Final Strategic Plan

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Internal Environmental Analysis: Microsoft Corporation

Taron D. Maddox

STR/581

May 13, 2020

German Ibarra

Internal Environmental Analysis

Introduction

Internal environmental analysis of a company involves looking at the factors within the company that impact the activities of the company. The importance of analyzing the internal environment in strategic planning is to look for any gaps within the organization so as to come up with strategies that address those gaps. Also, internal environmental analysis looks out for the opportunities and strengths that the company has for strategic planners to employ strategies that maximize on those opportunities and strengths for the success of the company. Therefore, this paper will carry out an internal environmental analysis for Microsoft Company by looking at the company’s most important strengths and weaknesses, assessing the organizations resources, competitor analysis, the organization’s structure and the impact it has on its performance, and finally the competitive position of Microsoft.

Strengths and Weaknesses of Microsoft

Strengths

Leading software company - Microsoft is world’s market leader in software technology especially in the filed of cloud computing.

Largest market with dominant market share in the world - Microsoft is one of the five largest software companies in the world, they have the largest market share in that industry. The five largest software companies are Microsoft, google, IBM, oracle, and AWS (Warner, 2019).

Vast market reach – Microsoft has extended its eservices to more than one hundred and ninety countries in the world. The larger the market, the more the revenue it generates.

Strong brand reputation – Microsoft is ranked number four in the world’s most valuable brands in the technology industry. The good and strong reputation of the company’s brand has earned it more customers all over the world and Microsoft now enjoys the traffic towards its products.

Weaknesses

Losing the market share in the internet browser field – Microsoft’s competitors like google, Firefox, and safari are expanding and gaining more market share in the internet browser segment while Microsoft it is losing it as time goes by. This gives the competitors a room to beat Microsoft in the internet browsing field of the technology industry (Warner, 2019).

Cybercrime attacks – Microsoft is a victim of the increasing cybercrime cases where hackers have managed to attack the cybersecurity of Microsoft’s windows OS many times. This vulnerability of Microsoft to hackers leaves it at danger of cybercrime theft.

Overexposure to the PC market – Most of the times, personal computers face frequent falls because of either currency fluctuations or vendors hiking prices. This negative exposure leaves Microsoft at a vulnerable position.

Assessment of Microsoft’s Resources

Company’s resources and capabilities are the elements that enable the company to maintain its competitive advantage over other companies in the same industry. Some of the Microsoft’s resources and capabilities are; large partnership networks with manufacturers all over the globe, its strong brand image, human resource capabilities which lead to advancements in its technologies, and its high compatibility with other third party products in the industry it operates in (Giron & Vialle, 2017).

Important Internal Environmental Factors for Microsoft

Internal environmental factors can be defined as the events that take place within the organization. They can either have positive or negative impact to the success of the company. In this case, the most important internal environmental factors for Microsoft include; its organizational structure. Microsoft’s organizational structure drives the company towards growth and success especially after the structural changes that were implemented in 2015. The current structure which is the product type divisional kind of structure focuses on business output. In consideration to the competitive forces in the software industry, Microsoft uses its structure to remain at the top of its competitors.

Another important internal environment factor for Microsoft is its employee retention strategy. The company is considered to have the best and well planned employee retention strategies in the software technology industry. The human resource of Microsoft provides good working environment to its employees to encourage them to continue working hard and realize the dreams of the company. For example, the company offers its employees with benefits like health insurance, flexible and reasonable working hours, and discounts when purchasing their certain services and products.

Competitor Analysis

In order to manage competition, a company should have information about its competitors in details. That information helps the company to plan on the best strategies to use to maintain a competitive advantage over its competitors. In this case, there are many other companies that operate in the same industry as Microsoft. Therefore, competition is an aspect that Microsoft cannot run away from. It instead has to put in place strategies that will give the company a competitive advantage. Microsoft’s windows operating system faces competition mainly from other software devices and products Google and Apple. Microsoft’s Xbox faces competition from Sony’s console platforms (Le, 2018). The two products have earned themselves a huge base of customers hence making competition very stiff. Microsoft’s windows phone OS faces competition from blackberry, IOS, and android operating systems. Microsoft’s mobile phones also face competition from Apple and Samsung.

Structure of the Organization and its Influence on its Performance

As mentioned earlier, Microsoft operates on a product type divisional organizational structure. This kind of organizational structure involves division in regards to certain computer software and hardware products or company’s output. Microsoft changed from its former organizational structure to the current divisional structure because it aligns with its strategies and goals. Its current structure is made up of two divisions that is the business operations division and the engineering functions division. The divisional structure has a positive impact to the organization’s performance because it provides an effective and more efficient ability in coordinating functions between the two divisions and also makes it easier for the company to respond to any changes in the market. The organizational structure of Microsoft plays a crucial role in maintaining the organization’s competitive advantage because through the divisions, any gaps can be identified easily and best measures can be put in place to prevent any further damage in time.

Microsoft’s Competitive Position

Despite the fact that Microsoft operates in a very competitive industry, it has managed to remain at the top of its competitors. There are several factors that have helped the company to maintain its competitive advantage. First of all, Microsoft focuses more on innovation. The company invests a lot in research and development to produce more innovative products that are customer satisfying. It also has an excellent management of its intellectual property. The company also maximizes on its strengths and opportunities to stay on top of its competitors.

References

Giron, A. J. L., & Vialle, P. (2017). A preliminary analysis of mergers and acquisitions by Microsoft from 1992 to 2016: a resource and competence perspective.

Le, H. T. N. (2018). Nintendo vs. Its Competitors in Marketing Efforts: From the Point of View of Customers.

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