Strategic Analysis and Recommendations for Microsoft

This report provides a strategic analysis of Microsoft Corporation, examining its business operations, vision, and current market position. It delves into the application of Porter's Five Forces model to assess the competitive landscape, analyzing factors such as buyer power, supplier power, the threat of substitutes, new entrants, and competitive rivalry. The report also explores Porter's generic strategies, focusing on cost leadership and differentiation, and their potential application to Microsoft. Furthermore, the analysis includes recommendations for Microsoft to maintain its competitive edge in the software and technology market. The report highlights the importance of strategic management in achieving organizational goals and objectives, offering valuable insights into Microsoft's strategic planning and decision-making processes.

Strategic
Management

Table of Contents
INTRODUCTION ..........................................................................................................................3
Philosophy of Microsoft..............................................................................................................3
TASK 1 ...........................................................................................................................................4
Porter's Five Forces Model .........................................................................................................4
TASK 2 ...........................................................................................................................................7
Porter's Generic Strategies..........................................................................................................7
TASK 3 ...........................................................................................................................................9
Recommendation.........................................................................................................................9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10
Books and journals ...................................................................................................................10

INTRODUCTION
Strategic management is process where company plans, monitor, analyse and ensure that
all necessary resource must be available to meet organisational goals and objective. In other
words, it involves formulating and planning the business idea and initiative decision are taken by
top organisation for better future. The present project is based upon Microsoft Corporation, it as
American multinational company which deals in software services (Grunig, 2013). Its
headquarter is located in Redmond, Washington. This report covers critical analysis and
strategies of organisation in best possible way. Many theories and model have used in regards
with Microsoft, and can execute formal plan to reduce future uncertainty.
Company overview
Microsoft is one of the biggest software manufacturing firm across the globe. The
company was founded by college dropout Bill Gates and Paul Allen in year 1975. they have
diversified range of product such as computer software, personnel computers and mobile
software. The company have vast reach across the world and have goodwill and brand image
among customers worldwide.
Philosophy of Microsoft
Company have desire to reach maximum numbers of people to provide their services.
Vision statement of Microsoft is to make more effective operating system which can compete
with the rivals present in market. Organisation have motive to increase employees efficiency and
can achieve high profit. Stakeholders plays an important role in development of company and
Microsoft is trying to provide benefits in every possible way.
Current business Scenario
At present, Microsoft is one of the leading companies after Apple in electronic market.
Company provide various product offering such as computer hardware, software, electronic
goods, networking services, clouding computing and many more. They have windows, offices,
Xbox (Hahn, 2013). The current revenue of the company is 125.8 billion dollars and have total
assets of 286.55 billion dollars. Organisation have effective presence in market and also provide
tuff competition to their competitors. Company launch their initial IPO in 1896 with the opening
price of 21 dollars. In year 2014 Microsoft acquire mobile giant Nokia for 7.2 billion dollars and

the subsidiary was renamed as Microsoft mobile. Company revels in new software for public in
Taipei. In year 2012 company sold their major stake in MSNBC which perform their business
operation with NBC. After this incident company launch window surface to beat its rival
competitor Apple. Every organisation have to mange the proper strategic management plan
which provide competitive edge in the market (Hair, And et. al., 2012). Microsoft have to
identify the market need and modify their product according to the requirement. For the above
report Porter's Five Forces Model can be implement by Microsoft to manage the company as a
whole.
TASK 1
Porter's Five Forces Model
The Porters Five Forces model was given by Michael E. Porter in the year 1980. This
model is used by different organisations to analyse their strength and weaknesses in a particular
market. This model is used for identifying structure of industries and corporate strategies of the
organisation. According to Porter there are five forces competitive and efficacious forces that are
responsible for developing market and industry. These five forces help in carrying out analysis
of different aspects. These help in increasing probability and efficiency of the organisation. The
five forces given by Porter are Power of Suppliers,Threat of New Entrants, Threat of Substitutes,
Power of Buyers, and Competitive Rivalry. These forces or factors provides a great impact on
industry and this is helpful for the company as it helps in formulation of effective strategies. This
Porter's Five forces model will help Microsoft to make effective strategies that will help to
increase profitability and efficiency of the company (Hill, Jones, and Schilling, 2014). The
Porters Five Forces model for Microsoft is described below -
Power of Buyers:
Buyer achieve ownership of products or services that are offered by the organisation.
Companies are responsible for making strategies and implementing them according to buyer's
need within market. A company can exist in market only if it concentrates on three major factors
of business i.e. groups, firms, individuals are core of business. Companies have to make their
product attractive in order to improve value and reputation of the company (Hill, 2017). This
organisation provide products and services which are fulfilling needs and requirements of
customers. Microsoft corporation is operating in different countries of the world and in both

