Microsoft case study report

Microsoft case study report

Victoria University

October 25th, 2022

Maria Emilia Torre Hernandez

Ana Paula De los Santos Pizzuto

Ignacio Gonzalez Salazar

Yash Dabas

Bushra Islam

Index

Executive summary3-4

Introduction of the case...4

Current and Revised Vision and Mission..4-6

Internal Assessment....6

External Assessment7-9

Analysis of the case using matching relevant tools..10-16

Strategic Solutions generated from these tools16-17

Concise recommendations...17-18

Conclusion19

References..20-21

Executive summary

Microsoft was founded in 1947 by Paul Allen & Bill Gates and it is famous for developing cutting edge softwares and other technological products. Microsoft's current CEO is Satya Nadella.

Microsofts most famous product is Windows operative system which has a 76% (in June of 2022) of market share in the PC market as shown in the image below

Microsoft has a lot of presence in the gaming industry; their console Xbox divides the market with Sonys Playstation. Xbox is second as Play Station remains the most popular gaming console; the current market share is shown in the image below.

Microsoft biggest competitive advantage over the competition is the global presence, they have research and development centers in China and India. Data Centers in Ireland, Netherlands, and Singapore. Offices in major countries. And they have a global distribution channel for sales and distribution of their products and services through OEMs, direct channels, distributors, and resellers. This allows clients to access Microsofts products quickly and effectively.

Introduction of the case

Microsoft was founded on 4 April 1975 in Albuquerque, New Mexico, United states. Microsoft corporation is one the worlds major developers of personal computer software systems and applications. Microsoft also sells its various books, hybrid tablets, multimedia titles and sells electronic game systems. Microsoft operates more than 600 headquarters in more than 100 countries across the globe. The main source for generating revenue for Microsoft is by innovating licensing and supporting a vast range of software products and services. They also offer some cloud-based solutions to its customers. Cloud based solutions such as Microsoft Office 365. Moreover, this company also offers some very great range of products such as Xbox gaming and entertainment consoles. The main motive of this report is to demonstrate and analyze the external and internal environment through the value chain analysis to discover the risk associated with opportunities. Matching the organization's internal strengths to external opportunities, we are creating the core competencies in order to meet the needs for Microsoft customers. We aim to convert the internal weaknesses into strengths and the external threats into opportunities. Furthermore, we used Porters five forces and PESTEL tools to research its external forces. In this report recommendations and conclusion would be completely based on findings of the external and internal environment analyses. SWOT analysis and matrix will be based on the result from external and internal environments.

Current and Revised Vision and Mission

Microsofts current vision statements is

To help people and businesses throughout the world realize their full potential.

After revising the vision statement we consider that the current vision statements lack in some fundamental points which are

This vision statement is not very clear because it does not say how they will help people and businesses achieve more. It is not futuristic since it does not answer the fundamental question for a vision which is what do we want to become?. We came to the conclusion that it is a concise vision statement because it is a short sentence, however in this short sentence we do not get how Microsoft will achieve their goal. It is not a unique vision statement since they do not say how they will help in a different way than other firms. We thought that the first part is not very inspiring but the last part where it says full potential is very inspiring.

Taking that into consideration we concluded that the following vision statement had to be improved in many areas so this is our new vision statement

To become the greatest software in the world to empower people and businesses realize their full potential

We decided to make our vision statement like this because we believe that it is a clear vision that tells us how Microsoft wants to empower people and businesses. We also made it futuristic because it is very important for a vision statement to answer What do we want to become? it is clear that they want to be the greatest software in the world, this means the most innovative and easy to use software. It is unique because by telling us that they want to become the greatest software in the world makes them different from the rest of their competitors. It is very inspiring because it makes you believe that they want to help and empower people through their software. Also by using the word empower this inspires people and companies to choose microsoft because it makes them realize that microsoft wants what is best for them.

Microsofts current mission statements is

To empower every person and every organization on the planet to achieve more.

