Background
Today, Microsoft Corporation is a world leader in software production, provision of services, and Internet technologies for personal computers and servers. Over the years, the company has experienced ups and downs but was able to overcome the crisis and keep the bar of the leader in the development of various software technologies and products. This work is devoted to the analysis of the problems faced by the company and the decisions taken by the company’s management.
Microsoft has many successes on its account, which resulted from the evolution of the company’s marketing and production over the years. In addition to its operating systems, the company has a stranglehold on the office suite market. Large and small enterprises use this software because it gave them tools that made it easier to process texts and create spreadsheets, presentations, and documents. The primary success of Microsoft is undoubtedly Windows NT, a family of operating systems that Microsoft has been using since the early 90s. In addition, it is possible to recall Windows 95, Windows XP, Windows 7, mobile operating, and search systems, which significantly expanded and strengthened the company’s influence on the global market.
However, Microsoft also had setbacks that negatively affected the company’s reputation. For example, Windows ME is an operating system that was released in a hurry and, as a result, lasted only a little more than a year. It was constantly faced with incompatibilities, bugs, slow and unstable work. Microsoft Vista was heavily criticized for many errors and problems, which is why the company’s management even organized a particular Windows Mojave advertising campaign. Marketing failed to implement its plans, especially after users discovered that the operating system was stuffed with DRM restrictions and consumed excessive RAM and processor resources.
In 2011, the company decided to enter the growing mobile industry and took the dominant position of Google thanks to the Bing search system. The Internet is playing an increasingly important role in human activity, as it provides quick access to a massive amount of information. It means that users need high-quality search engines, including Bing, which has many useful features and updates to compete with Google and Google Chrome. Thus, given the constant innovations and changes, Microsoft search systems will remain in demand for a long time.
Nevertheless, the same cannot be said about Microsoft’s mobile products, the production of which ended four years ago due to several factors. For example, in the last years of the life of Windows Phone, Microsoft, for some reason, began to target the commercial sector, although it was necessary to focus on the mass consumer. In addition, Windows Phone had a minimal app store. Developers were reluctant to optimize their applications for the new platform because Windows Phone used a different API, which took a lot of time and money. Thus, the field of mobile devices could become an extremely profitable and promising direction for Microsoft, but Windows Phone came out too late. If Microsoft had introduced a new operating system earlier, instead of using Windows Mobile until the last moment, the story could have turned out entirely differently.
Microsoft needs to listen to users’ words and no longer try to establish a monopoly on a particular product sector so that the company’s actions do not cause disputes and disagreements. In addition, a transparent and honest marketing policy is needed, which will convince customers of the high quality of Microsoft products. It will also serve as an essential component of the company’s reputation. Of course, Microsoft has been on the market for many years and has a stable and reliable reputation. Still, the situation on the market may change, new competitors may appear, which will have to be reckoned with and coexisted.
PEST Analysis
Microsoft has faced several political challenges over the past couple of years. In particular, some trust issues have arisen, which are severe and require solutions, unlike many other problems. Countries, primarily China, face the problem of methods of distribution and sale of Microsoft software. Relations between the United States and China are, for the most part, friendly and mutually beneficial (Warner, 2019). The United States relies heavily on China, which means that any problems and interference can cause unrest even for Microsoft. However, the issues are connected with China and the European Union, which in 2013 fined the company $ 730 million for violating trust rules. Recently, the EU changed its privacy rules, which may be the reason for continuing legal proceedings against large American companies.
Any active business’s profitability and income directly depend on the political environment, so Microsoft needs to monitor laws in other countries carefully. Over the past two years, the company’s management has spent more than ten million dollars on organizing a favorable political environment, so Microsoft is in an advantageous position (Warner, 2019). Microsoft operates in many countries, so the nation’s attitude to the company’s activities directly affects its success.
The corporation is still recovering from the changes that occurred more than a decade ago. In 2007, when the financial crisis broke out, Microsoft was forced to lay off more than 5,000 employees. Any changes in the economy can lead to devastating consequences for companies, even as big as Microsoft. The current state of the economy also impacts Microsoft’s situation, as profits fluctuate due to changes in tax rates and labor legislation. In addition, unfriendly relations between international companies can increase inflammation or hinder the import and export of materials.
