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Microsoft Business Statergy

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  1. 1. Microsoft CorporationThe Business Strategy Author: Saurabh Kamaldeep Laltendu July 15th 2012 1
  2. 2. Quotes from Bill GatesEvery day were saying, „How can we keep this customerhappy?‟ How can we get ahead in innovation by doing this,because if we don‟t, somebody else will.”“Your most unhappy customers are your greatest source oflearning.”“Success is a lousy teacher.It seduces smart people into thinkingthey can‟t lose.”“As we look ahead into the nextcentury, leaders will be those whoempower others.” 2
  3. 3. IndexWe have partnered • Microsoft Profile & Offering • Vision Mission & Value • SWOT • Porters Five Force Model • Microsoft Finance • Future Strategy • Q&A 3
  4. 4. Microsoft Corporation Computer softwareIndustry Online services Video gamesFounded Albuquerque, New Mexico, United States (April 4, 1975 (1975-04-04))Founder(s) Bill Gates, Paul AllenHeadquarters Microsoft Redmond Campus, Redmond, Washington, U.S.Key people Steve Ballmer (CEO)Revenue US$ 69.94 billion (2011)Operating Income US$ 27.16 billion (2011)Net Income US$ 23.15 billion (2011)Total Assets US$ 108.7 billion (2011)Total Equity US$ 57.08 billion (2011)Employees 92,000 (2011) 4
  5. 5. Important MilestonesDate Event 1975 Microsoft foundedJan. 1, 1979 Microsoft moves from Albuquerque, New Mexico to Bellevue, WashingtonAug. 12, 1981 IBM introduces its personal computer with Microsofts 16-bit operating system, MS-DOS 1.0 13-Mar-86 Microsoft stock goes public 22-May-90 Microsoft launches Windows 3.0Aug. 24, 1995 Microsoft launches Windows 95 25-Jun-98 Microsoft launches Windows 98Jan. 13, 2000 Steve Ballmer named president and chief executive officer for MicrosoftFeb. 17, 2000 Microsoft launches Windows 2000 22-Jun-00 Bill Gates and Steve Ballmer outline Microsofts .NET strategy for Web services 31-May-01 Microsoft launches Office XPOct. 25, 2001 Microsoft launches Windows XPNov. 15, 2001 Microsoft launches XboxNov. 7, 2002 Microsoft and partners launch Tablet PC 24-Apr-03 Microsoft launches Windows Server 2003Oct. 21, 2003 Microsoft launches Microsoft Office SystemNov. 22, 2005 Microsoft launches Xbox 360Jan. 30, 2007 Microsoft launches Windows Vista and the 2007 Microsoft Office System to consumers worldwideFeb. 27, 2008 Microsoft launches Windows Server 2008, SQL Server 2008 and Visual Studio 2008 3-Jun-09 Microsoft launches Bing decision engineOct. 22, 2009 Microsoft launches Windows 7 15-Jun-10 Microsoft launches general availability of Office 2010Nov. 4, 2010 Microsoft launches Kinect for Xbox 360Nov. 10, 2010 Microsoft launches Windows Phone 7 28-Jun-11 Microsoft launches Office 365Oct. 13, 2011 Microsoft closes its acquisition of Skype 5
  6. 6. Product Divisions Server EntertainmWindows Online Business ent & and Services Division andWindows Tools Devices Live 6
  7. 7. Windows, Server and Tools, Online Services DivisionWe have partnered Windows 7 Microsoft Visual Studio Microsoft SQL Server Windows Set of Certification Programs IT consulting ("Microsoft Consulting Services") Online service MSN $ search engine Bing Cable news channel MSNBC 7
  8. 8. Business DivisionWe have partnered Microsoft Office 2010 Outlook Publisher Business Visio MS Project Enterprise resource planning (ERP) MapPoint, InfoPath and OneNote. 8
  9. 9. Entertainment and Devices DivisionWe have partnered Windows CE OS for embedded Systems Windows Phone for SmartPhones Computer Games - Microsoft Flight Simulator Series Entertainment and Microsoft Office 2011 for Mac Devices Xbox 360 Personal computer hardware - Mouse, Keyboards Game controllers - Joysticks & Gamepads 9
  10. 10. Vision Mission & Value 10
  11. 11. VisionOur vision is to create innovative technologythat is accessible to everyone and that adapts toeach persons needs. Accessible technologyeliminates barriers for people with disabilitiesand it enables individuals to take full advantageof their capabilities. 11
  12. 12. Mission & ValueMissionAt Microsoft, we work to help people and businessesthroughout the world realize their full potential. This is ourmission. Everything we do reflects this mission and thevalues that make it possible.ValuesAs a company, and as individuals, we value: Integrity andhonesty.Passion for customers, for our partners, and fortechnology.Openness and respectfulness.Taking on big challenges and seeing them through.Constructive self-criticism, self-improvement, andpersonal excellence.Accountability to customers, shareholders, partners, andemployees for commitments, results, and quality. 12
  13. 13. Mission Statement Evaluation Matrix Concern for Survival, Products Growth, Organization Customers Services Markets Profitability TechnologyMicrosoftCorporation Yes No Yes Yes Yes Self- Concern for Concern for Philosophy Concept Public Image Employees No No Yes Yes 13
  14. 14. SWOT Analysis 14
  15. 15. StrengthsWindows series, and Windows NT are globally known as thePC desktop operating system with a market share of 88%Multinational corporation operating through regionalsubsidiaries in more than 60 countriesRelatively rapid product development processes that allowfor timely updating and release of new productsRevenues and profits rising at 30% a year withmerger/acquisition or investment over past five yearsSoftware products have high name recognition, andconsumer acceptanceTop rating from Fortune for best company to work atStrong reputation for innovative productsLoyal, hardworking, and diverse workforce 15
  16. 16. WeaknessDependency on hardware manufacturers to pre-installMicrosofts PC operating systemEmployee turnover has increased from 6% for a ten yearperiod to 7.4%Falling sales in the operating systems and server software sPerceived by many as a cut-throat competitor that uses itsdominant market position to marginalize competition bystealing/destroying the competitions products, stifling productinnovation, and decreasing availability of competitor productsLittle or no significant presence in the wireless market andWindows CE has been disappointingNot a key player in the Internet space and few products forInternet applicationsProducts have a single application focus and do not workwell with or on-top of other products 16
