Issues
Microsoft depends on the sale of computer hardware by Original Equipment Manufacturers (OEMs) for the sale of its software products. However, the dominance of PCs in the market is waning slowly. Mobile electronic devices are the technological devices of the future.
These mobile devices include smartphones, tablet computers, and entertainment devices. Microsoft has been unable to capture this market. Google and Apple are some of the companies that are dominant in this market. Microsoft attempted to launch a smartphone to capture this market. However, the launch was unsuccessful.
Development of various technological products threatens to lead to the obsolescence of Microsoft’s products. Cloud computing is one of the technological developments.
Developments in cloud computing would pose a serious threat to the company since it sells its software products in a ‘box.’ This necessitates the company to undertake huge investments in cloud computing. This would enable the company to exert its influence in this technology at its early stage of development.
The huge size of Microsoft makes it difficult for the company to make decisions quickly. This reduces its competitiveness. The ability to make quick decisions enables companies in the industry to launch new products quickly.
SWOT Analysis
Strengths
- Microsoft has a strong brand name.
- The company has good financial performance.
- Microsoft software applications dominate the market.
Weaknesses
- The large size of the company increases its bureaucracy.
- The company is unable to attract talented employees.
Opportunities
- Venturing into emerging markets would increase profitability of the company.
- Acquisitions would increase the competitiveness of the company.
- Collaborations with companies that manufacture smartphones would increase the competitiveness of the company.
Threats
- There is stiff competition in the smartphone market.
- There is a significant reduction in the sale of PCs.
EFE Matrix
Microsoft has a rating of 3.7 from the EFE matrix. This value is significantly lower than industry average. In ability to attract talented employees is one of the major problems that the company faces. In addition, stiff competition in the smartphone market poses a serious threat to Microsoft.
Alternative Courses of Action
The technology industry is poised for a new revolution. The revolution favors the development of mobile devices. The internet would be one of the major means that companies would use to offer various products. It is a fact that Microsoft lags behind in the development of various products that respond to the current needs of the market. Therefore, the company should use its financial muscle to force its way into the market.
Vertical integration is one of the methods that the company may use to force its way into the market. The company should acquire smaller companies that offer cloud computing and online security services. During the early stages of the development of the PC, Microsoft used this strategy to dominate the market. Using a similar strategy would enable the company to conquer the market.
The company may also form strategic collaborations with various companies that manufacture smartphones. The company should provide software that would help in running the smartphones of these companies. This strategy would enable the company to increase the sale of various software devices. It would help in countering revenue losses due to the reduction in the sales of PCs that use the company’s operating system.
Microsoft may also strive to develop various products that respond to the market trends ‘in-house.’ It is a fact that the company has vast experience in developing various successful products. The company should tap into this knowledge to develop products that would be successful in the market.
Prioritization of the Course of Action
Vertical integration is the most efficient strategy that the company should use to force its way into the market. Vertical integration would enable the company to acquire the capabilities of other companies (Thompson & Martin, 2010). This would enable Microsoft to improve its competitiveness. However, it is vital for the company to ensure that it reorganizes its management structure.
This would ensure that vertical integration does not increase the bureaucracy of the company (Hill & Jones, 2009). The bureaucracy of the company may limit the efficiency of vertical integration. Forming strategic collaborations would also enable the company to force its way into the market.
However, this strategy may not enable the company to conquer the market. The development new products ‘in-house’ may not improve the competitiveness of the company. Microsoft does not possess the capabilities that would enable it to develop products that would conquer the market.
Implementation Plan
It is vital for Microsoft to ensure that launches successful products as soon as possible. Failure to launch successful may make the company lose its competitive edge. This would make it difficult for the company to launch successful products in the future. Vertical integration would enable the company to acquire the capabilities of other companies. In addition, it would acquire the products of the company.
This would help in improving the image of Microsoft. Microsoft should use the acquisitions as a launching pad to introduce other products. Microsoft should acquire companies that manufacture various mobile devices.
In addition, the company should acquire companies that provide cloud computing and online security services. Microsoft should ensure that it incorporates the services of these companies into its new product offerings. This would enable the company to improve the competitiveness of its products.
References
Hill, C. & Jones, G.R. (2009). Strategic management: An integrated approach: Theory. Belmont, CA: Cengage Learning.
Thompson, J.L. & Martin, F. (2010). Strategic management: Awareness & change. Belmont, CA: Cengage Learning.