Executive Summary
Microsoft Corporation is a technology-based developer specializing in personal computer programs formed in 1975 by Bill Gates and Paul G Allen. The name Microsoft was coined from two words, microcomputer, and software. The Company specializes in research and development to offer top-notch services in the technology realm. The Company’s key target customers are people aged sixteen years and above from rural and urban areas. Further, it develops products for both business and personal information. The Company is working towards creating a cloud solution to have all the people have customized solutions to meet their needs. This report analyzes the historical background and the strategies to gain a competitive advantage. An analysis is completed through tools such as SWOT, Porter’s five forces, and the four corners to determine the corporation’s competitive advantage and sustainability. The information sources for the analysis were books, online journals, university libraries, websites, and journals.
Table of Figures
Figure 1: Microsoft Organization Structure
Figure 2: Company Details (Satish, 2021)
Figure 3: Strategic Activity Map
List of Abbreviations
SWOT-Strength Weaknesses Opportunities Threats.
PESTEL-Political Economic Sociological Technological Environmental and Legal Factors
CEO-Chief Executive Officer
IBM-International Business Machines
R&D-Research and Development
Introduction
Historical Background, Growth, and Development
Microsoft is one of the American technology Companies which boasts of being the largest software establishment in the world. It engages in the production of software products and ensures that they are licensed to offer efficient services on a global scale. The history of the Company began on April 4th, 1975, when Bill Gates founded it. Since then, its revenue has grown exponentially and it is listed among the fortune 500 companies. Satya Narayana Nadella is the current CEO who, since her appointment in 2014, has focused on expanding cloud computing for business sustainability (Wynn & Olayinka, 2021). Nadella was selected as the CEO because he knew Microsoft consumers more than any other employee. He vowed to offer a customer-centered approach to expansion. The Company is selected for analysis because it has a unique business strategy that makes it thrive despite the massive competition in its market niche. The Company thrives in a dynamic and competitive environment because it operates on strategies aligned with the customer’s needs.
Organizational Structure and Culture
An organizational structure defines the bureaucracy and how decisions are made. The corporation is divided into two functions engineering and business. Microsoft’s strategic management team ensures that all customer needs are included in the final products. The growing technology demands, innovation, and a robust research and development department make the organization navigate through a dynamic corporate landscape. Microsoft’s prosperity lies in the ability of the management to take timely decisions and implement better means of full filling customers’ demands (Wynn & Olayinka, 2021). Microsoft employees are known for their dedication, strong values, and accountability which propel the business to greater heights. It is prudent to note that the business keeps changing and does not hesitate to change to align itself with the customer’s new demands. Since customers’ needs are dynamic, the organization continues to change to make customers happy.
Microsoft’s Mission, Vision, and Values
Vision, mission, and values are important factors in an organization that defines working relationships’ operations and state. Microsoft is guided by strategic mission and values, ensuring that all the functions are performed in line with the business objective. Bill Gates, the founder, envisioned that every home and office in the world would one day have a computer running on the Windows platform. The vision was, however, refined to be an emerging technology assisting businesses and people worldwide to realize their potential. The Company fulfills its mission by producing specialized and customized products to meet the needs of both people and businesses (Wynn & Olayinka, 2021). The organization’s mission is in tandem with the vision as it aims at empowering all people and the organization to achieve more. The mission and vision statements are achieved by maintaining a positive customer relationship. Microsoft succeeds in most of its activities because the mission and vision statements are expressed succinctly, and everyone has access to them. The continuous motivation of the employees makes them more innovative, productive, and satisfied.
Microsoft has a comprehensive set of values that helps people relate to each other and their customers. As it globalizes to other parts, diversity is a key value practiced to ensure that everyone feels part of the organization regardless of their culture and origin. Innovation is an esteemed value in the corporation because it is the source of all the major positive results to the changing customer needs solved through innovation. Respect, accountability, and integrity help the organization streamline its operations. Respect is important, as people may have different opinions, leading to type C conflict (Satish, 2021). The values are, therefore, key to ensuring that people share positive relationships in the long run. Employees are given the time to study, research, and make decisions on behalf of the Company. The mission and vision cascaded with the values that support innovation in the Company.