In 2015, the strengthening of the dollar led to a reduction in revenues and expenses from Microsoft’s international operations. If one country is experiencing difficulties, their purchasing habits will shift only to essential goods. However, if a country’s economy is booming, they are likely to buy more products, even if they are not expediently needed (Jiang et al., 2021). Microsoft needs to act accordingly to ensure that such changes will not significantly impact the company as a whole.
In addition to economic factors, social factors have a significant impact on the company’s income and profit. The lack of tracking of cultural changes can have a negative effect on business (Lopez Giron & Vialle, 2017). The management of large companies makes a lot of efforts to learn about new trends, to study the customs and cultural traditions of the countries where their business operates. Unfortunately, Microsoft doesn’t pay much attention to changing its positioning to benefit cultures.
There is a significant increase in mobile devices, which should be fast, optimized for screen size, and easy to use. Microsoft has not easily adapted to smartphones, as most Microsoft products are designed for computers. Microsoft needs to make some adjustments in its attitude towards mobile device users if the company wants to succeed in this field. For example, it makes sense to include smartphones as the central part of their marketing strategies; otherwise, other companies will take the initiative.
Microsoft is a technology company that develops and distributes digital software. The corporation is affected by any changes in the technology industry: the old technology is discarded as soon as a new one is developed. The two main competitors, Apple and Google, pose a constant threat to Microsoft, as they adapt more easily and quickly to continuous changes. If Microsoft does not take any action, it will most likely lead to a devastating loss of profits (Warner, 2019). Fortunately, Microsoft invests a lot in innovation, research of new technologies. For example, the company has achieved profit growth after the introduction of cloud services. Nevertheless, the corporation is not entirely familiar with mobile technologies, which are gradually becoming a priority.
SWOT Analysis
Strengths
- A leading position in the global software technology market, especially in the field of cloud computing. Microsoft is the world’s largest operating system developer and a top cloud player. In the third fiscal quarter of 2020, the number of daily users of the Microsoft Teams remote work solution increased by 70% – from 44 million to 75 million within six weeks; and increased by 110% in the four months prior.
- Microsoft ranks second in the world by market value, being the world’s largest company with a dominant market share. It also holds the largest market share with 3% growth among the five largest cloud service providers.
- Microsoft has a comprehensive market coverage, operating in more than 190 countries around the world.
- The corporation demonstrates constant and steady growth in the cloud business based on profit results.
- The company’s management resorts to effective and robust marketing strategies that impact people around the world.
Weaknesses
- Microsoft focuses entirely on the PC market, which is often subject to falls due to rising supplier prices and currency fluctuations. This factor puts the company in a vulnerable and periodically dangerous position.
- Currently, there is a constant increase in cybercrime, which negatively affects the company’s activities. Hackers launch attacks on the cybersecurity of Windows operating systems.
- Microsoft has failed to increase sales of its hardware products, such as computers and Surface pro phones. The corporation lags in innovation and advanced technology, while Apple and Google are quickly making their way.
One of the organizational problems of Microsoft is the mobile direction of activity, which is difficult for the company. This problem is evident against the background that companies are beginning to allow their employees to use Android and iOS devices instead of the traditional Windows and BlackBerry devices for the corporate segment. The attention of consumers is entirely attracted by new devices – smartphones and tablets in which Microsoft has not yet reached a confident position.
Potential marketing solutions to this problem are the following: the development of a recognizable Microsoft flagship phone, like Nexus or iPhone; the expansion of the Windows Phone app store; the corporation’s transition to the Android system. Presumably, the field of mobile technologies has already been conquered by other companies, and Microsoft is unlikely to regain a significant mobile device sales sector, even despite the high quality of its products. The best strategy seems to be the transition to the Android mobile system. Even a Windows Phone-based phone with a 50-megapixel camera will not convince connoisseurs of portable electronics to reconsider their preferences in favor of a mobile platform that is not currently in high demand.
References
Jiang, Z., Sun, J., & Wei, K. (2021). The Application of PEST Analysis and POCD Framework to Skydio’s Venture Capital Investment. In 2021 International Conference on Financial Management and Economic Transition (FMET 2021) (pp. 202-208). Atlantis Press.
Lopez Giron, A. J., & Vialle, P. (2017). A preliminary analysis of mergers and acquisitions by Microsoft from 1992 to 2016: a resource and competence perspective.
Warner, J. P. (2019). Microsoft: A Strategic Audit.