Strategic Management Report: Analyzing Microsoft's Business Strategies

This report provides a strategic management assessment of Microsoft Corporation, examining its business strategies and market position. The introduction defines strategic management and highlights its importance for companies like Microsoft. The company overview discusses Microsoft's history, philosophy, and current business scenario. The core of the report focuses on applying Porter's Five Forces model to analyze the competitive environment, including the bargaining power of suppliers and buyers, the threat of new entrants and substitutes, and competitive rivalry. The report evaluates the effectiveness and limitations of the model in the context of Microsoft's operations. Finally, the report offers recommendations for Microsoft's future strategic direction and concludes with a summary of the key findings, referencing relevant academic sources.

Strategic Management
Assessment

Table of Contents
Introduction......................................................................................................................................3
Company Overview.........................................................................................................................3
Philosophy of Microsoft.........................................................................................................3
Current Business Scenario......................................................................................................4
TASK...............................................................................................................................................5
Porter's Five Forces Model.....................................................................................................5
Effectiveness and limitations of Porter's Five Forces Model.................................................8
Recommendation..................................................................................................................11
Conclusion.....................................................................................................................................11
References......................................................................................................................................13

Introduction
Strategic management can be defined as a procedure, that aid a company in attaining
specific goals and objectives with the help elements like planning, monitoring, analysis,
assessing and evaluation. It is being found that, strategic management basically helps in
identifying a range of opportunities that could directly help a business firm in grabbing a good
position within the market (Doz, 2017). Firm, which has been chosen in present report i.e.
Microsoft Corporation. Company was found in the year of 1975 and it is headquartered in
Redmond, Washington. Along with this, assignment is going to put light on various theories like
Porter's Five Forces Model and Porter's Generic Strategies that will aid in understanding how
effectively Microsoft could execute overall strategic management within the dynamic business
environment. Lastly, report will also show recommendations in regards to how business firm
i.e. Microsoft could run its business at international level in a smooth manner.
Company Overview
In present report, firm which has been taken into consideration i.e. Microsoft
Corporation. Organisation is considered to be one of largest organisation, which is dealing
within the technological industry. It was found by Bill Gates and Paul Allen in the year of 1975.
Company deals in various sub sections like manufacturing, development, along with the sales of
various software, electronic gizmos and private or personal computers. Due to its performance
and reliable products and services, Microsoft Corporation has become one of the trusted
brands within the technological industry (Microsoft Annual Report 2018, 2019).
Philosophy of Microsoft
If it is talked about philosophy of Microsoft, company basically aims to achieve all the small
and short term objectives. Alongside this, if it is talked about Microsoft's Vision, company has
kept its focus on making businesses along with people to gain absolute potentials and to give
worth to their own products that are basically offered by Business Company to their targeted
customers. On the other hand, agenda of Microsoft is to authorise every single staff member so
that they could take decisions by their own in regards to offer customers with best sort of
services.

Current Business Scenario
If it is analysed, Microsoft is basically offering customers with ample number of services.
Away with this, it could be considered as leading business firm within electronic industry where
some other companies dealing at small or large level are not that much capable of building
presence within the business market. In present time, Microsoft has basically crossed $100
Billion through generating revenue in the amount of $110 Billion in 2018. Along with this,
company in current consists with heavy presence in global market & firm has utilised updated
technology in order to improve competitive advantages. On the other hand, creations that are
innovative in nature are playing an immense role for Microsoft in today's business world
(Grunig, 2013).
This could be understood with a good example of Microsoft, where its performance is
basically showed on different social media tools like LinkedIn, Surface and Windows Pro. One
more resource that came in front i.e. " Commercial cloud", in order to outline and it was being
classified and created by Microsoft which majorly enclosed with different things like Office 365,
Dynamics 365, Azure, numerous ones. Alongside this, it is being found that focussing upon
procedures in order to improve execution of distributed computing (Microsoft Annual Report
2018, 2019). Aside from this, Microsoft has overseen effectively gaming through, which it has
earned approximately to $10 Billion.
It has been found that, a business firm would require to develop along with execute the
overall plans in order to enhance the strategic management. This could easily help Microsoft in
attaining competitive advantages and might also gain effectiveness as well in near future. It is
much needed for Microsoft to pull the overall analysis and carry out the evaluation report of
the whole industry. With the help of this, development of strategies can easily be done in
specified time frame. Away with this, the vital most reason that came in front was the specified
reason behind that is required to develop a clear pathway regards all the identified high threats
along with the opportunities that could help Microsoft in attaining the overall need of strategic
management. For this particular aim, Porter’s Five Force Model could be considered as the
model that has been taken into consideration by Microsoft that will aid in analysing overall
industry (Hahn, 2013).