Microsoft’s Existing Business Strategy
The Company’s business model operates in three areas: business process, personal computer, and intelligent cloud. As a result of the different operation models, the Company has a key strategy to ensure that the products reach as many customers as possible. The key strategy that the Company uses is broad differentiation to increase competitive advantage (Gupta et al., 2021). The strategy ensures that each unique customer need is solved by a unique product introduced into the market. It is further important to note that Microsoft’s strategy can be understood through two different lenses: corporate level and business level.
Corporate-Level Strategy
Microsoft has a multi-tiered plan to ensure that it operates within the technology niche and succeeds. Its main corporate-level strategy is to expand its operations globally and ensure that growth is achieved. Its corporate-level strategy is, therefore, to diversify its operations to have all the customers’ needs understood and resolved for sustainability to be achieved. The CEO works closely with the research and development department to understand the customer’s needs and ensure they are taken care of for success (Rikap et al., 2021). Diversifying operations is key to meeting various needs and having the customers get services under the same roof. Microsoft’s five-year plan proves that the Company is prepared to take care of the customers’ changing needs. It is imperative to note that diversification is the corporate-level strategy that has helped it maintain more customers and expand its business network.
Business Level Strategy
Product development and differentiation is the business-level strategy that keeps Microsoft on top of the technology realm. Microsoft produces and tests new products to meet various customer needs and differentiates the products to make them appealing to individual customers. The differentiation is key to penetrating various markets and making more profits in the discourse (Satish, 2021). For example, Microsoft customizes its products and ensures they are always met. The main method used by the Company to differentiate its product is through its strong research and development department, which offers a better understanding of the market and produces unique products for unique needs in different continents. Differentiation is, therefore, the prerequisite for market penetration in different parts of the world.
Microsoft’s key strategy is guided by a strategic map, as shown in figure 3 below. The organization plans to flourish through three main strategic spheres of operations. For example, Microsoft cloud aims to expand the cloud computing market and develop new technologies and platforms that help organizations flourish (Weinstein, 2021). The cloud computing strategy will likely succeed because many people and businesses intend to transform their storage facilities and invest in the cloud for safety. Devices are the second item in the strategy map that includes the production of better devices to support the newest technology, such as the internet of things, for a better outcome in the discourse.
Gaming is an important aspect of the strategy that makes it possible for the Company to get customers and maintain them as it uses artificial intelligence to develop gaming applications. As technology advances, the organization gets markets from all over the globe for the products. The strategic activity map shows the three important activities that are the key to remaining relevant in the market and getting better outcomes.
Microsoft Strategic Analysis
Micro/Internal Environment
SWOT
Literature Supporting the Tool
The SWOT analysis is an important tool for a business to understand its internal environment effectively and make decisions aligned with its ability. The strengths show what a business is best fitted for, while the weaknesses show the areas that need to be improved for the business to thrive (Xu, 2022). The opportunities show the organization’s ability to grow, while the threats hinder the organization’s success and achievement (Wu, 2022). The management’s role is to leverage the strengths and opportunities to overcome the weaknesses and threats to thrive in the discourse.
Link with Strategic Management Theories
The SWOT analysis is a strategic management and planning theory used to determine the organization’s future. It can be linked with the business reengineering theory since the weaknesses and threats can be avoided by reorganizing the business through leveraging the strengths and opportunities. The key strengths include a vast market reach, a higher reputation of being the best software company in the world, and constant growth. Further, it has an effective advertisement platform and can generate more customer satisfaction than other techniques. However, the Company has several areas for improvement, such as cyber security, lack of market leadership in the strategic team, and some unsuccessful acquisitions, which are likely to cause failure in the organization in the discourse (Mitra & Mitra, 2022). However, it is imperative to note that Microsoft has a vast pool of opportunities likely to lead to better outcomes and increased revenue. Some opportunities include the rapid growth in cloud computing and the rise in artificial intelligence and innovation. The rise in smartphone technology, remote work scenarios, and cost leadership strategy is key to ensuring that the Company increases its operations and reaches numerous markets for success (Tan, 2022). Numerous threats must be understood and eliminated for success to be achieved in the business.
The main threats to the Company include the gay controversy, aggressive competition in the technology domain, consumers’ constantly changing preferences, and open-source projects likely to affect Microsoft’s business. The Company’s management must ensure that the threats are understood and that more investment is made in the opportunities to improve better outcomes (Lessambo, 2022). The Company’s strategic operations leverage the strengths and the opportunities to perform better in the corporate domain.
