Harvard Business Simulation: Wintel

Student name: Yang HU ID: 42954998

1 Course Code: MGTS7303 Course Title: Principle of Strategic Management

Harvard Business School Simulations: Wintel

Harvard Business School Simulations: Wintel

Performance Description Basically, the performance is not too bad. The average profit of Microsoft is $4,882 MM and the average profit of Intel is $2,727 MM respectively. In this simulation, we set up our strategy and decided to maximize our profit through co-operating with our competitors, choosing the optimal price where we can gain the maximum profit and releasing the new generations 5 years once. First stage: operating Microsoft At the first stage, we were not familiar with the simulation and we just started by setting the price of Microsoft’s operation system at a lower price, considering that the costs of the operation system are relatively lower than Intel. In addition, we decided to release the new generations often as we thought the new operation system can attract more customers. However, we gradually found that even the price was lower and the release of new generations attracted more customers, our profit was really low. Moreover, each time we released new system, we can get more customers, but the profit was decreased, compared with last round. Thus, we decided to reduce the release as we realized that Microsoft derived profit from the installed base and switching to a new generation implies that the first generation installed base will begin to fade. We also started to use the scratch pad to choose the best price where the profit is highest, without considering the profit of Intel. Gradually, our general incomes were getting better; however, the deficit of Intel could be witnessed sometimes. Second stage: operating Microsoft Based on the achievement of first stage, we decided to release new generations regularly and gave a signal to the complementor that we will release new system every five years. The price was also set up according to the scratch pad. In addition, we also decided to set up a lower price at the beginning so that we can get more installed base, even the profit could be low. Then, we started to charge a higher price than the optimal price illustrated on the scratch pad, considering that we can earn more from the installed base we already have. Accordingly, our profits increased steadily as we can take advantage of the increasing installed base. Nevertheless, the growth rate of profits was still relatively slow. Thus, we considered to reduce the price again, owing that the price of Intel’s processor was relatively high and we had no options but reduce the price to maintain customers’ willingness to purchase. In addition, Intel’s player only released the new generations after Microsoft released new system 2-3 years later. Until the end of this round, we achieved total profit