did not compete with Microsoft in the early stages were Google (search engine), Facebook (social network), Amazon (online retailer store) and Twitter (social network).

Companies with different backgrounds like search engine, social network and online retail are competing against a company like Microsoft shows about the evolvement of the technology industry. This particular involvement forced Microsoft into a new growth strategy. Top companies like the ones that are mentioned have enough capital and customer base to replicate each other's product, so each business has to maintain their competitive edge. For some companies it might mean internal development and further improving their product and for some it means merging or acquiring firms and use their assets to enter different product market within the technology industry.

Internal development is driven by the cycle of the product. Company needs to constantly improve its product and develop new ones with innovation. Competitors sometimes act as driving force for internal development. A better scope of competition that Microsoft faces will give a bigger picture to analyze particular motives in the growth strategy.

Apple

Apple is a company that designs, manufactures and markets mobile communication and media devices, personal computers, and portable digital music players, and sells a variety of related software, services, peripherals, networking solutions, and third-party digital content and applications. Apart from that, the Company produces and sells various products like iPhone, iPad, Mac and iPod compatible products, including application software, printers, storage devices, speakers, headphones, and various other accessories and peripherals, through its online and retail stores.

Apple has been one of the initial competitors of Microsoft. It was producing Macintosh computers that competed with Microsoft PC. Advantage that Microsoft had was the price differentiation as Macintosh computers were more expensive due to costs and operating system. Apple expanded into producing smartphones, tablets and cloud services. Microsoft launched Azure, product that was internally developed, to compete with Apple's cloud service. Inorganic growth was not necessary for the company because cloud service was a product that was close to Microsoft's domain product. Other internal development products include Windows tablet and mobile.

Google (Alphabet Inc)

Google offers targeted search results from billions of webpages. Results are based on a proprietary algorithm. Its technology for ranking web pages is called PageRank. The firm generates revenue through advertising sales. Advertisers deliver relevant ads targeted to search queries or web content. The Google Network is a network of third-party customers that use Google's ad programs to deliver relevant ads to their own sites. In October 2015, Google formally became part - and by far the biggest part - of the Alphabet Inc. holding company. (D&B Hoovers)

Google was not a primary competitor for Microsoft initially. Development of the internet opened new opportunities and Google was able to capitalize by creating the most popular search engine. To compete with Google, Bing search engine was developed by Microsoft (originally MSN search). Bing might be popular as google, but Microsoft was able to avoid turning to inorganic growth or M&A to launch its own search engine. According to comScore, Google Sites led the US explicit core search market with 64% market share (up 0.2 percentage points), followed by Microsoft Sites with 21.4% (up 0.1 percentage points) and Yahoo Sites with 12.2%. Ask Network accounted for 1.6% of explicit core searches, followed by AOL, Inc. with 0.9%. 16.8 billion explicit core searches were conducted, with Google Sites ranking first with 10.8 billion. Microsoft Sites ranked second with 3.6 billion searches, followed by Yahoo Sites with 2 billion, Ask Network with 273 million and AOL, Inc. with 145 million. (comScore, 2016).

Google's strategy can be considered similar to Microsoft's growth strategy early in the 2000s when organic growth led to launching products like Azure, Vista, Xbox and cloud service. Google started as a search engine but once it generated enough revenue, it started to grow organically by launching their own products like Google mail (Gmail), Google cloud, Google phone and Google softwares.

Amazon

Amazon is an American electronic commerce and cloud computing company founded by Jeff Bezos. Amazon first started selling online books and later diversified to sell video downloads/streaming, MP3 streaming, audiobook downloads/streaming, software, video games, electronics, apparel, furniture, food, toys, and jewelry. The company also is the world's largest provider of cloud infrastructure services.

Microsoft competes with Amazon in the cloud service market. Amazon was able to successfully grow inorganically to penetrate the cloud business market and establish itself as one of the biggest competitors in the technology industry. Azure cloud service (internally developed by Microsoft) might not have the market share that Amazon (AWS - Amazon Web Services) does but still poses the biggest threat to it.