developing as well as developed countries. The performance of this company totally depends
upon needs of customers. In today's world there is customer oriented market and thus Microsoft
has to work effectively for increasing number of customers. This can be done by meeting the
requirement of latest technology and providing latest technology software and hardware to
customers. In the present scenarios, there are some external factors that that affects a company
in identifying the power of buyers. The main external factor is threat of substitute. Microsoft
provides latest technology systems and software to customers so that they can attract more
customers towards their products (Hitt, Ireland, and Hoskisson, 2012). This is biggest strength of
Microsoft that it provides user friendly and convenient systems for customers. Also software
which is used by Microsoft is familiar to various people. This creates a possibility in market for
Microsoft to become first preference over all other competitors in market. If Microsoft increase
price of it's products then there will be no problem with customer as this company has build up
very food value on front of customers by providing genuine and user friendly products. There are
a lot of competitors of Microsoft when it comes to hardware products so it cannot take risk with
hardware products. Another major factor is customers can compare products and services by
availability of information of various firms. This makes bargaining power of customers
moderate.
Power of Suppliers:
Suppliers are those people who provide effective components and materials to
organisation. These help in doing operations and business activities in an effective manner.
These are external stakeholders of the company that renders excessive support to the company
for improving products and services of the company in an appropriate manner. In context of
Microsoft, suppliers have an essential role in the functioning of company. This company is
involved in hardware and software business and this impacts suppliers of Microsoft. There are
moderate suppliers of software and hardware of Microsoft. This has impact on operations and
business activities of this organisation (Hitt, and Duane Ireland, 2017). This can be explained
with an example, if there is change in pricing of supplier then this will directly impact the pricing
of Microsoft products too. The major factor which is restricting force on Microsoft is that this
company is capable of making it's own software and selling it in market. It has skilled and
talented team which undergoes research and development so that company can reduce the impact
of suppliers on organisation. Microsoft has moderate bargaining power.

Threat of Substitutes:
Substitute are those product which can take over actual product of the company. These
are those products or service that can be used in place of product offered by the company. These
are identical to products of the company and they provide same benefit as the product of
company (Keupp, Palmié, and Gassmann, 2012). Substitutes are those products which can
reduce cost of market share to a great limit. This creates a great impact on the organisation. In
context of Microsoft, substitute of products of this organisation can be manual processes or
non-online processes. They cannot perform same as Microsoft products. So the threat of
substitution to Microsoft is very less. Moreover, switching cost of the products of Microsoft is
moderate. It is concluded that threat of substitutes on Microsoft is low.
Threat of New Entrants:
In a business environment, entry of a new firm is unavoidable. Start-ups have a strong
impact on existing market and and this makes it difficult for companies to make effective
strategies and plans. In context of Microsoft which deals with software businesses, it costs a lot
to these company in launching software that fulfils requirements of all customers. There is a lot
of investment for establishing such businesses that will help in making new entries in market. If
Microsoft wants to launch new software then it will require moderate cost for managing as well
as conducting the operations of business effectively (Meyer, Neck, and Meeks, 2017). It is not
easy for a new company to compete with a great competitor i.e. Microsoft and do a successful
business. It is concluded that the threat to substitute for Microsoft is very less.
Competitive Rivalry:
Competitors determines the company which are providing similar kind of products or
services in market. Such companies act as threat to companies as strategies and plans of these
organisations are not predictable. The way of working of such business activities is also not
similar. Competitors can formulate new strategies and capture market share. In context of
Microsoft, there are various competitors of this organisation in market such as Oracle, IBM,
Apple, SAP, Google, etc. These companies have enhanced market share and they have a lot of
customers across the world. Factor which makes a strong threat to other firms is technology that
is used by company for accomplishing requirements and demands of customers. Designs are
generated by anticipating requirements of future. Such companies are involved in providing a
wide range of products and services. Both Google and Apple provides wide range of services

