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 I would like to express my special thanks to Lakshmi


Ma’am for giving me the golden opportunity to do
this wonderful project . It helped me learn new
things. I am really thankful to her . Secondly , I
would like to thank my parents and friends who
helped me a lot in finalizing this project within the
stipulated time .
5 PORTER
ANALYSIS for Microsoft
Introduction
MICROSOFT CORPORATION
IS AN AMERICAN MULTINATIONAL COMPUTER
TECHNOLOGY CORPORATION. IT DEVELOPS,
MANUFACTURES, LICENSES, AND SUPPORTS A
WIDE RANGE OF SOFTWARE PRODUCTS FOR
COMPUTING DEVICES. MICROSOFT'S BEST-
SELLING PRODUCTS
ARE THE MICROSOFT WINDOWS OPERATING
SYSTEM AND THE MICROSOFT OFFICE SUITE OF
PRODUCTIVITY SOFTWARE. THESE PRODUCTS
HAVE PROMINENT POSITIONS IN THEIR
RESPECTIVE MARKETS, WITH MARKET SHARE
ESTIMATES AS HIGH AS 90% OR MORE FOR
MICROSOFT WINDOWS AND FOR MICROSOFT
OFFICE. ONE OF BILL GATES' KEY VISIONS FOR
THE COMPANY WAS TO
“ TO GET A WORKSTATION RUNNING OUR
SOFTWARE ONTO EVERY DESK
AND EVENTUALLY IN EVERY HOME ”
" .
William Henry Gates III popularly known as Bill Gates is an American business
magnate , investor, author, philanthropist, and humanitarian. He is best known as
the principal founder of Microsoft Corporation , he found the company along with
Paul Allen. A Harvard graduate Gates has been criticized heavily for his anti-
competitive business tactics nevertheless he still is considered as one of the most
influential people on the planet . The
Microsoft Corporation is now headed by CEO Satya Nadella after Steve Ballmer .
Microsoft Corp falls under the telecommunication & electronics sector and the IT
sector . Which we will discuss shortly .

Paul Allen
Bill Gates

Satya Nadella
Table Of Contents

 A brief introduction on electronics &


telecommunication sector and IT sector
 Products and Services offered by Microsoft Corp.
 Porter’s 5 rule analysis
 Microsoft Corp’s 5 porter analysis
 Microsoft’s performance in the market
 Bibliography
TELECOMMUNICATION INDUSTRY
 The telecommunications industry is broader than it was in the past. It
encompasses multiple service providers, including telephone
companies, cable system operators, Internet service providers, wireless
carriers, and satellite operators. The industry today includes software-
based applications with a communications emphasis and intermediate
layers of software incorporated into end-to-end communication
services. It also includes suppliers of telecommunications equipment
and software products sold directly to consumers and also to service
providers, as well as the telecommunications service providers .
 India is currently the world’s second-largest telecommunications
market with a subscriber base of 1.17 billion and has registered strong
growth in the past decade and half
…CONTINUED
 The broad range and large number of companies that contribute to the
telecommunications industry are evident in the following list of examples:

 Networking service providers across the Internet and the PSTN, wireless
carriers, and cable operators. Examples include AT&T, Comcast, Verizon, and
DirecTV.
 Communications equipment suppliers that are the primary suppliers to service
providers. Examples include Cisco, Lucent, and Motorola.
 Networking equipment suppliers selling products to end-user organizations
and individuals. Examples include Cisco’s Linksys division and Hewlett-
Packard (local area networking products).