TASK
Porter's Five Forces Model
Model could be considered as one of the crucial element, which was found in the year
of 1980 by Michael E. Porter and utilised by business organisation, industries at a wider range
for attaining specific objectives in a short span. It has been found that, there are five forces,
that majorly affects a business company while attaining goals and objectives in specified time
frame and these are ; threat of new entrants, power of suppliers, power of buyers, threat of
substitutes and competitive rivalry.
Bargaining Power of Suppliers:
It has been identified that, bargaining power of suppliers is somewhere moderate for
Microsoft. This is because, Microsoft's state of suppliers assumes critical job inside assurance of
business of association. The reason behind this is that, equipment and programming business
condition makes an unmistakable effect on suppliers. In any case, if there should arise an
occurrence of Microsoft the populace just as size of providers is moderate. It will make
moderate effect on tasks just as association overall. A model can be taken to comprehend this
like if there are sensible measured providers who arrangement in PC equipment parts adjusts
their costs then it will prompt changes inside estimating of association moreover. Providers
have restricted power on association. Other central point which is confining power is that
Microsoft Corporation is fit enough to build up their own product. With their skilled and
talented R&D group, the association can limit impact of providers inside association. In this
way, it very well may be said that dealing power as for Microsoft of providers is moderate ( Hair
and et. al., 2012). Here, it can be said that
Bargaining Power of Buyers:
If it is talked about Microsoft Corporation, company is having consumers in all over the
world with moderate force or bargaining power. The reason that came in front was low
substitute availability. Along with this, Microsoft as working within the market in industrialized
countries as well as developing nations. Organizational efficiency is oriented towards their
customers. Microsoft should provide more competent goods and services in the user-oriented
sector to enhance its market share and reach the latest technological needs. There are some

internal variables in this situation that affect the organization to recognize consumers '
authority.
Threat of Substitutes:
In the case of Microsoft, it can easily be said that this force is weak enough. It has been
analysed that within the technological industry, customers to believes in buying or purchasing
the products and services from renowned brand only. The products which are giving same
benefits to customer is called to be substitute. The products which are used and offered by the
company is having the same usage and also used for the same purpose. It created large cost
down to the market shares of organisation. So it made the large impact on the organisation
(Hill, Jones and Schilling, 2014). In context to Microsoft, their substitute process which may
online or offline. The quality of the product which does not match the performance level of
Microsoft. All though the minimum abilities of substitute that need to be set for the market
shares of the business. Due to changes in the technology which will act so fast in the minds of
customer that may company growth. Microsoft company which needs to involve some
innovations techniques and creativity in appropriate manner. According the market survey it
has been stated that Microsoft company is having low threats. Microsoft is one of the
renowned international company which affect the company growth, hence it has many loyal
customers which likes the products of this company but hence there many challenges that
every company faces, Some of them are been disused below:
Threat of New Entrants:
In present context, this force basically stays moderate and the reason behind this is
moderate switching costs of Microsoft's products and services. Entry of the new firm which is
been unacceptable by many new companies around the market place. Some of the steps that
are been created by the strong competitors which is existing business, that can be costly affect
on launching of new products and software which are been implemented by the company. The
customer need and demands differs according to market changes and new entry of
technologies into the market place (Hill, 2017). Due to new products innovations company need
to invest large investment for establishing its business, and which will make affect to new
entries. More over in the organisation point the cost need to be moderate according to the

operations of enterprise. New entries styles and creativity that may affect the customer mind
and because of which business will go to less profit. As a Microsoft Corporation it itself is large
firm and there is less new enter who can beat this company. All over it is high brand and
captured large number of customers.
Competitive Rivalry:
Threat from present force is high and the reason behind this is High aggressiveness of
firms that are dealing within the technological department. Competitors which affect the
organisation which leads to the growth of customer. The threats and strategies which are which
will affect the growth, The essential development of the organisation which is been required for
an edge with its market place. The essentials of the business which taking part in operations
which affect the capabilities of the business which lead improve in the market shares and
development. With respect to Microsoft Corporation which drives competitors that are IBM,
Apple, SAP, Google and many more. Some organisation which enhance market share which
created a large number of customers across the world (Hitt, Ireland and Hoskisson, 2012). The
major factor that makes the strong threats which is strong innovative technology which need to
accomplish demands of customer in affective manner. The designs which need to be created in
such way that may affect the future requirements. In context to diversification this company is
competitive with other company. Apple which is well known brand and even its providing the
large number services and products and in such way it presents in front of customer that will
affect the business growth. So these organisation majorly focusing on research and
development which will create unique identity for the growth of the business. Some campaigns
which will increase the company image and more over it aid to enhance knowledge about the
product of the company (Hitt and Duane Ireland, 2017). So these are some of the threats which
existing the Microsoft Corporation in high. Innovations in new product which lead to the growth
of the business and hence due which company is taking new tools and techniques which can
attract the customer in appropriate manner.
From the above detail observation these are some of treats which ranking high in the
organisation and also which affect the business in large way. The teams and strategies which
are been adopted by the company will affect the future growth. In spite of this company should

