Business and Microsoft Corporation - Case Study Example

Business Report: Microsoft Corporation Student’s Name Number Course Code Course Date Table of Contents Table of Contents 2 Introduction 3 SWOT Analysis of Microsoft 3 Strengths 3 Weaknesses 4 Opportunities 5 Threats 6 Key elements of Microsoft’s strategy 6 Key lessons for Microsoft 7 New initiatives to be implemented 8 Conclusion 9 References 11 Business Report: Microsoft Corporation Introduction Microsoft Corporation is a multinational company whose headquarter is at Redmond, Washington. It develops, manufactures, certifies and supports an extensive assortment of commodities and services for businesses and consumers. Microsoft was founded in 1975 by Paul Allen and Bill Gates. It is known globally for its operating system and office line of products such as Excel, Internet Explorer, Word programs and PowerPoint. In the consumer electronics’ market, Microsoft offers Xbox 360 and Xbox video games as well as the Zune music device. On the entertainment arena, it operates MSNBC network of cable television and MSN internet gateway. Microsoft launched a fresh search engine known as Bing in mid-2009, which is intended for gaining knowledge and insight from the internet. Microsoft Windows forms the firm’s flagship merchandise and generates the biggest portion of its earnings. Microsoft leads in the operating system’s market with a market share of 96.6 percent (Batchelor 2012). SWOT Analysis of Microsoft Strengths Drawing from Thompson (2001, p.558), Microsoft’s key strength is a strong brand name that is recognized across the globe as the biggest software company in the world. Besides its well-known brand name, the company has a strong repute for the manufacture of innovative and quality products. In this case, Microsoft’s products and services are known by a big global population, which makes it easy for the company in marketing its products. The strong brand name also gives Microsoft a competitive advantage over rivals especially small and upcoming software companies. In addition, its software products such as Word, Excel, Access and PowerPoint are highly recognized and also have high broad-based consumer and corporate acceptance. The products also have a number of powerful traits that are used globally, which in turn promotes competitive advantage and standardization through their simplicity of integration along with cost-effectiveness. Moreover, Microsoft has a relatively fast process of developing products which allows for apt new products’ review and release. As a result, it is able to draw and retain customers’ interest in its products throughout. Furthermore, Microsoft is a multinational corporation carrying out its business operations through regional subsidiaries in order to minimize cultural differences in over 60 countries and eliminate the challenges of cultural diversity. Additionally, it has a top ranking from Fortune as the best firm to work for and most admired, which boosts its reputation globally. Microsoft also has flexible workforce with contingent employees being hired for seasonal projects and thus, it is able to meet market demand for various products (Thompson 2001, p.558). Weaknesses Microsoft’s greatest weakness is its high dependency on manufacturers of hardware to pre-install its personal computers’ operating system. This puts it at stake because any major changes on the manufacturers’ side like low production level or low quality products can hardly affect Microsoft resulting in huge financial losses. Another major weakness is its frequent reorganization, autocratic atmosphere and red tape, which dampen employee creativity resulting in a loss of important personnel, as well as chilling of innovation and communication. It is also perceived by several people as a ruthless rival that uses its market leadership to marginalise rivalry through destruction of the products of its competitors, suppressing product innovation, and reducing the access to competitor products. This sometimes causes the company to have poor relations with its competitors (Thompson 2001, p.560). Thompson (2001, p.560) maintains that, within a period of 10 years, Microsoft’s workforce turnover has risen from 6 percent to 7.4 percent. This has made the company to incur huge costs in recruiting new workforce. The management of Microsoft failed to accurately forecast and plan for the growth of internet use between 1990 and 1995. This had made it to be not a major player in internet business and to have only few internet applications despite the internet space being a booming business opportunity for many companies. Opportunities According to Softwaretop100.Org (2011), one of Microsoft’s opportunities is a reduction in worldwide telecommunication costs which opens up new markets through increased use of the internet. The popularity of internet access among people around the world is on the rise, which presents Microsoft with a growth opportunity as a participant in the internet space. In addition, personal computers’ demand especially by business organisations in American as well as global markets continues to be strong regardless of the increasing popularity and growth of handheld devices like smart phones and iPhones. Moreover, markets for mobile phones especially in developing countries are growing which presents Microsoft with an opportunity for introduction of new software for mobile phones. The company’s presence in the video game marketplace is growing through the creation of Xbox. The revenue for the market is expected to hit $66 billion by the end of 2012, which provides an expansion opportunity of Microsoft in that market. Threats Microsoft has many court wars with other firms regarding software developer antitrust and lawsuits. This drags its operations backwards because a lot of time and money is wasted in the court cases. In addition, Apple Inc. and Linux have seized over 80 percent of Microsoft’s market share in the desktop functioning market. Thus, Microsoft is at a risk of experiencing a decline in its desktop sales which may in turn reduce its revenue. The company is also facing stiff competition from its main software developers’ competitors like IBM and Oracle, which challenges its market dominance in the operating systems and personal computers’ market. Moreover, buyers’ bargaining power is currently very high due to availability of numerous alternative products, which threatens the demand for Microsoft’s products. Furthermore, technology’s life cycle is becoming shorter every day and thus Microsoft is likely to suffer losses when its products become outdated (Bishop 2004). Key elements of Microsoft’s strategy According to Microsoft (2012), inclusion and diversity are central to Microsoft’s strategy. The company recognizes that, in the current global marketplace, leadership requires the creation of an organizational culture and an all-encompassing business setting. This is where the brightest and best diverse employees with different skills, experiences and perspectives work in unison in meeting worldwide consumer demands. Microsoft’s collaboration of different perspectives and culture ideas is a corporate asset and brings about greater innovation and creativity. The significance given to inclusion and diversity by the company relates