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PORTER Five Forces Analysis of Microsoft

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This report is aimed at performing a strategic analysis with respect to Microsoft Corporation and there are various strategic tools that would be applied in analyzing company’s performance. Initially the external environment analysis would be performed through applying tools such as STEEP analysis, and this will be followed by an analysis of the needs and expectations of different stakeholders of the organization. The current strategies as pursued by Microsoft Corporation will be analyzed through the application of important tools such as BCG matrix and product lifecycle, and SWOT analysis to analyze the company’s strengths and weakness. The options for strategic planning in respect to Microsoft would be assessed, and this will be followed by construction of a strategic plan. The factors affecting the strategic plan would be assessed and finally, implementation plan would be devised.

Analysis of Microsoft Corporation

An analysis of Microsoft indicates that it is an American multinational corporation that accounts for selling large number of products and services in consumer electronics segments. It accounts for developing, manufacturing, licensing, supporting and selling computer software, electronics and personal computers and services. Microsoft is popularly known for its operating systems windows which is not only evident in personal computing but it also supports the smart phones, as most of the smart phones today in the market are supported by windows operating systems (Microsoft Corporation, 2014).

1: External Environment Impacting Organization

An organization is affected by external environment conditions in which it operates and in respect to Microsoft, it is also affected by the external environment in which it operates. This is analyzed as follows:

1.1: Importance of External Factors: The external environment of an organization is highly important as it directly impacts its performance and necessitates management to devise appropriate strategies in dealing with them. Such external factors can be in the form of political conditions such as government influences of legal conditions or it can be economic conditions in the form of declining economic performance etc. In respect to Microsoft, its analysis indicates that it is also affected by external environment conditions, as the changes taking place necessitates in making changes to its existing strategies. This is analyzed through STEEP as follows:

Social: The social factor impact Microsoft is mainly in terms of demands for highly efficient windows operating systems as the social trends within consumers imply that they expects fast and highly advanced operating systems whether it their PC or mobile (Microsoft Corporation, 2014).

Technology: The best technology is what the modern day customers look at and Microsoft being an electronic product manufacturer, the advancement in technology has resulted into advanced operating systems and services which necessitated Microsoft to make regular introduction of enhanced version of its operating systems (Corporate Citizenship Microsoft, 2014).

Economic: The economic factors in terms of increasing threats of cyber attacks are posing threats to the organization like Microsoft in coming up with newer technology in addressing customer needs.

Environmental: Sustainable development is also required at Microsoft, and it is working with government, customers, and its partners to introduce technology that helps in addressing world’s environmental challenges (Environmental Sustainability Microsoft, 2014).

Political: The political conditions also impact Microsoft in the sense that European Union fined Microsoft in 2004 to take out its media player version from European’s Windows version (General Environment, 2014).

The external environment greatly influences Microsoft in the sense that in necessitate it in devising its business strategies in a manner that best addresses the environmental needs. An analysis above has indicated that there has been higher demand for highly innovative and technological products within its customers, and this is likely to result into highly competitive position of the company in meeting out the needs and requirements of its customers. This implies that Microsoft has the potential in achieving higher level of competitiveness within the industry in terms of meeting out the needs and requirements of its customers in a highly efficient manner.

1.2: Importance of Stakeholders: Stakeholders mainly include the parties affected by an organization’s decisions and in respect to Microsoft; it has important stakeholders in the form of employees, customers and government. These are the important stakeholders of an organization and the efforts of the organization are aimed at meeting out the needs and requirements of its customers. Employees are crucial as they have to carry out innovation in producing highly innovative products, but their expectations indicate that they prefer higher pay and good working conditions. This has been a crucial stakeholder of the organization, and their role is significant in leading organization to higher level of success. Customers have the expectations of getting higher quality Microsoft’s products such as advanced operating systems and servers and tools. The innovative products as produced by the company are highly effective from the point of view of addressing the requirements of the customers. Government has the expectation that Microsoft should account positively towards environment and also contributes in a positive manner towards economic growth and development.

