Inform Strategic Decisions with a Situational Analysis
Background of Microsoft Corporation
Microsoft Corporation is one of the leading brands in designing, manufacturing, supporting, and licensing of a wide range of software in the world. Paul Allen and Bill Gates are credited for establishing the company in 1975 (Chao, Chao, Kavadias & Kavadias, 2017). Its head office is situated in Redmond, Washington. The company was created to sell basic operating system. It concentrated in production of operating system (OS). After three years in operation, it had attained sales worthy $1 million. Its shares were first traded through IPO in 1986 at $21 per share. The firm diversified its product portfolios to deliver on entertainment and gaming, a collection of productivity suites, GUI centred operating systems, and support services (Riviere, Suder & Bass, 2017). In 2010, Microsoft had over $62 billion in revenue.
Situational analysis outlines the external and internal factors of an organization and explicitly identifies the business environment, potential customer, existing customer and capabilities as well as the influence they have on the business. It can be utilized to identify he threats, opportunities, weaknesses, and strengths to the company (Riviere, Suder & Bass, 2017).
Internal analysis of Microsoft Corporation
In terms of the human resource, Microsoft Corporation has one of the most talented computer experts in the world. Reports indicated that the company had over 89,000 workers across the globe. In the United States, it has approximately 53, 750 employees. Most of workers, 40,380, provide services in the Puget Sound area in Washington State (Patel, 2016). Microsoft has a strict and rigorous recruitment procedure, which ensures that only the brightest and the best persons are hired to work for the firm. Furthermore, the firm recruits from top universities and colleges from across the globe (Sawhney et al., 2017). In fact, the organisation has a highly diverse workforce. The corporation offer high benefits and great pay to its employees as well as to an exceedingly competitive job environment. For these reasons, it is able to attract best talents and achievers (Riviere, Suder & Bass, 2017). Therefore, this ecosystem or network of close to 89, 000 excellent minds is the most essential strength of the firm.
Microsoft Corporation’s competitive advantage is further enhanced by its capability to operate across different cultures (Patel, 2016). Since the marketplace is highly globalized, the capacity to diverse cultures can be very essential for company because it improves on its competitive edge. The firm has presence in about 629 sites globally but more than half (59.3 per cent) function in overseas countries outside the United States (Chao, Chao, Kavadias & Kavadias, 2017). Therefore, the corporation has created ability to work effectively in various cultures. In this regard, this strength will raise its significance as foreign markets become larger and more important to its growth (Sawhney et al., 2017).
The program of internal promotion supports the strategic human resource management. Managers who have been in Microsoft for the several years especially the senior managers clearly understand the firm’s values and vision (Jeffery et al., 2017). Such executives have been effective the organizational distinctive work environment by utilizing scarce resources. In addition, they have experienced external difficulties in the course of their duties hence they are proven leaders, administrators and experts in the division Microsoft Corporation function in (Chao, Chao, Kavadias & Kavadias, 2017). The top management is composed of influential persons who have played a key part in information technology a computer industry. The firm has also a robust board, which include entrepreneurs led by Bill Gates who is the founder of the firm and the richest individual in the world (Riviere, Suder & Bass, 2017).
Microsoft Corporation has demonstrated weakness in the development of new products. In this regard, it is unable to utilize its staff to produce new innovative products apart from software. In the 1980s, the company dominated the market in the production of operating system. Similarly, it had the largest market share in the 1990s in productivity suite (Sawhney et al., 2017). Nonetheless, the organization has not taken advantage of emerging opportunities to initiate new items in the market in the past decade. Furthermore, the company has talented workforce and quality R&D resources coupled with commanding position to venture to new markets with novel products. Indeed, this seems to be the biggest weakness for the company (Chao, Chao, Kavadias & Kavadias, 2017). For instance, it had a chance to be the leading firm in online advertising but it did not utilize the opportunity. Besides, its entry to mobile operating systems was quite late hence; Apple and Google were able to capture a large share of the market. Similarly, the organization effectively entered into the entertainment market when it introduced the X-box. However, it has faced stiff competition from Nintendo and Sony who have introduced competitive products (Riviere, Suder & Bass, 2017). The weakness is likely to rise in significance as the firm old items continue to lose their market share hence contributing to decrease in revenues.