and products and they are diverse within nature. Such companies are making a lot of investments
in research and development department for identifying value within the organisation. Such
companies have strong marketing strategy and various campaigns are organised for gathering
more number of customers. These factors explains that threat of existent competitors for
Microsoft Corporation is very high.
From the above analysis it has been analysed that there are various threat that are present
in market for a company. It is the responsibility of the organisation to formulate effective
strategies and plans by the help of which companies can remain successful in market. Companies
should overcome these threats for running a successful business. Porter's Generic Strategies
Model can be used by Microsoft for overcoming these threats. It is explained in the below task.
TASK 2
Porter's Generic Strategies
The Porter's strategy was developed in the year 1980 by Michael E. Porter. Strategies
given by this model are implemented in an organisation for smoothly operating of all business
activities and operations. According to Porter, organisations must adopt any one of the strategy
so that elimination of resources of wastage is done. The main aim of such strategies is to assist
organisations for acquiring competitive edge. This depends on type of customer on which
organisation should focus. Each and every strategy has it's own purpose and uniqueness that is
important for identifying the right strategy for the company. Microsoft can adopt various
strategies listed below -
Cost Leadership Strategy:
According to cost leadership strategy, the organisation adopts strategy of providing low
cost in production and it emphasize to appeal customers who are cost conscious and price
sensitive. Companies provide their products in market at a lower price as compared to the
competitor. The main reason for this is to grab huge return on investment on products or service.
It is essential for company to operate and function at low price in market. Microsoft has three
different ways of deploying. Effectual vantage from EOS is the first way. According to this, the
organisation should work for achieving great utilisation of assets. This organisation produces
products and services in large amount and this results in low cost unit. Microsoft can work in an

effective manner for achieving low operating cost. Companies can retain customers and clients
with standardised services and needs so that they can distance them from customisation or
personalisation in offerings of the organisation (Vogel, and Güttel, 2013). This helps Microsoft
in managing and executing effective strategies that will help in conducting business
appropriately.
Differentiation Strategy:
According to this strategy, company focuses upon development of services and products
in an effective manner. Organisations analyses moves and strategies of their competitors and
then they take decisions for business. Companies can render the offerings in order to treat in
different way within the industry. Companies require to identify various aspects related to
accomplish purpose of organisation. Microsoft Corporation must adopt differentiation strategy
when target customers are not focusing on price. This means dealing with competitive
environment in which there is existence of demand in market. Microsoft Corporation can charge
premium prices for services and try to formulate the brand loyalty by using this strategy.
Focus Strategy:
This strategy states that niche market area is considered by companies in aiming choices
for competitive scope. An area of industry is selected according to this strategy and they are
served in better way.
Therefore, it is concluded that Microsoft Corporation should use best strategy i.e.
differentiation strategy which will help in developing competitive edge in marketplace.
Differentiation strategy consists of unique products which are offered by an organisation to
different customers. If Microsoft corporation will use differentiation strategy then this will help
in attracting a lot of customers. This strategy aligns mission and vision statements of Microsoft
and this focuses on capturing market share at international level. Other two strategies i.e. focus
strategy and cost leadership strategy are not useful for this company as these are focusing on a
specific market segment and not on mission and vision of the company (Priem, Li, and Carr,
2012). The valuable strategy used by Microsoft is cost leadership leadership strategy. The
differentiation strategy is best way by which Microsoft can effectively expand it's business in an
effective manner.

