Introduction
The inception of Microsoft Corporation began in 1975 when Bill Gates and Paul Allen, who were childhood friends, converted BASIC, a common computer programming language at the time, to be used on an early personal computer (PC) known as the Altair. Briefly after BASIC was converted for use on the Altair, Gates and Allen came up with the name Microsoft , which was extracted from the words, Microcomputer and Software. Perhaps Microsoft’s popularity gained momentum in 1980 when the International Business Machines Corporation (IBM) asked Gates and Allen to create the operating system for its very first personal computer, the IBM PC ( Microsoft Corporation, 2018 ). What the two cofounders did was buying an operating system from another firm and modified it. They renamed the operating system to MS-DOS (Microsoft Disk Operating System). Consequently, the MS-DOS was unveiled with the IBM PC in 1981.
The MS-DOS seems to have been a success because after it was launched, a significant number of manufacturers of personal computers approved MS-DOS as their operating system, a factor that contributed to high revenue generation by Microsoft. For instance, by the early 1990s, the company had sold over 100 million copies of the operating system. The company’s operating system surpassed traditional operating systems such as CP/M and IBM OS/2, which were Microsoft’s main rivals. Perhaps the most important invention that placed Microsoft as the first operating system manufacturer was the launch of Windows in 1990 ( Microsoft Corporation, 2018 ). The success of the invention was evident because by 1993, as Microsoft Corporation (2017) states, Windows 3.0 and its consequent versions were selling at a rate of approximately one million copies every month and almost 90 percent of all the PCs in the world were using Microsoft operating system.
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Nevertheless, Microsoft has faced a lot of hurdles throughout the years. One of the struggles of the company are legal battles, most of the time emanating from the accusations that the company was trying to block other operators by establishing a monopoly. One of the cases arose from Microsoft’s attempt to establish a monopoly in the internet sector. Initially, the company had been reluctant to enter into the internet business because it did not realize the potential of the internet. Microsoft entered into the internet business when a new firm known as Netscape Communications Corp. introduced Navigator, which was a web browser program that simplified the process of navigating the World Wide Web (MarketLine Industry Profile). Microsoft swiftly changed its course by creating its own browser, the Internet Explorer. Additionally, the company made the internet software free and took aggressive steps to convince the manufacturers of computers and the providers of internet service to distribute it widely. Microsoft Corporation had begun the process of integrating Internet Explorer into Windows when Netscape moved to court, accusing Microsoft of violating business regulations.
After approximately 30 months, a judge concluded that Microsoft violated the Sherman Antitrust Act (1890) and ordered that the company be broken up. However, Microsoft appealed the court decision, which was overturned although the company was found guilty of trying to maintain a monopoly. The legal hurdles of the company became even prominent when the European Union (EU) imposed a fine of $611 million in 2004 for the company’s near-monopoly practices (Microsoft Corporation, 2018). The EU even imposed a heavier fine of $1.35 billion in 2008 for the company’s defiance of the EU’s 2004 antitrust decision against the company.
Despite the woes that Microsoft Corporation faces, the company remains to be one of the most profitable in the technological sector. The public figure that has been behind Microsoft is Bill Gates who has now relinquished his position as the CEO but remains chairman of the board (Curtis, 2014). In 2000, Gates made Steve Ballmer, whom he had met briefly at Harvard, the CEO of Microsoft. However, Satya Nadella, a longtime Microsoft executive, replaced Ballmer as CEO in 2014, a position that he holds to date (Company Profile, 2017). At this juncture, it is vital to mention that the main objective of this working paper is to carry out an analysis of Microsoft Corporation using the relevant models. Thereafter, recommendations will be made based on the findings of the analysis.