Facebook

Facebook is an American online social networking service company founded by Mark Zuckerberg in 2004. Development of the internet allowed Facebook to enter the technology industry as a social networking service and had a revenue of over $40 billion in 2017 (Investopedia 2017). Microsoft might not be in direct competition with Facebook. However, Microsoft did acquire LinkedIn to enter the social network market via inorganic growth strategy and diversification which will be discussed in the third subchapter. Internal development by Microsoft can be considered if we look at how R&D and investments have been directed towards LinkedIn after its acquisition.

Facebook adapted inorganic growth of acquiring up and coming startups in the social network market. Any new product that posed a threat to Facebook was instantly acquired by the company. The company was able to generate most of its revenue from advertising and used that capital to acquire new applications like Instagram and Whatsapp to maintain its dominance in the market.

To summarize the main competitors of Microsoft in the technology industry, we can direct our attention to Table 1. It also provides domain product of each company, expansion into different sectors and main competitors. Each competitor has expanded into each other's sector

Table 1: Internet companies - areas of expansion and main comptetitors Source: Research by Dolata (2017)

In a battle between browsers that has not gone well for Microsoft has to highlighted as an internal development. Internet Explorer is a browser developed by Microsoft used to be the most used browser. Innovation and better performance by new browsers from Firefox, Chrome (Google) and Safari (Apple) has taken away the market share from Microsoft. Internet Explorer might not be what it used to be in terms of dominating the market, it was still was an internally developed product.

Microsoft Tablet is another major product developed internally that competes against iPad (Apple) and Android Tablets. Internal growth has allowed Microsoft to enter the tablet market and increase its market share year by year. The market is dominated by Android due to its price differentiation. However, the Surface Book, one of Microsoft's newest additions to the 2-in-1 hybrid space, looks like a traditional laptop, but can detach to form a tablet at a moment's notice. But even before the Surface Book was announced, analysts had been predicting a major increase in Windows tablet market share, with its 8.4% estimated to grow to 17.5% by 2019. The IDC also reports that Microsoft's OS is set to breach the 10% market share milestone in 2017, taking 11.3% of the market, while Android is to take 66.2% and iOS 22.4%. According to the IDC, Windows had 9% market share in first quarter of 2016. It also included a forecast for the next four years and expect Windows to grow to 19.3% of the market in 2020, with iOS taking 22.9% and Android 57.8% (IDC, 2017).

Xbox was one of the first choices to enter e new market via internal development by Microsoft. When it entered the market, leaders were Nintendo and Sony. While Xbox does bring in only 29% (Research Methodology, 2017) of the market share, it is still profitable product in Microsoft's portfolio. Growth strategy in the initial phase of the company's life cycle gave the corporation an opportunity to further develop the counsel and increase market share.

Microsoft's diversification into video games and game consoles, with launch of Xbox 360, has proved extraordinary and also particularly interesting. The rationale behind their market entry into the video games industry comes with good reason. It was designed primarily to keep their potential competitor, Sony, in check. Although, Sony operated in a different industry, Microsoft recognized that they could emerge as its rival. The Sony PlayStation was in essence nothing more than a specialized game console and even worse, not having Microsoft Operating System. However, SonyPlayStation II was introduced with web browsing potentials and Microsoft thus worried that SonyPlayStation II could gain control of consumers' computing habits and web browsing, ultimately, taking their customers away from PCs with Microsoft Operating Systems.

Microsoft's conceptualization of its business scope has changed radically over time and their goals have dramatically evolved from being a software supplier to a company that has attempted to epitomize the new developments in seamless technology, including information services, entertainment, networking software and more. Their diversification has extended in many areas whilst trying to mitigate the market saturation as well as market dominance. Some of which includes:

Microsoft's primary product lines include:

- PC Games - Internet technologies

- Xbox Games - Xbox Hardware

- Hardware - Home Productivity

- Development tools - Reference Software

- Business software - Macintosh Products

- Operating Systems & Servers - Telecommunication (Research Methodology, 2017)

These products, result of internal development, have allowed Microsoft to enter and gain enough market share to stay relevant in the markets. Evolution of technology, the internet and fast-paced innovations forced Microsoft to turn to inorganic growth to enter new markets within the technology industry. While internal development made Microsoft what it is today, inorganic growth might elevate it in the future.

