Microsoft Corporation Capstone Project

Microsoft Corporation

Introduction

A 19-year-old, who is a Harvard dropout, had a vision that each desktop should have a personal computer and founded the Microsoft Corporation Company in 1975. This company has been listed in the Fortune 100 and thus, Microsoft currently is dominating in multiple industries. Microsoft Corporation has combined a striking portfolio of alliances, customers, global operations, critics, and resources. Microsoft is a market-driven and agile company. The company offers such Microsoft services and products like software applications and operating systems. Microsoft corporation is an international company, which sales its products and services through both manufacturers of the original equipment and retailers (Garraffo, 2001). Most of its revenue is coming from manufacturers of the original equipment.

The Impact of the Company’s Mission, Vision, And Primary Stakeholders on Its Overall Success

The company designed its mission and vision carefully together with the tenets and values, which shape its strategy and thus, boost the entire success of the company. The vision statement of the company enabled the company to develop future plans, thus determining its success. The vision serves as the guiding image of success that acts as the company`s blueprint, thus a base to develop the company`s strategy. The existence of Microsoft Corporation is determined by its mission and vision statements, which are constantly shaped in order to beat the competitors in terms of their targeted goals. The company`s success is achieved through maximization of employees` potential. The mission statement concerning global diversity involves creation of favorable environment that boosts the company`s capitalization on the diversity of its people. This will also help the company succeed; moreover, the company will be able to find ideas that will meet the requirements of its customers worldwide. The company`s culture plays an important part in driving the growth of the company, for instance, employee ethics have promoted the company`s success and enabled it to retain good talents to promote innovation when developing services and products. The company`s employees with good ethics promote the need to serve increasing global partner and customer base. A good relationship between the company`s staff, suppliers, customers, and managers makes it easier to solve problems, which can arise within the company.

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How the Five Forces of Competition Influenced the Company

Microsoft adopted Porter’s five forces and it influenced it in several ways. For example, the threat of new entrants had low influence on the company`s success because new technologies are constantly emerging, and the competing companies embrace these new technologies to achieve success. However, Microsoft managed to destroy the net market share along with other things in order to bundle its browsers with operating systems facing challenges. The company was able to control the distribution of channels and gain a significant market share. There was a low threat of new entrants because of low requirement of capital in order to enter the industry. The cost of developing and designing enterprise software is high since a lot of time and skills are required. Those companies with strong brand names tried to use loyalty of strong customers. This did not influence much the company`s success in that those companies within the industry had achieved economies of scale, thus reduced the possible profit, which the new entrants could attain. Loyalty in the industry is due to the compatibility issues caused by high switching costs related to switching vendors, thus the company`s success wasn’t impacted.

The bargaining power of suppliers had low impact on the company`s success because there was a minimal bargaining power within the industry. There were only a few suppliers with who the company had to negotiate. However, since the company deals with software and intellectual products the number of required suppliers is minimized as compared to other companies which produce tangible goods. The company had to deal with those suppliers who could record the media. The cost of transforming physical software to the media was low and thus the media manufacturers and producers had little impact on the company.

Rivalry in the industry had high impact on the company`s success because it had several factors affecting it, such as diversity of competitors, price differentiation, concentration of competitors and product differentiation. Concentration of competitors in the industry is high, comprising of large multinational companies and small local vendors of software. In this industry, there are no clear edges and most large companies perform the same activities such as manufacturing of operating systems, consulting, and production of software and hardware among others. The industry is made up of diverse companies, where many of them have specific skills, which enabled them to concentrate on different segments of the industry and some have general skills applied across the industry.

The threat of substitutes had low effect on the company`s success because there were few products competing within those produced by Microsoft. The way different companies used to share and maintain information was old like printed reports. Thus, there was a need to create a modern way in which companies can keep and share data. This enabled Microsoft to continuously build multiple disparate systems and other companies could not manage to provide a business solution like that provided by Microsoft. The bargaining power of customers had low impact on the company`s success because there was a minimal bargaining power within the industry due to different reasons. Concentration of customers is growing fast; hence, there are many non-unified and diverse groups due to different needs and backgrounds. Most of the companies within the industry consider software necessary for their business, hence willing to meet increased rates due to changes in the industry. High and frequently changing costs among the suppliers are due to costs related to an infrastructure that serves several types of the system.

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The SWOT Analysis of the Microsoft Company

One of the strengths of the Microsoft Corporation is consistent operating performance. The division of both clients and business drives the revenue growth of this company and improves its efficiency. However, the company`s operating profit decreased due to expenses related to cost of revenue associated with windows vista. Operating margin of the Microsoft Corporation was above the average (8.2%). The company recorded strong returns for more than five years. The company returns on investment, equity and assets within five years (up to June 2007) were 14.3%, 18.5%, and 20.2% respectively. The company had higher returns than its competitors, for example, International Business Machines and Hewlett Packard Company. The ability of the management to deploy assets in profitable avenues is achieved through enhanced investor confidence.

Strong brand image of the company has been developed since 1975. Microsoft is the third largest brand after General Electric (GE) and Google, with a brand value of $54,900 billion in 2007. Strong brand image has enabled the company to create a large percentage of intangible earnings. The company has been a preferred operating system over its competitor due to strong brand image. Moreover, strong brand image promotes trust in the company’s services and products thus boosting demand for its products. Extensive product portfolio has enabled the company to develop, license, support and manufacture different software products and services for many computing devices. The company`s products consist of five segments, which include online services, server and tools, client, device, and entertainment. Strong development and research investment of the company enabled it to focus on research and development (R&D) to introduce more innovative products. The company`s investment in research and development would pay off in the form of new technologies and products developed to meet the ever changing customer requirements.