TASK 3
Recommendation
It has been figure out that, Porters model is the best option for Microsoft, which acts a
support for organisation to manage corporate strategies and business operations. This model will
provide ease for company to sustain long in the market. It is so because, there are many
companies manufacturing same product. These forces guide industry structure and different level
of competition in company. A small firm, having limited customers and suppliers may face tough
competition rather than big players. The model also help identify the strength and weakness of
company and can be put-upon the capability to increase position. Tool may effectively formulate
organisation strategy and re-enforce the capabilities in a particular industry. It is recommend to
Microsoft that it must implement this model to gain probability. Most of the companies
nowadays spends million of dollars on research and development in order to analyse the actual
needs of customers. Microsoft should take into consideration of R&D, which reduces the future
uncertainty. This may lead Microsoft to achieve its desired goal and can capture larger audience.
As Microsoft is a big software company which is offering products around the world so it is very
important for this organisation to focus on building good image and reputation in market. For
doing so this company must undergo effective researches in specific intervals. It should analyse
demand of customers across the world so that they are able to provide good products and
services to them. Being a well known company it is recommended for Microsoft to provide best
products and services in order to capture more number of customers.
CONCLUSION
From the given report, it has been analysed that strategic management is turn out one of
the important factor of each company to fulfil their organisational goals and objective. In other
words, it is process which is used worldwide to plan, access, monitor and figure out each and
every important aspect to accomplish company target in best possible way. In regards with this,
company must implement Porters model to measure the cause which effect the market segments.
Add-on to this, Microsoft corporation must identify the best strategy and put into the process of
business to improve their efficiency in productivity. It is concluded from the above research that
it is important to make effective strategies and planning in order to provide good services and
products to people around the world. There are various strategies for implementing business in

an appropriate manner so it is responsibility of Microsoft's management to undergo research that
will lead to increase in productivity and efficiency of the company. As Strategic management is
process where company plans, monitor, analyse and ensure that all necessary resource must be
available to meet organisational goals and objective so Microsoft must implement this to make
more profits.

REFERENCES
Books and journals
Doz, Y. L., 2017. Strategic management in multinational companies. In International Business
(pp. 229-248). Routledge.
Grunig, J. E., 2013. Furnishing the Edifice: Ongoing Research on Public Relations as a Strategic
Management Function. In Public Relations and Communication Management (pp. 41-
66). Routledge.
Hahn, R., 2013. ISO 26000 and the standardization of strategic management processes for
sustainability and corporate social responsibility. Business Strategy and the
Environment. 22(7). pp.442-455.
Hair, J. F. And et. al., 2012. The use of partial least squares structural equation modeling in
strategic management research: a review of past practices and recommendations for
future applications. Long range planning. 45(5-6). pp.320-340.
Hill, C. W., Jones, G. R. and Schilling, M. A., 2014. Strategic management: theory: an
integrated approach. Cengage Learning.
Hill, T., 2017. Manufacturing strategy: the strategic management of the manufacturing function.
Macmillan International Higher Education.
Hitt, M. A., Ireland, R. D. and Hoskisson, R. E., 2012. Strategic management cases:
competitiveness and globalization. Cengage Learning.
Hitt, M. and Duane Ireland, R., 2017. The intersection of entrepreneurship and strategic
management research. The Blackwell handbook of entrepreneurship, pp.45-63.
Keupp, M. M., Palmié, M. and Gassmann, O., 2012. The strategic management of innovation: A
systematic review and paths for future research. International Journal of Management
Reviews. 14(4). pp.367-390.
Meyer, G. D., Neck, H. M. and Meeks, M. D., 2017. The entrepreneurship‐strategic management
interface. Strategic entrepreneurship: Creating a new mindset. pp.17-44.
Priem, R. L., Li, S. and Carr, J. C., 2012. Insights and new directions from demand-side
approaches to technology innovation, entrepreneurship, and strategic management
research. Journal of management. 38(1). pp.346-374.
Vogel, R. and Güttel, W. H., 2013. The dynamic capability view in strategic management: A
bibliometric review. International Journal of Management Reviews. 15(4). pp.426-446.