2.3 Acquisition and “One Microsoft” strategy

With the expansion of the technology industry brought new challenges for the growth of Microsoft Corporation. In the past chapters, we have looked at evolution of growth strategies and internal developments of the company. While Organic growth helped Microsoft become one of the leading companies in the industry, acquisitions and inorganic growth has helped them sustain their success and keep their competitors in check. This chapter will look at some of the major acquisitions executed for inorganic growth.

As of late, merger and acquisitions have been a frequently used as a growth mode in the technology industry during. They did so for reasons, such as expanding the scale and scope of their business, enter new markets faster and to acquire new capabilities. Microsoft is highly representative companies who have intensively relied on M&A for growth. Microsoft since its foundation has acquired over 200 companies; in average 6 companies per year and has targeted different sectors of the technology business. When a company makes nine acquisitions, each worth over one billion dollars, it shows how serious it is about inorganic growth and external development (Ludwig, 2013).

Microsoft has captured various segments of the IT industry and is gradually diversifying their portfolio into unrelated areas such as finance and investments. This initiative is a far-cry from Microsoft's initial vision. The move into multiple portfolios provides the incentive for Microsoft to afford to cross-subsidies one business from the surpluses earned from another, in a way that their competitors may not be able to. In other words, it ensures a competitive advantage for the subsidized business, and the long-run effect may be to drive their competitors out of business, leaving Microsoft with a monopoly from which good and services can then be earned.

Each acquisition either has a purpose of further supporting the development of a core product or enter a new product with a new market under the Microsoft brand. “One Microsoft” strategy is directed at unifying all products and services under one `umbrella' of the company. All of the products and service will have correlation between one another. We mentioned that there are nine acquisitions that top the billion-dollar mark, but we will be looking at major and most recent acquisitions to describe the strategy executed by Microsoft. Acquisitions and their results could have increased or decreased revenue however, we will be looking at the motives.

One of the major acquisitions which caught the attention of the technology industry was the acquisition of Skype for $8.5 billion. This acquisition can be described as Microsoft's intention of entering the communication market. Skype is a telecommunications application software product that specializes in providing video chat and voice calls between computer, tablets, mobile devices, the Xbox One console and smartwatches via the Internet and to regular telephones.

This action was aimed further expanding Microsoft portfolio and integrate it with its core products like MSN Messenger and Xbox consoles. Another reason why this acquisition was made because Skype made it easier to connect to phone systems and seemed like a useful asset to have for future growth or product development. Anonyms source from Microsoft gave several reasons why the company made the move on Skype like user base which consisted of 660 million, peer to peer video innovation and to prevent other competitors from acquiring it (Rosoff, 2011). Skype is operating as it did in the past and receiving R&D support from the company.

Next huge acquisition decision that caused waves in the technology industry was the acquisition of Nokia for over $7 billion. This move was to help Microsoft establish itself in the smartphone market. Inorganic growth move might not have panned out as expected because Nokia was losing major market share to Samsung and Apple. Nokia was running the Windows Phone operating system and Microsoft decided that it wanted to enter the smartphone hardware business by acquiring the company.

To compete with Google and enter the new market of online advertising, Microsoft turned to acquisition again when it decided to acquire aQuantive for $6.2 billion in 2012. This inorganic growth was directed at entering the competitors market and attempt to take market share away from Google while trying to bolster their overall revenue for the company. To develop an online advertising company organically would've required considerable amount of time and with time factor and innovation driving the industry, Microsoft had to rely on Acquisition. This company is now receiving investment and R&D support to improve its position and continue competing with Google.