innovate products according to customer need and demand which will highly overcome threats
effectively and hence goals and objectives, targets which can be achieved by the company
inappropriate manner.
Effectiveness and limitations of Porter's Five Forces Model
Threats of New Entrants
This force has helped Microsoft in analysing the situation of the business environment,
which helped them in developing the innovative services or products. Through this, Microsoft
has effectively engaged their existing and new customers for a longer period of time with the
help of new new and existing products and other electronic gadgets as well. Along with this, it
has also helped Microsoft in improving the economies of scale through bringing reduction
within fixed cost per unit. On the other side, as the business organisation i.e. Microsoft has low
threat from new entrance as it is already a market leader at international market, and if
organisation keeps on enhancing the standards regularly, it has helped them in discouraging the
new entrance in near future. But, its limitation is that the organisation would
require to reduce the number of barriers to entry in order to expand their own business. This
is because of many reasons like international regulations and high fixed and/or start-up costs,
protected intellectual property and so on.
Bargaining Power of Suppliers
This force where the bargaining power is high has made Microsoft in building much
more effective and efficient supply chain considering a range of suppliers. Along with this,
considering this Microsoft has also done a range of experiments focusing upon product's
designs with the help of different materials. This helps them in keeping the cost lower than it's
competitors as whenever there is a chance takes place of product's price is going to get high,
management of Microsoft Corporation mainly shifts from existing supplier to another one. On
the other side, company has also helped dedicated suppliers, whose business is totally
dependent on Microsoft only. Organisation has also taken into consideration of various
examples like Nike and Wal-Mart, where they have developed third party manufacturers whose
business solely depends on them. Through this, Microsoft has gained knowledge in regards to
third party manufacturers and their benefits like reducing the bargaining power of suppliers.

Bargaining Power of Buyers
Effectiveness can be seen through looking at the procedure that Microsoft is following
for enhancing or enlarging the customer base. It has helped this business organisation in
reducing the overall bargaining power of the buyers. This has given an opportunity to Microsoft
in order to streamline its sales and production process. On the other hand, Microsoft has also
rapidly focuses upon enhancing the procedure of innovating its existing products. Along side
this, Microsoft has also gained knowledge in regards to the customers from different regions.
This has raised chances for Microsoft in establishing the products as per the requirements of
targeted customers. Away with this, new products has also helped Microsoft in reducing the
defection of existing customers of Microsoft Corporation to its competitors. On the other hand,
limitation is that buyers at international level carries different range of requirements that
cannot be fulfilled in a regular manner.
Threats of Substitute Products or Services
Considering the information, which has been presented above it can easily be said that
Microsoft has changed itself by being service oriented rather than just product oriented. This
has raised high number of benefits for Microsoft, which reduced this threat from high to low.
With the help of this force, company has also understood the core need of the customer rather
than what the customer is buying. On the other hand, it has also been analysed that
enhancement of switching cost for the customers or adoption of this strategy has helped
Microsoft in meeting all the requirements in specified time frame. But, it's limitation is low
buyer propensity, which directly takes individuals to substituting. Here, it has been analysed
that the level of buyer propensity might go for substitute products or services to Microsoft’s
products and services can be assessed as low.
Rivalry among the Existing Competitors
Business organisation i.e. Microsoft has built a sustainable differentiation strategy,
which has helped Microsoft in meeting all the requirements of customers and enhancing the
rivalry of existing competitors as well. On the other hand, through building the scale, it can
easily be said that the organisation would start competing in much effective and efficient
manner with its rivals. Along with this, collaboration can also be considered as the approach,

which Microsoft is utilising with its rivals as this is much helpful in enhancing the market size
and to gain competitive advantages as well. It's limitation is that existing competitors keeps on
bringing innovative approaches Microsoft and this can be threat for the organisation.
Recommendation
With the help of above description of this report it can be suggested that in Microsoft
Corporation Porters five forces model are proved to be most effective for determination of
company's strategy and structure of the corporation. It is advisable by this report that if
Microsoft Corporation desired to survive for long period of time than they can think about this
model. The reason for suggestion is that this model helps the company to assess factors which
create threats in marketplace for corporation and their profitability index. Bargaining power of
suppliers, threat of new entrants, production of substitute goods, bargaining power of buyers
or competitive rivalry, threat can come in any way to the organisation. To secure success for a
longer period and achievement of growth these factors should be known and accessed. That's a
reason behind recommendation of Porter's five forces model to Microsoft Corporation which
guides to ascertain profits and its creativeness which attracts others. In order to analyse the
impact of Five forces factors on this corporation and make strategies according to increment in
its profit ratios in concern to future it is advised to Microsoft corporation invest in research and
development department. Along with this, it is advised to use differentiation strategy by the
company for achievement of increment in market share at international level. And this strategy
also focus on the mission and vision targets to get access in the international market.
Conclusion
From the preceding description it can be resulted that to achieve organisational
objectives and targets in a predetermined period of time, strategic management plays a vital
role. It is a comprehensive process which is used to analyse, evaluate, arrange, access and
monitor the activities in an organisation to achieve its aims and targets efficiently and
effectually. For achieving targets with all grace it is important for each and every organisation
to follow the whole process. With this Porter's five forces model is also well advised to the
company to measure the factors which are affecting the working of organisation and their
market place. Along with this its ended with a suggestions to Microsoft Corporation for

acceptance of differentiation strategy as their corporate strategy in industry with the aim to get
control over market and success at an international level.

References
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Online
Microsoft Annual Report 2018. 2019. [Online]. Available Through:
<https://www.microsoft.com/en-us/annualreports/ar2018/annualreport/>.