2: Existing Business Plan and Strategy

This section analyses the current business plan and strategy of Microsoft Corporation. An analysis of Microsoft’s current business strategy implies that it pursues growth strategies aimed at achieving higher excellence in the entire industry. The key business strategy of Microsoft can be classified as pursuing a global diversity and inclusion strategy aimed at supporting diverse group of employees, fostering higher employee engagement, and focusing towards innovation in achieving excellence. The analysis of its strategy through product lifecycle and BCG matrix is performed as follows:

2.1: Product lifecycle and BCG Matrix: The product lifecycle indicates that every product passes through four major stages such as introduction, growth, maturity and decline. These phases are crucial and they are applicable in respect to every kind of products. The product lifecycle stages of the project are indicated as follows:

An analysis of the case of Microsoft indicates that its majority of the products such as windows live division, servers and tools, online services and Microsoft business division are achieving higher growth. The windows operating systems are applied in PCs and Microsoft has also entered into mobile division supporting its operating systems. It achieves higher growth and is further coming up with advanced version of its operating systems for PC. This implies that it is within growth phase as per product lifecycle because in such growth phase, organization comes up with various growth strategies aims at achieving higher growth from the market. As Microsoft has already its products in the market in the form of various operating systems, the organization is further aiming towards achieving growth by including newer version of windows product in its operations.

On the basis of analysis as carried out in respect to product life cycle stage in relation to the products of Microsoft, it has been assessed that they are reflected by the growth phase in respect to company’s performance. In this context, Microsoft could consider for applying strategic human resource management (SHRM) aimed at leveraging on the growth that is evident in its performance. The human resources of the organization could be strategically utilized for the purpose of meeting out the needs and requirements of its customers by way of achieving innovation with respect to the offerings as made by the organization. The strategic use of human resources would allow Microsoft in not only introducing highly efficient employees, but it would also result into the positive strategic decisions in leading organization to the areas accounting for higher overall growth.

In respect to BCG matrix, it indicates the industry position of a company by exampling its market share and market growth. The analysis of market share and market growth is essential to business because it helps them in making strategic decisions aimed at achieving higher overall effectiveness and growth in their performance. The four major quadrants are cash cows, dogs, star and question mark, and these are indicated as follows:

In relation to Microsoft, the analysis of its position indicates that it is also within one of the category as indicated above. The position of Microsoft in the industry can be categorized as that of star whereby the growth in the IT and electronic industry is massive and at the same time, Microsoft is also gaining higher market share (Grigoroudis and Siskos, 2010). This star position in respect to Microsoft implies that the company is currently performing efficiently in the industry, and in order to sustain its position, the long term strategies should aim at bringing highly innovative products and services in order to retain its competitive position. It is also essential that the organisation should focus towards employing highly efficient human resources because they are key to achieving competitive position in the industry. It is mainly the strategic role being played by human resources which has been the key factor to the organisation in occupying the leading position in the industry, and this should further be encouraged in ensuring that the growth position of the organisation can be sustained and further level of growth in its performance can be achieved.

2.2: Competitive Position: The competitive position of Microsoft is assessed through Porter five forces in the industry as follows:

Bargaining Power of Buyers: The buyer bargaining power is higher because larger number of companies offering highly advanced operating systems and IT project allows them with better options. However, the preference among buyers especially with respect to the operating systems as offered by Microsoft is usually higher as compared to other players in the industry.

Bargaining Power of Suppliers: The bargaining power of suppliers is lower because of large number of suppliers providing competitive operating systems and advanced technological products to their customers (Microsoft Corporation, 2014). However, in respect to the case of Microsoft, it is assessed that there has been majority of the markets being dominant by Microsoft with its operating systems and this indicates the higher bargaining power especially within Microsoft in the mobile phone industry.

Rivalry Among existing Firms: Rivalry is significantly higher as the competitors in the operating systems segments such Microsoft, Apple, Research In Motion are competing against each other. Even though there is higher competition levels within existing players in the industry, Microsoft has relatively enjoyed a dominant position in respect to its competitors.

