Environmental analysis


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Environmental analysis

  1. 1. Product Category : Microsoft-Software, Operating System Category Instructors- Kerry Shields Group Member-Rajwan Siddiquee Sareh A Ahmedyar
  2. 2. Pest Analysis TechnologiPolitical Economic Social calFactors al Factors Factors Factors
  3. 3.  Sometimes Microsoft violates antitrust law, after that it doesn’t face any political barrier in home country. As we know Microsoft did in 1990. Because of their electronics product, operating software, online advertising etc. it doesn’t compromise with their product quality. From Beginning of their business they got high response politically. Microsoft participate in the public policy process in the United States , from corporate government affairs programs designed to educate and influence elected officials on key public policy issues . To avoid political noise, it has already been confirmed about their license agreement in operating country, even they pay royalty too. Political factors arises trade restriction in the host county. They face some entry barriers in a international market such as México etc due to some competitor, strategies etc. but now they overcome this problem in the country market.
  4. 4.  Recently Microsoft released a corporate bond as $2.25 billion with low borrowing rates than govt. bond. Recently they provides job to the local about 55,000 people and 35,000 internationally to remove unemployment as well as poverty within the country. By giving these opportunities, per capita income is increasing. Finally economical development is happening. Microsoft ecosystem employ 14.9 million people, make approximately $537 billion of their own revenue, and invest $175 billion in their local economies. From software sale globally, Profits were $66 billion; on revenues of $30.5 form all sales business. As a result economical growth of a country also increased. Their contribution in economy has been resulted as change of exchange rate of existing country.
  5. 5. Included under the Dynamics brand is the customer relationshipmanagement software for social networking all over the world.To be partner with govt. and communities it is making strength of socialactivities and increasing innovations.Providing every day’s updated news, hot news in yahoo page, Google pageetc.Developed Skype, facebook, Tulalip, Hi five etc social networking sites.Think about customer satisfaction, fascination. So every kind of softwarethat are producing such as windows vista, Microsoft XP, DATA baseprogram etc for ensuring social communication networking in locally as wellas in the world .
  6. 6. Microsoft is already established as operating software market inworld wide.Microsoft already rose to dominate the home computer operatingsystem market with MS-DOS from earlier stage.Dominate the office suite market with Microsoft, provided SQLserver, outlook, publisher etc also for more technologicaladvancement.Makes user friendly operating software and Provides Windows Vistafor more technological advancement in the world market.
  7. 7. The competitive analysis of Microsoft and its products include thecompetition that is in the marketplace. Microsoft identifies itscompetition in categories such as computer software, computerhardware, music, online services, servers and tools andentertainment. Some of these competitors include AppleInc, Google, IBM, Oracle and SONY. All of these companies havesimilar products and product line like Microsoft, which in fact makethem a strong competition for Microsoft. What separates Microsoftfrom the competition is the brand name, trust and loyalty that it haswith it`s customers. Microsoft strives on the most trusted and wellknown innovator of the century named Bill Gates. Bill Gates if the cofounder of Microsoft and he is the number on reason of the successof the company. All of the products that were introduced by Microsoftto the consumer market were Bill Gates creations and ideas. Someof the strengths, weaknesses, Opportunities and Threats forMicrosoft corporation include the growth of the market and thecompetition of the market.
  8. 8. Microsoft is the number one software company that develops and sellsa variety of products used by consumers and businesses. There are alot of companies in the market that are in the same industry and offerthe same products as Microsoft. Therefore, every company is usingtheir own different strategies and making marketing plans in order todevelop new and innovative ideas for the consumer market. The levelof competition and the chances of a new competitors entering themarket is relatively high in this industry. Potential entry for newcompetitors is also the factor to intense the competition in the industry.A larger number of new entrants results in more changes of intensecompetition; mainly because technology is growing at a fast rate andmore and more companies are providing new products everyday. Ifexisting firms are producing at economies of scale then the newentrants must ensure to make its entry into the market with a largeproduction scale capability to lower its fixed and variable cost per unit inorder to compete with the competitors product, in order to stay in themarket longer. It all depends on the type of product being introducedand the level of competition in the market.
  9. 9. This factor depends on the image of the company and the relationshipor loyalty of the customers to the company. More factors would includethe cost, the alternatives, value of the product and buyers` willingness.Firms mostly monitoring the trends within the industry to track thestrategies but competition not only arise within the similar industry butalso in different industry. Companies in other industry offer productswith similar features and functionality or even better act as substitutefor the products. For example, Microsoft developed the XBOX for theentertainment target of the market, likewise SONY introduced the Playstation 3 to compete with the video game industry against Microsoft.The chances of the consumers switching to the play station is highbecause SONY itself is a well known brand that Microsoft customersmay want to try something different. The competitive strength can bedetermined by market share, sales pattern, producers adding capacityfor more production, and rise in profits. As for the competition of theXBOX and Play station, Microsoft have been winning in thatdepartment by the market share.
