Strategic management

Instructor : PhD. Eldi MetushiStudent : Zakariya Albaroudi

Microsoft Corporate

• Introduction

• History and development

• Vision & mission

• SWOT Analysis

• Porter’s Five forces analysis

• Capabilities & core competences

• Corporate & Business level strategy

• Strategic Partnerships

• Recommendation

Contents

• American public multinational corporation

• Established on April 4, 1975.

• With a vision by a Harvard drop-out, to see a PC on every desktop.

• headquartered in Redmond, Washington, USA.

• Microsoft is listed in the Fortune 100.

Introduction

Products• Operating Systems.

• Office Suites

• Xbox for Games

• Internet Explorer.

• Search Engine.

• Mail’s.

• Security.

• Servers.

• Visual Studio.

• Calling Device.

• Paul Allen and Bill Gates, childhood friends with a passion in computer programming

• Were seeking to make a successful business utilizing their shared skills.

• They developed the interpreter on a simulator

• They demonstrated the interpreter to MITS in New Mexico in March 1975

• They officially established Microsoft on April 4, 1975, with Gates as the CEO

History and Development4 April 1975: The beginning

1984–1994: Windows and Office

• Started developing a new OS with IBM in 1984

• Released a graphical extension for MS-DOS - Microsoft Windows.

• Moved its headquarters to Redmond on February 26, 1986.

• March 13 the company went public.

• Microsoft introduced its office suite, Microsoft Office, in 1990

1995–2005: Internet and the 32-bit era

• On May 26, 1995 Microsoft expanded its product line into computer networking and the World Wide Web.

• Released Windows 95 on August 24, 1995.

• Bill Gates handed over the CEO position on January 13, 2000 to Steve Ballmer and took role as Chief Software Architect.

2006 on: Vista and Cloud computing

• The next version of Windows – WINDOWS VISTA - Released in January 2007.

• Bill Gates retired from his role as Chief Software Architect on June 27, 2008.

• On February 12, 2009, Microsoft opened the first retail chain of Microsoft-branded retail stores in Scottsdale, Arizona.

• The same day the first store opened Windows 7 was officially released to the public

• “At Microsoft, our mission is to enable people and businesses throughout the world to realize their full potential. We consider our mission statement a commitment to our customers.”

• Diversity and inclusion are integral to Microsoft’s vision, strategy and business success.

Mission and vision

SWOT AnalysisStrength• Brand loyalty & reputation

• Easy to use software

• Tie-ups with hardware industry

• Robust financial performance

• Acquisition of Skype

Opportunities• Cloud based services

• Mobile advertising

• Mobile device industry

• Growth through acquisitions

Threats• Intense

competition

• Changing consumer behavior

• Open source projects

• Potential lawsuits

Weaknesses• Poor acquisitions and

investments

• Dependence on hardware makers

• PC markets have matured

• Slow to innovate

• American public multinational corporation

• Established on April 4, 1975.

• With a vision by a Harvard drop-out, to see a PC on every desktop.

• headquartered in Redmond, Washington, USA.

• Microsoft is listed in the Fortune 100.

Introduction

Threat of SubstitutesBrand loyalty: High

Switching Costs: HighClose relationships: High

Bargaining powerof Buyers

Switching Costs: HighBuyer concentration: High

Bargaining Powerof SuppliersSwitching costs: Low

New Entrants Cost of entry: High

Economies of scale: High Brand loyalty: High

Product differentiation: High Proprietary knowledge: High

Potential Retaliation: High

Industry RivalryConcentration of competitors: High

Diversity of competitors: HighProduct/price differentiation: High

• Tangible Resources

• Intangible Resources

• Human Resources

Capabilities and core competences

• Cash Reserves: approximately $67 billion in cash reserves

• Operating Revenue : FY2013 as $86 billion

• Ranks #34 in the Fortune 500

• Financial Leverage: not highly leveraged with a leverage ratio of0.79 in 2014

• Property and Equipment : $9.9 billion before depreciation expenses.

• Distribution Channels and Customers: including online vendors and retailers.

Tangible Resources

• Research and Development : • 1100 people • Spent $9 billion in FY’14

• Intellectual Property: 40,000 patents and many other forms of intellectual property.

• 5th most valuable brand name in the world

Intangible Resources

• Attract and retain the best talent in the information technology business.

• Educated ,dedicated and committed employees.

Human Resources

• Financial control

• Capacity for decision making

• Continuous improvements

• Brand management

• Ability to identify and respond to market trends and adapt

• Engineering and technical know-how

• Research capability

Capabilities

• Microsoft has a divisional organization structure

• Customer service staff, research and development, and sales.• Windows & Live Windows Group• Server Software• Online Services• Microsoft Business• Entertainment and Devices.

• Investments and global expansion throughout the world.

Corporate & Business level strategy

Windows 7

Windows Xp

Windows Vista

Windows 8

Windows 8.1

Windows Old

Linux

MAC

0 10 20 30 40 50 60

49.27

26.29

2.89

6.36

5.88

0.1

1.58

7.62

World Wide Desktop OS Market Share 2014

•  Involves driving and expanding innovation to achieve market excellence.

• 2009, Spent more than $1 billion working with over 1,200 suppliers that are women, minority or veteran owned.

“Cont”

Strategic PartnershipsCompany Price Year

Visio $ 1.4 Billion 2000

Navision $ 1.45 Billion 2002

aQuantive $ 6.3 Billion 2007

Fast Search $ 1.2 Billion 2008

Skype $ 8.5 Billion 2011

Yammer $ 1.2 Billion 2012

Nokia $ 7.2 Billion 2013

• HP: longest standing alliances of its kind in the industry 25 years

• Microsoft won PartnerOne Alliance Partner of the Year 2013 by HP

• IBM: the benefit of the alliance is that all parts of your solution hardware, software, and middleware will install quickly

• Dell: help business reduce the complexity and cost of deploying a server based environment

Software Alliances

• “Mobile First, Cloud First” strategy

• Product Innovation and Invention

• Reduce Poor Investments

• Strengthen Strategic alliances

• Cut down unprofitable Products

• Microsoft Research Division

Recommendation

•Thank you