| Company name | Microsoft Corporation |
| Corporate headquarters | Redmond, Washington, United States |
| Telephone number | 1 425 8828080 |
| Fax number | 1 425 7067329 |
| Website address | www.microsoft.comen-us |
| CEO name | Satya Nadella |
| Annual sales volume | $90 billion |
| Total number of employees | 124,000 |
SWOT Analysis and Industry Analysis
External Analysis
| FIG 1A- PORTERS FIVE FORCES ANALYSIS-BARRIERS TO ENTRY | Weight | Highly unattractive | Mildly unattractive | Normal | Mildly attractive | Highly attractive | Present rating | Future rating | |
| Current | 1 | 2 | 3 | 4 | 5 | ||||
| Future (3-5 years) | |||||||||
| Government regulations | 0.19 | 0.81 | |||||||
| 0.9 | |||||||||
| Capital requirements | 0.23 | 0.87 | |||||||
| 1.2 | |||||||||
| Brand image | 0.18 | 0.67 | |||||||
| 0.67 | |||||||||
| Economies of scale | 0.21 | 0.89 | |||||||
| 0.89 | |||||||||
| Technology requirements | 0.19 | 0.56 | |||||||
| 0.76 | |||||||||
| Total weighted score | 1.0 | 3.80 | 4.42 |
Government regulation is a normal factor that affects the operations of technology companies such as Microsoft. Government regulations set in through environmental and safety regulations. Secondly, most governments have different regulations in regard to offering operating licenses to technology companies (Prahalad & Hamel, 2000). The process of receiving permission to operate can be lengthy, expensive, and complicated. However, perhaps it is accurate to assume that the regulations will get attractive in the future because several governments are trying to implement and enforce new regulations.
The various capital requirements that are essential in the technology industry can be viewed as attractive. Most of the top competitors in the technology industry such as Apple, Amazon, and Google have made tremendous investments in innovation, technology, and other equipment (MarketLine Industry Profile, 2017). Additionally, new entrants into the market will need to invest considerably in research and development. It is important to note that the requirement for capital in research and development is difficult because it cannot be recovered. As competition in the technology industry continues to increase, research, innovation and development will become critical, a factor which makes capital requirements to be even more attractive in the future.
As Priem & Butler, (2013) state, in the technology industry, a firm that has a strong brand image have a high probability of enjoying a competitive advantage over others. Microsoft Corporation is a traditional firm that has enjoyed a strong global image throughout the years. However, other global brands such as Apple, Google, and Amazon have enjoyed the same advantage. Nevertheless, Microsoft Corporation has an advantage over new entrants into the technology industry. One of the factors that has contributed to Microsoft’s strong brand is that it has been in the technology industry for a long period. New firms will have to put on an aggressive brand campaign to get close to being worthy rivals of Microsoft Corporation.
Just like capital requirements, economies of scale have a tremendous impact in the technology industry. The leading companies that have been mentioned are large, highly vertically-integrated, multinational companies. These companies use their large scale of production as well as distribution networks to minimize costs and maximize profits (Priem, 2007). That means that economies of scale are not only every extremely attractive to such firms but their robust distribution channels also give them a competitive edge (Barney, 2001). On the contrary, new entrants ought to secure distribution of their products and services, which sometimes face issues of unequal access to channels of distribution.
| FIG 1A- PORTERS FIVE FORCES ANALYSIS- POWER OF BUYERS | Weight | Highly unattractive | Mildly unattractive | Normal | Mildly attractive | Highly attractive | Present rating | Future rating | |
| Current | 1 | 2 | 3 | 4 | 5 | ||||
| Future (3-5 years) | |||||||||
| Number of buyers | 0.20 | 0.83 | |||||||
| 0.83 | |||||||||
| Substitutes | 0.19 | 0.73 | |||||||
| 0.55 | |||||||||
| Switching costs | 0.11 | 0.11 | |||||||
| 0.11 | |||||||||
| Consumer dependence | 0.23 | 1.16 | |||||||
| 0.70 | |||||||||
| Product differentiation | 0.27 | 0.12 | |||||||
| 0.12 | |||||||||
| Total weighted score | 1.0 | 3.35 | 2.71 |
When analyzing the power of buyers of Microsoft Corporation, the ratings show that there is a threat currently but an opportunity in the future. The prominent contributing factors include the high number of buyers, low differentiation of products between competitors, as well as the high level of consumer dependence on technology. Porter posits that powerful customers influence value by forcing down prices and demanding high quality of products. According to Porter, all this value comes at the expense of the profitability of industries (Porter, 2008).
