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Case Study Analysis of Microsoft

Case Study Analysis of Microsoft


Introduction

Microsoft has emerged as an important company in the history of computer software. Microsoft has produced popular software such as the Windows, Microsoft Office, and Internet Explorer and so on. The company, established by Bill Gates, has been able to improve its performance. Nonetheless, the company has been facing a few challenges due to its few weaknesses. The company has designed its own strategy and has been pursuing to accomplish a particular strategy although it has faced various hurdles such as competition from other companies, attack by open source advocates, competition from Linux, court cases against Microsoft, and the government directives. The company has been trying to find a way to utilize the opportunities that have been offered to the company.


History and Evolution of strategy

The Microsoft company history can be traced to 1975, when young Bill Gages along with his friend Paul Allen founded the company. In the year 1975, the company earned revenue of $16,000. In 1976, the trade name Microsoft was registered with the Secretary of state’s office in New Mexico. This resulted in the emergence of a new brand in the history of computing. In the year 1977, Bill Gates became the president and Paul Allen was given the position of vice president. In this year, the company had obtained the revenue of $381,715 with the support of only nine employees. This shows that the company had reached great heights during the early period of its history. This development was also due to the fact that there was not much of competition to the company. The year 1978 was important in the history of Microsoft because in this year the company succeeded to cross the sale target of $1 million. From a small company, Microsoft had emerged as an important company specializing in the production of software. With the emergence of IBM machines after 1980, Microsoft and Apple companies were able to further improve their market shares. In the year 1986, Microsoft issued its Initial Public Offering which received excellent response from the investors. In the year 1990, Microsoft reached another milestone when it produced Windows. The company has produced several new versions of the Windows, constantly researching and eradicating limitations of the software. (Microsoft, 2006)

During the initial years, the main aim of the company was to participate in the exciting software revolution. Soon, it was realized that there was great potential for the company to multiply its revenues. This can be seen in the phenomenal growth of the company revenue till the recent years. The various moves of the company – registering the trademark and opening the company to the public investors – show that the Microsoft possessed intended strategy with a view to enhance the company revenues. (Microsoft, 2006)

As early as 1991, Bill Gates expressed the intended strategy of the company. Bill Gates stated that the company strategy during 1980s was to establish “one architecture� and “one operating system�. The strategy of the company for 1990s was to make Windows as the premier computer software used by majority of world computer users. History of the company has revealed that the company in reality succeeded in achieving its stated goals. Bill Gates evolved a ‘broad product strategy’ for the company. This implied that the company faced competition from many other companies. Despite competition, the Microsoft was able to earn phenomenal profit by popularizing its products. The company believes in constant progress through research, innovation, and investment. (Gates, 1991) Periodically, the Microsoft executives have been assessing the progress of the company in order to reevaluate the strategies and understand challenges and opportunities so that new strategies could be used to counter the limitations or threats to the company progress. This indicates that the strategy of the company is the combination of intended strategies and emergent strategies because the company was compelled to introduce changes in the strategy in order to face the challenges and utilize new opportunities. The above details show that the Microsoft Company has been periodically revising its strategy depending on the business environment. (Gates, 1991)

The company has been revisiting its strategies in order to adjust with the changing needs of the time. It was decided in 1998 to dominate the database and the messenger market. The company, till 1998, could not give much importance to MSN Explorer. But, in 1998, it was decided to further develop the MSN website in order to compete with other companies. The company decided to give greater prominence to Windows NT instead of Windows 95. The company also decided to produce three versions of Windows for consumers, businessmen, and servers. Microsoft decided to invest in games in order to become a major producer of games. (Thurrott, 1998) Recently, the company has decided to shift its focus from feature-rich products to security-rich products. This strategy has been termed as “Trustworthy Computing�. (Komotv, 2002) According to Bill Gates, this term refers to the attempt of the Microsoft to encourage people to use the internet connected computers that use Microsoft products. Recently, it has been revealed that many Microsoft product using computers can be intruded by hackers leading to the demand for security-rich products instead of concentrating on the old strategy of feature-rich computing. The company has realized that, in the light of the September 11, 2001 terrorist attacks, it is important to provide security to the company products so that the computers that use Microsoft products are not affected by the hackers. The engineers or the employees of Microsoft are provided incentive so that they are able to discover ways of strengthening security of the Microsoft products. (Komotv, 2002) Throughout the period - 1975 to 2005 - the Microsoft has been changing its strategies. The strategy depended on various circumstances such as competition from other companies, computer trends, need for innovation, pressure from the government and customers and so on. It is important to note that the company has been assessing its strengths and limitations. Of late, the company has realized that it needs to address security issues, which was the major criticism against Windows and other Microsoft products such as Internet Explorer. Such criticisms have allowed the company to further improve the security of their products so that the software of Microsoft could become popular among the consumers.


