Introduction
Corporate strategy entails the structural makeup of a corporation with the addition of the entire aspects of the business componenents the most four common concepts that are utilized by companies in the United States are management of portfolio, restructuring, activity sharing and transfer of skills. The mission of Microsoft is to provide the capability for the enablement of business in the entire world for the realization of full potential. It has long worked hard to attain this mission through the formulation of technology aimed at the transformation of the methods of work used by people as well as how they communicate. The company develops and markets software in addition to services and hardware based solutions with the delivery of new opportunities and increased convenience (Emma, 400).
This in addition to enhancement of the value in the lives of people through its global business in over 100 offices worldwide; Furthermore, the company generates revenue through the development, manufacture and license with support of a broad range of software products and services of various types of computing devices. The software products comprise of operating systems for personal computers, servers as well intelligent based devices in addition to distributed computing environments for server applications. Other software products include productivity for information worker applications, solutions for business applications and increased performance of computing applications with tools for software development as well as video gaming. In addition the company also provides consultation and support for its products in the form of services with training and certification of integrators of computers systems as well as developers. The company is also engaged in the design and hardware sell with the inclusion of the Xbox 360 consoles for gaming and entertainment in addition to related accessories (McNiel, 8).
The structure includes the Zune device for digital music and entertainment with associated accessories with the inclusion of the Microsoft Personal computer known as PC as hardware based product. This in addition to the sale of products and services that are individual with the offer of product suites and services as those presented above. The company also earns revenue through the payment by customers of a license fee that continues to be a crucial aspect within the business operations even as the company continues development and delivery of cloud computing devices. The "software plus services" are a reflection of Microsoft's vision of its notion of the most powerful aspect of the end user being able to run software that is sophisticated from their computing devices while interacting with resources that are cloud based.
The company also undertakes research and development of advanced technologies for software products of the future with the belief of breakthrough delivery in innovative and high value solutions using a software platform that is integrated (Martina, 30). This being the main aspect in meeting the needs of the customer for future growth as the company continually believes to lay a long term foundation for growth through delivery through products and services that are new. This in addition to creation of new partner opportunities with the improvement of satisfaction of the customer as well as internal procedures improvement; The emphasis is to build upon this foundation through continued innovation in its platforms of integrated software through the delivery of valued propositions that are compelling to its customers. This being a response to the effective needs of the customer and partner with continued focus on crucial need of excellence of its products, efficacy of business as well as accountability.
Internal analysis of strengths and weaknesses with inclusion of a relevant financial analysis
The company's strength lays in its operation of five segments which comprise of the divisions of Windows and Windows Live, Server and Resources, Online services, business division and entertainment as devices. The segments avail the provision of management with a financial perspective that is vital to the major businesses with the segments enabling strategy alignment as well as objectives across development, sales and marketing services (McNiel, 8). This is in addition to the provision of a framework that is timed and rational in allocation of the factors mentioned above in their respective business units. For a closer look we can see that the changes in the hardware market with the drive being shifts within the emerging and developing market has led to reduced costs of personal computing devices that allows for more access to Microsoft products. Furthermore, by attaching Windows within personal computers there has been an increase in the inventory levels of OEM channels which is an account of nearly 80 percent of the division’s revenue.
Another internal strength of the company is its server and resources development with marketing of server software, development tools as well as service solutions with a design based on creating professionals in information technology with increased system productivity and efficiency. This has allowed for nearly 50 percent in revenue from sales being identified in annual volume license agreements with nearly 30 percent of purchases being through volume transaction license programs in addition to retailing of packaged license products.
Another identified internal strength is the online services divisions comprises of offers of online information for instance the Bing search engine as a platform for advertising with publisher and advertised offers. This has enabled the company to earn revenue through online advertisement and publishing tools which has allowed the company with time to undertake effective improvement (Martina, 30). This is in addition to increased search value through offers of an increased scale in search queries and expansion into searches that are increasingly competitive and marketplace advertisements.
The internal weakness of Microsoft corporation is the presentation of its cloud based computing as well as its execution presents risks that are competitive with the company's transition an environment attributed by cloud based services the utilize client smart devices. The pace of development and deployment of these could based services has been undertaken at a slow pace by the company that has had a negative impact on the influence of customers in accessing cloud based services. Furthermore, limited resources in significance have been devoted to the development of cloud based products that are competitive in addition to service strategies with a weak competitive foundation.