| FIG 1A- PORTERS FIVE FORCES ANALYSIS- POWER OF SUPPLIERS | Weight | Highly unattractive | Mildly unattractive | Normal | Mildly attractive | Highly attractive | Present rating | Future rating | |
| Current | 1 | 2 | 3 | 4 | 5 | ||||
| Future (3-5 years) | |||||||||
| Backward integration | 0.19 | 0.72 | |||||||
| 0.89 | |||||||||
| Dependence on industry revenues | 0.31 | 1.59 | |||||||
| 1.59 | |||||||||
| International political risks | 0.27 | 0.27 | |||||||
| 0.27 | |||||||||
| Ability to outsource | 0.23 | 0.97 | |||||||
| 0.97 | |||||||||
| Total weighted score | 1.0 | 3.54 | 3.72 |
According to Porter, the supplier group is powerful if it does not rely heavily on the industry for its revenues. Nevertheless, one of the most attractive factors that favors the technology industry in relation to the suppliers is that the revenue of suppliers is highly dependent on the success of the firms involved in the innovation and development of various technological products and services. For example, when the price of the various technology products is high, the companies may explore options that were considered expensive previously, which would then increase the revenues of suppliers. On the contrary, is the prices are low, the companies can reduce their investment in both research, innovation and development consequently leading to increased competition among the suppliers (Barney, 2000). As it can be deduced, suppliers cannot be successful if the technology companies are not successful.
There are many factors that are attractive in relation to the power of suppliers. Nevertheless, the political risks involved in the technology industry are not attractive. Most technology companies prefer investing in countries with stable political systems as well as a history of enforcing long-term leases and granting. The risks are always specific to each country, their political and economic structure, as well as, to each industry (Priem & Butler, 2013). On the same note, some countries may decide to come up with measures to bar the entry of some technology products because of political differences with countries where some technology products are manufactured. The most prominent barriers in that respect are economic sanctions.
| FIG 1A- PORTERS FIVE FORCES ANALYSIS- AVAILABILITY OF SUBSTITUTES | Weight | Highly unattractive | Mildly unattractive | Normal | Mildly attractive | Highly attractive | Present rating | Future rating | |
| Current | 1 | 2 | 3 | 4 | 5 | ||||
| Future (3-5 years) | |||||||||
| Availability of substitutes | 0.35 | 1.39 | |||||||
| 1.04 | |||||||||
| Competition from substitutes | 0.29 | 1.21 | |||||||
| 0.91 | |||||||||
| Substitute price/ value | 0.34 | 1.05 | |||||||
| 0.70 | |||||||||
| Total weighted score | 1.0 | 3.65 | 2.65 |
The availability of substitutes presently tends to be an opportunity but may become a threat in the future. Although there are high numbers of substitutes in the technology industry currently, Microsoft Corporation is not threatened perhaps because of the strong brand image. However, as more advances in technology continue being made, researchers project that there will be a lot of differentiation (Priem & Butler, 2013). If other technology companies make superior products over those of Microsoft, the share of Microsoft Corporation in the technology market will be threatened. Perhaps Microsoft’s standing currently is not threatened because the current population was introduced to Microsoft’s products and has got used to them.
