Strategic Analysis: Microsoft Corporation's Business Strategies

This report provides a strategic management assessment of Microsoft Corporation. It begins with a company overview, discussing Microsoft's philosophy and current business scenario. The core of the report focuses on applying Porter's Five Forces model to analyze Microsoft's competitive environment, including the bargaining power of suppliers and buyers, the threat of substitutes and new entrants, and competitive rivalry. The report evaluates the effectiveness and limitations of this model in the context of Microsoft's business. Finally, it offers recommendations for Microsoft's management team, considering the dynamic nature of the technology industry and the need for continuous strategic adaptation. The report concludes with a summary of findings and a list of references.

Strategic Management
Assessment

Table of Contents
Introduction......................................................................................................................................3
Company overview..........................................................................................................................3
Philosophy of Microsoft.........................................................................................................3
Current Business Scenario of Microsoft.................................................................................4
TASK...............................................................................................................................................4
Porter's Five Forces Model.....................................................................................................4
Effectiveness as well as limitations of Porter's Five Forces Model.......................................6
Recommendation....................................................................................................................9
Conclusion.......................................................................................................................................9
References......................................................................................................................................10

Introduction
Strategic management refers to the process which assists an organization in order to
accomplish their goals and targets in an effective manner with the assistance of factors such as
planning, analysis, monitoring, assessing as well as evaluating. It has been identified that
strategic management usually aid in examining various opportunities which will help a business
entity in order to grab strong market position. Microsoft Corporation is the organisation chosen
in the current project. It is an organization established in year 1975 whereas the headquartered is
located in Redmond, Washington. In this report, various types of models and theories are going
to be discussed such as Porter's Generic as well as Porter's Five Forces Model which will help in
understanding that how efficiently Microsoft implement strategic management among the
changing business situation. At last, recommendation will also be provided to the management
team of Microsoft with the help of which they can smoothly run their business functions at
global level.
Main Body
Company overview
In the present project, Microsoft Corporation is chosen as the base company which is
considered as one of the biggest organization perform its functionality within information
technology sector . Microsoft Corporation is an American multinational technology industry
which was established in year 1975 by Bill Gates & Paul Allen. This is an organization
specialised in different sub sections such as development, manufacturing, sales of different
software, personal and private computer system, electronic gizmos and many more. It has been
identified that because of the high quality and reliable goods and services offered by Microsoft
Corporation to their customers, it is now one of the most trusted brands among the technological
sector.
Philosophy of Microsoft
It has-been said that the philosophy of Microsoft is to attain their each and every short term
goals within specified time period. In addition to this, if talking about the vision of the
organization their focus is to grab potential candidates with the help of which they can produce
high quality products offered by them to their targeted customers. Along with this, Microsoft
agenda is that they must authorise each and every employee working within the organization so

they can take all the decisions by their own. This leads them to offer best services to their
customers and help them in retaining their potential users for a longer period of time frame.
Current Business Scenario of Microsoft
It has been identified that Microsoft is currently providing ample number of high quality
services to their customers. Microsoft Corporation is one of the biggest leading organisation
within electronic sector in which ample number of different small as well as large level of
companies deal but are not capable of developing the position at marketplace. It has been
examined that at present Microsoft crossed $100 Billion by creating revenue in the year 2018 of
$110 Billion. As a result, company is having strong presence at international marketplace and
use advanced technology for improving competitive advantages. Furthermore, by creating
innovative products Microsoft grab attention of large number of customers towards them.
It can easily be understood with an instance of Microsoft in which performance of the
company is usually showed on various social media platforms such as LinkedIn, Windows Pro
and Surface. Another element is also there which is " Commercial cloud", which is used to
outline & it has been classified as well as developed by Microsoft majorly enclosed with various
things such as Azure, Office 365, numerous ones, Dynamics 365 and many more. In addition to
this, it has also been identified that the higher authorities of Microsoft emphasises on the process
so that they can enhance the implementation of distributed computing (Microsoft Annual Report
2018, 2019).
It is identified that for maintaining smooth running at the competitive marketplace it is
necessary for the management team to develop all the plans and strategies according to the
changing situations. With the help of strategic management, Microsoft can easily grab
competitive advantages as well as effectiveness in near future. Therefore, it is required by
Microsoft to conduct an analysis of the whole industry. With the assistance of which, strategies
can easily be developed. For this, Porter’s Five Force model is used by higher authorities which
is one of the most effective strategy and help in examining the overall market situation in an
effective manner.

