History of Microsoft corporation

One of the largest multinational corporations in the world: Microsoft Corporation

One of the largest multinational corporations in the world is Microsoft Corporation. The business’s main office is in Redmond, Washington. The Microsoft Corporation, usually known by its initials MS, creates and sells computer software, consumer electronics, and personal computers in addition to providing its customers with technological services. Bill Gates and Paul Allen launched the business in 1975, and since then it has had tremendous success.

This essay aims to address a number of MS-related themes:

This essay aims to address a number of MS-related themes, such as how successful MS’s mission and vision statements have been, the impact of the five forces of competition on the business, a SWOT analysis of the business, recommending the strategy of the company based on the SWOT analysis, the various levels and types of strategies that MS can use to improve its profitability, a communication plan that would be most effective for the company, corporate governance mechanisms, effectiveness of leadership in the company, and ethics in the company as comprehensively discussed below.

Impact of the company’s mission, vision and primary stakeholders on the overall success

According to Kirkpatrick, S. (2016), the success of Microsoft Company is founded on the fulfillment of the mission, and vision statements and the role played by the primary stakeholders. Microsoft’s vision statement has been critical in directing the development of the business toward the desired future condition since the vision statement includes what the company can do for an individual customer or an organizational customer.

The company’s vision statement

The company’s vision statement is “to help individuals and businesses realize their full potential.” This vision statement has three main components which are: one, help realize, two, full potential and finally, individuals and businesses. The vision statement has helped the company realize its full potential by clearly defining the target market and ensuring the customers are satisfied since the products are aimed at ensuring they realize the full potential. On the company’s mission statement, Microsoft Corporation emphasizes the empowerment of the customers and other people, helping people achieve more and having the customers on board and in mind while conceptualizing new projects.

The company’s mission statement

The mission statement states that ”to empower every person and every organization on the planet to achieve more.“ This mission statement has made a great contribution to the success of the company (Babnik, K., Breznik, K., Dermol, V., & Trunk Sirca, N. 2014).

Finally, the primary stakeholders of the company which includes the management, the customers, and the competitors have each played significant roles in the success of the company. For instance, it is through stiff competition by companies such as Apple Inc. that the MS has been able to innovate new products such as the operating systems that can work with other devices not manufactured by the Microsoft Company. The continued support by the customers, on the other hand, has enabled the company to grow in revenues and avoid bankruptcy which, by the nature of competition in the industry, has enabled the MS to continue making profits.

The five forces of competition and how they impact on the company

Competition is one of the external factors that can influence the success or failure of a company. Unlike the other factors, competition has the highest intensity in the computer technology industry environment in which the Microsoft Company operates. Borrowing from Porter’s model (Dobbs, M. 2014), the five forces of completion facing Microsoft include the threat of new entrants, the threat of substitutes, the bargaining power of suppliers, the competitive rivalry and the bargaining power of the buyers.

Competitive rivalry

This is the strongest force among the forces of competitive advantage has three main components. These are the aggressiveness of the firms, the high diversity of the firms and the moderate switching costs. In as much as most customers do not prefer changing allegiance to a company’s products, it is possible that organizations can change their choice and prefer the product’s of other competitors. On the diversity of firms, Microsoft Company has to ensure that its products meet the standards of features offered by the products of the competitors and a high aggressiveness level of the competitors raises the bar of innovation and therefore makes Microsoft incur more costs which must be compensated by even higher revenues.

The bargaining power of Microsoft’s customers

The success of Microsoft Company is directly influenced by the bargaining power of the customers; the three elements that affect the bargaining power include the availability of substitutes, the quality of information and the level of switching costs. Microsoft’s success can be attributed to their ability to lower substitute availability which makes it difficult to let it sink due to competition and to offer quality information to the customers promptly to ensure that they do not incur high switching costs which are incurred when the customers start preferring products from the competitors.

The bargaining power of the suppliers

Unlike customers, suppliers also have the aim of making profits just like Microsoft Company. The desire to make a profit, therefore, bringing the element of competition which must be properly managed by the company. For instance, it is the obligation of the company to have a moderate size of suppliers. A moderate population of suppliers and an overall supply to ensure that supply rate is always constant. For instance, should the suppliers of hardware spare parts start doing so to Apple Inc., Microsoft should be in a position to instantly and or spontaneously get other suppliers with the same hardware spare parts.

Threat of substitution

Substitution threat is a force almost similar to the bargaining power of the customers. The three components of the force that can affect Microsoft Company are the performance of the competitors, the availability of substitutes and the switching costs. As far as competition is concerned, the company can feel the pressure of competition if there is a high level of substitutes, high availability of substitutes high switching costs.

The threat of new entry into the industry

The computer and communication industry is a perfectly competitive industry which means that there is no barrier to entry or exit from the market. However, the industry is not so much affected by new entry by other firms because of the high cost of brand development, the high cost of doing business and having a market share and the high switching costs from established firms to the new firms. To this extent, this fifth force of competition would not heavily affect Microsoft.

SWOT analysis for the company

SWOT analysis is a tool that helps in determining a company’s strengths, weaknesses, threats, and opportunities. The first two are internal factors while the other two are external (Bernroider, E. 2002).