| FIG 1A- PORTERS FIVE FORCES ANALYSIS-RIVALRY | Weight | Highly unattractive | Mildly unattractive | Normal | Mildly attractive | Highly attractive | Present rating | Future rating | |
| Current | 1 | 2 | 3 | 4 | 5 | ||||
| Future (3-5 years) | |||||||||
| Industry size | 0.22 | 0.76 | |||||||
| 0.76 | |||||||||
| Same dimension competition | 0.17 | 0.45 | |||||||
| 0.45 | |||||||||
| Industry growth | 0.11 | 0.58 | |||||||
| 0.58 | |||||||||
| Product differentiation | 0.24 | 0.47 | |||||||
| 0.47 | |||||||||
| Switching costs | 0.26 | 0.19 | |||||||
| 0.19 | |||||||||
| Total weighted score | 1.0 | 2.45 | 2.45 |
Rivalry among competitors in the technology industry is a threat because of competition in similar products and services, low level of differentiation of products among competitors as well as very low consumer switching costs. The technology industry competes on both price and like aspects such as luxury which consequently results to low profits.
|
Porter’s five forces summary |
||||
| Factors summary | Present | Future | Opportunity or threat | Assessment |
| Barriers to entry | 3.81 | 4.42 | Opportunity | Firms such as Microsoft have an opportunity because of the government regulations that hinder new firms from entering the industry |
| Power of buyers | 3.35 | 2.71 | Threat | Because most firms in the technology industry have low differentiation on products, buyers tend to be very sensitive on price. Therefore, there is a very high probability of buyers to switch between different competitors in the industry |
| Power of suppliers | 3.54 | 3.72 | Opportunity | Because the revenues of suppliers are heavily reliant on the success of the overall industry, this is extremely attractive for technology companies because it reduces the power of suppliers. |
| Availability of substitutes | 3.65 | 2.65 | Threat | Most technology companies have begun to differentiate their products and this trend is projected to continue in the future. Microsoft Corporation may be threatened if the substitutes are more superior to the products manufactured by Microsoft |
| Rivalry | 2.45 | 2.45 | Threat | One of the factors that threatens Microsoft in this aspect is that most technology companies have similar business models |
| Totals | 16.8 | 15.59 | ||
Overall, according to the summary of Porter’s analysis, Microsoft Corporation faces an eminent threat in its future operations. The main reason is that Microsoft is not differentiating its products and services well enough like the competitors. One of those competitors is Apple, a company that is trying to come up with unique products in an attempt of gaining a competitive edge over its competitors. While Microsoft is popular among older people, Apple is trying to create products that resonate with the younger generation, a population group that is rapidly expanding in regard to market size (Priem, 2007).
External Factor Evaluation
| Key external factors | Weight | Rating | Weighted score |
| Opportunities | |||
| Capital requirements | 0.08 | 4 | 0.29 |
| Brand image | 0.04 | 3 | 0.14 |
| Government regulation | 0.04 | 2 | 0.10 |
| Economies of scale | 0.04 | 4 | 0.20 |
| Proprietary technology | 0.07 | 4 | 0.23 |
| Vertical integration | 0.05 | 3 | 0.16 |
| Number of buyers | 0.02 | 2 | 0.04 |
| Backward integration | 0.06 | 3 | 0.17 |
| Ability to outsource | 0.06 | 4 | 0.25 |
| Industry growth rates | 0.03 | 2 | 0.06 |
| Threats | |||
| Tendency to switch | 0.04 | 4 | 0.15 |
| Network effects | 0.02 | 2 | 0.05 |
| Product differentiation | 0.03 | 2 | 0.06 |
| Price sensitivity | 0.03 | 2 | 0.06 |
| International political risks | 0.08 | 3 | 0.23 |
| Environmental awareness | 0.07 | 3 | 0.22 |
| Industry growth | 0.07 | 3 | 0.18 |
| Similarity of competitors | 0.07 | 3 | 0.18 |
| Zero-sum competition | 0.07 | 3 | 0.18 |
| High barrier of exit | 0.05 | 2 | 1.10 |
| Total | 1.00 | 3.05 |
Proprietary technology seems to be one of the most robust factor in all Microsoft Corporation’s division. It is therefore accurate to conclude that it is one of the company’s most significant opportunities moving forward. For instance, Microsoft has been improving on Windows Operating System over the years. That means that the company has been conducting research to find out the best ways of making superior products that make the target market to solve problems easily. Most remarkably, Microsoft is trying to reduce fragmentation of the Windows operating system by promoting the “One Windows” strategy. The strategy aims at providing Windows 10 which will be offered as a free upgrade for people using Windows 7 and Windows 8 (Microsoft Corporation, 2018). The move is also projected to unify PCs, smartphones and tablets under a common operating system.