In 2014, Microsoft turned its attention to gaming industry when it decided to acquire a block-building game “Minecraft” for $2.5 billion which was current CEO Satya Nadella's first mega-acquisition. It is important to note that Minecraft is game and not a console like Xbox. This acquisition added another asset in the gaming industry to the company's portfolio (Weinberger, 2016).

Yammer was Founded in 2008 by David O. Sacks. Yammer was designed as a social networking tool to be used for private communications in businesses. One of the main differentiators between Yammer and its competition is that Yammer is a "freemium" program, meaning that while the program is free for all to download, companies must pay to access more advanced options. The company quickly took off, and Yammer now claims that 85% of Fortune 500 companies use their software. Microsoft announced in June 2012 that they would be buying Yammer for $1.2 billion. Eventually, Microsoft folded Yammer into their Office 365 team, where it has become a vital part of that program suite's ecosystem. This acquisition supported one of the core products of Microsoft (Goetz, 2017).

Hotmail acquisition was acquired with the intent of entering the email service market. Originally founded in June 1996, Hotmail was one of the first free browser-based email services in the world, hitting one million subscribers in less than a year. In December of 1997, Hotmail was purchased by Microsoft for $400 million. Microsoft has continued to develop Hotmail, eventually transforming it into its current iteration: Outlook. As of October 2017, Outlook has hundreds of millions of users, and controls 12% of the email market share, comparable only to Gmail and Yahoo (Goetz, 2017).

Another Bold acquisition executed by Microsoft was when it acquired LinkedIn for $26.2 billion, making it the largest acquisition in its history. LinkedIn is a business and employment-oriented service that operates via websites and mobile apps. Originally founded in 2002, launched on May 5, 2003 and acquired by Microsoft on June 13, 2016. It is mainly used for professional networking, including employers posting jobs and job seekers posting their CVs. This acquisition supported Microsoft's inorganic growth as it entered a new market via acquisition rather than developing on their own.

This move is aimed at competing with Facebook in the social network market. Microsoft envisions it to be the ultimate echo chamber of your identity rather than Facebook (Mistry, 2016). Acquisition can be described as an asset and capabilities that will be combined with existing assets of acquirer to generate new business. Other possibility could be that Microsoft could look to sell it for a higher price in the future (Gomes-Casseres, 2016). Nevertheless, this moves show the inorganic growth that the company has adapted when entering a new market or providing assets to develop its core business products.

Technology industry is forcing Microsoft to adapt a growth strategy that will help them enhance their own product, which we can refer to appendix 3 Appendix 3 is the full analytical model (adapted from Prahalad and Hamel (1990)) of analytical model that can show the framework of how acquisitions contribute to the core business or enter a new market under the Microsoft brand and expand its portfolio. Other notable acquisitions aimed at improving their own product or entering a new market are:

VoloMetrix: The VoloMetrix is a well-known company in people analytics for the enterprise. This acquisition is aimed at complementing the Microsoft 365 product to further elevate it and offer more tools for their costumers.

Equivio: is a small firm that develops text analysis software for e-discovery. Microsoft's email compliance options need an information governance according to their blogs (Insightssuccess, 2017). This acquisition will help users explore huge and unstructured sets of data to find relevant parts effectively.

Adallom: Adallom secures enterprise software-as-a-service (SaaS) application usage, audits user activities, and protects workforces and digital assets from threats in real time. They offer an access-security broker for other services, like Office 365, Salesforce, Box, and Dropbox. Nowadays each firm is investing heavily to strengthen its reputation and capabilities around security.

Incent Games: Incent Games' primary product is, well-known FantasySalesTeam, which is developed to improve CRM adoption. Microsoft's plans for integration of FantasySalesTeam are for its own Dynamics CRM product line. Furthermore, Microsoft plans to look into other areas where it can integrate FantasySalesTeam and will continue to support non-Microsoft CRM platforms with those offerings. (Insightssuccess, 2017).

