Financial Analysis Microsoft Corporation

EXECUTIVE SUMMARY

The Microsoft Corporation was established in 1975 with an aim of helping people realize their potentials through provision of technology. Microsoft Corporation is located in Washington D.C. and its shares trade in the United States securities and exchange. They have established offices in more than 100 countries dealing with the development of software, hardware and services such as consultation, solution and product support services as well as training computer developers. Microsoft primary areas of operation focuses with consumer operating systems, phones, business servers, software development tools, productivity applications, server applications and hardware. They also offer consultation and product support services, cloud-based solutions to their esteemed customers giving them the ability to download software over the Internet.

Currently Microsoft is performing low in the Stock Market and in recent weeks has gone up and down .22 points for its market share. The company stills remain profitable and shows no sign of losing too much market share in the upcoming quarter. Currently they have introduced 2 new products that I believe will contribute to the growth of its market share in the new few years. The first product is the new and improved Office 365. Although this has been a controversial product, due to the change of the single payment system to a monthly subscription service, this move should increase its current market share over the next 10 quarters by 1. The second new product, Windows 10, will also give consumers a fresh new look at the product as Microsoft has been in trouble with the release of its Windows 8 and 8.1 operating systems. An indicator of the company strength is its revenue income, which is high hence better performance; net income from Microsoft Corporation is significantly high with comparison to competitors.

S.W.O.T. ANALYSIS

(STRENGTH)

1) Brand loyalty - The Corporation over the years has been the best software and operating system provider due to its brand, which resulted to a higher market share. The software products are worldwide recognized and have consumer acceptance with numerous characteristics thus promoting competition and standardization through cost effectiveness and integration.

2) Reputation of the brand – Microsoft Corporation brands are among the most valuable products worldwide and have become eccentric to everyday personal use and within various business industries.

3) Strong channels for distribution – through the Corporation involvement with hardware producers and major retailers, they ensure that just about every PC sold has a pre-installed copy Microsoft Windows. It engages with Nokia and Dell to tighten relationship with them for better quality products.

4) Ease of use – products of Microsoft Corporation like office software and its signature operating system, Windows, are popular for their ease of use and understandability.

(WEAKNESES)

1) The corporation depends more on hardware manufacturers. The company does not produce the hardware it uses to run its Windows OS, hence it strongly depends on computer manufacturers of those hardware components to make the company successful.

2) Lack of innovation – Microsoft Corporation usually engages in research and development which they incur very huge costs but have failed to implement the knowledge obtained. The corporation has had better chances to enter new markets and produce more improved products but fail to take the chance when it reveals itself.

3) Cut-throat competitor – the corporation is viewed as using its power of market dominating the market to marginalize competition in the market by destroying the products of their competitors through innovation hence decreasing competitor’s available products.

4) Security flaws criticism – the argument behind the security of the Microsoft products is that they are very weak hence they are easily attacked by viruses especially windows which are not well protected compared to other available operating systems.

(OPPORTUNITIES)

1) Mobile phone industry – the company should exploit the market by introducing its own hardware running its Windows Platform. Mobile phone industry represents growth and could provide an opportunity to Microsoft Company to enter such a market.

2) Mobile advertising - with adverse expected growth in mobile advertising the company has an opportunity to tap the market through its intervention in mobile operating systems.

3) Cloud based services – the company has an opportunity to expand on its range of software and cloud services as the demand for those services is increasing. The introduction of its OneNote software has done that.

4) Global communications – global communications are opening new markets, which are relatively cheaper as many people are connecting to the Internet. Microsoft has taken advantage of this with the roll out of its Office 365 product.

(THREATS)

1) Competition in software products – the threat of increased competition in software products leaves no choice but for the company to venture in more improved operating system in the markets in order to compete with its major competitors.

2) Consumer change of tastes and habits – Microsoft Company should go hand in hand with consumer change in needs and even their habits to want more products than those the company has in the market in order to maintain their market share.

3) Potential lawsuits – many lawsuits against the company is a threat to the performance since defending a lawsuit is very expensive especially if the company losses the case.

4) Currency fluctuations – the exchange rates of the country currency fluctuations affect the demand for hardware and software applications that may negatively influence the revenues of the company in global market.

Reference Hafner, A. W. (2013). Retrieved from SWOT Analysis: Microsoft Corporation: http://www.bsu.edu/libraries/ahafner/awh-th-swot-ms.html International, E. (2014, January). Microsoft Corp in Toys and Games. Retrieved from http://www.euromonitor.com/microsoft-corp-in-toys-and-games/report Trejdify. (2014, August). A SWOT analysis: Can the once mighty Microsoft rise again? Retrieved from http://blog.trejdify.com/2012/08/a-swot-analysis-can-once-mighty.html