Microsoft Corporation is a company that engages in the development and licensing of a range of computer application software and computer services. The firm also sells computer hardware and besides offering in online advertising framework for business people. These ranges of products necessitates segmentation of the company’s market is segment. The segment is categorized into five main groups: Microsoft Business Division, (MBD), Entertainment and Devices Division, (EDD), Online Services Division, (OSD), Server and Tools, and Windows Division. Microsoft develops Operating Systems, (OS) for application in personal computers, cell phones, servers and other devices that require technical knowledge in Information Technology, (IT). In addition, the corporation deals in distribution of computing environment, offers online platform for business operations and management through development of management tools, and online gaming. Recent development in business operation in Microsoft Corporation is acquisition on Skype Global and VideoSurf Inc. in October and November 2011 respectively. This essay identifies the nature of business environment for Microsoft Corporation and reasons behind its market leadership in the general technology industry.
Taking Charge of the Environment
Business enterprises strive to establish effective linkages to manipulate resources and create products and services by incurring minimum costs. Another way of ensuring that a firm remains competitive is through changing business environment domain. Four main techniques help in controlling the environmental domain in the technology sector: change of domain, regulating political activities, corporate associations, and engaging in illegitimate activities. Changing domains may call for a firm either to seek new corporate relationships or disengage current relationships. According to SW Learning, (2011), “An organization may try to find a domain where there is little competition, no government regulation, abundant suppliers, affluent customers, and barriers to keep competitors” (p. 67).
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The nature of technology industry is highly competitive, requires relatively less capital and requires the high level of technology. This implies that a market leader today would be rendered extinct if complacency sets in. As a result, corporations in the technology sectors continually seek for ways of maintaining their market dominance. In the social networking, an industry that is steadily becoming a new business platform is one avenue for developing strategic alliances. Competitors’ rivalry is extreme in the social networking industry. The greatest threat to the industry is Facebook, MySpace, and Twitter despite the three having different format platforms. Hartley, (2010, p. 51) confirms that “Facebook and MySpace are the dominant consumer social networking tools used by more than 400 million members.”
Microsoft Corporation has the strategic management system that identifies viable alliances that will help it maintain its market dominance. The strategic alliance between Microsoft and Facebook is informed by the aforementioned corporate relationship that Facebook has created. The technology industry is unique as most firms get into strategic alliances to evade unhealthy market competition. Other than this alliance, “The software giant has signed a confidentiality agreement with Yahoo, according to a person briefed on the move, joining other potential bidders like the private equity firms Silver Lake and TPG Capital” (De La Merced, 2011). Yahoo’s management system has faced challenges, which have seen the firm drop in performance since 2008. The potential acquisition of the firm by Microsoft Corporation is a critical domain change model that the firm applies to restructure its environmental domain. Other acquisitions by Microsoft are takeovers of Skype Global and VideoSurf Inc.
Another critical environment domain is the political dispensation in the corporate environment. Activities with political intent include technical approaches to influence government in making policy that would favor their business interests. Business owners in the technology industry erect dogmatic barriers that prevent new entrants from entering the industry. They also seek to influence political appointments to advocate for the appointment of people who may be sympathetic to their interests. “Efforts of Sun Microsystems and Netscape to persuade the Justice Department to break up Microsoft, arguing that Microsoft had acted as a monopoly in controlling the software industry and now threatens to extend that power to Internet access” (SW Learning, 2011, p. 68). Observers of that case opine that it would have been different if Microsoft had built a political interest with the Justice Department. The firm would have evaded investigation by the legal body.
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The third environmental factor that influences the industry is engagement in illegitimate activities. This results from pressure from bosses that force employees to devise crooked ways of getting results. Although Microsoft has not been in the limelight is suck engagements, the online environment provides an avenue for engaging in illegal business activities like illegal gambling and sale of pornographic materials to the children below legitimate adult age. “Example behaviors include payoffs to foreign governments, illegal political contributions, promotional gifts, and wiretapping. Intense competition among cement producers and in the oil business during a period of decline led to thefts and illegal kickbacks” (SW Learning, 2011, p. 68). Another opportunity for controlling environmental domain as mentioned above is trade association, which in essence, means forming an association that will jointly address needs of organizations which similar interests.
Giant firms like Google and Baidu with their new products Google Android and mobile OS respectively dominate the competition in the industry. Microsoft has the challenge of overcoming these competition and merger and acquisition remains the best option. Google’s substantial supplier force in search engine can be curtailed by forward integration if Baidu, Apple, and Microsoft introduce newly invented software, (Hitt et al., 2011, p. 23-24). Baidu and other search engines have their services improved, which is easy to pass on through other product and services on offer. Since there is no perfection in the search engine business, any firm can challenge Google market dominance. Microsoft’s key success factor, (KSF) is its substantial capital base which according to Microsoft Corporation, (2004), “With annual revenues of more than $32 billion, Microsoft Corporation is more than the largest software company in the world: it is a cultural phenomenon.” The corporation also engages in corporate social responsibilities that extend to aid for the African continent in fighting poverty and modern-day disease. This sustainable competitive strategy will make Microsoft remain the market leader in the future.