Secondly, government regulation especially on new entrants into the industry is poised to be an opportunity for Microsoft because it is already in existence and has been in operation for a long time. New entrants will face challenges such as the high costs of obtaining business permits in different countries. Another advantage that Microsoft has over new firms is that it has a strong brand and the key figure that has been behind the robust brand is Bill Gates. Bill Gates seemingly is synonymous with the company and many people even fear that Microsoft will collapse with the demise of Gates (Curtis, 2014). However, Microsoft still has competent employees such as the CEO, Satya Nadella, who was an executive officer of the company for a long time.
Perhaps one of the challenges that the company faces is the legal uncertainty of investing in some countries. This uncertainty arises as a result of traditional monopoly nature of the company and the legal suits that the company has found itself in. While some countries have little regulations in regard to the operation of technology companies, others have strict regulations (Priem, 2007). Perhaps it is the reason why Microsoft is likely to face fines in developed countries such as the US and European countries and face no legal fines in developing countries such as a majority in Asia and Australia. The most probable reason is that developed countries have many rivals and new entrants while developing countries have few or no rivals.
Internal Analysis
| Core competencies | Weight | Rare | Hard to imitate | Not easily substitutable | Valuable | Sustained competitive advantage | Total weight | Percent total | |
| Corporate social responsibility | 0.19 | X | X | X | X | 0.71 | 0.20 | ||
| Brand reputation | 0.25 | X | X | X | X | X | 1.31 | 0.33 | |
| Wide network of distributors and dealers | 0.17 | X | X | 0.32 | 0.07 | ||||
| One Windows strategy | 0.12 | X | X | X | X | X | 0.53 | 0.15 | |
| Economies of scale | 0.13 | X | X | 0.23 | 0.06 | ||||
| Product development technology | 0.14 | X | X | X | X | 0.75 | 0.19 | ||
| Totals | 1 | 3.65 | 100% |
Microsoft Corporation has numerous core competencies which can be utilized to gain competitive advantages over competition (Vitell, 2015). Microsoft’s core competencies include brand reputation, corporate social responsibility, a wide network of distributors and dealers, the One Windows strategy, product development technology, and benefits of economies of scale. According to Schmidt & Keil (2013), for a competency to be sustained it ought to be rare, hard to imitate, not easily substitutable, and valuable. One Windows strategy, brand reputation, corporate social responsibility, and product development technology are all sustained competitive advantages since they contain at least three of the factors. Microsoft Corporation’s wide network of distributors and dealers and economies of scale are not sustainable since they are neither rare nor hard to imitate within the automotive industry.