 Semiconductor manufacturers, especially those supplying system-on-a-chip


solutions for the telecommunications industry. Examples include Texas
Instruments, Qualcomm, Broadcom, and STMicroelectronics.
….CONTINUED
 Suppliers of operating systems that include a networking stack.
Microsoft is an example.
 Software suppliers, especially those selling infrastructure and
applications incorporating or based on real-time media. Examples
include IBM, RealNetworks (streaming media), and BEA (application
servers).
 Utility or on-demand service providers selling real-time
communications-oriented applications. Examples include AOL and
Microsoft (instant messaging) and WebEx (online meetings).
 Consumer electronics suppliers with communications-oriented
customer-premises equipment and handheld appliances. Examples
include Motorola and Nokia (cell phones), Research in Motion
(handheld e-mail appliances), Polycom (videoconferencing terminals),
Microsoft and Sony (networked video games), and Panasonic
(televisions).
Information Technology (IT) Sector
 Information technology deals with the storage,
processing and distribution of information. During the
decade, the industry has gained global attention due to a
series of political, technological and socioeconomic
events. India is witnessing the emergence of information
technology hubs in Bangalore, Mumbai, Hyderabad and
Chennai.
 The Silicon Valley and Bangalore both share many same
aspects in the development of Information technology
such as pleasant climate, skilled workforce, presence of
high quality educational, technological and scientific
centers and access to markets.
 It is playing an important role in economic
development in a broader sense, beyond just
economic growth. The IT sector is one of the largest
employers of women, and therefore, can play a
crucial role in women empowerment and the
reduction of gender inequalities.
 Some of the biggest IT service providers in India
include IBM ,HP and Microsoft as well as Indian
based companies like TATA Consultancy Services
(TCS) and Wipro
The IT industry in India is a key part of the country’s economy. In
2013, information technology and its various subsectors
represented 8 percent of the nation’s overall GDP, making it the
fifth largest industry in India. In the 2014/15 financial year alone,
the IT industry in India generated an annual revenue of around 120
billion U.S. dollars, a significant increase from around 60 billion
U.S. dollars in 2008/09. Of this revenue in 2015, the majority, 98.1
billion U.S. dollars, was generated in exports while domestic
revenue totaled more than 20 billion U.S. dollars.
Products and Services offered by
Microsoft Corp.
 Over 1 billion Windows users. Over 500 million Windows
10 users. Over 1.2 billion Microsoft Office users. Over
400 million Outlook.com users. Over 3 billion Skype
minutes a day. Over 669,000 Windows Store apps. That’s
the stats of Microsoft.
 You have Microsoft Software and Microsoft
Servers and Microsoft Mobile Services and Microsoft
Operating Systems and Microsoft Office and Microsoft
Services and Microsoft Hardware and Microsoft
Studios to explore more Microsoft products, services,
tools, apps, and games.

MICROSFT SOFTWARE


MICROSOFT OFFICE
MICROSOFT OS
Other products offered by Microsoft
Porter's Five Forces

Porter's Five Forces is a simple but


powerful tool for understanding the
competitiveness of your business
environment, and for identifying your
strategy's potential profitability.
SWOT Analysis of Microsoft Corp
MICROSOFT CORP. 5
PORTER ANALYSIS
 Microsoft Corporation Porter Five (5) Forces Analysis for Technology
Industry
 Threat of New Entrants or New Entry (Moderate Force)
 In this aspect of the Five Forces analysis, the focus is on the influence of new entrants on
the computer hardware and software industry environment. The intensities of external
factors that lead to the moderate force of the threat of new entry against Microsoft are as
follows:
 High cost of brand development (weak force)
 Moderate cost of doing business (moderate force)
 Moderate switching costs (moderate force)

 How Microsoft Corporation can tackle the Threats of New Entrants


 By innovating new products and services. New products not only brings new customers to
the fold but also give old customer a reason to buy Microsoft Corporation ‘s products.
 By building economies of scale so that it can lower the fixed cost per unit.
 Building capacities and spending money on research and development. New entrants are
less likely to enter a dynamic industry where the established players such as Microsoft
Corporation keep defining the standards regularly. It significantly reduces the window of
extraordinary profits for the new firms thus discourage new players in the industry.
.  Bargaining Power of Microsoft’s Suppliers (Moderate Force)
 Microsoft’s business depends on supply conditions. This aspect of the Five
Forces analysis outlines the influence of suppliers on the computer hardware
and software industry environment. The following external factors and their
intensities maintain the weak force of the bargaining power of suppliers on
Microsoft Corporation:
 Moderate size of suppliers (moderate force)
 Moderate population of suppliers (moderate force)
 Moderate overall supply (moderate force)