  10. 10. The bargaining power of Microsoft is more because it is a huge suppliersof software and hardware. Microsoft enforces computer manufacturers toload Windows in their computers and place their logo on laptops, desktopsand server machines. Intel is another supplier for Microsoft on the otherhand which also demands computer manufacturers to place their logo onmachines using Intel processor. Intel and Microsoft are enforcing their termsalso by charging high cost from the computer manufacturing companies.Intel can be a good example to use to describe the bargaining power ofsuppliers. Manufacturer needs to build relationship with the supplier in orderto improve the quality and reduce the prices of the product by workingtogether for improvement in processes and reduce time to market byimplementing in their inventory. Microsoft is a massive company and mostsuppliers are willing to bargain less with the company because of the brandimage and how successful is the company in the market. For example, Dellcomputer is known for low cost and best quality computer, laptop andserver manufacturer in the industry. The key behind dell’s success ismaintaining good relationship and collaboration with the supplier ofcomputer hardware and software. This results in less bargaining with thesuppliers and if Microsoft is able to use the same strategy they will be the
  11. 11. Consumers are the final users of the product; performance ofthe companies totally dependent upon the consumers.Bargaining power of consumers is more especially when they arehuge in number and consumers purchase in large quantity. Thebargaining power of consumers is also more when products areundifferentiated and widely available. In this case consumer canask for more discounts, get promotional offers, use the onlinediscounts and extended warranty and services. As thesatisfaction level of consumer goes up more the intensity level ofcompetition increases. The power of consumers can also relateto the threats of substitutions, if the product that the consumer islooking for at a lower price they may look into alternative andother competitors such as Apple and SONY. In order forMicrosoft to satisfy their customer needs and wants they mustalways be offering discounts and promotional offers to attract thecustomers to their company. This way Microsoft will be in front ofthe competition and be able to make all the profits in the market.
  12. 12. Strengths Weaknesses SWOTAnalysis Opportunities Threats
  13. 13. The strengths of this company are product brand name, product line, financialstrength, and Distributions. These are the strengths that make Bill Gates and hiscompany successfully throughout the competition. Moreover, the brand name ofMicrosoft is well known to consumers and it is the most trusted when it come toproducts in the market. Microsoft have build a tremendous customer loyalty throughit`s brand by making sure the quality of their products satisfies their customers. Oncea product from Microsoft hits the market consumers are ready to buy the productwithout intensive research of the new product; mainly because the company does agood job of promoting and introducing the product to the market through a productintroduction presentation by Bill Gates himself. Furthermore, the product line thatMicrosoft offers include laptop computers, notebooks, windows software, games forentertainment, Cell phones and other computer devices. These strong competitiveproduct helps Microsoft stay within the competition and be able to have a success inthe consumer market. The distribution of the Microsoft products to the consumermarket is also a key component of the success of this company. Microsoft distributesit`s products through the wholesalers and then through retailers, which is the majorpart of the distribution channel. Once the products gets to the retailers, then theconsumers are able to get the products. Another way for the consumers to get thenew product is through the online services that Microsoft offers to it`s customers.This keeps Microsoft ahead of it`s competitors when it comes to distribution. Theseare the strengths that makes Microsoft a strong competitor and also separates for theother companies.
  14. 14. Some of the weaknesses that Microsoft faces in theconsumer market are the amount of new companiesoffering the same or similar products in the consumermarket everyday. Which is a concern mainly becauseMicrosoft have not been able to create a new andinnovative product that will attract the new generation ofconsumer in the market. Other weaknesses may includethe growth of other competitive companies in themarket, such as Apple and Google. Other weaknessinclude the amount of illegal downloads of the Microsoftsoftware on the internet. Most people try to download thesoftwares that Microsoft provide from other websitesrather then from the official Microsoft website; whichresult in loss of profits for the company.
  15. 15. The opportunities that are available for Microsoft in the consumermarket include cost of the products, creation of newproducts, targeting a particular market, and changing or upgradingone of their successful products. The main reason that Microsoft isas successful as it is today is because they also target a nichemarket. For example, they are going to target the niche market bydoing surveys and asking questions to their customers to see if theyare satisfied with their products. They may target the students forthe new software for their school and education purposes. This waythe company creates more opportunities in the consumer market tobe successful. One of the opportunities that Microsoft is using is theentertainment; the company has developed a successful product inthe entertainment section called the XBOX. This target the youngergenerations and it is by far miles ahead of it`s closest competitionSONY. The company always wants to know what are the needs andthe wants of the customers and they try to imply that in theirmarketing strategies.
  16. 16. Microsoft is able to detect threats by constantly reviewingthe market to observe any changes and any newcompetitors. Microsoft uses various different methods todeal with threats. For example, one of the competitorsintroduced a software that was similar to the softwares thatMicrosoft offers, Microsoft dealt with this new competitionby upgrading it`s software to a new one that work onalmost any computer. This way Microsoft made moreprofits and since the company already had a goodimage, more consumers bought Microsoft products.Also, whenever a competitor that introduces a new productor a similar product that Microsoft offers, Bill Gates use themarketing strategy to lower and upgrade their products tomaintain a strong stand against any threats that they mayface in the market.
