Strategic Analysis & Planning Coursework Example | Topics and Well Written Essays - 3000 words

Strategic Analysis & Planning - Coursework Example With such widespread popularity, it would appear that Microsoft made a lucrative and rational decision to acquire Minecraft in order to secure a more profitable strategic position in the international gaming market. However, the acquisition of Minecraft was an all-cash agreement that cost Microsoft $2.5 billion, which is a substantial financial risk in terms of expenditures for the acquisition in an environment where Mojang, Minecraft’s original developing company, only earned $326 million in revenues in 2013 (Stuart and Hern 2014). With the assumption that Minecraft manages the same revenue-producing capabilities year-on-year, it would theoretically take Microsoft 6.1 years to recover the just the cost of the acquisition of Mojang. This report conducts a strategic analysis of this acquisition in order to determine whether this was a shrewd business decision and whether the $2.5 billion acquisition can effectively serve the strategic objectives of Microsoft. It should be recognised that there is not a specific strategic business unit at Microsoft that is being evaluated as in 2013 the firm restructured the organisation in an effort to consolidate global business operations. The firm desired to unify the company and believed that this reorganization and consolidation would contribute to greater control and innovation production as a result of incorporating established SBUs (Ludwig 2013). Hence, strategic analysis will consider Microsoft as a newly-combined firm that now has inter-dependencies controlled centrally in areas of production, development, marketing and strategy. Michael Porter (1987) introduced his Five Forces model which describes the potential competitive forces that pose risk to a competing business, a framework for projecting future competitive activity and potential for profitability over an extended period of time. Figure 1 illustrates Porter’s