Mission and major goals

Mission and values are extremely important for any company in order to justify its activities. The Microsoft believes in the mission of helping the people and business to achieve their fullest potential by using the computer technology. In order to achieve this mission, the company has advocated various values such as integrity and honesty, accountability to shareholders and customers, constant self-improvement and progress. (Mission and values, 2003)

Apart from increasing its revenue, the Microsoft aims to help the different members of the society such as the children, teachers, and computer users to obtain the benefits of using Microsoft products. The children, through the use of Microsoft based computers are encouraged to learn new things with the use of computers. The company aims to provide opportunity to the parents to monitor the computer-related activities of their children so that the parents are satisfied with the safety and security issues. The teachers are able to improve their teaching methods by using the technology such as power point presentation that is provided by the Microsoft. The company also aims to improve the computing safety and security. The company has realized that it is important to protect the privacy of individuals and the data that is being used by the consumers. Innovation and introduction of new products in order to revolutionize the lives of the people is another goal of the company. The Microsoft has always welcomed people with new ideas. The computer experts and ordinary computer users are encouraged to provide new ideas in order to improve the computing experiences. The company also aims to perform its duties related to ‘corporate responsibility’. Bill Gates has already showed his intent to contribute in order to fight the social and medicinal problems such as the AIDS. (Corporate Campaigns, 2007)


Challenges and opportunities

Internal strengths of the company are innovation, constant revision of strategy, diversified workforce, and employee satisfaction. Weaknesses of the company are security problems, and inability to convince the government concerning the mission and goals of the company.

The company has been facing various challenges and opportunities. Every now and then, the company has been realizing the challenges and opportunities. In 1991, Bill Gates had realized that there are many challenges to the company. These challenges are law suits, Federal government inquiry, patents, pricing, and competition from the companies such as Lotus, WordPerfect, Borland, and other companies. (Gates, 1991)

An important strength of the company is that it has taken care of the welfare of the employees by insisting on diversity and by avoiding discrimination among the employees. The company has recruited talented software engineers from different parts of the world including Asia. The employees have been encouraged to give their suggestions in order to improve the products of the company so that they are able to provide competition to other companies that are producing similar products. The company has provided all necessary benefits to the company employees who have been satisfied with the facilities that were given to them by the company authorities. This organization does not believe in discrimination based on sex or any other factor. The leaders of the Microsoft have been supporting various legislations that deal with the question of discrimination. The company believes in the diversity principle which is proved by the fact that the company has hired employees belonging to different races, regions, countries, and genders. The above-listed actions have increased the internal strength of the company. (Ballmer, 2005)

A study has proved that both Microsoft windows and Linux software are vulnerable to attack. The users are generally not aware of security problems unless an expert points out software vulnerability. The software producers have been issuing security patches in order to address security questions that emerge due to revelation that a particular component of the software can become vulnerable. The study has argued that in spite of the suggestion that Linux is more secure than Windows, there is no evidence to accept this criticism. (Koetzle, 2004)

Recently, the company executives have realized that new challenges and opportunities have emerged and the company needs to manage these new issues. In the future, the revenue of the company is likely to decline due to the decreasing PC sales. As there will be few buyers of computers compared to the earlier years, it will be difficult for the company to maintain its leadership in the field of computer software. This can affect the commercial and retail business of the company. At the same time, Microsoft has continued to invest in research and development in order to improve the performance of the products. The company finds opportunity in servers and tools business as there are demands for new servers of the company. With the release of Office 2007, the company is expected to increase its revenues. (Galli, 2006) The company authorities also believe that the company would be able to increase its revenue in home and entertainment business. On the negative side, the MSN would yield less revenue when compared to the earlier years. The company may lose some revenue in marketing its products, hiring new employees in order to increase the productivity of the company. The company finds great opportunity in software innovation by developing new software to help the business and ordinary consumers. Another problem that the company has been facing is the fine imposed by the European Union for not complying with the EU laws. (Galli, 2006)

The above details show that there are many challenges and opportunities that the company needs to address in the future. Based on these challenges and opportunities, one can suggest that the company needs to adjust its pricing in order to attract more customers in the light of the fact that PC unit sales are likely to decrease in the future. The company needs to avoid legal complications by hiring professionals to deal with legal issues and to avoid legal complications. This is because legal battle with the US and the EU can affect the reputation of the company. The Microsoft also needs to develop MSN as a major product in order to give competition to other similar products. The company has already realized that it needs to dominate the Internet. The company has suggested that it would like to compete with Google and Yahoo! in order to find new opportunities. The company needs to introduce further innovations and find new software in order to attract. The Microsoft also needs to maintain cordial business relationship with other companies such as HP and Sun Microsystems in order to realize its real potential.
The CEO

