Strategic Management Assignment Sample | Microsoft's Strategic Issues and Tactical Alternatives

Strategic Analysis of Microsoft - Evaluating Performance, Strategy and Providing Recommendations

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Introduction Of Strategic Management Assignment 

1. Introduction

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The main aim behind conducting this study is to do a discussion on the topic of strategic issues of Microsoft Company which has confronted in the recent times. In addition to this the report is also aiming towards showing the tactical alternatives to augment the firm’s development in the coming times. This research will also initiate by evaluating the Microsoft as a company in addition to will also the financial performance in the past three years. The study will also make use of various theories like BCG Matrix, Porters 5 Forces, as well as the VRIO Analysis framework.

Here the BCG matrix will be deployed to argue the item attractiveness inside a sector for instance the Microsoft phone compared to an IPhone that will be calculated by making use of business sector development rate as well as business sector share which is presently held. Porter’s 5 forces is utilized to decide industry allure and competition and incorporating it

to Microsoft's tactical issues over the most recent 5 years is gainful as every part of the structure is utilized while framing a decent technique. At last, VRIO will create a conversation encompassing assets to acquire upper hand, helping Microsoft with the plan of specific circle back procedures.

The company has developed since past few years yet it is ranked 3rd inside the technology industry that depicts their position has fall down in the past times to rivalries like Apple and Google. Although Microsoft's achievement has been unsound inside the telephone market, share cost has expanded as of late due to the joining of another CEO as well as modifications inside administration. Overall the study will also discuss and evaluate the company’s tactical administration in the last three years as well as will that will provide recommendation to deal with issues also.

2. Strategic background

Bill Gates and the co-founder of Microsoft Paul Allen; successfully make possible their unexpected expansion of the company from tiny organizations to selling interpreters for the Altair 8800 PC at $22.9 billion company selling operating systems applications and tools. Within the 25 years history of Microsoft, the company ensured 90% of shares of the microcomputer software market. In 2000 Microsoft secure its place at the top five most valuable companies. And at that time the valuation of the company was a market capital of $258 billion(Porter, M.E., 2008).

2.1 Strategic Formulation

Microsoft's history says the changes of leadership. There are several reasons behind why the most influenced or at the top of high tech companies Microsoft belongs. The change of leadership from Steve Ballmer to Satya Nadella; makes subsequent changes in the strategic plans of Microsoft(Warner, J.P., 2019). Microsoft started preplanning for proprietary products to open source, and at the same time, the company makes a strong focus on making the crowd as a there initial important priority.

The company makes an important impact on the common people through using high technology sense and its supports across the world. Under the strategic plan of Microsoft, another important fact is the ecosystem which provides a large impact on the society and world by supporting a billion lives every single day(Securities, U.S., 2019). Microsoft always wants to create some new opportunities and always tries to provide high technology with some better opportunities for the customer and partners.

Satya Nadella makes the target of making Microsoft more cultural by organizations way and making Microsoft upgraded towards humanizing. So Microsoft always trying to expand their business globally to enrich organizational culture and provide hi-tech to the world’s people.

2.2 Implemented Strategy 2019-2021

Microsoft is planning to double their GDP from 5% to 10% within the fiscal year 2030. But the important fact is what Microsoft thinks about their remaining 90% of GDP. The company also established an upgraded version of digital transformations over the next 10 years. Also, the company projected to make an innovative ecosystem of investor’s, partner’s, creators, and all the knowledge and Frontline workers. Microsoft projected that this type of ecosystem engine helps to maintain and earn a huge growth and opportunity for Microsoft in a very beneficial way to everyone.

Microsoft provided some exciting enabled tools with the organization at the cheapest remarkably in a few years.

Microsoft provides a huge contribution towards NASA's Mars missions and that is a milestone for the company when almost 12000 developers working on GitHub; to make possible these Mars missions Microsoft powering the flight and all the developers are trying to contribute code to the open-source software(Cusumano, et al., 202019).

1300 ft ship get blocked in Suez canal and make disruption to global shipping system then a partner of Microsoft, Blue Yonder uses Microsoft AI Technology to help the customers find some alternative ways. This time Microsoft AI Technology saved from becoming delay of almost $500 worth of products(Sehgal, et al., 2020).