Microsoft’s strengths

The greatest internal factors that have contributed to the Microsoft’s success include its dominant brand image which has been established over the years, the strong alliances which Microsoft company has with other companies such as the IBM company which manufactures compatible operating systems and the product alignment with positive externalities such as increased advertisement of the operating systems by other intermediaries in the chain of supply.

Microsoft’s weaknesses

The company, just like the others in the industry, is not immune to weakness. Some of which is the vulnerability to cybercrime, the inadequate dominance of the computer hardware products and ease of imitating of some of the products manufactured or produced by the company.

Microsoft’s opportunities

Opportunities are the external factors in the company, and those available to Microsoft Company include but not limited to stronger security to curb the threat of cybercrime, innovation for the computer hardware products and the ability of the company to be more innovative in the industry.

Microsoft’s threats

Threats, just like opportunities, are external factors which the company may not have direct control over. Some of the threats facing the company include but not limited to piracy by other forms, increased level of competition for instance, by the Apple Inc. company and the alarming rise of cybercrime cases.

A strategy for the company based on SWOT analysis

The success of any company is determined by the ability to capitalize on the strengths and opportunities and to minimize the threats and weaknesses. The recommendation consequently would be for the company to keep enhancing its brand image while at the same time increasing the alliance with other firms in a bid to improve on the positive externalities. On the other hand, Microsoft must continue innovating ways of reducing the effect of cybercrime and also increase the computer hardware development efforts.

Levels and types of strategies for maximizing competitiveness and profitability

There are two main levels of strategies that a company must focus on namely the revenue strategies and the cost strategies. For Microsoft to increase its competitiveness and profitability, it must lower costs and increase revenues. Some of the strategies for increasing sales revenue include increasing the productivity of the staff, enhancing proper customer service, carrying out retail displays, increasing the prices of products once the brand is widely accepted and finding new markets to increase the market share.

On the other hand, there are many strategies which Microsoft can use to lower costs. Some of which are the decrease of unnecessary inventory, decrease of direct costs for instance, by properly negotiating for a better process from suppliers, decreasing the indirect costs for instance, by enhancing efficiency in marketing and decreasing overheads by means such as energy saving techniques to cut costs.

A strategy-communication plan

To have the strategies reach out to the team in charge of the implementation, Microsoft would concentrate on a way (plan) of ensuring that information reaches the target promptly. The suggested plan would be to have the strategies communicated by the Chief Executive Officer of the company and ensure the message is simple, but deep in meaning and contain discipline of a framework which means the strategy communicated should be inspiring, educative and contains the ability to be reinforced.

Corporate governance mechanisms and how they help in controlling managerial actions

The corporate governance framework at Microsoft is designed to give the board the necessary authority and practices in place to review and evaluate all the business operations and help them in making decisions independent of management. To achieve this, the two mechanisms used are the shareholder outreach and the director video series. Shareholder outreach is when the directors and senior management members get opinions of the major shareholders for decision making. The director video series is run annually, and it aims to get the views of the individual directors as regards the direction of the company which consequently influences the decision making of other stakeholders.

Effectiveness of leadership and recommendations

The leadership of Microsoft has been effective by complying at to some extent exceeding the requirements of NASDAQ Stock Market and the applicable law. In order to ensure that the company is transparent, the leadership has developed a framework which establishes the practices of the Board with respect to the composition, director selection and director compensation, the refreshment and successful planning of the board, board committees and evaluations, risk oversight and shareholder agreement, CEO performance evaluation and the independent board leadership. In light of the knowledge from Schein, E. H. (2010), the leadership has steered the company to the right direction, and the only recommendation would be to come up with a strategy of ensuring the workers at the junior level have their ideas incorporated into the operations of the company.

Microsoft’s ethical standard

Microsoft has struggled to build trust by making ethical choices and acting with integrity in our dealings with customers, partners, competitors, shareholders, suppliers, representatives, regulatory agencies, and government officials. Some of the measures taken to meet the ethical standards include training of employees in ethical decision-making, having a business conduct compliance program and hiring people of good ethical conduct as indicated in their compulsory certificate of conduct. The availability of these ethical standards has helped the company in building trust among the stakeholders, and therefore, ethical steps taken by Microsoft can be credited as one of the causes of the company’s success.

Conclusion

The financial statements of the fourth quarter released by Microsoft indicating a rise of up to 27.8% in revenues is a testament to proper leadership, ethical standards, and management as discussed. From the SWOT analysis, it is evident that the company can achieve even greater profits should it be able to take advantage of the opportunities and strengths while at the same time, reducing the effects of the weaknesses and threats.

References

Babnik, K., Breznik, K., Dermol, V., & Trunk Sirca, N. (2014). The mission statement: organizational culture perspective. Industrial Management & Data Systems, 114(4), 612- 627.

Bernroider, E. (2002). Factors in SWOT Analysis Applied to Micro, Small-to-Medium, and Large Software Enterprises: an Austrian Study. European Management Journal, 20(5), 562-573.

Dobbs, M. (2014). Guidelines for applying Porter’s five forces framework: a set of industry analysis templates. Competitiveness Review, 24(1), 32-45.

Kirkpatrick, S. (2016). Build a Better Vision Statement: Extending Research with Practical Advice. Rowman & Littlefield.

Schein, E. H. (2010). Organizational culture and leadership (Vol. 2). John Wiley & Sons.