Threat of Substitute: The threat of substitute is lower as operating systems are essential in functioning of IT systems and tools (Microsoft Corporation, 2014). This has therefore been a competitive advantageous factor to Microsoft from the point of view of creating impact within the target customers.

Threat of New Entrants: The threat of new entrants is lower because of huge investment and reputation is required in entering into such operating systems development industry. This is also a beneficial factor to Microsoft in the sense that there would not be any major competitor that is likely to emerge in front of the company.

The entire analysis of the competitive position of Microsoft above indicates that the company has occupied significant level of position in the industry and it is competitive enough in respect to its competitors. Such highly competitive position in the industry is therefore crucial to Microsoft in achieving higher level of success.

2.3: Competitive Strengths and Weakness: The competitive strengths and weakness of Microsoft is analyzed through SWOT as follows:

  • Strengths: The strength of Microsoft is its Windows operating system which is highly popular within users and it is the highly used operating systems especially in the computing industry (Malhotra, 2008).
  • Weakness: The weakness is mainly the lower overall success of the windows operating systems in respect to mobile phone segment (Gunaym, 2008).
  • Opportunities: The opportunities are mainly from the higher overall developments of IT infrastructure across developing countries which provide good chance to Microsoft in achieving higher growth (Microsoft Corporation, 2014).
  • Threats: The threat is mainly in the form of rising competition as Apple, Research in Motion, Google etc offers highly competitive operating systems.

The current business strategies of Microsoft indicate that it is also coming up with updated version of its windows for PC as against its competitors. In addition to this, Microsoft is also coming up with advances IT products in all segments such as gaming, mobile phone, PC etc in order to compete effectively with its competitors.

            Comparison of Competitive Strengths of Microsoft with Competitors: This section of analysis is now focused towards comparing the strengths of Microsoft with that of its competitors. As analyzed above, the core strength point of Microsoft is identified as its higher popularity levels with respect to its operating systems among the users. In comparison to this, the core competitor of Microsoft i.e. Apple Inc also has significant position in terms of its strong operating systems. Apple Inc has its own operating systems which are known as iOS which supports mobile phones, and there is Mac software that supports computing segments. The strength point of these operating systems by Apple Inc indicates that they are highly advanced and innovative but in comparison to Microsoft’s windows operating systems, the relevant application of such operating systems have been lower within users. This can therefore be regarded as a major competing factor in respect to Microsoft as against its competitor Apple Inc. Apart from this, Google is another major competitor of Microsoft especially in respect to the mobile phone segments but there is no such operating systems being provided by Google supporting computers or mobile phones. This signifies a highly competitive position of Microsoft as against its competitors in the computing and mobile phone industry.

3: Strategic Planning for Microsoft

The strategic analysis of Microsoft is performed below to undergo strategic planning as follows:

3.1: Core Competency Analysis: The core competency of an organization is mainly the strength points or the areas whereby the organization has higher level of competitiveness in meeting out their customer requirements and also in achieving effectiveness in their operations. The core competency as indicated by the core competency model is shown below:

The model above indicates about the core competency areas of an organization and these can be in terms of core values, competencies and managerial competences as possessed by an organization. The core values can be classified as integrity, professionalism, and respect for diversity whereas core competencies can be teamwork, communication, accountability, planning and organization, technological awareness etc. The managerial competencies can be leadership, vision, empowering others etc and there can be competencies in the form of innovative abilities in launching newer products. The core competency of Microsoft as per the core competency model is its ability of providing innovative products which is mainly the windows operating system which has been utilized in most of the PCs operating worldwide. The ability to bring innovative products into the market is therefore a key competency to the organization.