Internal Factor Evaluation
INTERNAL FACTOR EVALUATION |
|||
| Weight | Rating | Weighted score | |
| Strengths | |||
| Corporate social responsibility | 0.07 | 3 | 0.17 |
| Brand reputation | 0.10 | 4 | 0.4 |
| Wide network of distributors and dealers | 0.05 | 4 | 0.25 |
| One Windows strategy | 0.07 | 3 | 0.21 |
| Economies of scale | 0.05 | 3 | 0.15 |
| Product development technology | 0.06 | 2 | 0.12 |
| Strong standing in the US market | 0.09 | 4 | 0.36 |
| Financial performance | 0.04 | 4 | 0.16 |
| Growth in China | 0.01 | 4 | 0.04 |
| Weaknesses | |||
| Little diversification | 0.05 | 3 | 0.15 |
| Low capital spending in R & D | 0.04 | 2 | 0.08 |
| High cost structure | 0.10 | 3 | 0.27 |
| Unprofitable Europe operations | 0.02 | 1 | 0.01 |
| Product recall | 0.04 | 1 | 0.04 |
| Increasing demand for luxury | 0.08 | 2 | 0.16 |
| Slow innovation | 0.03 | 1 | 0.03 |
| Limited association with emerging markets | 0.03 | 1 | 0.02 |
| Little differentiation | 0.09 | 3 | 0.30 |
| Totals | 1.00 | 2.62 | |
Based on the Internal Factor Evaluation, some of the most prominent strengths and weaknesses that contribute to the outcomes across all the categories are the One Windows Strategy, financial performance, increasing demand for luxury, and a high cost structure. According to Kock, Allen & Husted (2015), Microsoft Corporation’s strengths are easy to see. As Microsoft Corporation (2018) points out, more than 90 percent of personal computers in the world use various versions of Windows, while Microsoft Office remains the most prominent productivity software suit around the globe with approximately 1.2 billion users.
Although Microsoft Corporation has witnessed significant reductions in costs over the past decade primarily because of the upgrade of its systems and the One Windows approach, the company continues to have a high cost structure in comparison to the other technology products manufacturers (Company Profile, 2017). This weakness does have a heavy impact on Microsoft Corporation’s financial position, however they are handling the issue fairly well. Not only is Microsoft Corporation pushing for cost reduction through the One Windows strategy, but much of their cost in comparison to competitors arises by the way of generous employee compensation and pension plans. High costs through employee compensation can give the company employees additional motivation. Thus, these high expenses could be leading toward indirect revenues and efficiencies due to a high quality of employees.
Microsoft Corporation has been consistently one of the strongest technology and innovation industries throughout history. Microsoft Corporation was the only one of the large US technology business that did not need to be bailed out and was the first to recover from the recession in 2008 (Curtis, 2014). Additionally, Microsoft Corporation continues to show high profit margins compared to competitors with the highest liquidity ratio. Microsoft Corporation has struggled recently with turning a profit in Europe but the losses are continuing to improve year over year (Curtis, 2014).
The increased demand for luxury has begun to hurt Microsoft Corporation and will continue unless there are changes implemented to control this issue. Microsoft Corporation, as with many of the successful makers of technology products and services, controls a global luxury brand particularly in the US. Nevertheless, other competitors such as Apple and Amazon are creating luxurious products especially smartphones and games, while Microsoft Corporation continues to rely on traditional software. The demand for luxurious products especially among young people may make the young population to develop a preference for products of Microsoft’s competitors hence creating a potential threat to Microsoft.
Problem and Issue Diagnosis
Tier 1 issues and problems
Degree of rivalry
Legal uncertainties
T
Tier 2 issues and problems
Increasing demand for luxury
Slow innovation
As it can be depicted form the analysis, Microsoft Corporation experiences challenges in four key areas which include stiff rivalry from competitors, legal hurdles because of its monopolistic nature, the increased demand for luxuries and slow innovation. All these factors are a combination of potential threats and weaknesses that might affect Microsoft Corporation’s desire to gain a favorable share of the technology market. It is important to state at this juncture that although Microsoft Corporation is predominantly known for developing operating systems for computers, it also invests heavily in gaming, publishing, internet service, and cloud computing.
