41. (Cost management and strategy change) The following excerpt illustrates a strategy change by Corel, the software company.

Corel’s problems originated four years ago when the company purchased the WordPerfect word-processing software from Novell Inc. and started waging war with Microsoft for the top retail sales spot in packaged office suites. Within months of the $124 million acquisition, Corel transformed the moribund WordPerfect into the centerpiece of a rival to Microsoft’s Office package, which included a word processor, a spreadsheet, graphics software, and a personal organizer. For two months in 1995, Corel’s package edged out Microsoft’s in retail sales.

But the early success was deceptive. Corel sacrificed profit for market share by marketing its office suite at about half the retail price of Microsoft’s Office.

Meanwhile, Corel’s aggressive advertising campaign, including title sponsorship of the women’s professional tennis tour and national television commercials in the United States, drained the company’s meager resources. When Microsoft introduced its own upgraded Office 97 suite, the battle was over.

To reverse its fortunes, Corel is slashing costs. . . . For instance, it is spending much less than before to attract new office-software customers.

SOURCE: Adapted from Julian Beltrame, “Corel Stages Comeback from Battle with Microsoft—Cost Cutting, Refocusing on Corel Products Move Company Into the Black,” The Wall Street Journal (August 9, 1999), p. B4.

Corel’s change in cost management has resulted in the company’s return to profitable operations. The change in cost management resulting in “slashing costs” implies that the company has changed its strategy. Discuss how the firm’s strategy might have changed such that the firm’s new strategy would be consistent with the change in cost management that is described in the article.