After revising the mission statement we consider that in a way it was a good mission but it had to be modified due to the lack of some important points which are

Microsofts mission statement is broad in scope and avoids the use of numerical components. It is an inspiring mission statement because they want to exploit the full potential of the people and organizations by empowering them. This makes people realize that Microsoft wants what is best for them. However the current mission statement does not mention what microsoft offers, it does not answer the important question what is our business?. We could see that this mission reveals social responsibility because it shows concern for human development. Out of the 9 the current statement lacks 6: products / services, markets, technology, concern for survival, self - concept, and concern for employees. This mission statement is enduring and reconciliatory.

Taking that into consideration we concluded that the following mission statement had to be improved in some areas and this is our new mission statement

To empower every person and organization on the world to achieve more by providing our innovative software

The mission statement is broad in scope and avoids the use of numerical components, but we decided to modify our mission statement so it could be clear what Microsoft offers to the people and why they offer that. This mission statement shows us clearly that the main firm's main product is their software. This mission statement is great because it combines what Microsoft offers and why they want to offer that. This makes Microsoft look successful by providing their innovative software and how they care about every person and organization by telling us that they want them to achieve their full potential. By using the word empower we see that Microsoft wants for people and organizations to exploit their skills by the easy use of Microsoft products.

Internal Assessment

Value chain

External Assessment

Pestel analysis

Bargaining power of buyers: Modern consumers have more leverage in negotiations due to technological advancements. Technology advancement is one factor that has contributed to these shifts. Customers in the modern day know what they want and need. In addition, they have more options to choose from, and the expenses associated with making a change are typically minimal, as a result of increased competition. Customers now have more leverage in negotiations as a result of these developments. Consumers' negotiating power is tempered by a number of factors, including the reputation and equity of the brand and the quality of the goods and services offered.

Bargaining power of suppliers: Overall, Microsoft's suppliers have somewhat low bargaining leverage due to the company's massive scale and deep pockets. Microsoft relies on an extensive network of global suppliers and subcontractors. It has handled this massive chain really well. As a whole, these are significantly smaller companies and brands than Microsoft. Even if there aren't many of them, the list does include a few recognisable household names that may potentially be used as bargaining chips. There are several elements, including suppliers' reputations, financial stability, and global footprints, combined to make their overall bargaining power moderate.

Threat of substitute: Microsoft faces little competition. While there are many competitors in the cloud computing space. Furthermore, Windows OS and Microsoft Office are not in any way threatened by alternatives. The software and operating system it produces also contribute significantly to the company's bottom line. Reducing the brand's emotional impact include the pricing plan, the brand's global presence, and the quality of the items and services it provides (Brujil & Gerard, 2018). Therefore, competition from similar products and brands poses little risk to Microsoft as a whole.

Threat of new entrants: Due to the high barrier to entry into the business, only a truly revolutionary product or a massive financial commitment can allow a new player to break into the industry. Microsoft is a household name throughout the world, and to compete with them, you need to have both the technological prowess of a company like Google or Apple plus a product or service of equal value. Existing brands invest extensively in R&D for innovation and market share and domain protection, which discourages new entrants from entering the market. The expense of investing in highly trained workers is likewise high in the modern era.

Competition level: The level of competition in the tech sector has reached new heights. Microsoft's rivals, from Google and Amazon to Apple and the rest, are all very serious about maintaining their market share and client base, and they all spend a lot of money on R&D and advertising to reach new consumers and develop their businesses (Moure, 2021). Extremely high levels of rivalry can be found across the board in this market.

SWOT Matrix

Space Matrix-653886714138

Given Microsofts financial strength the company can make aggressive strategies in order to keep growth and enter new markets as shown in the space matrix.