Industry-Level Environment
Four-Corner Analysis
Literature Supporting the Tool
The four-corner analysis is a strategy developed by Porter to help organizations assess their competitors and make strategic decisions on the best strategies to make more profits in the discourse. The four-corner analysis focuses on an organization’s key points: motivation, place, cost, and profit. An analysis of the four items will likely lead a business to success (Alverson, 2020). Microsoft uses the strategy to understand the competitor’s strength and make decisions to overcome the challenges set by the people (Gautam et al., 2019). It is imperative to note that the model helps beat the competition because it focuses more on the competitors, what they are likely to do, and make better decisions in the discourse.
Link with Strategic Management Theories
The theoretical model helps an organization understand the competitors and develop countermeasures to succeed. The tool is linked to the competitive advantage model because it helps Microsoft understand and make decisions to counter the competition. Microsoft’s key competitors include Apple, Oracle, IBM, and Google, which work to be more appealing to customers. The increased competition could lower Microsoft’s revenue as the loyal customers may shift to the customers (Nandi and Nandi, 2020). However, the four-corner analysis seeks to understand the competitors and take actions or decisions that improve the discourse operations.
Through the analysis, the Company has always been aware of the competitor’s moves and made decisions that are more likely to increase profits by beating the competition (Akbulut, 2019). Microsoft’s analysis on the four corner analysis looks at the competitor’s strategy, capabilities, drivers, and management assumptions. Once the assumptions are considered, a more appealing outcome may be achieved in the long run (Archila, 2021). Once Microsoft understands the competitor’s strategy, it makes better decisions for developing new and enhanced products. The four-corner analysis helps Microsoft operate within the legal framework to understand the people’s challenges.
Porters Five Force Analysis
Literature Supporting the Tool
The five-force analysis is an important tool that a company uses to understand how its demand and supply dynamics are affected in the long run. The analysis conducted by Microsoft Company ensures that the five prongs for success are analyzed. Competition is the strongest force that affects the organization (Martín-Martín et al., 2021). Since Microsoft increased its use of the four-point analysis to understand its competitors, it can make better decisions always to attain a competitive advantage. For example, as the competitors focus on developing devices such as Apple, Microsoft uses diversification to invest in cloud computing, which makes the Company ahead of its competitors (Mwakasege 2020). The buyer’s bargaining power is moderate because the Company has continued to gain customer loyalty who buy without considering the competitors. The only way for Microsoft to maintain sales is to constantly improve and develop the product to meet the customer’s needs. A company’s ability to maintain its loyal customers is key to success in the discourse. Microsoft’s top management has mastered the art of generating better services and devices to meet the constant development of solutions to meet the customer’s needs.
Link with Strategic Management Theories
The delta model theory underscores the importance of customer engagement for the success of a business. When the organization manages the supplier forces and the demand dynamics, it is likely to offer customized solutions to the customers and therefore thrive in the long run (Archila, 2021). The suppliers at Microsoft enjoy a moderate force which is key for developing solutions in the discourse. For example, the packaging and hardware suppliers have a stake in determining the prices of the final product. Since the organization well maintains the suppliers, the price of goods remains low, and purchases are likely to increase in the discourse. Although the Company faces numerous challenges, the threat of a new entry is lower because the huge industry requires vast resources and capital to be established (Kah Chon, 2019). Consequently, only a few organizations are likely to invest in the technology industry for success.
It is imperative to note that Microsoft’s analysis through Porte’s five forces helps the organization to understand its operations and cover up all loopholes that can be closed for better outcomes in the organization (Kreps, 2019). The systems theory of management depends on the five forces for an effective decision to be reached in the Company. Microsoft works harder to ensure that every part of the operational framework aligns with the customer’s needs.
Macro/General Environment
Microsoft PESTEL Analysis
Literature Supporting the Tool
A PESTEL analysis is a special tool used by an organization, especially the marketing segment, to understand the business environment and help make better decisions in the discourse. The tool is good because it analysis both the internal and external environment and helps people make better decisions in the long run. When the environmental factors affecting an organization are eradicated, the profit margins are likely to be increased (Abid, 2022). The external factors considered in the business analysis include political, sociological, technological, economic, and legal affairs affecting the organization in the discourse. Microsoft operates in peace-loving countries for political stability (Adelakun, 2020). The organization understood that political instability is the key to many business failures. Before making the expansion decision, it ensures that the new destination for development is safer and politically affected.