Apart from the core competency in the areas of launching newer products, Microsoft also has the core competency in the areas of human resource management. Its human resource is another key competitiveness which allows for technological innovation. The company has highly skilled and efficient personnel that accounts for performing innovation and thereby helping the organization in achieving higher level of growth and development in its operations. In respect to its competitor Apple Inc, it has its highly innovative operating system iOS that is highly advanced. Google for instance has its operating system Nexus that is highly accepted among customers especially in respect to mobile phone segments. Thus, every company has certain major core competencies that allows them in serving their markets in a positive manner and with respect to Microsoft, its operating systems in particular as devised by it highly efficient employees is key factor for growth. This effectiveness in the HR management area can be best explained through the HR competency model which is indicated as follows:

The HR competency model as indicated above implies about a number of areas whereby there can be competencies being achieved by an organization. The major areas include recruitment and selection, succession planning, performance management, professional development, rewards compensation etc. In respect to Microsoft, its higher level of efficiency with regard to HR is mainly because of effectiveness in these areas as indicated in the model above.

3.2: Sustaining Future Organizational Strategy: An analysis of Microsoft indicates that it has specific strategies in sustaining its core competencies in the future. As for instance, with regard to its operating systems, it is coming up with more advanced windows operating systems whereas in sustaining its core human resources, it has a policy of employee inclusion and supporting diversity that helps in sustaining its competitive employees currently and also allows for their sustainability in future. This implies that there has been higher level of sustainability in its core competency that is likely to be maintained. The decision of the company in bringing highly innovative and advanced operating systems is therefore crucial from the point of view of sustaining the effectiveness with their operation.

4: Constructing a Strategy Plan for Microsoft

This section is concerned with proposing a suitable structure for strategy plan in ensuring active participation from all its members.

4.1: Proposing a Suitable Structure: The analysis indicated that Microsoft has not been able to make significant impact within its operating systems in respect to mobile phone division, and as such, the suitable strategy needed is mainly to perform innovation and offer new software that can be easily supported in its highly configured windows phone. In achieving this, appropriate participation within its stakeholders especially its diversified group of employees is highly essential and this could be ensured through the diversified inclusion strategy of the organization. The participation of diversified employees can be possible through practicing an informal structure within employees which is aimed at encouraging informal way of communication and data sharing. This would allow for better interaction within diversified employees of the organization and the resulting impact would be better chances of efficient employee contribution towards higher organization effectiveness. This proposed structure in the form of allowing informal sharing of information and resources within employees is likely to ensure positive participation because it would lead to direct level of interaction within the diversified employee groups and thereby in encouraging positive sharing of information aimed at achieving organization effectiveness.

4.2: Reviewing Potential Options for Strategy Plan: The potential option for reviewing the above indicated strategy is mainly to perform in-house development through its own employees and R&D team or to consider for external IT teams or organizations in achieving improvement over its windows operating system for phones that would benefit its customers. The development of newer mobile app supporting over windows systems is crucial. This option could be a significant contributor towards the above identified strategy in respect to Microsoft (Effross, 2010). The analysis of Microsoft indicates that the company has completely acquired the Nokia’s mobile phone division and the newer introduction of products is therefore the responsibility of Microsoft. It is therefore essential that efficient strategies aimed at taking the Nokia’s mobile phone division to newer heights should be ensured by way of introducing newer and advanced smartphones. The strategic option also available to Microsoft could be in terms of contracting within Android market for its mobile phone division because it is the most supportive mobile systems currently in terms of smart phones users. As a result, by considering this strategic plan, it could be possible to achieve effectiveness in respect to its operations.

4.3: Resources Required in Implementing Strategies: In performing the implementation of strategies, there are certain important resources that are required and in the given case of Microsoft, there are important resources essential in revamping its operating systems in the context of mobile phone division which is lacking significantly at the moment. There are various important resources needed in ensuring successful implementation of such strategy in the context of Microsoft Corporation. The important resources needed to Microsoft in implementing its strategy include sound IT personnel with good knowledge, because it is mainly the IT personnel that would perform the implementation of new innovation and technological revolutions within the organization. Apart from this, access to highly equipped infrastructure and exclusive support from all the organizational stakeholders is also crucial because they are critical factors in performing the successful implementation of technological systems within organization. By having a sound technological infrastructure, it would be possible to make necessary changes into the existing IT platform of the organization. Apart from this, financial resources in performing R&D activities are also highly crucial because R&D practices requires significant level of resources in terms of sufficient level of funding such process. Efficient R&D practices are crucial from the point of view of performing newer introduction of products and services.