One of the weaknesses of the company is geographic concentration of operations. The company conducts its operation across the world and has offices in 103 countries. The reliance on the US market enables the company to adverse economic and social-political changes within the region (Patricia Seybold Group, 2001). The company faces a problem of decline in search engine market share. Thus, it may hinder the future strategy of the company to generate revenue through online services.

The company enjoys opportunities through launching new products such as windows vista, which is a substantial advancement in Windows with innovations in the developer platform. Windows Vista is expected to introduce improvement in user experience, reliability, and security, which will enable customers to develop applications that will bring clarify to users` complex world of information. Microsoft Corporation expects that the new system will have more improvements, including a user-friendly interface, more comprehensive search capabilities, and better security features. The company faces an intense competition in various markets. The company also faces challenges related to commercial software products, including variants of UNIX.

The Strategy Developed for the Company to Capitalize On Its Strengths and Opportunities, and Minimize Its Weaknesses and Threats

The company wants to capitalize its strengths and opportunities, and minimize its weaknesses and threats including acquisition strategy. The company continues with its aggressive acquisition strategy in order to increase its future growth through the acquisition of more companies. The companies acquired by the Microsoft Corporation include Medstory Inc (acquired in 2007), a provider of intelligent web search technology that deals with health information. This enabled Microsoft to commit itself to the development of various health care solutions. Further, the company acquired Tellme Networks, a provider of voice services for daily life (Porter’s generic strategies, 2003). Through acquisitions, the company has managed to introduce innovative services for international customers. Screen Tonic was acquired in 2007 by Microsoft Corporation to facilitate the company`s expansion of digital advertising solutions offered with the mobile expertise. Microsoft`s development of internet based advertising platform was due to acquisition of aQunative. Moreover, the company  acquired AdECN Inc., an advertising exchange platform company, to provide real-time for selling and buying display advertisements. Hence, the company acquisitions in 2007 are expected to boost advertising and online marketing solutions and Microsoft’s search engine, which would have a positive impact on the company`s future growth.

Various Levels and Types of Strategies the Firm May Use to Maximize Its Competitiveness and Profitability

Microsoft Corporation can minimize losses or maximize profits based on its strength. However, low price and product differentiation may lead to critical control of cost; in order to maintain market share and maximize profits the company should use minimization of loss strategy. The company should not consider the assets it owns, losses it incurred or cash it held, because this will weaken its position of assets and reduce the amount of cash it holds.

The company`s ability to differentiate itself by providing top-quality services and products has enabled it to command higher prices in the market. However, the   price alone does not guarantee a profit; this knowledge has provided the company with an opportunity to maximize profit. Though all the companies within the same industry are equal, prices they charge for their services and products are different based on their quality (Mahoney, & Paul, 2001). The differentiation strategy works only if  companies within the same industry have a target market, in which customers are less price-sensitive, but more conscious of the product quality than customers of other markets.

The low-price strategy is only applied in markets with non-homogeneous customers. The company can maximize its competitiveness through catering to those customers who look for products and services price with basic functions. For this strategy to be successful, the company should be able to expand distribution and have mass production.

A Communications Plan the Company Can Use To Make Its Strategies Known To All Stakeholders

The company should design a way in which all the shareholders can be easily reached and updated on the company`s progress. The company`s shareholders can be reached through mail or e-mail. Both the addressees and the topic of communication should be addressed (Munro, 2000). The company should communicate with its shareholders via a formally written letter, and it should make sure that it is made in time and that it reaches all the addressees. The company can use written letters to explain the company`s strategies to its stakeholders or invite them to a meeting or to inform them about the company`s future and current strategies. The company`s website can be one of communicating plans used to facilitate communication of all the company`s strategies to all the stakeholders.

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Two Corporate Governance Mechanisms Used By the Corporation and Their Effectiveness in Controlling Managerial Actions

The company`s Board of Directors periodically reviews evolving legal, regulatory and best practice developments in order to identify those serving the interests of the company`s shareholders. In addition, the company has adopted such policies as stock ownership and holding requirements to enable the Company`s executives and all the executive officers to maintain a minimum equity stake in the company to promote a long-term enterprise management perspective and to align executive and shareholder interest. The company also amended its bylaws in order to incorporate majority standard of votes for the election of directors.

The Effectiveness of Leadership within the Corporation

The company`s leaders are effective in that honest communication has been developed within the company. Good response to the needs of all the company`s employees was achieved through the company`s effective leadership. The Microsoft`s leaders have developed good communication within the company through good communication skills at all levels. Through effective leadership, the company operates efficiently and effectively thus, has a good reputation.

The Efforts This Corporation Made to Be Corporate Citizen and the Impact of These Efforts on the Company’s Bottom Line

The company provides its service to both local and international customers; its products are manufactured and sold through retailers in different countries. Good leadership of this company has attracted citizens, thus promoting good public relations. The quality of its products promotes customer trust and develops understanding. This has a positive effect the company`s growth leading to higher sales and revenue as compared to the company`s competitors.

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References

Garraffo, F. (2001). Types of competition to manage emerging technologies. University of Catania. Department of Economics and Business Management.

Mahoney, P. G. (2001). The common law and economic growth: Hayek might be right. Journal of Legal Studies, 30(2), 503-25.

Munro, N. (2000). A window in Microsoft strategy. National Journal, 32(43), 3336.

Patricia Seybold Group, (2001). Understanding Microsoft’s strategy: .NET, XP and beyond.

Porter’s generic strategies. (2003). Quick MBA. Retrieved on Sept 7th, 2003 from

http://www.quickmba.com/strategy/generic.shtml

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