Term Paper on "Macro-Environment Microsoft Corporation: Strengths, Weaknesses, Threats"

Term Paper 4 pages (1763 words) Sources: 1+

[EXCERPT] . . . .

Macro-Environment

Microsoft Corporation: Strengths, Weaknesses, Threats, and Opportunities

Describe the organization and explain its major strengths and weaknesses

The Microsoft Corporation was founded in 1975. Its CEO and founder Bill Gates, is one of the richest and most powerful business leaders in the world today. If you've used a computer recently, there is a good chance that you have used one of Microsoft's products -- either its mainframe system Windows or its word processing program Microsoft Word. Microsoft Windows remains the unquestioned market leader of computer desktop technology. The organization's major strength is its ubiquity. To be functional in the business world today, every person must have some familiarity and fluency with Microsoft's products.

Microsoft is so ingrained as a brand, that with the exception of some companies that strenuously attempt to avoid it by using non-proprietary software, or Mac devotees, the idea of shifting to a different system than Windows for most businesses would prove too costly and complicated, logistically and in terms of training personnel in the new system. However, Microsoft has many weaknesses, because of its size and outreach as a company. There is widespread criticism that hackers can easily impinge upon its software because knowledge of the inner workings of its systems is so common. Also, its size means that it has proved unable to capitalize on niche market trends, like the exploding downloadable music industry dominated by Apple and the iPod.

General Environmental: Strengths, Weakness, Opportunities, and Threats

Microsoft's main strength lies in its branding. Microsoft's main advantage is that it has "a well-recognized brand," unlike its main rival Apple that is popular to a specific demographic of younger users. (MTV enters crowded downloadable market," CNN Technology, AP Wire, 2006) Currently, Microsoft is integrated into the PC culture of so many homes and business networks Microsoft is unlikely to ever worry about losing its market share entirely, in the near future. But no organization can continue to rest on its laurels in Microsoft's industry. The current climate in the computer and information technology industry is extremely volatile. This means that there may be many opportunities in the future to capitalize upon for Microsoft, but also many threats to its dominance in the far future. Microsoft must keep its eye on the future, rather than simply try to play 'catch up' in the present, in some key areas.

Who poses these threats? Linux, the free software code developed by a global community of programmers is now the world's fastest growing operating system and number two behind Microsoft. (Lu Stout, 2006) Companies such as Google continue to challenge Microsoft's hold on various specific aspects of its business, such as the need for an effective Internet search engine. Also, Apple has eked out a market in the area of downloadable music with its nearly ubiquitous iPod. All of these companies pose substantial threats to different areas of Microsoft's business.

Strategic Plan: two Sets of tactical and operational plans

Thus far, to circumvent some of these threats, the Microsoft Corporation has begun to develop rival products. Recently, it released a test version of a product to help workers to simultaneously find information on the Microsoft computer desktop, the Internet and corporate networks. This product is supposed to counter the market leadership of the search engine Google. Like Google, the Microsoft Internet search engine is free and it can be added on to Microsoft's current search engine designed to scour the Microsoft PC desktop. The search engine is available as a free download and will be automatically included in the next version of Windows, called Vista.

However, the announcement of this new search engine was somewhat anticlimactic: "For about a year, Google has offered a similar free download, which can be used with Google's own search technology for businesses, as well as those from a few other companies. Matthew Glotzbach, head of products for Google enterprise, said he had been expecting Microsoft to follow with its own offering." ("Microsoft rolls-out corporate search tool." CNN: Technology. AP Wire)

Microsoft's forays into the area of downloadable music to rival Apple have been equally disappointing.

To lure users away from Apple, Microsoft created a service called URGE. URGE came integrated into the newest version of Microsoft Corporation's Windows Media Player. URGE offered 2 million tracks, which could be purchased individually for $.99 cents or users could select an option that allowed unlimited downloads at a monthly rate of $9.95, or $14.95 which allowed URGE subscribers to transfer songs to compatible portable music players. Apple's iTunes service offered no such subscription option.

But because Microsoft is not a first-mover in the market, and Apple has established a lock on this aspect of the business, this means that URGE's potential to rival Apple's iTunes is quite doubtful. The fact that URGE is not compatible with Apple's Macintosh computers or Apple's market-leading iPod digital music player, combined with the availability of music on Internet file-sharing networks, "has made subscription music plans a tough sell." (MTV enters crowded downloadable market," CNN Technology, AP Wire, 2006)

To circumvent these two threats posed by two different flanks, that of the Internet search engine and downloadable music, Microsoft must endeavor to make sure that it is offering not simply comparable offerings but innovative products in these areas to attract new users. What to do when 'Google' is a verb and iPods are synonymous with MP3 players, just as Windows is synonymous with desktops? In terms of downloadable music, Microsoft hopes that streaming videos will be one way to offer an additional service. But will persons be willing to pay more, given that one of the most attractive components of MP3 players is the fact that it offers such a portable form of music?

Microsoft seems to be 'onto' a better tactical plan against the Google threat, as it is attempting to offer a more bettered- filtered way of dispensing information to users and allows users to use a search engine to search their entire computer. But this added component, as Google also offers a similar downloadable service, is not enough.

Instead of striving to stay one step ahead of its competitors, Microsoft must regroup and refocus its organizational eye upon the far rather than the near future. This capitalizes upon its great strength -- its size allows it to divert financial resources to long-term R&D while still drawing in revenue from its desktop products. Also, because of Microsoft's skillful branding, if it takes stock of its current place and conducts intensive R&D at this juncture, it will remain a leader in its core areas of software.

The overall goal of the anti-Google campaign must be to create a better, user-friendlier search engine device. Step one of Microsoft's strategic plan against Google must be to create a prototypical model, with additional features, such as prompts to help users navigate the web to the maximum degree of efficacy. Only then can Microsoft enter step two, to market this, not just as a rival to Google, but as an improvement on the current features of Google. Then, step three will be to make the ease of downloading this product an improvement upon the rival Google desktop and Internet scouring engine.

The challenge of Apple is even more worrisome to Microsoft's current dominance. None of Microsoft's proposed challenges to Apple seem like really feasible ways to challenge Apple's lock on the business -- and the idea of subscription services, forcing a commitment for young persons with fickle musical tastes seems even less advisable. Strategically, Microsoft's plan must shift. Instead of offering the same features as Apple, Microsoft must stress another entertainment option that targets the same consumer base as Apple. One of the greatest dangers of the iPod threat is not simply the downloadable music component of Apple's iTunes service, but the fact that such music means that young users may become more attracted to Macs for use at home, because they are first interested in technology through Apple.

Microsoft has one weapon that Apple does not possess to attract teens and young technically savvy consumers -- the Xbox. Along with its new search engine, the new Microsoft Vista will also boast the Xbox Live game and entertainment network to the Windows platform. In its new strategic plan, Microsoft could use the Xbox to market music, perhaps by creating do-it-yourself music videos, splicing, and mixing through the computer game technology. Step one, tactically would be to research this possibility, step two, to beta-test it, and step three, to market it in the next release of the Xbox. (Microsoft Announces Spectacular Windows Vista Title Lineup," Microsoft Press Release, 2006)

Rational Decision-making model

In terms of feasibility, obviously Microsoft would have to continue to test these technological innovations in both strategic plans. However, for Microsoft to stay as it is and merely offer modified or inferior versions of competing technology will not create a greater sense of consumer satisfaction with Microsoft's product. Consumers are unlikely to choose either the Microsoft search engine or downloadable music devices… READ MORE

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