Microsoft faces extreme rivalry overall business sectors for its products and services. The organization's rivals extend in estimate from Fortune 100 organizations to little, specific single-item organizations and open source group based ventures. In the Productivity and Business Processes segment, the firm competes with programming and worldwide application sellers, for example, Adobe Systems, Apple, Cisco Systems, Facebook, Google, IBM, Oracle, SAP, and online and mobile application competitors and also local application developers in Asia and Europe (Microsoft Corporation, 2018). Skype for Business and Skype competes with texting, voice, and video correspondence suppliers, going from new companies to build up ventures rivalling singular applications that have situated themselves as other options to Microsoft's items. The firm's Dynamics items compete with merchants, for example, Oracle and SAP in the market for expansive associations and divisions of worldwide undertakings. In the market concentrated on giving answers for little and medium-sized organizations, the firm’s Dynamics items compete with sellers, for example, Infor, The Sage Group, and NetSuite. Salesforce.com's cloud CRM offerings compete specifically with Dynamics CRM on-premises and CRM Online offerings.
Microsoft's server items face rivalry from different server operating systems and applications offered by other firms, including Hewlett-Packard, IBM, and Oracle with a scope of market approaches. Its web application stage programming competes with open source programming, for example, Apache, Linux, MySQL, and PHP. In middleware, the organization competes against Java vendors. The organization's database, business insight, and information warehousing arrangements contributions compete with items from IBM, Oracle, SAP, and different organizations. Framework administration arrangements compete with server administration and server virtualization stage suppliers, for example, BMC, CA Technologies, Hewlett-Packard, IBM, and VMware. Its items for programming developers compete against offerings from Adobe, IBM, Oracle, and different organizations. Sky blue faces combined rivalry from companies such as Amazon, Google, IBM, Oracle, Salesforce.com, VMware, and open source offerings (Microsoft Corporation, 2017). The Windows operating system faces rivalry from different programming items and from elective stages and gadgets, chiefly from Apple and Google. Microsoft's inquiry promoting business rivals Google and sites, social platforms such as Facebook, and entrances that give content and online offerings to end clients. Developing aggressive weights may affect the organization's portion of the overall industry and edges in close term.
Alternative Strategies Identification
| Problems and Issues SWOT Strategies | |
| SO Strategies | WO Strategies |
| SO1: (S1, O3) Development, manufacturing, and licensing of any product that leads to a patent means that any competitor who needs to innovate must first purchase rights to do so. | WO1: (W1,O2) Even though with new innovations there are sometimes a learning curve a company's loyal customers will take their times and try to master the product that the company put out and then they will also tell and teach it to new customers that you could potentially have |
| SO2: (S3,O7)Innovations and technology can greatly propel forward integration to other fields that Microsoft is involved in. | WO2:(W4,O9) Even with Microsoft market share being lower than that of its competitors it could still the market with the competitors fighting amongst each other and not paying attention to Microsoft but with Microsoft constant invations it could definitely pave the way for mcirosoft to take over the industry. |
| SO3: (S6,O2) Financial resources are a pivotal point in any industry simply because having more money allows for more Innovations which in turn keeps customers returning as well as taking customers from your competitors | WO3 :(W8,O10) With Microsoft Lack of Authority distribution coupled with industry growth Microsoft could actually capitalize on its downfall by implementing subdivisions to the new innovative Technologies and fields that it creates . |
| ST Strategies | WT Strategies |
| ST1: (S3,T4)Although Microsoft was once a pioneer with its innovative tendencies it could very soon crash and burn because of the similarities between it and its competitors so a lot of customers have their own customer acquisitions as to how one product versus the product of Microsoft is so similar and they will wonder if Microsoft stole that from another competitor | WT1 :( W1, T4) The frequency of products being made available and the lack of education for customers. The customers acquisitions would be a choice call in their loyalty to Microsoft if say Google or Sony offers which they do offer similar platform and either field which is easier to use |
| ST2: (S4,T5) With all of Microsoft competencies in the online system it has been a little bit relaxed because of its experience and longevity but its rivalry its close if not ahead with new innovations that fit the new standard of living now of days. | WT2: (W4,T2) Microsoft earnings per share are lower than its competitors if the costs continue to switch Microsoft may not ever be able to prevail as far as keeping up with the rest of the industry |
