Strategic Management of Microsoft

Introduction

Background of the Study

The success of Microsoft in the business industry has become one of the major topics for various business experts all around the world. This report retrieves as well as explores Microsoft’s strategy of the business, which makes them world leaders with no closer competitors. This report will disclose various business strategies applied by the company to create sustainable strategies in a competitive position. A PESTEL analysis will be carried to make identification of the macro-environmental drivers to review the strategy against the issues from them. The value chain model is utilized to diagnose the strategic capabilities. There is the inclusion of a strategic group map that demonstrates the competitive market positioning of the company.

Overview of Software Industry

The software industry comprises of designers, sellers, marketers, programmers, and others which creates the program user’s needs and even market and sell them. Various programs are designed for mass consumption while others are for company needs. Computer software companies are found providing software assistance for specific functions. There are three segments of computer software namely corporate information services (IS) departments, consultants, and software vendors. Corporate IS department generally implements both software and hardware products for those companies which generate non-technical services and items. Those people who work for software companies give focus on the creation of products for sale. Services are provided to business niches like the medical industry, restaurant industry or other departments in the industry (Dempsey, 2015). The common job positioning in the computer software industry is software engineers, programmers, software marketers, salespeople, as well as quality control personnel.

Introduction of Microsoft Corporation

Microsoft Corporation is a leading provider of hardware and software products and services. The main mission of this company is to provide people and organizations to perform and attain more by the creation of technology, which transforms the ways of people to work, learn and communicate. The company is found developing and marketing services, software, and devices that provide newer opportunities and enable values to the lives of people (Microsoft, 2019). Microsoft Corporation makes the generation of revenues through developing, supporting and licensing a wider range of software services and products through manufacturing as well as selling of services. The products of the company include computing devices, phones, servers as well as other various intelligent devices like productivity applications, software development tools as well as online advertising. Microsoft offers solutions that give customers software, services, and content over the Internet through shared computing resources. The company is found conducting research and developing advanced technology for future software, services, and devices (Microsoft, 2015). It believes that their business will continue to grow as well as meet the needs of the customers by creating a newer opportunity for partners, enhancing customer satisfaction, and improving excellence along with business efficacy. There are various divisions segregated by the company for products and services such as windows & Windows Live Division, Server and Tools, Online Services Division, Entertainment and devices division as well as Microsoft business division.

The current strategy of Microsoft corporation

The present strategy of Microsoft Corporation is listed below:

Building a collaborative and stronger link with technology partners as well as organization to increase awareness regarding the significance of accessibility in attaining the technology needs of people

Provide accessible technology to the next generation and move the software industry forward through groundbreaking technology

Creating computer to use, see and hear through making easy accessibility in Microsoft products

Processing commitment and leadership in awareness, innovation, and accessibility (Microsoft, 2019)

Vision and mission of Microsoft Corporation

The mission of Microsoft is to provide people and organizations to achieve more by the creation of technology, which transforms the lifestyle of people at work, play, communication and even learn. On the other hand, the vision of the Company is to produce innovative technology, which is accessible to each of the people, which adapts the needs of the people. The accessible technology assists in eliminating the issues for people who possess disabilities and even help individuals to attain the full benefit of capabilities (Microsoft, 2019).

SWOT Analysis of Microsoft Corporation

A SWOT analysis if planning methods are used to analyses the strengths, weaknesses, opportunities, and Threats possesses in the business industry. The strengths, weaknesses, threats, opportunities of Microsoft Corporation are as follows.

Strengths

Microsoft Corporation possesses brand loyalty and Reputation. The company is found, resulting in more than 90% of the market share for the operation system, and it has become very tough for other companies to attract users. The reputation has led the company to greater market share and higher sales. The company has even tied up with various branded hardware manufacturers like Samsung and Dell, where products would be sold with already pre-installed Windows software. Microsoft possesses a stronger financial surplus as it has grown its revenues in an increased manner within five years timespan (Microsoft, 2019).

Weaknesses

The company was found making bad investment decisions that were not successful. Multimillionaire acquisitions, which were made by Microsoft like Massive, WebTV, Link Exchange, got shut down and divested early. Moreover, Microsoft company is highly dependent on computer hardware manufacturers to produce products that execute Windows OS. The Maturity of the PC market has even made it tougher for the company to grow revenues in such sectors. The company also possesses greater research and development resources and greater positions to enter the market with products but didn’t get successful. The acquisition processes by Nokia have resulted in bad output, which also dropped the share prices and could even recover the costs until 2016.

Opportunities

The company was seen possessing opportunities through cloud-based services and mobile advertisement. It is expected that the company should expand its cloud service range as demand for cloud-based products and services is increasing. Since smartphone and tablet markets are growing in a greater extends so the company could take benefits of opportunities through the introduction of its tablets. Microsoft could also acquire new startups, which would help bring new technology, competence, and skills to the business.

