The contemporary business world is characterized by a high level of competition. Various individuals and groups have engaged in conducting business. This builds up the level of competition as businesses engage in the production of relatively the same goods and services.
This therefore calls for application of strategic measures to keep pace with the competitive market situation. For the sake of this assignment, I will give a critical analysis of Microsoft Company. Much emphasis will be given to aspects such as the company’s overview and the industry of its operation, the company’s major business lines and the company’s competitive strategy and market position. Finally, the company’s use of Information Technology for competitive advantage will be highlighted.
Description of the Company and the Industry in Which It Competes
Microsoft is a well known company. It was founded in 1975 by Bill Gates. The company came into being following combined ideas from Bill Gates and Paul Allen, individuals who had interest in computers and programming in particular. The company started as a small organization whose operations were only local. It was later that Bill Gates developed the idea of programming languages and tried some applications that became successful although initially faced with some challenges (Kumar, 2010).
It was in 1976 that the Microsoft Company was registered in Mexico City. The company picked so well and this enhanced its growth and development. It was not after long that the company was in a position to extend its operations, selling its products locally as well as internationally. The company grew day by day and developed more advanced and desirable programming languages such as FORTRAIN and COBOL (Kumar, 2010).
The growth of the company was accelerated by an increase of Personal Computers’ manufacturers in the market. This increased the demand for Microsoft products and hence the need for Microsoft Company to enhance its production strategies to meet the demand. It for instance started an office in Japan in 1978.
From this time there was emergence of new developments that put the company at a better position in the market. A major development was that of MS DOS, which paved way to other advanced programs like the windows. It was in the year 1982 that Microsoft Corporation changed its name to Microsoft Inc (Kumar, 2010).
Microsoft operates in the software industry. It provides a lot of products and services that are aimed at satisfying the needs of customers in the software industry. In addition to this, the company has diversified its operations in other fields in an effort to enhance its competitive advantage.
This includes Microsoft games which have gained considerable application among people. The industry in which Microsoft operates is highly competitive mainly because of the effects of technological developments making it a necessity to be extremely alert to capture and implement everything new in order to satisfy the ever changing demand of the market. The industry is also characterized by new entries as people and groups wish to be as successful as Microsoft Company (Kumar, 2010).
To deal with the competition, Microsoft has engaged in production of products that are of high quality. The company also engages in strategies that are geared towards improving the quality of its products every now and then to satisfy the changing demands of the market. This has been made possible through research and development programs. This is an effort that has bore positive fruits for example attraction of a lot of customers and maintaining their loyalty.
Description of the Company’s Major Business Lines
Microsoft is involved in provision of a wide range of products and services to its customers. The major line of business is however in the provision of software related products and services. The company is involved in the provision of servers, office, hardware, windows live, software, Microsoft store and mobile devices among others. Apart from being involved in provision of products, Microsoft has also invested a lot in services provision.
Some of the services include, Skype, Microsoft advertising and Microsoft Online services among others (Microsoft, 2011). The provision of these products and services has been the main source of profit to the company. This in turn helps in placing the company in a good position in the market as it is an indication of good performance, an aspect that is desired by all organizations as well as customers.
Generally, Microsoft have performed relatively well over the past years. This has led other companies to desire to utilize the company’s production strategies in an effort to excel in their business operations. This has greatly increased the level of competition in the industry thus necessitating that Microsoft engage in even more strategic measures.
A major threat is for example the Linux program which has gained a lot of favour from the customers. However, plans are underway to upgrade Microsoft’s products and enhance it services in order to maintain its competitiveness compared to other companies in the industry. This will be made possible through extensive research.
Description of the Company’s Competitive Strategy and Market Position
Different companies have different competitive strategies and thus they secure different market positions in the market. Microsoft is competitive enough in its industry of operation and it has secured a good position in the market. Various aspects have been attributed to it competitiveness. For instance, its management is a source of its competitive advantage.
There is quality leadership at Microsoft. Bill Gates is the company’s chairman while Steve Ballmer is the CEO. Election is usually fair. The share holders have the duty of electing the board of directors. The board of directors is then supposed to hire the presidents, vice-presidents, top executives, treasurer and the secretary. The workforce in Microsoft is very rich in terms of skills and knowledge, making the company to do well in its business operations both locally as well as internationally (Johnson, 2008).
Microsoft has a number of strengths, which have significantly contributed to the company’s success. To begin with, the company has a broad global brand. The company has the largest software developer which has a good reputation all over the world. It has a big customer base which is located all over the world. All the products in the Windows line are successful. This has significantly contributed to the company’s success.
The company’s strongly developed brand has put it in a position where it is able to cultivate customer loyalty all over the world. Its customers are enthusiastic and act as advocates who always use the company’s products. Therefore, the company has managed to retain its existing customers as well as attracting more. This has contributed to the tremendous growth of the company.
