Capitalize on a New Opportunity Was Microsoft.

¶ … capitalize on a new opportunity was Microsoft. The company with the world's most dominant operating system completely failed to gain any traction for its mobile operating system, and is essentially a non-factor in smartphones and tablets as a result. Its longtime operating system competitor Apple is one leader, while new entrant Google is another.

Microsoft failed to recognize the opportunity presented to it in mobile, despite operating systems being its core business. As a result, Microsoft now faces a serious threat to its business. The company essentially relies on Windows for the bulk of its cash flow. If it loses dominance in PCs, Microsoft is going to struggle mightily. Thus, the failure of the company to address the opportunity in mobile has morphed into a threat. Additionally, its failure in mobile was the result of failing to recognize a major threat -- the lousy reputation of Windows. Microsoft perhaps took for granted that it could waltz into the online OS space and take over. It underestimated how many of its customers use Windows for lack of a viable option, especially for most software needs. When presented with operating systems that had more applications -- that is to say more capability to do the things you want to do, which is the precise competitive advantage Windows has -- Microsoft's consumers leapt at the opportunity to take their business elsewhere. Apple has had a longstanding strategy of trying to convert smartphone buyers and iPad buyers into Mac buyers. Google is now launching computers with its own operating system, using capabilities it gained in the development and launch of Android. Google and Apple combined own mobile, now they are both threatening the dominance of Microsoft because that company cannot recognize threats well, and failed to take advantage of opportunities when they are presented.

Failing to build up strengths is another business sin. Firms need to develop competitive advantages in order to succeed -- they need to be good at something. In the airline industry, American Airlines is still in the process of dealing with a Chapter 11 reorganization. The company thrived during the regulation years and like many other legacy carriers in the U.S. It has struggled ever since the airline industry was deregulated. While it has some strengths, notably the size of its fleet and its route network, American has no other strengths that it has cultivated to gain competitive advantage. It offers no-frills service, but cannot charge a no-frills price. As a result, it and other legacy carriers are all faced with losing market share to airlines that do have strengths -- Southwest, JetBlue, Alaskan -- and have all spent time in Chapter 11.