Essays on External Analysis - Microsoft Corporation Case Study

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The paper "External Analysis - Microsoft Corporation" is a perfect example of a business case study. Microsoft Corporation (Microsoft) has become renowned for developing, licencing and supporting an array of software services and products. Some of its major offerings are operating systems; business solution applications; desktop and server management tools; training and certification of computer system developers and integrators; server applications; cross-device productivity applications; and video games. [Market Controls] Previously, Microsoft had stipulated the services and systems that it would support, to control markets. However, Nadella, its present CEO, has provided its technologies everywhere.

He has emphasised upon mobile and cloud services. This is pathbreaking, as Microsoft does not own the standards nor dominates in these areas. Its mobile market share is less than one percent; whereas, Android and Apple have 84% and 15%, respectively. Its cloud market share is 10%, whilst Amazon has 30%. [Policies and Guidelines] Microsoft’ s corporate governance promotes shareholders’ long-term interests, ensures internal checks and balances, reinforces management accountability, cultivates public trust, and promotes accountability and responsible decision making. This is facilitated by its corporate governance framework’ s Articles, Bylaws and policies. EXTERNAL ENVIRONMENT ANALYSIS Technological Environment Microsoft has not been very successful in effecting change.

Albeit, it has been releasing new versions of Windows regularly, its hardware has frequently been unsuccessful. Thus, it had to withdraw its Kin phones within two months of their introduction. Consequently, it has lagged in mobile devices. Microsoft’ s major issue is that its revenues are primarily derived from its Business division. This renders it vulnerable to transition towards mobile devices and consumer products. In 2010, the iPad had been introduced. Prior to that PC sales had experienced 10% growth, and this reduced to 2%.   Economic Environment The operations of Microsoft have been distributed into business units of: Business division, Client Division, Server and Tools division, Entertainment and Devices division and Online Services division.

From the perspective of revenue generated, these divisions account for 32%, 25%, 24%, 13% and 5%, respectively. Significantly, 90% of the Business division’ s revenue is from Microsoft Office (Office), with 80% of the sales of this suite being to businesses. Hence, its sales growth is determined by the number of employees using Office, instead of the number of personal computers (PCs) sold.

The direct consumer sales of Office are usually related to the number of PCs sold, as this suite is frequently purchased along with the PC. In the Client division, 80% of the revenue is derived from original equipment manufacturers selling computers with Windows pre-installed. Revenue growth is directly affected by an increase in PC purchase numbers. Half of the revenue of the Server and Tools division arises from licencing agreements. Moreover, the revenue of Entertainment and Devices division, which sells Zune, Xbox, PC and online games, and hardware, such as, keyboards and mice, is seasonal.

Lastly, the Online Services division’ s revenue is from online advertising, like Windows Live suite, MSN and Bing. Microsoft concentrates upon research and development (R& D) and had allocated US$9 billion or 15% of its revenue for that year in 2009. 2.3 Competitive Environment Microsoft’ s presence in the consumer market is minimal. Moreover, dependence upon software sale revenues is a vital weakness, as its rivals, including Google’ s Android and Docs, have been offering free software. Despite its near-monopoly on PC operating systems, Microsoft has a mere 4% market share, vis-à -vis mobile phones, and its market share in tablets is minuscule.

Microsoft should provide a tablet solution that is integrated with the extant information technology infrastructure of servers with its software and businesses using Office. This is important as an iPad application ‘ QuickOffice’ , enables viewing and editing of Office documents.


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