How Microsoft Corporation can tackle Bargaining Power of the


Suppliers
 By building efficient supply chain with multiple suppliers.
 By experimenting with product designs using different materials so that if the
prices go up of one raw material then company can shift to another.
 Developing dedicated suppliers whose business depends upon the firm. One of
the lessons Microsoft Corporation can learn from certain companies is how
these companies developed third party manufacturers whose business solely
depends on them thus creating a scenario where these third party
manufacturers have significantly less bargaining power compare to the these
actual companies
.  Bargaining Power of Microsoft’s Customers/Buyers (Moderate Force)
 Microsoft needs to continue satisfying customers, who significantly determine the
company’s performance. The impact of customers or consumers on the computer
hardware and software industry environment is evaluated in this aspect of the Five
Forces analysis. Microsoft must respond to the moderate force of the bargaining
power of customers, based on the following external factors and their intensities:
 Low substitute availability (weak force)
 Moderate switching costs (moderate force)
 High quality of information (strong force)

 How Microsoft Corporation can tackle the Bargaining Power of Buyers


 By building a large base of customers. This will be helpful in two ways. It will reduce
the bargaining power of the buyers plus it will provide an opportunity to the firm to
streamline its sales and production process.
 By rapidly innovating new products. Customers often seek discounts and offerings
on established products so if Microsoft Corporation keep on coming up with new
products then it can limit the bargaining power of buyers.
 New products will also reduce the defection of existing customers of Microsoft
Corporation to its competitors.
 Threat of Substitutes or Substitution (Weak Force)
 Substitutes can reduce Microsoft’s market share. The effects of substitutes
on firms and their industry environment are determined in this aspect of
the Five Forces analysis. In Microsoft’s case, the following external factors
and their intensities impose the weak force of substitution on the business:
 Low performance of substitutes (weak force)
 Low availability of substitutes (weak force)
 Moderate switching costs (moderate force)

How Microsoft Corporation can tackle the Treat of Substitute


Products / Services
 By being service oriented rather than just product oriented.
 By understanding the core need of the customer rather than what the
customer is buying.
 By increasing the switching cost for the customers.
 Competitive Rivalry or Competition with Microsoft Corporation
(Strong Force)
 Microsoft needs to effectively compete to remain successful. This aspect of the
Five Forces analysis determines the effects of firms on each other and the
related conditions of the industry environment. In the case of Microsoft, the
following external factors and their intensities exert the strong force of
competition against the company:
 Moderate switching costs (moderate force)
 High aggressiveness of firms (strong force)
 High diversity of firms (strong force)

 How Microsoft Corporation can tackle Intense Rivalry among the


Existing Competitors in Business Software & Services industry
 By building a sustainable differentiation
 By building scale so that it can compete better
 Collaborating with competitors to increase the market size rather than just
competing for small market.
Microsoft’s Performance in the market
 Microsoft's global brand value from 2006 to 2018 (in
billion U.S. dollars)

Microsoft is the
world's sixth-largest
information
technology company
by revenue.
Microsoft's annual revenue worldwide, from FY
2002 to FY 2018 (in billion U.S. dollars)
Microsoft's net income from 2002 to 2018 (in
billion U.S. dollars)
Microsoft vs Apple
 Bottom Line
.
 Over the long run, investors will see that MSFT has climbed higher,
with Apple stock dominating throughout most of the 2000s. Yet,
some might be somewhat surprised to see that shares of Microsoft
have climbed above Apple over the last year.
 Microsoft is fast growing, large and international technological
brand led by CEO Satya Nadella. While the declining PC industry
might have hurt its profitability, growth across the cloud
businesses and gaming has more than made up for it. The brand
is investing in innovation as well as growing its range of products
and services so as to achieve faster and superior growth.
However, Microsoft may need to grow its pace of innovation
since the challenge from competition has grown a lot. To find
faster growth the brand can invest in acquisitions or introduce
lower riced packages for the developing and underdeveloped
regions
BIBLIOGRAPHY

 http://fernfortuniversity.com/term-
papers/porter5/analysis/3735-microsoft-
corporation.php
 https://www.bartleby.com/writing/plans
 https://www.cio.com/article/3188853/it-
industry/microsoft-vs-apple-strategies-change-but-
the-battle-continues.html
 https://www.zacks.com/stock/news/309879/apple-
vs-microsoft-evaluating-the-two-giants-growth-
since-the-1980s