Threats

Microsoft company is facing intense competition in the software products as Google and Apple have established its position in the market. The consumer's habit of consumption has also changed, where they started buying smartphones and tablets rather than laptops and PCs. The arrival of open source projects like New Linux OS as well as Open source Office are free and are a major threat to the expensive Microsoft’s products. The potential expensive lawsuits also increase the risks of the company.

Political factors

Regulations to education and industry

Restrictions on recruitment of foreign employees

Anti-trust law

Political involvement in newer deals (Fleming and Donnan, 2017)

Economic factors

Fluctuation and non-predicted actions of foreign Currency

Barriers in Import and export

Conditions of demand and supply

Trade cycles

Social factors

Donation of software to non-profit company globally

Increased aging population

Empowering of the young generation

After considering PESTEL analysis, it is argued that Technology is the main driver that impacts the business strategy of Microsoft. Company is found spending 13-14% of its revenue in Research & Development, and its sustainability is highly dependent on a competitor’s ability to give better solutions at lower prices. It has become very challenging for the competitors of the company to beat the price of Microsoft products as the company enjoys the economies of scale (Dudovskiy, 2018). However, the company needs to acquire some innovative substitutes as an existing strategy might have a chance to attain failure.

Michael Porter’s Five force analysis

Porter’s Five Force is a framework that determines the profitability and attractiveness of the market. Microsoft is leading software providers who had faced various types of competitors and industrial regulations challenges. However, the company has always constantly focused on technology as well as earns and needs of the customers rather than increasing profits. The company has made tactical control over the five forces of Michael Porter.

The Threat of New Entrants-Low

The scale of the Microsoft operation makes it difficult for new entrants. Moreover, Microsoft has also created a successful network with partners, business firms and people, which makes them directly or indirectly dependent on technologies of Microsoft. It is thus difficult for the existing customers to switch the company.

Industry rivalry-Moderate

The increased competition of Microsoft products and successful operations have made it obvious to possess a moderate level rival.

Bargaining Power of Suppliers-Low

The established customer base of the company, along with a larger number of suppliers and partners, has enhanced the bargaining power of the company than suppliers (Dudovskiy, 2018).

Bargaining power of Buyers- Low

Microsoft company is so innovative with its products and pricing strategy that customers don’t have any close substitutes.

Threats of Substitutes- Low

Some substitute products assist in maintain and sharing information of the company. Although, the company possesses enterprise software which is effective and moderns means of connection business information, there might be any possibility than some new substitute might arrive, which would compete with micro soft’s products (Dudovskiy, 2018).

Short term and long-term objectives of Microsoft Corporation

Microsoft company is found satisfying the requirement of the customers by providing software and building stronger links with stakeholders. On the other hand, the company has also provided structure by which management, as well as boards, could monitor performance. It has also strengthened as well as safeguard the business integrity and practice of business. The company has also encouraged efficient resource usage and possess accountability for the stewardship of resources. The owners of the company have also distributed the responsibilities and rights equally among managers, board members, and shareholders.

Value Chain Analysis

Value-chain analysis is a strategic tool that is utilized to evaluate the activities of internal firms. It assists in acknowledging optimal solutions acceptable to suppliers, employees, customers, and investors.

Inbound Logistics

Microsoft has made a contract with various suppliers, and thus the company must make highly complex supply chain operations without disruptions. The company is found selling Microsoft Dynamics and other software, which helps in supply-chain management of the business. The company also possesses in-depth knowledge regarding supply-chain management and inbound logistics.

The company’s manufacturing plants are situated globally, which ensures proximity to suppliers and reduces the costs of transportation and minimizes the negative impact of the environment. Some of the plants of manufacturing are situated in poor areas, which also creates a job for the local people. Although many of the corporations are of the same size but Microsoft is not seen giving detail data regarding the number and other information regarding manufacturing plants globally.

The distribution of services and products are done via three major channels, which include distributors and resellers, online sales channels and original equipment manufacturers (OEM). This channel helps the company to pre-install windows operating systems as well as also assist in presenting information regarding sales promotions and seasonal offers.

The company is found using online and offline channels in marketing and sales. The brand marketing message is also associated with efficiency, effectiveness, and convenience to deal with professional and personal tasks.

Microsoft has tried to make a higher level of services of customers to pre-purchase at the time of purchase and after purchase. The Online answer desk gives proper services to the customers in terms of accounting, billing, technical support, and installation support. Moreover, the company also offers support to IT professionals and business by attaining higher benefits through their services and products.

Infrastructure

Microsoft has made good infrastructure and is still working on the building when required. The management of the company is inspected regularly, and the culture of the company has also been stronger.

Human resources management

Human resources are one of the essential assets of the company. Microsoft can retain and attract the best talents in this technology business. The employees of the company are educated, dedicated and committed to the company, and they make a strong resource base for the company. Microsoft gives higher pay and benefits to its human resources, which thus attracts a large number of achievers towards the company (Microsoft corporation, 2018).