Microsoft also doing some work for humanitarian crises likes Covid -19. They enable setup 169 covid-19 response sites in just 30 days and expansion of over thousands of volunteers.

2.3 Performance 2019-2021

Fig1: Share Purchasing Programs for last 3 years. (Source: Microsoft Financial Annual Report)

The above graph of repurchasing program of Microsoft shows progress from 2019 to 2022 and at 2021. The interesting fact is the fourth quarter of 2020 was decreased share repurchasing program. Also, the same thing is located in the third quarter of the fiscal year 2019. But in 2021 it looks really good and uses cash resources for all share repurchasing(Gandhmal, et al., 2019).

Fig 2: Dividends for last 3 years. (Source: Microsoft Financial Annual Report)

If looking into the differences of the dividend of the fiscal year 2020 and 2021 then it shows a good increase in wealth of Microsoft. But at the same time in the physical year of 2020, the dividend per share was $2.04 and in 2021 it became $2.24 per share(Mayes, T.R., 2020).

Fig 3: Comparison between Three Companies (Source: Microsoft Financial Annual Report)

The most effective part of Microsoft's strategic performance between 2019 and 2021 is located in a graph. The graph shows comparisons between three top-level companies who are engaged in high technology. But it looks in favor of Microsoft Corporation for the last 5 years. At the start of the graph on June 16 it looks equal for three companies like Microsoft Corporation, S&P 500, and NASDAQ Computer. The graph shows consistent progress in the performance of Microsoft.

So it's very clear that from all the statistical performances Microsoft is running with the continuous progression and making their projections to reality.

3. Analysis

Financial analysis of Microsoft is going with the help of three different analysis systems below:

3.1 BCG matrix

Fig 4: BCG Matrix for Microsoft and their Multi Business Strategy

Microsoft is not following the BCG principles of BCG principal says the dogs to continue to survive. From the above diagram of Microsoft BCG strategy; Microsoft cloud services and Xbox 360 is the most important and unique ideas of the company and the focus on their cloud system. For Microsoft, Windows 10 provides a high market share and adequate capital funding; with the very fast going industry in the Computer world(Zwiegelaar, et al., 2022). It's also a star fact for the company. As per the companies hire intellectual property is the coding so Microsoft is focusing on these services. At the same time, the cash cow of Microsoft is Microsoft Office. Windows 7 market shares were almost 49.4 2% but in last year’s the growth of market value just only 2%( Whitler, K.A., 2021.).

You talking about question marks then the big question mark arise about Windows phones; launched in October 2010, but still, it runs with very low market shares and with very poor growth. Company-wise they make a lot of collaborations like software design and trying to work together with Windows operating system and Microsoft servers. At the same time, Microsoft is a good example of providing a good and different test for the server and tool segment. If talking about the good and will prospects of Microsoft then definitely it is Windows Vista with low market share it can provide high growth prospects.

3.2 Porters Five analysis

Fig 5: Porters Five analysis Diagram

  • Rivalry Competition of Microsoft

If Microsoft wants to stay at remaining successful; then much need to look about some factors. Needs to moderate switching costs to provide a better competition between rivalries(Porter, M.E., 2008). To maintain goodwill and growth of the company leads to change in the aggressiveness of farms; at the same time need to look about high diversity of Microsoft for their consistent progress.

  • Bargaining skills of Customers/Buyers of Microsoft's

Microsoft always keeps focusing on their intellect and that's why the raw materials are not very much available. So these Lo substitute makes a weak force for Microsoft. And moderate switching costs also make difficulties for both buyers and customers both. The strong zone of bargaining skills of Microsoft is the quality of information and high technology(Tukiainen, et al., 2019).

  • Bargain power of suppliers of Microsoft

It depends on the supply conditions of Microsoft. It varies on the environment of the computer hardware and software industry. So it's a moderate force of the overall supply chain.

  • The threat of Microsoft's substitute

Low performances of substitutes make a danger zone for Microsoft's market shares. Switching costs and lower availability of substitute goods are still not giving a strong competition towards Microsoft. But if anytime the substitute can significantly strengthen then it could be dangerous for Microsoft's future.