The present CEO of the company is Steven Ballmer, who has showed notable leadership qualities by articulating Microsoft philosophy in public forums and by giving orientation to the company employees concerning the future prospects of the company. Steven Ballmer was the CEO (Chief Executive Officer) during the period when there was slowdown in the technology and software business. During the post 2000 years, there was slowdown of the Microsoft revenue. Ballmer has claimed that after 2005, Microsoft has been able to increase its revenue. Ballmer has been responsible for empowering employees and encouraging the employees to think creatively. The freedom that is given to the employees has resulted in the emergence of cordial relationship between the CEO and other members of the organization. Most of the employees take pride at the fact that they are working for the Microsoft. The leadership quality of Ballmer is revealed by the fact that he as the CEO of the company has allowed criticism and constructive suggestions in order to achieve greater improvement and innovation. The employees and the management of the Microsoft have enjoyed the unique culture of the Microsoft. Under the leadership of Ballmer, the company has been achieving great improvements in innovation. For example, the company has marketed new products such as Visual Studio 2005, SQL Server 2005, and Windows Vista. (Green and Rebello, 2005) The company has been able to compete with major players such as Oracle and IBM as exhibited by the fact that the company has been able to sell more number of software when compared to these two major software companies. The company has established a leadership team. Steven Ballmer has realized that any company needs a great leadership team in order to quickly assess the situation and introduce policies according to the changed needs and market conditions. The company has hired new leaders such as Kevin Turner, the chief operating officer and Robie Bach, the manager of ‘Xbox activities’. (Green and Rebello, 2005) This shows that Ballmer has not only emerged as a great leader, but also he has encouraged other people in the organization to emerge as leaders by introducing new products and giving new ideas so that the company is able to stay ahead of competitors. The CEO has been obtaining information regarding the perception among the employees and others regarding the company policies and achievements. The main goal of the CEO has been to empower people to enable them think creatively and present original ideas or to develop the existing products. The company has been investing huge amounts of money in software development. Through the developer’s conferences, the company has been attracting large numbers of young talented computer professionals in order to develop new tools and ideas. The company has been hiring thousands of computer professionals every year. This shows that the company under Steven Ballmer has not stopped progressing. Although there is criticism that company bureaucracy has been hindering the employees to work independently, Ballmer has been able to achieve tremendous progress in terms of company revenues, talented workers’ pool, innovation, and market share. During the period 2000 to 2005, the company profit has increased by 70 percent while the average profit of the industry has increased by 30 percent during this period. This can be considered as a great achievement of Ballmer and his team of leaders. (Green and Rebello, 2005)


Conclusion

After its establishment in 1975 by Bill Gates, the Microsoft Company has been showing great progress. This progress is the result of constant innovation and revision of strategies. The company has been periodically reviewing its strategies in order to give competition to other companies. The company is known for diversity of workforce, innovation, and investments. The Microsoft’s major goal is to help the businessmen and the consumers to achieve their goals. Recently, the company has realized the importance of giving secure products to the consumers. The company has been facing various challenges such as legal problems, security issues, and competition from other companies. The company under the leadership of Steven Ballmer has been able to improve its revenues and achieve greater innovation.




References

Ballmer, S. (2005). How Microsoft Changed Its Mind. Business Week Online. May 12.
Retrieved February 6, 2007, from the Web site: http://www.businessweek.com/

(2007). Corporate Campaign. Microsoft. Retrieved February 6, 2007, from the Web site:
http://www.microsoft.com/about/brandcampaigns/innovation//

Gates, B. (1991). Challenges and Strategy. Retrieved February 6, 2007, from the Web
site: http://www.bralyn.net/etext/literature/bill.gates/challenges-strategy.txt

Galli, P. (2006). Microsoft Highlights 2007 Business Challenges, Opportunities.
eWeek.com. Retrieved February 6, 2007, from the Web site: http://www.eweek.com/

Green, J. and Rebello, K. (2005). Steve Ballmer Shrugs Off The Critics. September 26,
BusinessWeeK Online. Retrieved February 6, 2007, from the Web site:
http://www.businessweek.com/cgi-bin/printer_friendly.pl?chan=mz

Koetzle, L. (2004). Is Linux More Secure Than Windows? Forrester Research, Inc.

(2006). Microsoft. Retrieved February 6, 2007, from the Web site:
http://www.thocp.net/companies/microsoft/microsoft_company_part2.htm

(2002). Microsoft shifts company strategy. Komotv. Retrieved February 6, 2007, from
the Web site: http://cas.clickability.com/cac?a=42076&n=14711&d=134726&c=3031

(2003). Mission and Values. Retrieved from the Web site: http://www.microsoft.com/

Thurrott, P. (1998). Annual Microsoft meeting reveals company strategy. Windows IT
Pro. Retrieved February 6, 2007, from the Web site: http://www.windowsitpro.com/
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Posted by: Jeffrey J. Thomson

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