Technological development

Microsoft has regularly created innovative technology products that have changed the living style of people while working, learning, playing and communication. In the development process of products, companies show interest and take partners and customers' feedbacks to deliver and build value in each of the products they build.

Procurement

The procurement process is the place where technology can make a difference. The balancing of challenges in maintaining efficiency is highly essential at the time of lowering costs and even meeting transparency requirements. Microsoft corporation is applying e-procurement tools that would meet all challenges and is attaining better growth. The company is found using electronic purchasing which is reducing the handwritten forms and long waits for services and supplies (Microsoft corporation, 2018).

Cloud Database

The companies that are prevailing in Cloud databases strategic group which is also known as Database-as-a-services or DaaS provide on-demand relational database software that is created on elastic architectures. This provides the users to select a relational database without purchasing any software to manage the configurations.

Cloud platforms

The companies in Cloud platforms strategic group, which is also known as Platform-as-a-service or PaaS, provides on-demand development environment and tools, which includes cloud database and cloud infrastructure layer, which enable the development of IT groups as well as delivery of the business applications before investigating traditional system software. The cloud platform also provides a standalone relational cloud database that had direct competition with DaaS firms (BBC News, 2016).

Traditional Software

The companies in traditional systems software’s generate programming languages, integrates development environment, middleware, relational database software’s and other materials which enable IT group to test, hosts, and develop business applications.

Multi business strategy/ BCG Matrix

Taking the BCG matrix into consideration, Microsoft is taking its position from cows and is investing its time and money in question marks. The company is not following the principles of BCG by permitting dogs to survive. Microsoft is an integrated software company that does all its design in the house because if its intellectual property, which is the code. Various services are outsourced such as internal IT as well as legal services. However, such services are not competencies for Microsoft as a company should stay with vertical integrations and outsource those business elements, which are not core competency as it ensures that none of the companies are imitating them (Dempsey, 2015).

Question Mark

This segment represents a low relative market share and executes in higher sales. The hardware segments of the Microsoft come in this category along with Lumia and Non-Lumia phones. When there was an introduction of android phones than people switched to android, which took the market share of Microsoft Lumia. Presently, Microsoft must make the usage of a product development strategy to enhance market share and should turn in star (BBC News, 2016).

Stars

Stars are one which possesses high market share and competes with higher sales. This segment possesses devices and consumer segments along with mobile applications and window linked software products. It is seen that Apple and Google are the main competitors of Microsoft company. It is thus stated that market development and product development strategies must be included in the star segments.

Cash Cows

Gaming and Microsoft computing are segments that should be included in the cash cow category. This segment operates in lower sales but higher market share. This segment is beneficial for the company to sustain its financial position. Although Xbox One and Xbox 360 have holder bigger market share in the gaming industry, Sony is known as the market leader in the game industry. The company should apply horizontal integration as it can assist the corporation in grabbing a bigger market share.

Dogs

The company is fortunate that none of its sections do fall in the dog’s category. This segment is one that competes in low sales and possesses a lower market share. This segment is a liability on organization and liquidation strategy is recommended for such segments.

Conclusion

Microsoft Corporation is a multinational software corporation which has it headquarter in Redmond Washington which develops, licenses, produce and support a range of products and services linked to computing. The company possesses control over the overwhelming share of the personal computer operating system market. Microsoft sells not only the operating system but also sells products like office software suite, Xbox, CRM applications, Zune and digital music players. The company has even bulked its existence in the market like Online advertising, enterprise software and mobile devices. The goal of the company is to offer customers and partners with the best experience and be a satisfied leader in the technology industry. The company has built accountability and trust along with improving product quality and security. They have also innovated their products and services according to customers' feedbacks and have done various means to satisfy customers.

It can be stated that Microsoft values the inputs from partners and assist in the progress of the organization and even improve the product’s quality. Since the world is changing in a pacer manner and Microsoft being a software leader globally, it is tackling various issues and challenges through the forces of industry. However, this analysis has found that the company is keeping ahead against the competition by becoming an industry leader.

Recommendation

Since the company is facing issues dealing with various challenges associated with it so it is recommended that the company should make various changes to work effectively. Companies should find their customers and give values wherein the main goal of the company must be to obtain trust through customers who also return values to the company. It is also recommended that the company should build core competencies as it is hard to imitate and is viewed as Unique sources of sustained competitive advantages. The company should also be very sure regarding the quality of the products provided by the customers as lower product quality would diminish the expectation of the customers towards the products.

References

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Fleming, S. and Donnan, S., 2017. Trade deficit drags on US economic growth. [Online]

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Microsoft corporation, 2018. "Microsoft Workers Gave Away $125 Million To Nonprofits In 2015." The Seattle Times. [Accessed on 8 December 2019].

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