Microsoft conducts a PEST analysis to understand the political, economic, social, and technological factors impacting its business. Politically, Microsoft sometimes faces antitrust issues but also lobbies governments. Economically, Microsoft employs many workers and contributes significantly to economies through software sales and investments. Socially, Microsoft provides popular social networking and communication tools. Technologically, Microsoft dominates the operating system and office software markets through products like Windows and Office.

1. Product Category : Microsoft-
Software, Operating System Category
Instructors- Kerry Shields
Group Member-Rajwan Siddiquee
Sareh A Ahmedyar

2. Pest
Analysis
Technologi
Political Economic Social
cal
Factors al Factors Factors
Factors

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.  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. Included under the Dynamics brand is the customer relationship
management software for social networking all over the world.
To be partner with govt. and communities it is making strength of social
activities and increasing innovations.
Providing every day’s updated news, hot news in yahoo page, Google page
etc.
Developed Skype, facebook, Tulalip, Hi five etc social networking sites.
Think about customer satisfaction, fascination. So every kind of software
that are producing such as windows vista, Microsoft XP, DATA base
program etc for ensuring social communication networking in locally as well
as in the world .

6. Microsoft is already established as operating software market in
world wide.
Microsoft already rose to dominate the home computer operating
system market with MS-DOS from earlier stage.
Dominate the office suite market with Microsoft, provided SQL
server, outlook, publisher etc also for more technological
advancement.
Makes user friendly operating software and Provides Windows Vista
for more technological advancement in the world market.

8. The competitive analysis of Microsoft and its products include the
competition that is in the marketplace. Microsoft identifies its
competition in categories such as computer software, computer
hardware, music, online services, servers and tools and
entertainment. Some of these competitors include Apple
Inc, Google, IBM, Oracle and SONY. All of these companies have
similar products and product line like Microsoft, which in fact make
them a strong competition for Microsoft. What separates Microsoft
from the competition is the brand name, trust and loyalty that it has
with it`s customers. Microsoft strives on the most trusted and well
known innovator of the century named Bill Gates. Bill Gates if the co
founder of Microsoft and he is the number on reason of the success
of the company. All of the products that were introduced by Microsoft
to the consumer market were Bill Gates creations and ideas. Some
of the strengths, weaknesses, Opportunities and Threats for
Microsoft corporation include the growth of the market and the
competition of the market.

9. Microsoft is the number one software company that develops and sells
a variety of products used by consumers and businesses. There are a
lot of companies in the market that are in the same industry and offer
the same products as Microsoft. Therefore, every company is using
their own different strategies and making marketing plans in order to
develop new and innovative ideas for the consumer market. The level
of competition and the chances of a new competitors entering the
market is relatively high in this industry. Potential entry for new
competitors is also the factor to intense the competition in the industry.
A larger number of new entrants results in more changes of intense
competition; mainly because technology is growing at a fast rate and
more and more companies are providing new products everyday. If
existing firms are producing at economies of scale then the new
entrants must ensure to make its entry into the market with a large
production scale capability to lower its fixed and variable cost per unit in
order to compete with the competitors product, in order to stay in the
market longer. It all depends on the type of product being introduced
and the level of competition in the market.

10. This factor depends on the image of the company and the relationship
or loyalty of the customers to the company. More factors would include
the cost, the alternatives, value of the product and buyers` willingness.
Firms mostly monitoring the trends within the industry to track the
strategies but competition not only arise within the similar industry but
also in different industry. Companies in other industry offer products
with similar features and functionality or even better act as substitute
for the products. For example, Microsoft developed the XBOX for the
entertainment target of the market, likewise SONY introduced the Play
station 3 to compete with the video game industry against Microsoft.
The chances of the consumers switching to the play station is high
because SONY itself is a well known brand that Microsoft customers
may want to try something different. The competitive strength can be
determined by market share, sales pattern, producers adding capacity
for more production, and rise in profits. As for the competition of the
XBOX and Play station, Microsoft have been winning in that
department by the market share.

11. The bargaining power of Microsoft is more because it is a huge suppliers
of software and hardware. Microsoft enforces computer manufacturers to
load Windows in their computers and place their logo on laptops, desktops
and server machines. Intel is another supplier for Microsoft on the other
hand which also demands computer manufacturers to place their logo on
machines using Intel processor. Intel and Microsoft are enforcing their terms
also by charging high cost from the computer manufacturing companies.
Intel can be a good example to use to describe the bargaining power of
suppliers. Manufacturer needs to build relationship with the supplier in order
to improve the quality and reduce the prices of the product by working
together for improvement in processes and reduce time to market by
implementing in their inventory. Microsoft is a massive company and most
suppliers are willing to bargain less with the company because of the brand
image and how successful is the company in the market. For example, Dell
computer is known for low cost and best quality computer, laptop and
server manufacturer in the industry. The key behind dell’s success is
maintaining good relationship and collaboration with the supplier of
computer hardware and software. This results in less bargaining with the
suppliers and if Microsoft is able to use the same strategy they will be the