Microsoft’s competitive strategy also involves the location of its premises or offices. Microsoft has offices located in different parts around the world. These offices are strategically situated in strategic positions. This has ensured that the company’s products are trendily available to all the customers across the world. For instance, the company has offices in Korea, Europe, China and Germany. This has promoted the availability of its products throughout the world avoiding unnecessary shortages.
Diversification of the company’s operations has also enhanced its competitiveness. For instance, the company has recently ventured in other areas like game design and developing. This provides a wide range of opportunities to the company.
The company has managed to provide free emails and news to its customers. In addition, it has managed to develop software that is very useful in organizing business spreadsheets and data. This comes at a time when the demand for such software has risen with increased need for efficiency in the contemporary business world.
The company’s market position can be understood by looking at its financial status. As already noted, Microsoft has been in the market for a long time. Since its development, the company has recorded good performance. Earlier this year, the company closed its fiscal year in optimistic results.
For the fourth quarter which ended in June 2011, the company’s revenue rose to $ 17.37 billion (Betanews, 2011). This was an eight percent increase over the last one year. Meanwhile, the operating income hit a level of $ 6.17 billion. During this quarter, the company recorded a profit of $ 5.87 billion (Betanews, 2011).
The success has not been attributed to a single aspect but rather a combination of factors. The strengths and opportunities are a source of the company’s competitive advantage and good position in the market. For example a strong brand that is well known all over the world. This has enhanced the level of sales and hence increased productivity and profitability.
Despite the fact that Microsoft Company has got considerable strengths and opportunities, it is not without some weaknesses and threats. Some of the weaknesses and threats that face Microsoft include; compatibility issues involved in the company’s products. For instance, most of its products are not effectively compatible with many hardware and software produced by other companies.
This may discourage customers from buying the company’s products due to the inefficiencies involved. Another weakness of the company is that it has not managed to develop an effective client and service support in the internet. This denies its customers important services in case problems and bugs occur. This threatens the integrity that the company’s products are perceived by its customers.
Competitors are a threat to the Microsoft Company. Many companies have engaged in the business of provision of software and other computer related services. This therefore necessitates that Microsoft Company establish and implement strategic measures aimed at maintaining its competitiveness to avoid losing its customers to the competitors. All in all, it is evident that the company has tried to overcome the threats and weaknesses through the reinforcement of their strengths and opportunities.
Use of Information Technology for Competitive Advantage
Information technology is a resourceful tool in an organization. It has been used by various organizations to secure a large share in the competitive market.
Effective utilization and implementation of information technology enables an organization and the workforce to be reliable in provision of services to the consumers. This is because it enhances efficiency, effectiveness and economy, an aspect that is extremely crucial in the achievement of high levels of productivity and profitability.
Microsoft Company has recognized information technology as a strategic asset and thus, it incorporates it in almost all its practices and processes. One area in which information technology has found application in the company is the accounting section.
The company has recognized that information technology can help in solving the problems that were associated with the traditional method of accounting. Information technology has also been used as a strategic communication tool. This involves communication services such as IP telephony, Microsoft Live Communication Server (LCS) and other Microsoft’s telecommunications infrastructure.
Some of the information technology related issues in Microsoft include; Business Application Support, clients services, messaging services, enterprise services, global technology services, corporate security among others (Rasmus, 2008). Microsoft is one of the leading companies that have achieved success through utilization of information technology including advertisement and reaching out clients and suppliers.
From the above discussion, it is evident that Microsoft Company has performed well over the past and has managed to secure a competitive market position. Its success is attributed to a variety of factors for instance a strong management body, an established brand name, strong and experienced workforce and utilization of information technology among others. Although it has some weaknesses and it faces some threats, it has been able to overcome this and its financial performance has been excellent over the past.
Betanews. (2011). Microsoft. Retrieved 2 December 2011 from http://betanews.com/2011/07/21/microsoft-q4-2011-by-the-numbers-17-37b-revenue-5-87b-profit-69-cents-eps/
Johnson, N. (2008). Microsoft Adds Record Number of Employees, Rules Out Acquisitions. Retrieved 2 December 2011 from http://searchenginewatch.com/ article/2053972/ Microsoft-Adds-Record-Number-of-Employees-Rules-Out-Acquisitions
Kumar. (2010). An overview of Microsoft and History of Windows. Retrieved 2 December 2011 from http://www.brighthub.com/computing/windows-platform/articles/45030.aspx
Microsoft. (2011). Top Products. Retrieved 2 December 2011 from http://www.microsoft.com/en-us/home/default.aspx
Rasmus, W.D. (2008). Building Strategic Advantage through IT. Microsoft Business Insights