  17. 17. OpportunitiesCheaper global telecommunication costs open new marketsas people connect to the InternetMobile phone applications and exploitation of personaldigital assistantsPopularity among people for Internet accessThe demand for personal computers in American and globalmarkets remains strong despite the growth and increasingpopularity of personal handheld devices 17
  18. 18. ThreatsApple and Linux threaten Microsofts 88% market share of thedesktop operating marketCurrency exchange rates negatively impacting revenues in theglobal marketplaceHardware manufacturers (Sun , IBM, AOL, and Apple) areissuing their own pre-bundled programs on their own hardwareRapid development of mobile devices that will displace/replacepersonal computersRecession or economic slowdown in global marketSoftware piracy of commercial and consumer software on aglobal scale threatens revenue streamsTechnology life cycle is shorter and shorterUnix dominates high-end mission-critical applications and itscustomers do not believe Windows can handle these operations 18
  19. 19. Porter’s Five Force’s Model 19
  20. 20. Industry rivalry: HIGHThe intensity of industry rivalry within the enterprise softwareindustry is affected by several factors: i) The concentration of competitors ii) Diversity of competitors, iii) Product differentiation and iv) Price differentiation.Large multinational vendors and a handful of smaller localized firmscompete in the enterprise software industryConcentration of competitors within the industry is high with bigplayers such as Oracle, Google, Apple, SAP etcThe companies within the enterprise software/server platformsindustry are very diverse.Larger companies not only produce and consult on hardware andsoftware, but also manufacture operating systems, general computersoftware, and development platformsBusiness Tie-up among Market leaders 20
  21. 21. Microsoft Vs Competitors 21
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  25. 25. Threat of New EntrantThreat of new entrants to OS, Enterprise software industry andGaming is low.  Capital requirements to enter the industry are very large  Cost to design and develop enterprise software is extremely high  Software development process is quite long and expensive due to the reality of the software development lifecycle.  Companies within the industry have already achieved economies of scale, thereby reducing the potential profit for new entrant  Considerable product differentiation within the industry.  If new company had a differentiating software major companies would takeover the new firm in order to acquire the technology for themselves.  Government policies 25
  26. 26. Threat of New Entrant Cont……….Threat of new entrants to Mobiles, Browsers and Peripherals is High.  Capital requirements to enter the industry are low  Cost to design and develop low  Many players exists in market and scope for new entrants is high 26
  27. 27. Threat of SubstitutesThere are few substitute products that compete with enterprisesoftware.The old way of maintaining and sharing company information wasmanual paper archival systems or printed reports from separatedatabases. The modern way of connecting all of a businessinformation requires enterprise software.A business could continue with building multiple disparate systems,however, they would never be able to achieve what an enterprisesoftware business solution could provide. Therefore, enterprisesoftware is more flexible, scalable, and less expensive than the oldertypes of solutions.The near absence of modern substitutes in the industry is a goodsign for the companies within the industry. 27
  28. 28. Bargaining Power of Suppliers: LOWWithin the industry, the bargaining power of suppliers is quiteminimal. The main reason is because there are few suppliers withwhom the companies must negotiate.The fact that enterprise software applications are an intellectual andintangible product rather than a physical product minimizes thenumber of suppliers required.The main type of supplier that an enterprise software company mostlikely has to deal with is one that physically records the media. Sincethe cost of physically transferring the software to media is minimal, themedia producers and manufacturers have little effect on the industryas a whole. 28
  29. 29. Bargaining Power of Buyers: LOWThe bargaining power of buyers within the enterprise softwareindustry is fairly minimal for several reasons. First, the concentrationof buyers is growing quickly; however, they are a very diverse andnon-unified group, because they all have different backgrounds andneeds.Second, more companies are deciding that enterprise software is anecessity for their business. Therefore, they are often willing to paythe going rate.Lastly, there are extremely high switching costs from one supplier toanother, due to the high cost of the related infrastructure for thesetypes of systems 29
  30. 30. Financial Performance 30
  31. 31. Revenue & Headcount Growth – 10 Years 31
  32. 32. Future Strategy 32
  33. 33. Managing Weakness Migrate perceptions and re-brand - While Microsoft has successfullybegun to alter its reputation among consumers, many IT purists and CIOsremain leery of Microsoft products because of their image as the evil empire.To manage this weakness and repair their tarnished image, Microsoft shouldre-brand as a company that serves to make business function easier andseamlessly, through enterprise software solutions. Address security concerns - As technology becomes more seamless,and as devices outside of the PC are used more extensively, consumers arebecoming more concerned about security, especially in the enterprisesoftware area.Microsoft is poised to shape consumer preferences in this area, but to do so,will need to spend considerable revenues in researching and responding tosecurity concerns. 33
  34. 34. Investing in GrowthInnovatingCreating demandInvesting in competitors andGoing global 34
  35. 35. CSC Proprietary and Confidential 35