Microsoft Company Performance - Term Paper Example

? Microsoft Case This paper aims to critically analyze the case of Microsoft Company. The primary concern is to evaluate company’s mode of business, the positioning along with strengths and weaknesses and the business model with reference to the finances and investor relations. What is the company’s overall mode of doing business? Microsoft’s overall mode of doing business revolves around its strategies and diversification. Established back in 1975, the company has made significant progress in the area of information technology. Their aim was to facilitate people and organizations in doing business globally with an integrated computer technology (Farhoomand). They have altered the way people use to communicate, entertain and work by developing a list of market software, hardware and service devices. These were based upon enhancing the convenience level and revealing an entirely new area of opportunities. Their mode of doing business is incorporated with the development of significant revenues, sustenance of services and products, trade of hardware devices and advertisement of portfolio to a wide range of customers (Farhoomand). Their fundamental product range includes operating systems particularly designed for contemporary computers, phones, servers and the devices with enhanced artificial intelligence. Additionally they have server and productivity applications, solution generating business applications, facilities for online marketing and video games (Farhoomand). All of these products and service features are available to their customers around the globe with an addition of hardware devices such as Surface RT, Kinect especially for Xbox 360 etc. Furthermore, Microsoft provides an experience of online browsing and communication through its products including Bing, MS office, Skype etc. (Rivkin). In order to increase the work experience of their clients they are continuously working for the further development of hardware, software and services consistent with the latest technology. They extensively believe in the empowerment of individuals and businesses through providing them value and opportunities to grow (Farhoomand). Following Income Statement of Microsoft Corporation represents the financial position of the company in the year 2012-2013 (Earnings Release FY14 Q1: Financial Statement). How are they positioned competitively in the markets they serve and what are their fundamental strengths and weaknesses that play into their positioning? Positioning Microsoft is competitively positioned in the consumer and business markets through the incorporation of software and hardware devices and an extensive range of applications for business solutions and entertainment (Farhoomand). In a broader perspective their business positioning can be categorized into following segments (Farhoomand). Platform Services and Products: This segment is particularly positioned to provide the online services to the global customers such as internet browsing, communication, networking etc. Business Segment: Microsoft has greatly enhanced the overall nature of businesses internationally through providing its renowned office applications. However, in order to remain competitive Microsoft did not chose to cater the needs of large multinational organizations which were already benefitting from Oracle and Sap rather it positioned itself to the small enterprises. Entertainment Segment: Microsoft entered into the gaming market in 2001. This initiation was intended to position the company’s products and services to the entertainment industry. Strengths and Weaknesses Microsoft’s major strengths include its provision of advanced services provided to the global customers while continuously evaluating and improving its management plans. Although the drastic change in political environment and increase in terrorist activities have brought greater challenges for the company but Microsoft was able to manage its business operations and product positioning through research and development. Additionally they have sound investor relations along with a smooth supply chain which extensively facilitates the organization in its operations (Microsoft Corporation: Form 10-k). One of the major weaknesses of the company is associated with its risk management and the ability to cope with the emerging competition in the area of software development. The company faces immense difficulty in managing its finances and operating cost in the times of economic and political turmoil (Microsoft Corporation: Form 10-k). Please articulate the company’s business model, first simply and then in all its complexity to the extent you can compose a succinct narrative. The business model of Microsoft revolves around its investment infrastructure and the expertise in software and hardware development. This provides them a competitive edge in the global business environment while supporting the organization in greater revenue generation. The new business model is closely associated with the costs of developing software and the enrichment of cloud computer services (Risks and Uncertainties). Microsoft’s current business model covers the following areas (Risks and Uncertainties): Continuing the process of innovation and enhancing the experience of cloud-based technology. Increasing the market share and annual revenues. Maintaining a perfect balance between performance, capability and utility of the entire range of products and services. This is further linked with the software development for smart phones and tablets. Enduring to increase the attractiveness of cloud-based products for the third-party developers. The Microsoft’s Business Model face challenges in terms of operations and revenues. For instance, the achievement of company objectives is altered by the licensing of software and hardware devices. This primarily happens because of the small commercial organizations which source the software of Microsoft and then introduce them to the local markets. These companies do not have to bear the fundamental costs of research and development but they do cause damage to the business model of Microsoft. In order to secure the originality of their services and the strength of business model they seek to increase advertizing to the end users. Although this also increases the marketing cost for the organization but they tend to cover it with sales, operating margins and the overall revenue (Risks and Uncertainties). Comment on the extent to which the business model is cohesive—highlighting the loops and mutually reinforcing interconnections among the key parts of their model. The Microsoft’s business model is extensively cohesive and meets the company’s aims and objectives regarding business operations, finances, cash flows and trade of common stock. The cloud-based model of computation particularly deals with the competitive risks and the execution of plans. They are continuously transforming their relationship with competitors through advancing the small client devices. Moreover, the company is investing huge amounts in order to organize its strategies and services around the globe (Risks and Uncertainties). One of the most important parts of Microsoft’s business model deals with the development of eco-system which is entirely platform-based. This would not only increase the competitiveness of their business model rather it will also give diverse business solutions to the participants. The business model is vertically integrated in order to provide single solution based options for the software and hardware of different products including mobile phones, personal computers and the music players. Another part of the business model is incorporated with the revenues and licensing of company products such as the operating systems. Although the certainty of future computing devices, the technological advancements and the number of users remains ambiguous but Microsoft’s business model has substantiated it with alternate operating systems and software applications. In addition to this the business model also addresses the concerns of competitors and intense competition faced by the organization. For instance, it has developed effective financial resources, marketing and technical competency to meet the competitive challenges (Risks and Uncertainties). Examine the business model especially for obvious contradictions or conflicts among main parts of the company The main contradiction that company faces in terms of its business model relates to the security and protection of intellectual rights. The overall revenue of Microsoft is greatly influenced by the piracy practiced in different parts of the world especially in the countries with political and social issues (Risks and Uncertainties). Microsoft is ruling the I.T industry since more than 30 years but now it has to revise and reintegrate different parts of the business model in order to remain competitive in the market. Although the company is making tremendous revenues, for instance, the surface revenue for 2013 is $400 million (Earnings Release FY14 Q1: Performance). However, due to the change in the overall information technology and the transformation of customers from personal computers to the smart phones and tablets have increased challenges for Microsoft. The conflicts within the main parts of the business model arise due to licensing issues which incurs huge costs for the organization or otherwise the products are subject to piracy. Hence research and development has become even more crucial for the organization because of the changes in business scenario, the overall customer demands and the rise of modern technology. This has collectively reduced the operating margins which create contradictions for the company’s business model (Risks and Uncertainties). Works Cited Earnings Release FY14 Q1: Financial Statement. Microsoft: Investor Relations. 2013. Web. 22 Nov 2013. Earnings Release FY14 Q1: Performance. Microsoft: Investor Relations. 2013. Web. 22 Nov 2013. Farhoomand, Ali F. "Microsoft's Diversification Strategy." Asia Case Research Centre (2013): 1-27. Microsoft Corporation: Form 10-k. Commission File. Washington: US Securities and Exchange Commission, 2013. Risks and Uncertainties. Microsoft: Investor Relations. 2013. Web. 22 Nov 2013. Rivkin, Jan W. & Steen, Eric Van Den. "Microsoft's Search." Harvard Business School (2009): 1-18. Read More