TASK
Porter's Five Forces Model
It is a framework which is considered as the most crucial factor founded by Michael E.
Porter in year 1980. This is the model adopted by large number of organizations and industries
in order to accomplish their predefined targets within short period of time. This is a model which
includes five essential elements which are going to be discussed as follows:
Bargaining Power of Suppliers (Moderate):
It is said that, in reference to Microsoft bargaining power of suppliers are somewhere
moderate. Reason behind this is that suppliers plays very critical job among the business
organisation like Microsoft. It has been identified that suppliers have restricted and limited
power on the business organisation. Apart from this, it has also been identified that Microsoft
Corporation includes skilled staff members who can easily develop their products and services.
For this, they only need skilled team in their Research and development department which as a
result limits the influence of suppliers on the business entity. Therefore, it can clearly be said that
bargaining power of suppliers in context of Microsoft is moderate which creates limited threat to
the business entity.
Bargaining Power of Buyers (Moderate):
It refers to the power a purchaser or buyer holds at the marketplace. In the present context
of Microsoft Corporation it has been identified that buyers of the services offered by Microsoft
are located across the world with having moderate force of bargaining power. Reason behind this
is that company having low substitute availability at the marketplace which reduces the power of
bargaining in relation to the customers. In addition to this, it has also been identified that
Microsoft operates their business functioning at developing nations and their main aim is to
provide high quality service to their customers. It has also been analysed that customers find it
very difficult to buy non-computing network services at the market place which are as efficient
as Microsoft offerings. This as a result make it difficult for customers to bargain with the
organization. Therefore, bargaining as well as switching power of customers in relation to
Microsoft are moderate.
Threat of Substitutes (Weak):
Products or services which provide similar sort of benefits to the users are known as
substitute products. In reference to Microsoft, it has been said that this is the force which is weak

as customers only buy services from well known organisations. It is the factor which create large
impact on the performance and profitability of the company at marketplace. In relation to
Microsoft, their are limited substitute available which are unable to match the service offered by
the company. It has also been said that Microsoft usually conduct modifications in technology
which as a result make it difficult for the substitute products to beat the level of competition.
This as a result says that Microsoft is an organization which does not face any kind of threat
related to the substitute of products.
Threat of New Entrants (Moderate):
In reference to Microsoft, it has been identified that this is the force which is quite
moderate and the main reason behind this is that this sector requires lot of investment and funds.
It has also been said that entry of new firm in electronic industry are unacceptable by various
organization across the marketplace. In the current changing environment, it has also been said
that needs and requirements of customers are continuously changing for which companies need
huge amount of investment for innovative products and services. Therefore, Microsoft is one of
the fastest and well known organisation which faces moderate threat of new entrants as it is
already well established firm at the competitive marketplace.
Competitive Rivalry(Strong):
It is said that threat of competition among this sector is high as the main reason is high
aggressiveness of organization dealing in the technological sector. In reference to the Microsoft
Corporation major competition face by company is through Apple, IBM, SAP, Google & so on.
These are the organisation which create intense competition for the firm like Microsoft as they
have strong brand image and customer base too. It has also been analysed that some of the
organisation innovate unique services and promote them with the help of campaigns which as a
result assist in capturing and attracting large number of customers towards them. All these things
create threat for the organization like Microsoft Corporation in high.
With the aid of above mention analysis, there are some threats for the organisation which
can affect the overall performance of the company in a long run. Therefore, it is necessary for the
management team to adopt strategies and policies according to the requirements as they highly
influence future growth and development of the firm at competitive marketplace. Along with
this, it has also been suggested to the management team that they must modify their strategies

and policies according to the changing situations and as per the demand of customers so that they
can easily maintain competitive position at marketplace.
Effectiveness as well as limitations of Porter's Five Forces Model
Threats of New Entrants
This is the factor which assist Microsoft in order to examine the existing situation which
leads towards the development of innovative products and services according to the requirements
of customers. This as a result help business organisation to retain their potential customers as
well as attract new one at the marketplace. In addition to this, it will also help Microsoft in order
to enhance economies of scale with the assistance of bringing reduction in their cost. Apart from
this, it has been analysed that business entity such as Microsoft have low threat of new entrants
at the marketplace says that company is market leader at global level and by keeping innovations
and improving their set standards on a regular basis help in demotivating new entrants to enter
into the marketplace. But on the other hand, there is a limitation for which management team
need to reduce the entry barrier while expanding their business functions at international level.
Reason behind the entry restrictions is high level of international regulations, start up cost, high
fixed costs and many more.
Bargaining Power of Suppliers
This is the force in which bargaining power for Microsoft is high in order to develop
effective supply chain by considering ample number of suppliers. In addition to this, by
considering this, higher authorities of Microsoft done various number of experiments
emphasises on the product's designs through various materials. This as a result assist them in
order to keep their prices low then the rival firms. It has also been examined that whenever
company identify that there is a chance of increasing the prices, higher authorities of the
Microsoft Corporation switches to another suppliers which is beneficial for them. Apart from
this, it has also been said that Microsoft support those suppliers whose business are totally
dependent upon the organisation. In this reference, business firms like Microsoft corporations
considered ample number of organizations like Nike, Wal-Mart and many more as there business
organisations are totally dependent on them. This as a result help Microsoft in order to gain
success in context of third party manufacturers.
Bargaining Power of Buyers