Historically, M&A activities have followed a cyclical trend that started in the United States 1893 and transitions levels of high and low (Sudarsanam, 2003). Microsoft being founded in 1975, M&A activity was low in the United States. It did not affect the company's growth strategy as initial growth was directed at developing core products. Their acquisition activity spiked later in the 2000s with the intention of growing.

growth strategy technology company

Figure 2 M&A transaction of Microsoft and Global USA Research by Lopez, Ali & Pierre and IMAA-Institute

Microsoft's intention of diversification gives correlation with a structure presented by Prahalad and Hamel (1990). For each acquisition, we rely on documents by Microsoft and specialized press, in order to attribute characteristics in terms of contribution to end-product, business segment, core product, resource and competences. We followed the structure presented by Prahalad and Hamel (1990) in a seminal article (Appendix 1). Since electronic sources were diverse, they were cross-checked with alternative sources to validate the reliability.

Looking at the tech industry giants, each company has its own type of strategy that is executed for growth and development. The unique innovation and time factor allowed companies with excess cash to constantly acquire new firms to add to its product and ramp up a new technology quickly. M&As can ease the time-to-market process and solve the talent (innovation) issue quicker than internal activity can. That is why acquisitions have become a necessity to compete in the technology industry among the large companies. If we look at the actions and strategies executed by Microsoft's competitors, we can say that:

· Google has spent tens of billions of dollars to acquire more than 180 companies, mostly up and coming companies. Its strategy is difficult figure out because it has a philosophy of `try lots of things and fail fast'. A method can still be outlined as Google goes after three things in M&As, which are businesses directly related to Google's core search business, people, and strategic investments in the future.

· Facebook has a very direct and clear strategy in M&As. If anything poses a threat to them then they try to acquire it. Acquisitions of Instagram and Whatsapp showed than rather than developing internally, Facebook is not shy to spend their cash and buy it.

· Apple is making enough money to not to worry about its strategy. Their business is already exceptional and dominate most markets they are involved in. Apple's M&A strategy is directly in line with its business strategy of hiring great people and building great products. Their focus is more directed at R&D rather than M&As. If we look at companies they buy, they shut it down after acquisition and integrate it into one of their product lines. Examples can be the acquisition of Siri for iOS devices and Beats for their music service. (Forrest, 2017)

Leading tech companies were able to establish themselves well in the technology industry. Well position also meant that they were able to generate sufficient amount of cash to increase their activities in M&As. Table 2 provides the list of major technology companies acquisitions and their purchase price. All of the companies have been involved in the M&A activities to further develop their domain product and/or to acquire a product to enter a new market via inorganic growth.

Table 2: Internet companies and selected M&As Source: Annual reports and Dolata (2017)

One Microsoft strategy can be interpreted as combining all products the company has to make them work under one umbrella. Products will eventually have correlation with domain products of Microsoft. Internal growth strategy that was executed by made Microsoft the company that generated almost $90 billion in revenue in 2017 (Statista, 2017). Strategy that has taken a trend among top companies in the technology industry is to improve or compliment their core products by acquiring other companies, firms and products.

Not all of the acquisitions made by the software giant were successful in terms of successful integration or reaching projected revenue goal, but it did not stop them to further elevate this strategy. Microsoft is always looking into possible acquisitions if the right firm with the right product comes along. M&A oriented strategy has become a necessity for all companies vying for the biggest market share in the technology industry.

After observing the most recent growth actions made by the company we can agree that three elements are integrated into their strategy:

1. Microsoft CEO Satya Nadella recognizes the cloud service as a one of the core products of the company and serves as a solid source of competitive advantage. Microsoft is placing a great emphasis on cloud segment of the business and number of acquisitions were strictly aimed further developing the core business. Appendix 4 Appendix 4: Map of Competencies acquired by Microsoft for Cloud Computing created by Lopez in their research (Lopez, 2017) illustrates how the acquired companies or assets are placed in the core competence framework to contribute or integrate with cloud computing. The company aims to achieve USD 20 billion in commercial cloud annualized revenue run rate in fiscal year 2018. More than 70 percent of the Fortune 500 have at least two different Microsoft Cloud offerings and in financial year 2016 revenue within the Intelligent Cloud segment increased USD 1.3 billion, or 6 percent (Dudovskiy, 2017).