QSPM Matrix (Microsoft Company)

Top-level management can benefit from the Quantitative Strategic Planning Matrix (QSPM). The approach is also utilized to develop the promotional plan. To determine which of several possible strategies is the most desirable; analysts often employ quantitative strategic planning models (QSPMs) (Zulkarnain, Wahyuningtias & Putranto, 2018). The procedure reveals to the user which of the chosen solutions is the most practical, and places it at the top of the list. Microsoft is famous not just as the creator of Windows OS but also as a major player in the cloud computing market. However, rivalry has increased in the technological sector in recent years. Microsoft faces competition from a wide range of software companies and, in particular, cloud service providers. In particular, Microsoft has benefited from the expansion of the cloud computing market (Singh & Awasthi, 2020). The cloud service providers have benefited from the rising demand for their offerings. The company is expanding its portfolio of cloud-based services and experiencing revenue growth. Microsoft's Intelligent Cloud division provides cutting-edge cloud computing through its public, private, and hybrid server solutions and services.

Strengths

Inventory turnover increase from 5.8 to 6.7 0.05

Average customer purchase increased from $97 to $128 0.07 2 0.14 4 0.28

Employee morale is excellent 0.1

In-store promotions resulted in 20% increase in sales 0.05

Newspaper advertising expenditures increased 10% 0.02

Revenues from service segment of store up 16% 0.15 4 0.6 3 0.45

In-store technical support personnel 0.05

Stores debt-to-assets ratio declined to 34% 0.03 4 0.12 2 0.06

Revenues per employee up 19% 0.02

Weakness

Revenues from software segment of store down 12% 0.1 4 0.08

Location of store negatively impacted 0.15 4 0.6 4 0.08

Revenues from businesses down 8% 0.02 1 0.02 4 0.16

Supplier on-time-delivery increased to 2.4 days 0.02 1 0.02

Often times customers have to check out 0.04 3 0.12

0.05 2 0.1 4 0.2

Total 1 3.32 3.16

Based on the above matrix an alternative strategy that would be better for the chosen company is Porters five forces. The Five Forces, sometimes known as Porter's Five Forces, are extra-industry influences on business success. The Five Forces include the following: suppliers, buyers, replacement products, new competitors, and existing competitors. It provides a structure for thinking about the competitive dynamics at play in a given market.

Strategic Solutions generated from these tools

Using the Swot Matrix, BCG Matrix and the Space Matrix. We gathered the insights in order to create strategies for the company to implement.

1.- Implementing new and improved softwares for home office and have them pre-installed in Original Manufacturer's equipment to gain advantage in the new market of home Office (S1, O6)

2.- Use the global distribution channel to provide HoloLens to clients quickly and position this brand as the leader on VR equipment for the years to come, and once positioned in the VR market provide VR products such as games, home office programs, educational programs, etc. (S2, O3)

3.- Microsoft has the economic power to buy companies and by doing so the company diversifies and has more know-how to develop new products and services that can have correlation and compatibility with other Microsoft products. (S5, O5)

4.- Provide constant updates for windows, new products and make high investments on new technology for constant improvement since Microsoft is one of the most popular brands launching new products is easier because Microsoft can reach the clients with its own products. Additionally launching new products is a great branding strategy because clients will identify Microsoft as an innovative company and not as the same old company. (S4, T1)

5.- Constantly address legal issues to avoid lawsuits and improve the prevention for lawsuits by creating a better legal branch for the company. Microsoft has the resources for doing this and in the long term the savings from lawsuits are much greater than the costs of lawsuits. (S5, T4)

6.- Microsoft should attempt to enter strongly into the mobile and PC hardware industry so they can implement more innovative ideas offered only in Microsofts products. The risk reward ratio has a huge upside for Microsoft. (W2, O2)

7.- Improving cyber security would have a direct impact on the cloud-based industry because giving data protection security is a huge differentiator in that market. If clients can associate Windows with data security and low hacking probability, they could opt to choose Microsoft above all other competitors. (W3, O1)

8.- Microsoft needs to plan before acting when buying other business and gather a stronger team to evaluate companies. Buying developing competition is one strategy to mitigate threats and turn them into opportunities (W1, T3)

9.- Improving the internet browser by making it faster and user friendly should become top priority for Microsoft as there exists a lot of criticism of Microsoft in that area and it affects the whole companys reputation. (W6, T1)

Recommendations

1.- VR:

To position Microsoft as one of the VR equipment leaders they must create a VR headset for their gaming brand Xbox, they have the necessary money and technology. This strategy is very important so Microsoft does not fall behind its competitors because one of its main competitors Play station already has VR on their games and has already announced that they will soon launch a new version of their VR headsets.