The prices and inflation determine the economic force in the economy. Economic dynamics affect business holistically, and businesses must make decisions aligned with the price of commodities and inflation. In hard economic times, the Company will likely lose more customers in the discourse (Goyal, 2020). Microsoft determines a country’s economic activity and makes expansion decisions that affect the business. The ability to realize a country’s economic situation is key to deciding on what ether to invest in the courtier not. The social and socio-cultural factors ensure that the people’s beliefs are cascaded in the design (Salindeho et al., 2021). Microsoft’s main diversity strategy is helpful as it ensures that all customers and employees are treated with care to get the best out of the employees in the long run. Since Microsoft has a diversity strategy, socio-cultural factors cease to be a threat. Therefore, handling diversity in the organization will likely improve the coexistence between employees and customers, making better profits.
Technological factors play a major role in Microsoft’s business model as it operates in the technological realm. There is an opportunity in the rapid investment in mobile technology and the increased volumes of transactions conducted online. Since people use technology to advance their products and improve their lives, Microsoft leverages it to increase profits. Advancement in technology helps in overcoming competitors and making Microsoft thrive (Chowdhury, 2019). The automation in business activities and increase in the online presence make the organization get better services in the strategy of operating in the cloud with better outcomes. Governments worldwide have business laws affecting different factors of producing and selling goods and services (Mulder, 2023). When an organization operates contrary to the legal framework, it is likely to be deprived of its operating license, which may lead to failure in the discourse.
Link with Strategic Management Theories
The balanced scorecard theory is an important model linked to the PESTEL analysis because it is used to improve both internal and external communication. Microsoft will likely make more profits in the discourse by analyzing the various spheres of the economy and the social framework. Microsoft operates in different countries worldwide in congruence with the laws and the country’s business regulations. The PESTEL analysis helps the organization understand the features of a development framework for successfully implementing strategies to improve its performance in the long run.
Strategic Recommendations
Diverse Marketing
Strategic analysis is key in determining key loopholes and suggesting strategies that are likely to improve the operations of goods of the organization. Microsoft suffers from the threat of numerous competitors and must make a strategic decision for a better outcome (Correani et al., 2020). The foremost strategy is diverse marketing to ensure that people from all walks of life understand the products offered by Microsoft and give a rapid response for action. Although the Company has maintained brand loyalty through the provision of quality services, it must ensure that all the new marketing strategy maintains the clients by asking for their views and producing products and services that meet the people’s needs.
Research and Development
The research and development department serves an important role in Microsoft’s management. The department must be used to exploit the challenges affecting the organization. As it diversifies its actions, the Company must strengthen the R&D department for improved outcomes (Asipi and Duraković, 2020). The development of a robust team in research and development is likely to integrate innovation, customer needs, and trends in the market to generate goods and services that appeal to the market. The department can have training to increase the competence of the people in the organization (Bugwandeen and Ungerer, 2019). A robust R&D team is an antidote to a highly competitive business landscape.
Cyber Security
Cybercrime is one of the main threats in the operations in the technology domain as technology advances and people invest more in the online domain. Cybercriminals are likely to increase their knowledge, making it one of the most dangerous threats to its sustainability (Pierleoni et al., 2019). Microsoft must therefore invest in cyber security and produce devices that are always secure. Investment in cyber security is also beneficial to the Company because it will increase customer confidence in the product and make Microsoft perform better in the competitive landscape (Raji et al., 2020). Solving the cyber security problem increases the need for confidence in the product and ensures customer satisfaction.
Conclusion
Microsoft is the world’s largest software company and thrives in producing, licensing, and supporting software products. It focuses on diversification and differentiation to overcome the competition in the technology world. It focuses on artificial intelligence, cloud computing, and diversification to increase its business ideas. The strategic approach has made it thrive in the competitive corporate landscape and requires it to intensify its advertising to improve its success. Further, investing in cyber security is key for success because cybercrimes continuously affect people and their businesses as technology advances. Consequently, investing in cyber security will likely attract many companies and people for a better outcome.
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