2. With high number of mergers and acquisitions, inorganic growth plays an important role in Microsoft's strategy. Motives behind M&A is to increase its capabilities, product range and value offering. We looked at some notable acquisitions like Nokia Corporation's Devices or the Minecraft gaming franchise. Moreover, in June 2016, Microsoft acquired LinkedIn for USD 196 per share in an all-cash transaction valued at USD26.2 billion. This particular acquisition plays an instrumental role to connect the world's professional cloud and the world's professional network - creating new experiences and new value for business users. With more than 1.2 billion Office users and 433 million LinkedIn members, the combined data graphs are expected to improve how Sales, HR, and other professionals get work done. Apart from above, Microsoft completed 17 acquisitions for total cash consideration of USD1.4 billion during the fiscal year 2016 alone (Gomes-Casseres, 2016).

3. CEO Nadella is bringing a new vision after he was appointed the in 2014. He is placing a great amount of attention on augmented and virtual reality (VR). It has been noted that “while a majority of the augmented and virtual reality players are focused on consumer gaming, Microsoft has spent considerable time and effort defining the potential business use cases for HoloLens”. Moreover, Microsoft has been able to demonstrate how VR could be used to improve the shopping experience, in education and automotive design. It can be argued that leadership in augmented and virtual reality in the global scale can become one of the solid sources of Microsoft competitive advantage, similar to its leadership in cloud segment, with positive implications on long-term perspective (Dudovskiy, 2017).

One of the most recent actions in their diversification growth strategy is moving into the healthcare service. This aim could prove challenging for Microsoft as they just recently entered the industry. While the competitors Amazon and Apple are looking at the healthcare industry from the employee-consumption side by developing apps to further assist them in their jobs, Microsoft wants to utilize their products and assets to meet the needs of R&D research and the doctors. Infusing technology and healthcare could prove to be a daunting task but it doesn't mean that it is unachievable for Microsoft's ambitions.

The initiative aims to combine the cloud, artificial intelligence, research and industry expertise to focus on transforming health care. Healthcare NExT, which is a new healthcare-focused research unit, will deeply integrate greenfield research and health technology product development, as well as establish a new model at Microsoft for strategic health industry partnerships. Through these collaborations between health care partners and Microsoft's AI and Research organization, the goal is to enable a new wave of innovation and impact using Microsoft's deep AI expertise and global-scale cloud.

This initiative includes investments in resources for partners of Microsoft to capture new opportunities to apply AI to healthcare, such as the Microsoft AI in Health Partner Alliance, an expanding group of partners focused on advancing health technology. Alliance members will receive unique training and access to Microsoft technologies, engineering expertise and data sets (Lee P., 2017).

After creating the unit, Microsoft is gradually releasing new softwares, applications and services to further complement their initiative. The services are designed that they run on the company's core products like Microsoft Azur cloud and Microsoft 365. One of the examples of these service is the Microsoft medicine/genomics-process service which runs on the Azur cloud. This service is created for medical professionals that is highly accelerated processor (Lee, 2018).

Another service that is proving to be handy in handling sensitive date is the Microsoft Azure Security and Compliance Blueprint: HIPAA/HITRUST - Health Data &AI. This service provides the general availability of an end-to-end application development foundation to help health organizations move to the cloud with greater simplicity, compliance, security and industry-standard compatibility.

This strategy could prove to very useful for Microsoft as it would enter a new market that has been fairly new to its competitors. The diversification strategy and their plan to use both organic and inorganic growth to enter this particular industry will give them a head start in taking over the health care and further broaden their portfolio.