12. Consumers are the final users of the product; performance of
the companies totally dependent upon the consumers.
Bargaining power of consumers is more especially when they are
huge in number and consumers purchase in large quantity. The
bargaining power of consumers is also more when products are
undifferentiated and widely available. In this case consumer can
ask for more discounts, get promotional offers, use the online
discounts and extended warranty and services. As the
satisfaction level of consumer goes up more the intensity level of
competition increases. The power of consumers can also relate
to the threats of substitutions, if the product that the consumer is
looking for at a lower price they may look into alternative and
other competitors such as Apple and SONY. In order for
Microsoft to satisfy their customer needs and wants they must
always be offering discounts and promotional offers to attract the
customers to their company. This way Microsoft will be in front of
the competition and be able to make all the profits in the market.

13. Strengths
Weaknesses
SWOT
Analysis
Opportunities
Threats

14. The strengths of this company are product brand name, product line, financial
strength, and Distributions. These are the strengths that make Bill Gates and his
company successfully throughout the competition. Moreover, the brand name of
Microsoft is well known to consumers and it is the most trusted when it come to
products in the market. Microsoft have build a tremendous customer loyalty through
it`s brand by making sure the quality of their products satisfies their customers. Once
a product from Microsoft hits the market consumers are ready to buy the product
without intensive research of the new product; mainly because the company does a
good job of promoting and introducing the product to the market through a product
introduction presentation by Bill Gates himself. Furthermore, the product line that
Microsoft offers include laptop computers, notebooks, windows software, games for
entertainment, Cell phones and other computer devices. These strong competitive
product helps Microsoft stay within the competition and be able to have a success in
the consumer market. The distribution of the Microsoft products to the consumer
market is also a key component of the success of this company. Microsoft distributes
it`s products through the wholesalers and then through retailers, which is the major
part of the distribution channel. Once the products gets to the retailers, then the
consumers are able to get the products. Another way for the consumers to get the
new 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. These
are the strengths that makes Microsoft a strong competitor and also separates for the
other companies.

15. Some of the weaknesses that Microsoft faces in the
consumer market are the amount of new companies
offering the same or similar products in the consumer
market everyday. Which is a concern mainly because
Microsoft have not been able to create a new and
innovative product that will attract the new generation of
consumer in the market. Other weaknesses may include
the growth of other competitive companies in the
market, such as Apple and Google. Other weakness
include the amount of illegal downloads of the Microsoft
software on the internet. Most people try to download the
software's that Microsoft provide from other websites
rather then from the official Microsoft website; which
result in loss of profits for the company.

16. The opportunities that are available for Microsoft in the consumer
market include cost of the products, creation of new
products, targeting a particular market, and changing or upgrading
one of their successful products. The main reason that Microsoft is
as successful as it is today is because they also target a niche
market. For example, they are going to target the niche market by
doing surveys and asking questions to their customers to see if they
are satisfied with their products. They may target the students for
the new software for their school and education purposes. This way
the company creates more opportunities in the consumer market to
be successful. One of the opportunities that Microsoft is using is the
entertainment; the company has developed a successful product in
the entertainment section called the XBOX. This target the younger
generations and it is by far miles ahead of it`s closest competition
SONY. The company always wants to know what are the needs and
the wants of the customers and they try to imply that in their
marketing strategies.

17. Microsoft is able to detect threats by constantly reviewing
the market to observe any changes and any new
competitors. Microsoft uses various different methods to
deal with threats. For example, one of the competitors
introduced a software that was similar to the software's that
Microsoft offers, Microsoft dealt with this new competition
by upgrading it`s software to a new one that work on
almost any computer. This way Microsoft made more
profits and since the company already had a good
image, more consumers bought Microsoft products.
Also, whenever a competitor that introduces a new product
or a similar product that Microsoft offers, Bill Gates use the
marketing strategy to lower and upgrade their products to
maintain a strong stand against any threats that they may
face in the market.

18.  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

19.  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.

20. Microsoft segments their markets by differentiating each of their
products in a different market group. The goal of a marketing strategy is
to identify a target market and develop a marketing mix that will appeal
to those potential customers. Decisions regarding the ideal marketing
mix can be organized in terms of Price, Promotion, Product, and Price.
Microsoft mostly separates the software products from the other
products because of the level of competition with other companies in
the market. The other products that Microsoft offers are segmented by
demographic, psychographic and behavioral factors that determines
each market groups. For example, the Microsoft office target the
student in the market for their education; it offer discounts with buy one
get one free trial with their purchase. In addition, since students are
their target market they also tend to sell the laptop and PCs for the
students, which results in buying the software and the hardware
together by targeting the students. Another example, may include the
gaming industry which is one of the fastest growing industries in the
market right now. The company target the youth in order to promote
and sell their gaming product to their consumer by making new and
entertaining products.

21. Present Products New Products
Present Markets
Product
Market Penetration
Development
New markets
Market development Diversification

22. 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

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