Microsoft Business Analysis Essay

Microsoft was founded in 1975 by Bill Gates and Paul Allen. The current CEO of the tech giant is Satya Nadella. Microsoft is an electronic intelligence company specializing in software and other advanced technological products. Offering over 101 different products, Microsoft has built its brand reputation through customer satisfaction. Over 45 years, they have reached over 75 million customers across the world. Microsoft is proud of the easy-to-use products they have developed. Being a predominant force in the tech industry, Microsoft has been carbon neutral since 2012. They plan to be carbon negative by 2030. Microsoft has already developed a positive sustainable image for its company operations. They are the leading software brand and plan to further enhance their software capabilities for the future. Microsoft’s business strategy primarily is market penetration.    

Microsoft has a unique business strategy including growth through mergers and acquisitions in a way to increase its capabilities, product range, and value. The most notable recent acquisition back in 2014 includes Nokia Corporation’s Devices and Services business for over $9.4 billion. Microsoft has also spent time developing augmented and virtual reality. In 2018, Microsoft was able to complete 16 total acquisitions of companies. The companies ranged from video game producers to artificial intelligence to employee engagement. The CEO, Satya Nadella placed augmented and virtual reality at the core of their business’s strategy. Nadella mentioned, “while a majority of the augmented and virtual reality players are focused on consumer gaming, Microsoft has spent considerable time and effort defining the potential business use cases for HoloLens” (Dudovskiy, 2019). Virtual reality is used to improve the shopping experience for the customer in education and automotive design.   

Another portion of their unique business strategy comes from the “intelligent cloud”. In 2017, Nadella introduced the new corporate mantra of “intelligent cloud”. The “intelligent cloud is ubiquitous computing, enabled by the public cloud and artificial intelligence (AI) technology, for every type of intelligent application and system you can envision. Users get real-time insights and experiences, delivered by highly responsive and contextually aware apps.” (“Intelligent Edge – Future of Cloud Computing: Microsoft Azure”). The “intelligent cloud” represents one of the solid sources of their competitive advantages. Microsoft focuses a lot of its time and attention on the cloud segment of their business as they believe it to be the future. This illustrates the work and innovation Microsoft incorporates in its business strategy.   

Microsoft's corporate vision is “to help people and businesses throughout the world realize their full potential.” Microsoft’s vision statement illustrates that the company can present its business and products as tools allowing people and organizations to use them for development. Microsoft has many clear values representing who they are as an organization. Microsoft values innovation, believing technology is a force for making the world a brighter place. The company values diversity and inclusion. Microsoft believes it is important for the employees to stay engaged to stretch the company’s thinking allowing them to further innovate. Corporate social responsibility is also important for Microsoft to follow as they firmly believe technology is a powerful force for good. The company is currently working to foster a sustainable future where more people have access to technology and benefit from it. AI is valuable to Microsoft as it is a powerful tool offering capabilities to be extended. AI can help an organization efficiently achieve more. Microsoft believes AI to be the future and it is important to continue developing it to become more efficient and productive.  

Selling more products in the market Microsoft holds products in will help them penetrate the market. Microsoft has a stock price of roughly $259.50 per share and a market capacity of 1.96 trillion dollars. The SWOT analysis shows the multiple strengths Microsoft possesses. They are the leading software company and the largest company with a predominant market share. Also, Microsoft sees continuous growth through its easy-to-use products and the positive brand image the business portrays. Impacting weaknesses are the threats of cybercrime, a large presence in the PC market, and the lack of recent innovation. Microsoft has opportunities to keep its relevance in the future market. To succeed Microsoft must keep continuously improving the cloud, make advances in artificial intelligence, and penetrate the smartphone market. Threats to the company need to be addressed for future success. Microsoft’s threats consist of issues with workforce diversity, rising competition, cybercrime, and changing customer preferences. The SWOT analysis outlines why Microsoft is a successful company in the technology industry.   

Porters five force analysis further shows the areas where Microsoft continuously excels. Also, the analysis can show factors needing more attention. Being able to be constantly improving is crucial for a business heading into the future. In Porter’s five force analysis, suppliers are a weak force. Software is typically developed within the company driving down the force for suppliers. Also, the cost of switching suppliers is low. Potential entrants show a moderate force because of the low number of entrants into the software market. There is a small window for success for new entrants because of the work experience needed. Software is time-consuming to develop, driving away new entrants. Buyers also show a moderate force in the Porter analysis. It is not easy to change to different software. Also, products from Microsoft are designed to be easy to use. There is a variety in the market for buyers, but Microsoft is still the best rated. Substitutes are a weak force in the analysis because there are no directly comparable businesses. Microsoft is a software company that offers various numbers of different products. The rivalry force is strong for Microsoft. Different competitors can provide close to the same level of technological capabilities as Microsoft. Microsoft among many other tech companies maintains a great amount of customer loyalty because of the products they develop. The technology market pushes innovations for what the consumer will want.   

Through Porter’s five forces and the SWOT analysis, Microsoft can examine its strengths and weaknesses as a business. Outlining weaknesses in the analysis will allow a business to make changes for the future. Making changes to strengthen a business’s weaknesses will only drive success. As long as strengthening the weakness is within reason and attainable for the company. By highlighting the strengths of Microsoft, the business can use the analysis to further improve its strengths to attract more consumers. The main goal for Microsoft is to penetrate the market. To penetrate the market, Microsoft must continue to improve its business as a whole.   

The competitive comparison map shows the success Microsoft holds over other companies in the same market. Microsoft’s competitors are Adobe, Salesforce, SAP, VMWare, and Oracle. The comparison map shows the companies’ positions concerning their price-to-earnings ratio and their market capacity. Price to earnings shows the ratio of a company’s stock price to the earnings per share. In the comparison map, other companies have higher price-to-earnings ratios than Microsoft. Microsoft is considered to be slightly overvalued. Holding a price to earnings ratio of 32.02, Microsoft shows they are a successful business.  Microsoft holds the highest market capacity out of its competition. Adobe has the second-highest market capacity and Salesforce has the highest price to earnings ratio. Microsoft is an outlier in the comparison map, displaying the continuous success the business brings.  

The Political, Economic, Social, Technological, Environmental, and Legal (PESTEL) factors of Microsoft illustrate how they can maintain a competitive advantage. Politically, Microsoft can excel because there are increasing international trade agreements allowing for further expansion into new territories. There is also stability in the majority of the markets. Economically, there is a large growth of developing countries especially the middle class and the disposable income. Socially, there is an increasing amount of cultural diversity which can be useful for new demographics of people to use Microsoft for efficient work to be done. There is also a stable demand for high-quality customer service which Microsoft makes sure to pay attention to. Technologically, the use of mobile technology is only increasing which benefits the company as they continue to innovate. The number of volumes from online transactions is also increasing and Microsoft has emphasized it is easy-to-navigate its products and services. Environmentally, the preference for green products is increasing as Microsoft is working to become more of a corporate socially responsible company. Microsoft is devoting a lot of focus towards sustainable products. The number of recyclable materials is increasing, allowing Microsoft to successfully find materials to use. Legally, there is an increasing amount of electronic waste disposal regulations as well as energy consumption regulations which has helped shift the company to emphasize becoming greener.