to its strength of operating in over 60 countries in the world through regional subsidiaries. In this sense, Microsoft’s strategy is working as well as it can since having a diversified workforce will help it in a better understanding of customers’ needs in different parts of the world, for an enhanced customer satisfaction. Moreover, innovation and creativity through collaborated perspectives and ideas are significant aspects in the operations of Microsoft. These aspects match the company’s fast product development process since they will help in a quick development of new products to meet the growing demands of customers. In addition, technology keeps on advancing day after day. Therefore, Microsoft employees’ innovation and creativity will facilitate the creation of up to date products in order to retain customers’ interest on its products (Microsoft 2012). Accessibility is also a key element of Microsoft’s strategy. It is a corporate practice which is a component of Microsoft’s computing efforts focussing on responsibility and integrity in the company’s practices. Its strategic approach towards accessibility include constant leadership and commitment in creating new accessibility solutions and making the use of computers easy by building accessibility in its services and products. Some of Microsoft products whose accessibility has been enhanced include Windows 7 and 8, Internet Explorer 10, Office 2010, and Xbox 360’s Kinect. Increased accessibility will help Microsoft deal with competition from other software developers like IBM by providing highly differentiated and quality products. The accessibility strategy is also helpful to the company in dealing with the threat of high buyers’ bargaining power since its products will be irreplaceable (Microsoft 2012). Key lessons for Microsoft One of the biggest lessons for Microsoft relates to the short lifecycle of technology. The demand of a bigger percentage of the company’s products highly depends on the prevailing technology. Therefore, in order to effectively meet the demands of customers and retain customers, the company has to always keep its products updated through the adoption of advanced and current technology in developing their products. Additionally, Microsoft has learned that innovation is central in sustaining its success and also in dealing with the current and likely competition from its rivals. Therefore, it should be given first and continual priority in the formulation of its business strategies. This will facilitate continuous business success through increased demand and increased customer satisfaction (Carlton 2000, p.50). Carlton (2000, p.51) further asserts that, Microsoft has learned lots of lessons from the many court cases with different companies such as Netscape, in its way of handling competition through telling customers not to buy rivals’ products and also through antitrust cases. Microsoft has lost significant amount of money to lawsuits from rivals. The lesson that it has learned from such suits is the formulation of better ways of dealing with competition like practising product differentiation and manufacturing tailor-made products. New initiatives to be implemented Microsoft’s market share in the operating systems and desktop market is remarkable. However, this does not mean that, it should relax and continue retaining its market share. There is very stiff competition in the market and thus new initiatives need to be implemented in order to sustain its continuing success. To start with, Microsoft should increase its focus on the internet market. The use of internet is on the rise in most parts of the world especially by young people, students as well as business professionals. Many companies are using the internet to market and sell their products. In other words, the internet is becoming the centre of most human activities. Increased internet use has also come as result of development and introduction of many social networks like Twitter and Facebook and business and professional sites like LinkedIn and dealfish. The internet presents Microsoft with a huge business and growth opportunity. Therefore, the company should make plans for developing new applications and if possible owning social sites in order to capture a broader base of customer for increased profitability. In addition, Microsoft should take up the manufacture of handheld devices and laptops. At the present, Apple and Linux are giving Microsoft lot of competition on its desktops due to their manufacture of portable and handheld devices. In the coming years, the demand for desktops will definitely decline due to advanced technology, changing lifestyles and professionalism. Most business professionals prefer using handheld devices like iPhones, tablets and laptops to desktops. This is because; such devices are portable, lighter and have more applications. Hence, they are able to carry and use them to carry out their business activities wherever they are. In terms of lifestyle, handheld devices are becoming common especially among young people and students as well and thus nobody is much interested in using desktops. It is thus advisable for Microsoft to develop devices that match the current lifestyles in order to beat competition from its rivals. Microsoft should also concentrate on manufacture of quality and cost-friendly products. With an increased buyers’ bargaining power, the switching costs of consumers to substitute products is very low. Consumers are interested in innovative, quality and affordable products. Thus, manufacturing products and giving services that match the customers’ needs will help in retaining them and even drawing new customers. Conclusion Microsoft’s key strength is a strong name, while its greatest weakness is dependency on hardware makers for pre-installing operating systems in its personal computers. Its greatest business opportunity relates to increased use of internet and its main threat is stiff competition from Apple, Linux, Oracle and IBM. The key elements of the strategy of Microsoft include inclusion and diversity, creativity and innovation and accessibility. Microsoft’s key lessons relates to the short lifecycle of technology, significance of innovation to its success, and the costs of its many court wars. In order to sustain Microsoft’s continuing success, the new initiatives which should be implemented are; increased focus on internet, manufacture of handheld devices and laptops and more emphasis on quality and cost-friendly products. References Batchelor, B 2012, History of the Microsoft Corporation, [Online] Available at: http://www.ehow.com/about_5089170_history-microsoft-corporation.html [Accessed 29 November 2012]. Bishop, T 2004, Studies on Linux help their patron: Microsoft, Seattle Post-Intelligencer, 27 January. Carlton, DW 2000, The Lessons from Microsoft, Business Economics, 12(1), pp. 47-53. Microsoft 2012, A Vision and Strategy for the Future, [Online] Available at: https://www.microsoft.com/about/diversity/en/us/vision.aspx [Accessed 29 November 2010]. Microsoft 2012, Microsoft Accessibility, [Online] Available at: https://www.microsoft.com/enable/microsoft/mission.aspx [Accessed 21 November 2012]. Thompson, JL 2001, Understanding corporate strategy, London, Thomson Learning, cop. Read More