  • Microsoft's Threat from New Entrants

The most dangerous and effective fact in porter's five-factor plans is the threat of new entrants for Microsoft. The high cost of brand development makes a weak force Microsoft. Moderate cost of doing business makes a huge difference equation between upcoming new entrants and existing one of the top label company like Microsoft.

3.3 VRIO analysis

Fig 6: VIRO analysis Diagram of Microsoft

For brand reorganization, strong financials, product portfolio, and technological innovations Microsoft takes an advantage of competitive sustainability. The most important fact is Microsoft's innovating skills and upgraded Technology with complete efficiency makes a sustainable competitive position between rivalries. For VIRO analysis all above is fulfilling value, rareness, limitability, and organization criteria(Brandenburger, A., 2019).

But for talented human resource marketing and sales and distribution networks, Microsoft is not meeting the limitability behaviors as per the VRIO analysis.

4. Organizational Analysis

4.1 Strategic Direction

The main purpose of the Microsoft Corporation is to provide focal point over the items which are being accessible crossways the entire podium specifically the office 365 on the cellular phone and tabs. As the points were set up, Microsoft has carried out techniques to focus on numerous gatherings of customer, with the tablets as opposed to centering it in on the telephone market. A genuine model examined in part 5 is Microsoft's strategy to focus more on less lucky clients with their surface pc range, in addition to understudies with their limited surface master. The purpose itself is pointing on to gran the business sector part from Apple and Google as well as deploys their expertise understanding as a benefit. The purpose usually comprises of:

  • To augment upgrade of upcoming leading expertise items for example Office 365 since the customer need for it is considerable.
  • To utilize the up and coming age of pervasive computing as well as encompassing insight to change each life, each business sector as well as each nation
  • To keep on associating with the business, by uniting with LinkedIn
  • To put into the critical abilities of Windows 10, which will help the development of the Windows telephone

The company is deploying the above mentioned purposes to turn out to be the top ranked technology based firm in the globe. In this case the alliance with Linkden along with cell phone manufacturer to issue their functioning system on is also one of the pivotal things. This is eluded as creating an acquirement as well as associations which helps in strengthening the cutthroat position of Microsoft Corporation. This attainment will be deployed to advance items like PCs, these of which are utilized by business workers who might deal with their own LinkedIn profile. Also based on VRIO analysis it can be identified that the company is lagging behind in hiring some of the prospective talents from the market which is a major issue facing the Microsoft these days apart from the phone market.

4.2. SAFe criteria

A tactics might be assessed by making use of the SAFe criteria set up that helps in determining the Suitability, Acceptability and Feasibility. This set up will highlight the most important issues by means of the mentioned three aspects that examine a tactic for its power as well as weak points. The use of the strategy will also assist in concluding how much effectual is Microsoft’s’ present tactics are.

Figure 1: SAFe criteria

Source: Google

  1. Suitability: Suitability can be defined as a technique which helps in discovering in what quantity a definite tactic highlights the main occasions as well as risks a company confronts, Considering the tactics used by Microsoft in which it has been seen that they are making alliances with LinkedIn is considered as a suitable process to attain the business sector share inside the business sector.
  2. Acceptability: Acceptability usually assess whether the firm’s most prospective clients will assist the tactics. Microsoft's faced a challenge by delivering an item redesign free of charge, in light of the fact that the assets spent planning and conveying it will have been expensive, however the threat was to motivate clients to keep on utilizing the Microsoft Windows interface. This was a winning strategy as profit showed it is dynamic on in excess of 400 million gadgets around the world.
  3. Feasibility: A tactic ought to be effectual in use which shows that Microsoft will require the appropriate asset or it ought to be obtainable. These assets incorporate money and abilities which helped the technique to be more viable, for model Microsoft's technique to keep planning and selling own brand cell phones for two years was effortlessly carried out. This is on the grounds that Microsoft has the monetary ability to recuperate a specific office that might fail to meet expectations, by utilizing a free redesign motivating force methodology that contains a little threat.