  17. 17.  In case of Political views, sometimes they cross the rules regulation for software companies locally as well as internationally where they don’t compromise with their product quality. Sometimes for this reasons govt. can make restriction sales or production with in a country. Microsoft pays royalty to host country for their licensing agreement to operate business over their. Sometimes they don’t want to pay more royalty for operation, for that they have to convince some political leader or companies’ manager, which consume time and also reputation. In case of Economical view, they are issuing corporate bond at low borrowing rate in the market then govt. bond. It is very much harmful sometimes for public. If Govt. increase market rate of bond, then public will be in trouble. Company should not issue their bond at below rate of govt. standard rate. But Microsoft is issuing for increase their profit; sales may be for short term or may be for long term. On the other hand by employment, revenue is increasing, with this revenue, people have to pay a big amount of tax to govt. and they are getting dependent on software companies. In case of Social view, they are trying to doing their best by maintaining corporate social responsibility in the society. They are providing social networking site for building communities among people all over the world. Also it’s exposing user friendly software for all kind of people such as – video games for baby boomers, Skype soft for building strong community among people. By this way their software sales volume is increasing day by day. People are willingly taking this software product for consumption. In case of Technological views, Microsoft introduces their product with people locally as well as in the world too. For every kind of computer task, we can’t imagine without ms software. No matter what Their all product is flexible and easy to use. Maximum of their product is operating software, which are most important for any kind of technological advancement. It works undoubtedly best in the world. Undoubtedly we can say Life is impossible without operating
  18. 18.  Microsoft should issue their corporate bond in govt. rate for expansion their sales. If they want to issue in low rate, then they should go for short term investments. They should follow existing rules of local and host countries for business expansion in the host country and increase their sales. They should concentrate on the contribution of Software system to increase GDP growth rate of existing country for economic development and also for increasing sales volume. Microsoft should more carefully about their reputation because most of their product sales are being done only for reputation in worldwide. They should more explore and innovative abut their services. They can open more social networking site for best community all over the world. Microsoft has to avoid all kind of uncertainty about political violence in local country and also in foreign country.
  19. 19. Microsoft segments their markets by differentiating each of theirproducts in a different market group. The goal of a marketing strategy isto identify a target market and develop a marketing mix that will appealto those potential customers. Decisions regarding the ideal marketingmix can be organized in terms of Price, Promotion, Product, and Price.Microsoft mostly separates the software products from the otherproducts because of the level of competition with other companies inthe market. The other products that Microsoft offers are segmented bydemographic, psychographic and behavioral factors that determineseach market groups. For example, the Microsoft office target thestudent in the market for their education; it offer discounts with buy oneget one free trial with their purchase. In addition, since students aretheir target market they also tend to sell the laptop and PCs for thestudents, which results in buying the software and the hardwaretogether by targeting the students. Another example, may include thegaming industry which is one of the fastest growing industries in themarket right now. The company target the youth in order to promoteand sell their gaming product to their consumer by making new andentertaining products.
  20. 20. Present Products New ProductsPresent Markets Product Market Penetration Development New markets Market development Diversification
  21. 21. There are many different competition strategies that Microsoft can use. Competition strategies are useful to the business when the business is in trouble as it has too much competition thus their sales are affected. One change that Microsoft can take is make their software and hardware more affordable to the consumer market. Especially students who are their biggest target market. This way the prices will be lower and the sales and revenues will grow even more. The windows that stands out for Microsoft that is the best for students is the Windows Vista, which is the number source for their education purposes. Microsoft introduced Windows Vista to target the youth audience and make sure that every student would be able to use this new innovative software. Some more competition strategies are used or may be used in the future to win the customers and increase the sales and profits. Some of these changes and strategies may include, Finding new uses for a product Finding new markets for existing products Developing a wider product range Gearing the product to a specific target market, Changing the appearance, format or packaging of the product, Encouraging the customers of Microsoft to use their products more frequently Changing the components of the product "If you possess the market, you eventually possess the profits." -Bill Gates
  22. 22.  McMillian, J. (2007). The Importance of Market Segment. In Market Segmentation. Retrieved October 23, 2011, from http://www.mcmillantech.co.uk/articles/MarketSegments.pdf. Target Market Segmentation and Positioning. (January 27, 2010). . In Market Segmentation and Positioning. Retrieved October 23, 2011, from http://blog.demandmetric.com/2010/01/27/target-market- segmentation-and-positioning/. Microsoft Corporation. (2010). Microsoft Overview. In Microsoft Corporation Overview. Retrieved October 24, 2011, from http://www.hoovers.com/company/Microsoft_Corporation/rcrtif-1- 1njea3.html. Eaton, N. (June 3, 2010). The Microsoft . In Ballmer: And Microsoft’s main competitors are. Retrieved October 24, 2011, from http://blog.seattlepi.com/microsoft/2010/06/03/ballmer-and-microsofts- main-competitors-are/. Nugroho, D. Retnowulan. (2006). Starbuck`s Strategy. In Slideshare. Retrieved October 24, 2011, from http://www.slideshare.net/tommy2cruise/starbucks-strategy.