The investments and acquisitions in Microsoft Corporation have proved to be a major weakness. For instance, only a few of its acquisitions have succeeded in bringing return to investment (Jeffery et al., 2017). Additionally, these acquisitions have failed to launch new products and revenues as well as competencies and skills to the firm. Some of the Microsoft Corporation’s multimillion investments that have been ineffective in meeting the needs of the market include Danger, WebTV, LinkExchange, and Massive. Consequently, company is forced to divest or shut down most of them (Chao, Chao, Kavadias & Kavadias, 2017).
The firm is heavily reliant on computer hardware from other companies. Since Microsoft Corporation concentrates on software, development it does not manufacture its own hardware hence it is forced to be dependent on other players (Patel, 2016). If another software developer manufacture popular and cheaper OS, the hardware producers may select the alternatives hence Microsoft will have no influence in the situation (Riviere, Suder & Bass, 2017).
External Analysis of Microsoft Corporation
The emerging markets provide a great opportunity to software development firms such as Microsoft. The organization has an opportunity to grow when it utilize available business prospects in the emerging economies. More than 45 per cent of revenues of the company are acquired from emerging markets. Microsoft has the experience and understanding on how to function in these markets (Riviere, Suder & Bass, 2017). Nonetheless, the majority of its revenues have been created from software publishing operations. However, online services commerce has not registered great success in these markets. For instance, Google is largely dominant in the US market but has low market share in countries such as China. It can also utilize opportunities in the cloud-based software and business since the demand of such services is rising (Chao, Chao, Kavadias & Kavadias, 2017). Furthermore, it should be able to venture into mobile device market in the production of tablets and smartphones. Statistics have indicated that market for mobile devices is expected to rise steadily. Therefore, the firm can launch its tablets and creative smartphones (Sawhney et al., 2017).
The company faces serious competition in development of software in both the mobile markets and personal computers. For instance, Apple and Google are now producing OS, which poses a threat to Microsoft (Jeffery et al., 2017). Moreover, the company is experiencing pressure from consumers due to changing customer habits and needs. In the recent past, fewer customers are buying standalone PCs and laptops but instead they are purchasing tablets and smartphones. Unfortunately, Microsoft lacks commanding market shares in these segments. The open source products have been introduced in the market such as Open Source Office and Linux OS (Chao, Chao, Kavadias & Kavadias, 2017). Such projects are often free of charge hence they may became easier alternative to costly Microsoft’s products. The company is also engaged in several lawsuits and is forced to pay huge sums of money. Continuous lawsuits may rob the firm essential resources such as money and time (Riviere, Suder & Bass, 2017).
Microsoft Corporation is the leading brand around the world in software development. Based on internal analysis, its human resources department forms part of its strength. The company has one of the most talented minds in designing, manufacturing, and licencing software (Sawhney et al., 2017). It also has a thorough recruitment and selection process, which guarantees hiring of qualified persons. It also has persons who can function in different cultures. In terms of weaknesses, the company has not utilized its HR to develop innovative products particularly on internet marketing and hardware (Chao, Chao, Kavadias & Kavadias, 2017). Therefore, it has concentrated in software development. Concerning external analysis, the company can take advantage on emerging opportunities especially in online programs in developing world. For instance, it can utilize its financial resources to develop innovative mobile devices (Riviere, Suder & Bass, 2017). However, it faces threats from new entrants in software such as Google and Apple. Similarly, it has to handle changing customer habits and needs especially in use of laptops versus tablets.
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Patel, S. R. (2016). Microsoft”s Paradigm Shift: Strategically Reinventing the Brand, Supporting its Vision for Growth, and Strengthening Its Competitive Position.
Riviere, M., Suder, G., & Bass, A. E. (2017). Exploring the role of internationalization knowledge in fostering strategic renewal: A dynamic capabilities perspective. International Business Review.
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