So, it can be identified from the above discussion that using the SAFe strategy that Microsoft is in a position where it can additionally use some other strategies also to cope up with the risks identified in the study.

5. Strategic Evaluation and Recommendations

Microsoft's new CEO Satya Nadella, has delivered a system to help the administration of the corporate strategy of the firm which that will assist the ordinary movement at Microsoft by "properly disseminating freedoms as well as certain limitations among board individuals, supervisors and investors". This is considered as a recuperation methodology and expects to work on Microsoft’s tasks which erase dangers and missteps between workers. This sort of procedure is arranged as a 'transformation. Also from the study it can be evaluated that the system acknowledged within Microsoft phone tactics has been shown by means of revenues in the last few years with additional losses to sales as well as revenues in every half yearly. Considering the recommendation the Microsoft to assist recuperate is scrap their telephone market, and cut its loses, on the grounds that its future doesn't look splendid after Apple and Samsung proceed to take over the smartphone business sector, gathering various positive audits on destinations like Financial Time. The eliminating of telephones could prompt fewer assets.

6. Conclusion

A successful company like Microsoft needs no big changes in their strategic plans to make a strong initiative towards organizational success. But as the analysis of Microsoft's financial condition and their strategy, the company deteriorates its financial growth and their stable growth stars fluctuated in the last few years. It is not good for a company like Microsoft. As per the share and market capital analysis, their star factor is Windows 10 and made a huge business globally. But at the same time the last most successful Windows edition Windows 7 decreased with a very straight line. As per the BCG matrix of Microsoft, it shows only 2% of growth Windows 7 of in last year. Whereas it provides almost 49% growth before a year ago. So combine it's too think about their strategically policies and this kind of continuous fall of old products growth causes a huge effect towards companies goodwill and long term growth.

On another hand company launched their first mobile phone in October 2010; it creates hype in the market but after that, it can't hold that pride of the organization. Nowadays Microsoft phones are very low in shares with poor availability and market condition. So the company also needs to take care of their mobile phones and their production. Availability and fluctuating costs give use effects towards Microsoft products. So the company needs to think about their sustainable supply chain and market availability of Microsoft's product.

From all other factors, the company focuses on Microsoft clouding itself very good hue to provide high Technology. And as they planned a new ecosystem by 2030 it is also a good plan for companies' consistent growth. As well as company e still focuses from the very first day of its establishment on innovation its matters in rivalry competition. So hopefully Microsoft holds their topmost position among all the competitive organizations and makes more sustainable and consistent growth in the next few years.

7. Reference

Porter, M.E., 2008. The five competitive forces that shape strategy. Harvard business review, 86(1), pp.25-40.

Warner, J.P., 2019. Microsoft: A Strategic Audit.

Whitler, K.A., 2021. 4 Strategy Map Types. In Positioning for Advantage (pp. 73-96). Columbia University Press.

Zwiegelaar, J.B. and Stylos, N., 2022. Data Analytical Tools. In Encyclopedia of Tourism Management and Marketing. Edward Elgar Publishing.

Sehgal, G., Kee, D.M.H., Low, A.R., Chin, Y.S., Woo, E.M.Y., Lee, P.F. and Almutairi, F., 2020. Corporate social responsibility: A case study of Microsoft Corporation. Asia Pacific Journal of Management and Education (APJME), 3(1), pp.63-71.

Cusumano, M.A., Gawer, A. and Yoffie, D.B., 2019. The business of platforms: Strategy in the age of digital competition, innovation, and power (pp. 1-309). New York: Harper Business.

Tukiainen, T., Burström, T. and Lindell, M., 2019. The Strategies of technology startups within and between business ecosystems. Technology Innovation Management Review.

Brandenburger, A., 2019. Strategy needs creativity: an analytic framework alone won't reinvent your business. Harvard Business Review, 97(2), pp.59-66.

Mayes, T.R., 2020. Financial analysis with microsoft excel. Cengage Learning.

Gandhmal, D.P. and Kumar, K., 2019. Systematic analysis and review of stock market prediction techniques. Computer Science Review, 34, p.100190.

Securities, U.S., 2019. Agency Financial Report. US Department of State.

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