5: Factors Affecting Organizational Strategy Plan

The important factors affecting an organization’s strategic plan in relation to Microsoft are analyzed as follows:

5.1: Core Values Compared to Objectives:  An analysis of the important objectives of Microsoft indicates that the core priorities of Microsoft include achieving higher level of success with windows 8 operating systems and its apps. It aims at competing efficiently with its competitors especially Google and Apple. Its core objectives also include sustainable development through contributing towards the society and community in which it operates. In respect to this objective, the core organizational values with respect to the important areas of its business are discussed as follows:

Ethics: Microsoft has the values supporting higher ethics in developing its software and operating systems (Mitchell, Holtom and Lee, 2001).

Cultural: The value regarding culture is evident at Microsoft from its diversity inclusion policy for its employees (Hull, 2012).

Environmental: Microsoft intends to work in a sustainable manner and it has plans to develop software that contribute towards environmental effectiveness. It has partnerships with government and suppliers to achieve environmental effectiveness (Microsoft Corporation, 2014).

Social and Business: The company intends to work in a manner and perform innovation that contributes towards overall societal development.

5.2: Vision and Mission: With respect to vision of Microsoft, it has been to become the premier service providers of operating systems of higher standards to its customers across worldwide. In relation to this, the mission has been to achieve higher growth by supporting innovation with respect to its operating systems development. The strategy that could positively contribute towards the attainment of this vision and mission statement is the strategy of higher innovation in its operating systems so as to provide fast, secured and highly supportive working conditions to its users (Noe, Gerhart, Wright and Hollenbeck, 2006).

5.3: Measures in Evaluating the Strategic Plan: The measures that could ensure the evaluation of the strategic plan of achieving higher innovation in offering latest and highly innovative systems, it could be to identify the growth in the market share of the company after the launch of such innovation. The strategic plan can also be assessed through analyzing its contribution towards the environmental performance it offers in achieving highly efficient sustainable performance levels. The innovation can also be assessed from checking the acceptability levels within its customers for its newer operating systems (Hitt, Ireland and Hoskisson, 2008).

6: Implementation of Strategy Plan

This is the final stage which is mainly concerned with the implementation of the strategic plan. As in respect to Microsoft, the implementation of its strategic plan to produce highly innovative operating systems for PCs and mobile phones is performed as follows:

6.1: Strategy Implementation and Stakeholder’s Participation: In performing the implementation of strategy, it is essential to gain positive cooperation from its diverse technical staff. This would be achieved through conducing meetings with the technical staff, and also by considering additional support to them through making arrangements with technical staff from external environment. In addition to this, the implementation of the strategy to perform innovation will be performed through providing adequate training mechanism for its technical staff that are responsible in actually performing the innovation. Apart from this, the strategic implementation in achieving higher innovation can be made success by way of linking rewards with the performance of its employees. This means the innovative ideas and better support in developing innovative operating systems and highly advances apps would be provided with higher pay and benefits. This could be the best implementation strategy that could be applied by Microsoft for the purpose of implement its strategic plan. The stakeholder participation can be ensured by communicating them the benefit of this project and the ways in which it would positively benefit all of them (Deb, 2009).

6.2: Monitoring and Evaluation System: This has been an important factor especially in respect to achieving success in performing the project in a positive manner. The appropriate monitoring and evaluation of the progress is essential and this would be positively ensured at Microsoft by way of making the senior level managers to focus on each and every employee’s contribution. The performance of such innovation process would be emphasized via encouraging employees of Microsoft to work in team as team work allows for better performance and also its evaluation. In addition to this, the supervisors will be made responsible to track whether the requisite innovations in developing newer and highly advanced operating systems is likely to contribute or not towards the expectations of its customers. In this way, the monitoring and evaluation of the innovation process at Microsoft would be carried out in a positive manner (Gomez and Cardy, 2007).

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