| ST3: (S1,T1) Although Microsoft is very good at developing new products it can still have a downside with the more you attain the less you can get accomplished because you eventually you’ll run out of things to innovate. | WT3: (W5,T9) With the windows phone being a bust that leaves the door open for Substitutes products that are less quality to be able to capitalize on the downfall of Microsoft |
| ST4: (S2, T3) While Microsoft has been a pioneer especially in the development of operating systems for computers, there is a risk for the company being regarded as a traditional company because of the emerging youth market | WT4: (W5, T6) Microsoft Corporation has also plunged into the gaming industry but to gain a favorable share of the market, it needs to invest in young people |
| ST5: (S6, T5) The One Windows Strategy does not still compare with Apple's inbuilt and incorruptible operating system | WT5: (W6, T4) Cloud computing is an emerging viable area where Microsoft needs to invest substantially. |
BCG Matrix
According to the analysis conducted in this working paper, the BCG Matrix analysis for Microsoft Corporation portrays some interesting perspectives. As mentioned before, Microsoft Corporation is a multinational company that deals with varieties of technological products ranging from manufacture of operating systems, games, cloud computing services and internet services. This BCG Matrix analysis uses the data availed by MarketLine Industry Profile (2017).
Question Marks- they refer to products or investments that have a low market share within a high growth market. In regard to Microsoft, the cloud computing services have a potential only that they require an influx of investment to gain a favorable share of the market.
Stars- they are brands which have a high share in a high growth market. Microsoft’s gaming services seemingly fall under this quadrant. Microsoft Corporation needs to continue investing in the gaming industry to maintain their position in the industry.
Dogs- the Microsoft Corporation products in this category have a lower market share in a low growth market. Perhaps the perfect example is Microsoft’s publishing sector that seeks to compete with bigger companies in the sector such as Amazon.
Cash cows- These are brands that are essential because of their cash-generating potential. However, they have a higher market share but in a slow-growth industry. Microsoft’s products are popular among the older generation, a population that is not increasing any further. Funds generated from this population need to be used to fuel the Stars or Question Marks.
Strategic Evaluation and Selection
From the analysis of the weaknesses and threats that the company faces the three most effective strategies that the company needs to institute include first, the necessity to conduct market research with the priority being placed on analyzing the potential of the competitors. Secondly, it is necessary for Microsoft Corporation to differentiate its products. That means that the company should not just dwell on developing the traditional operating system but should invest heavily in other sectors such as gaming, smartphones, and cloud computing. Thirdly, there is need for Microsoft to revisit its model of doing business. The company has been fined previously for trying to establish a monopoly. That means that the company ought to employ experts who can offer advice on proper business models that do not put the company into conflict with the legal requirements.
Recommended Solution and Implementation
The best solution from the analysis above is for the company to conduct a market research both on the preferences of consumers and the potential of the competitors. It is because Microsoft Corporation has seemingly been operating in isolation without analyzing the threat posed by its competitors as well as being oblivious on the needs of the consumers. From such analysis the company can come up with measures such as employing a young workforce to help popularize the company among young people.
Conclusion
Microsoft Corporation is variously referred to as a traditional company because it has been in operation longer than a majority of its competitors. Microsoft boosts of a strong brand but has been slow to differentiate its products to gain a competitive edge of its competitors. It is therefore important for the company to conduct an analysis of the market and its competition to understand what is required in the contemporary world. One of the solutions that the company ought to consider implementing is the hiring of a young workforce which the youths can identify with in order to be at par with companies such as Apple, Google, and Amazon.
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Curtis, S. (2014). Bill Gates: a history at Microsoft . Telegraph.co.uk . Retrieved 29 May 2018, from https://www.telegraph.co.uk/technology/bill-gates/10616991/Bill-Gates-a-history-at-Microsoft.html
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