IntroductionThis essay plans to focus on Microsoft's business strategy and show how Microsoft has successfully used diversification in its business strategy to gain competitive advantage.This test will use the following structure. It will begin by providing the reader with a brief history of Microsoft and then explain what corporate strategy is. Next comes Microsoft's diversification strategy, alongside the reasons why they choose to diversify. In this section, the author plans to explore Microsoft's related diversification approach, its business logic, as well as why skill transfer is essential to maintaining competitive advantage and also how they have realized and used economies of scope (EOS). In the section on why Microsoft chooses to diversify, we will discuss the notions of proactive and defensive reasons, as well as the idea of ​​increasing market power and spreading risk. Finally, a conclusion will follow summarizing Microsoft's overall ability to maintain a competitive advantage. About MicrosoftMicrosoft was founded in 1975 by Bill Gates and Paul Allen. They first introduced their software package, Windows 1.0, in 1983, the first software package that consisted of a mouse for navigating a PC. MS-DOS commands were previously used to operate computer systems, but people found them extremely difficult to understand. This Windows 1.0 package was a key turning point in the emergence of Microsoft. Over time, Microsoft created updated versions that included advanced graphics, built-in Internet support, dial-up networking, and much more (Microsoft, 2011). Windows packages started from Windows 1.0 until the current version which...... middle of paper ......ation is moved by service companies seeking to benefit from the asymmetry of the 'information and economies of scope'. Stratgic Management Journal, 14: pages 569-591.- Porter, M. (1985). “Competitive advantage”. Maxwell Macmillan International-Rumelt, RP 1974, “Strategy, structure and economic performance Boston: Research Division, Graduate School of Business Administration, Harvard University.-Rumelt, RP “Diversity and Profitability”, Center for Management Studies, Graduate School of Management, University- Tang, J, 2006, “Competitive Behavior and innovation", Political Research, vol 35, - Volberda, H. Morgan, R. Et al. 2011, "Strategic management: competitiveness and globalization", Cengage Learning EMEA, page 244-258-X-box, 2011, “X-Box” http://www.xbox.com (accessed 02/11/11)-X -box 2010, “X-Box History” http://www.gameconsolesedu.info/Xbox.php (accessed 04/11/2011)