We concluded that Microsoft can also create VR headsets for its platform Teams since now in days lots of people are working remotely and many companies decided to leave their employees working from home and might never return to their office, by implementing the VR headset on teams this will give people the feeling of being on an office instead of their home. We concluded that this strategy is very innovative and will give Teams a competitive advantage since none of their competitors have access to VR.

Teams is also used for schools and universities, by implementing VR this will give students and teachers an opportunity to feel like they are in a classroom.

2.- Diversification

Microsoft should buy tech startups to add them to Microsoft such as Holo Light which is a immersive streaming platform that uses augmented reality this is a way for Microsoft to get involved into the next big technological leap which is the metaverse and buying existing companies that already have the know how on the technology would be a wise move rather than developing everything from scratch. Microsoft has the advantage of having a huge economical muscle to do this type of strategy. Microsoft should focus on making profound due diligence work before acquiring companies because reckless decisions would only end in cash waste. Strategic planning is fundamental because Microsoft should focus on how they are going to connect their products between each other using a virtual reality platform compatibility is and will keep being a huge differentiator and Microsoft has alot of room for improvement regarding this.

3.- Cybersecurity

Cyber Security is the biggest of threats for technological companies and Microsoft is not an exception. Microsoft should implement constant internal audits to discover the weak points of their network before hackers do so. Constantly improving the networks infrastructure is fundamental This means operating secure routers and servers, up-to-date hardware and software, and two-factor authentication on all applications. MIcrosoft employees should have a remote VPN in case they are not provided with one yet and employees should be capacitated to recognize scams, unsafe websites, malicious links and other cyber security threats.

Microsoft needs to have a reputation of having a top cyber security infrastructure to lure clients into using the cloud services they offer.

The strategic recommendations for Microsoft are, as Microsoft corporation is one of very strong and efficient players in the computer hardware and software industry and this firm has a very strong and positive brand image. The first and foremost recommendation for Microsoft is that and it would greatly help this brand, if it makes its products and prices a bit affordable for their customers. So, everyone around the globe can afford and use Microsofts intellectual products for their studies, work or different uses. As our research discovered, not everyone can afford Microsoft products around the globe as it is very hard to buy or afford them in some parts of the world (developing and under developing countries). This strategic planning would greatly help this firm to achieve financial annual revenue and its business long term goals to make this firm broader for its customers.

Furthermore, the second most essential business recommendation for Microsoft that can highly impact this company in a highly positive way. Highly great brands like Microsoft should open their new branches in under-developed, developing countries and the very remote parts of the world. So, those parts of the world can develop with the help and support of world-renowned firms like Microsoft. This would have numerous positive outcomes such as increasing its business and will generate more revenue. Also, by setting up its branches in remote parts of the world. It will create a massive number of opportunities for the local population. Such as it will create many job opportunities and help the locals to earn their livelihood. In addition to this, it also gives locals a chance to get connected with world famous brands like microsoft.

Conclusion

To conclude, Microsoft is one the most famous brands and market leader in software and computing solutions due to its product differentiation around the globe. It runs its business in many different countries of the world. However, Microsoft still faces problems in its external and internal environment. In order to launch a new product, Microsoft needs to analyze the risk related to its expansion of international business strategies before launching its new product in the international market. For Microsoft to generate its profitable revenue it needs to start launching its business in remote parts of the world so that it can greatly help the business and population to thrive. In addition to this, making it profitable in pricing so everyone can afford it would greatly help this business to spread worldwide.

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