Effectiveness can easily be seen by looking at the process which is followed by the
management team in order to enhance their customer base. This will assist business entity in
order to reduce the bargaining power of buyers. As a result it will create opportunities for the
Microsoft Corporation for streamline their sales as well as production procedure. In addition to
this, it has also been identified that Microsoft focuses on improving their process of innovating
their current products and services. People from various regions known about the offerings of
Microsoft which increases the chances for company to establish products as per their targeted
customers requirements. Furthermore, new and innovative products help in eliminating defection
of their current users to their rivalry companies. But on the other hand, there are some limitations
of this force which might affect the overall performance of the company. One of the biggest
limitation for the management team of Microsoft is that customers or buyers across the global
level carriers various range of requirements which can not easily be fulfilled by company on a
continuous basis.
Threats of Substitute Products or Services
By considering the above mentioned information, it has clearly been says that Microsoft
Corporation modified itself by changing then to service oriented apart from just product oriented.
As a result it increases the number of advantages gained by Microsoft, as well as reduced the
threat from high level to low level. Because of weak substitute threat, it can easily be concluded
that Microsoft holds strong position at the marketplace and can not face any sort of threat in
reference to substitute of services and products. With the assistance of this factor of Porter’s five
force model, company can easily understood the basic or core requirement of customers apart
from what customer are actually buying. Furthermore, it has also been identified that by reducing
the switching cost as well as meeting all the requirements of targeted customers, Microsoft
satisfy all the requirements of users within limited time period. But on the other hand, there are
some limitations which includes low purchaser propensity, which leads towards the customers
towards substituting. Herein, it can be concluded that level of purchasers propensity can go for
the substitution of products and services which can reduce the substitution power of Microsoft.
Rivalry among the Existing Competitors
In the present competitive environment, it has been identified that each and every
business faces competition at the marketplace which highly affects their overall performance and
profitability in a negative manner at the market. It is said that business organisations like

Microsoft develops sustainable as well as differentiation strategy, which assist management team
of Microsoft in fulfilling and meeting all needs and requirements of users. This as a result
enhance the level of competition among the existing firms. In addition to this, by creating
economies of scale it has been concluded that companies will start competing with their rivalry
firms in more effective as well as efficient way. Furthermore there are some strategies available
at the marketplace which can easily be adopted by Microsoft in order to reduce the level of
competition from the marketplace. It has been said that collaboration is considered as one of the
most effective and beneficial approach with the help of which Microsoft cab easily grab huge
market share as well as gain competitive edge effectively. Apart from the effectiveness and
benefits there are some limitation of these forces which can influence the overall functionality of
the company in an adverse way. In the present context, limitations of this factor is that current
competitors or rivalry firms bringing new and innovative approaches on a continuous basis
which as a result work as threat for the business organisations like Microsoft.
Recommendation
After examining the overall situation, it has been recommended to the management team of
Microsoft Corporation that Porters five forces framework is one of the most effective strategy
according to the current market situation. It has also been suggested to the management team that
that they must implement this model in order to stay competitive at the marketplace for a long
duration. The main reason behind recommending this framework to the management team is that
it help in examining the factors which will create threat to the organisation and affect their
overall profitability. It is said that threat can be because of bargaining power of suppliers, new
entrants, substitute products, competitive rivalry, bargaining power of purchaser. All these highly
affect the overall business operations in both positive and negative way which need to be
considered by managers of a business entity. This has been said that for getting higher
profitability and long term success, management team need to consider all these elements. In
addition to this, it has also been recommended to the higher authorities of Microsoft corporation
that they must invest some amount in their research and development section so that they can
easily analyse the influence of factors within given time period. Along with this, it has also been
examined that this is the strategy emphasize on the vision and mission of an organization which
leads towards the attainment of goals and targets in an appropriate manner.

Conclusion
With the help of analysis, it has been concluded that strategic management plays very
important role in order to attain organizational goals as well as objectives. This is one of the
comprehensive procedure used by higher authorities to examine, evaluating, accessing,
monitoring each and every activity within the business organization so that aims and objectives
will be accomplished in an effective manner. For attaining targets it is essential for every
business organisation that they must follow and adopt whole procedures in a systematic manner.
In addition to this, it has been identified that Porter's five forces framework with the help of
which organisation can easily measure all those factors which influences the working culture of
the company. Further more, it has also been concluded that management team need to adopt
differentiation strategy so that they can effectively get success at the global market place.

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