Maintaining their dominance in their core business market will provide them with enough cash to further pursue their growth strategy goals. Their growth is a necessity to enter new markets for one simple reason: if they don't then their competitors will. It is true that not all of their acquisitions have been utilized fully or came out to be successful in terms of generating revenue for them. Changing of CEOs in the past decade also impacts their growth strategy in negative way as it may disrupt their goals.

However, change of strategy and direction was necessary to maintain their status against their competitors who are fiercely using their assets and strategy to get ahead of Microsoft. Microsoft might be relying on inorganic growth, external development and mergers and acquisitions to play catchup in the technology industry. The company falling behind is not due to lack of effort as it has made many acquisitions to have a diverse portfolio. The acquisitions not panning out as they hoped it would or not being utilized in the right way has a lot to do with it. As we refer back to the report conducted by KPMG USA, technology is growing at an incredible speed and not being able to keep will result in life cycle of a company ending sooner rather than later.

Companies with different backgrounds like search engine, social network and online retail are competing against a company like Microsoft shows about the evolvement of the technology industry. This particular involvement forced Microsoft into a new growth strategy. Top companies like the ones that are mentioned have enough capital and customer base to replicate each other's product, so each business has to maintain their competitive edge. For some companies it might mean internal development and further improving their product and for some it means merging or acquiring firms and use their assets to enter different product market within the technology industry.

As we went over about the acquisitions made by Microsoft, each acquisition either has a purpose of further supporting the development of a core product or enter a new product with a new market under the Microsoft brand. “One Microsoft” strategy is directed at unifying all products and services under one `umbrella' of the company. All of the products and service will have correlation between one another. We mentioned that there are nine acquisitions that top the billion-dollar mark, but we will be looking at major and most recent acquisitions to describe the strategy executed by Microsoft. Acquisitions and their results could have increased or decreased revenue however, we will be looking at the motives.

We have also examined the evolution of growth strategies by Microsoft, we can follow the trend of internal development being dominant in the early stage of the company. Initially, the technology industry was not broad, in terms of products, as it is now. Microsoft started with producing operating systems then they used internal development and organic growth to further broaden their product. Eventually, the decision to enter the gaming counsel was made and internal development of Xbox helped Microsoft gain enough market share to compete with Nintendo and Sony. Internal development was driven by the market and new competitors. Number of competitors was not as big and internal development was enough to execute their growth.

Growth strategies were in the right path initially. Microsoft became a multibillion dollar company. Later growth strategies were also promising on paper, but the execution process might have distributed. Innovation and development of the Internet also opened new opportunities to new competitors thus forcing Microsoft to compete at all fronts of the industry in various sectors.

Competition in the technology industry in Microsoft has increased at an alarmingly fast rate. Increase was the result of innovation and broadening of the industry. Internet opened the way for new opportunities in the industry thus making internal development strategy not as effective. Developing a product internally for Microsoft was not a problem since they had enough capital invest in R&D.

The choice of organic or inorganic growth has started to have bigger impact for companies in the short and long terms. Factors of each industry and the state of the company determines the choice of growth. For the technology industry, one of the most important factors is the time factor that drives the choices in growth. The industry is evolving at a fast pace causing companies to focus on products outside of their domain or core business. Innovation dictates the market for technology and all other industries. Grant Thornton (2007) summarized in their research that companies face the buy-or build decisions in growth. In technology, the companies that invest wisely in R&D and build the next generation of a products instantly have first-mover advantage. The buy decision generally becomes a defensive move of catch-up through M&A (Grant Thornton, 2017).

It is important for a company to identify its primary business domain, in other words, what are they producing and what is their market. The base product or domain will help them determine which mode of growth should be executed. Businesses are likely to follow potential acquisition chances within its primary business domain and when an opportunity arises to acquire a firm with a similar product, it will likely choose so to widen or fill its resource gaps or replicate it by going with organic growth. By comparison, outside the primary business domain, businesses may turn to inorganic growth to acquire firms with different products. Thus, the choice between acquisition and internal development is likely paint a different picture when considering the inside and outside the initial business domain.(Lee & Lieberman, 2009).