There has also been a challenge to the business models that can reduce revenues and margins of operation as the company continually faces challenges in alternative methods of development and software licensing (Emma, 400). The weakness lays in the burden of costs that are met by the software developers in terms of costs in conversion of original ideas to software based products using research investment and development that has offset revenue costs being received from product distribution.
Microsoft's actual revenue growth is characterized by inconsistency such that is some years there is an increase in comparison to what is unadjusted known as nominal growth while in other years the opposite is true (Martina, 30). The company experiences forward and backward shifts between hard work for lower and lower work for more in addition to growth that is mediocre with a two year border for actual revenue growth in a 14 percent access.
Figure 1:1 Microsoft Corporation Real revenue growth over a five year period
Regarding sustainable revenue growth the unadjusted and actual growth of revenue is entirely sustainable and can be as high as 19 percent annually that is good for the company as it can search for new products and services which in turn will increase the revenues on an annual basis. On the other hand stagnation will lead to destruction with the best approach being forward movement.
Figure 1:2 Microsoft Corporation sustainable revenue growth over a five year period
On matters of pricing the policy of pricing is one of the vital downfalls of the company as the gross profit margin has reduced back and forth over the years. It finally plummeted in 2011 to the lowest point in a period of five years although for the most part Microsoft was able to achieve growth of the lined gross profit. This was somewhat higher in growth of revenue although there was a decline in the gross profit margin to nearly a half point on an annual basis.
Figure 1:3 Microsoft Corporation pricing policy over a five year period
External analysis of firm opportunities threats
The main external threat to Microsoft Corporation is in the stiff competition it faces from varied commercial software producers that availed their products through established companies such as Apple and Google that provide alternative operating systems. This has reduced the demand among consumers for personal computers with a subsequent shift in volume of users and usage to mobile based devices that are increasing globally in relative to the personal computer. Regarding online service provision Microsoft faces competition from providers such as Google and Yahoo among others with their varied platforms (Emma, 400).
The company also faces continued expansion with competition that is intense in varied in all markets for all its products and services with competition ranging from big fortune 100 companies to specialized small single product and service businesses as well as projects based on the open source community. This competition has produced outcomes of reduced volumes of sales , reduction in prices as well as increased costs in operations for instance in marketing incentives for sales. The outcome has been reduced revenue, gross margins and income for operations.
This has been in addition to the company's failure of adequate protection of intellectual rights of property as it combats copying that is not licensed and the use of software and intellectual property with meeting of difficulties as piracy has had an adverse impact on its revenues (McNiel, 8). As such there has been a gradual decrease in the personal market that is underlying with a similar absence of patents that are harmonized that creates increased difficulties in ensuring consistency in respect of patent rights.
Industry analysis using Porter’s Five Forces
Concerning Microsoft's threat of entry there has been a relative reduction for all its divisions with its business of personal computers having a considerable hold of the major share of operating systems used by its consumers. The current major competitors in the form of Apple's Mac OS X and Linux projects pose not major threat as it’s a market that is based on tech niche techniques.
Furthermore, the threat of rivalry for Microsoft has been relatively lower as from a view point of its operating systems within the industry there are few competitors that produce operating systems. As such Microsoft feels no need for constant survey of a considerable number of companies to examine their price or sales trends which creates static prices (McNiel, 8).
Within the operating system industry the threat for substitution is low even with consideration of the advancements within the industry as such as those made by Mac OS X at which point if user decides to make a change to Mac OS X they are required to purchase an Apple machine which is highly priced that deters some people as the cost cannot be justified.
With the threat of powerful suppliers it remains relatively low as all the required resources that are need for the supply to Microsoft are availed from several firms in which case the threat could only occur if a supplier held an item that was required by Microsoft and yet it could be applied in a broad variety of electronics. As such with the scope and recognition of the brand by external suppliers several of these components are availed by considerable firms (Emma, 400).
Concerning the power of buyers it is known that Microsoft is involved in nearly all main personal computer company with buyers in this case with the inclusion of the copy of the recent version of Windows within the operation of costs in pre-construction of a personal computer. The cost of having Windows does not comprise of the costs of personal computer manufacture which does not hold considerable weight for the company leading to a reduced threat from buyers.
References
Emma, G. Juan, S.”A Meta-Analysis of Corporate Governance and Earnings Management”.2009:594-610.Print
McNiel, H.”Data monitoring of Microsoft Corporation”. Data Monitor.2011: 1-10.Print
Martina, K. Andrew, G.”Firms and sustainability in mapped intellectual origins and structure of the corporate sustainable field.” Global Environmental Change. 2012:12-35.Print