If the new product market is related to a company's existing product then organic growth would decrease the cost of growth (Yip, 1982). The less related a new product market is to the business' product then higher the chance of acquisition as a mode of growth. It can be applied to technology firms today. Giant companies do not feel threatened by the cost of growth but rather the time and innovation requirements have a higher impact. The definition of technology industry is changing year by year and domain products are becoming different compared competition products.

A company usually plans its growth strategy to expand and increase revenue. In the technology industry, growth strategies are driven by pace factor of the industry, innovation and competition's actions that might pose a threat. It is very unlikely to survive against the likes of Apple, Google and IBM without a clear strategy. Microsoft's initial core/domain product has dominated its respective market. Evolution of technology has forced them into focus on a strategy that will complement or improve their core product.

Chapter 3. Results, suggestions, limitation and future study directions

Microsoft had to alter its growth strategy according to atmosphere the technology industry has presented. Microsoft's conceptualization of its business scope has changed radically over time and their goals have dramatically evolved from being a software supplier to a company that has attempted to epitomize the new developments in seamless technology, including information services, entertainment, networking software and more.

We first examined the evolution of the growth strategy executed by Microsoft. After entering the operating system market, the company mostly focused on internal development to gain market share. The competition was not as intense as it is today which allowed Microsoft to gradually build their growth strategy on internal development and organic growth. M&As were not frequent actions in executing their strategy.

Boost of innovation and development of the Internet made the technology industry a very hostile competition battleground. With expansion of sectors, Microsoft had to compete with different emerging companies in the tech industry. Fast pace evolvement and innovation factor caused Microsoft to abandon its organic growth strategy and turn to inorganic growth to maintain its competitive edge and market share.

Internal development played a key role in the earlier stages of the company made Microsoft the brand it is today. However, lack of innovation, maturation of some industries, time and introduction of new capable competitors forced Microsoft to rely on acquisitions for development, diversification and to enter new markets. Competitive nature of the technology industry made M&A activities a necessity for giant companies to keep their grip on the market.

After looking at M&As made by Microsoft to support its growth strategy, we can say that acquisitions mostly focused on complementing the core business while also supporting diversification. We referred to the analysis framework by Prahalad and Hamel (1990) to help us understand how acquisitions supported the core business. While not all acquisitions turned out to be a success in terms of revenue growth and market penetration, overall strategic acquisition strategy helped Microsoft maintain its brand equity

Microsoft has been very consistent with their mission in enabling businesses realize their full potential, both in the software enterprise industry and other diversification. They have successfully leveraged their core competencies of research capacity, brand equity, and financial stability to survive the segmented and aggressive competitive market. Microsoft has shown that they are capable to compete with various industries while sustaining their competitive advantage with the growth strategy that is being executed.

Limitation and future research

Main limitation we came across was the value of companies acquired would have provided sufficient information to analyze the acquisition from revenue standpoint. Price of acquisition is not same as value of the company that is acquired. Value of the company would also help us to determine how acquisition prices are set and how are they negotiated.

Other limitation was the lack of information on the personnel of the acquired company and their duties after the acquisition. This information would've helped in analyzing how the integration process is handled and how it effects on general performance of the company.

For future research, studying how the life cycle of industries in the fast-evolving technology industry would be an active topic to look into. Life cycle acts as one of the main factors that effects growth strategies.

Another area for future research is the negotiation process between large companies (acquirers) and small companies or start-ups. This study would be interesting and useful for up-and-coming start-ups on how to pitch their firm to a larger company.

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Appendix 1: analysis framework by Prahalad and Hamel (1990)

Appendix 2: 10 Year Revenue Growth vs. R&D Spend by Industry (KPMG 2015)

Appendix 3: Full analytical model (adapted from Prahalad and Hamel (1990))

Appendix 4: Map of Competencies acquired by Microsoft for Cloud Computing created by Lopez in their research (Lopez, 2017)

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