Porter’s Five Forces Analysis for Microsoft
Our company is a small investment company that specializes in technology investments. The company has a significant amount of capital invested in Microsoft.
We were made aware that a new company by the name of Strayer Holdings has just released an operating system that plans to compete with Microsoft’s operating system.Our team was charged to compile a Porter’s Five Forces analysis for Microsoft to ensure that our company’s Microsoft investment is not at risk. The following report is a Porter’s Five Forces analysis and three generic strategies that were compiled to ensure our company’s investment in Microsoft is secure. Analyzing Microsoft using Porter’s Five Forces Analysis The Microsoft Corporation (Public, NASDAQ:MSFT) was founded in 1975 by William H. Gates III.
The company’s mission is to enable people and businesses throughout the world to realize their full potential.They have worked to achieve this mission by creating technology that transforms the way people work, play, and communicate. They develop and market software, services, hardware, and solutions that deliver new opportunities, greater convenience, and enhanced value to people’s lives. They do business throughout the world and have offices in more than 100 countries. Microsoft generates revenue by developing, manufacturing, licensing, and supporting a wide range of software products and services for many different types of computing devices.The software products and services include operating systems for personal computers, servers, and intelligent devices; server applications for distributed computing environments; information worker productivity applications; business solutions applications; high-performance computing applications; software development tools; and video games.
Looking at Porter’s Five Forces Model we see that it is a useful tool to help companies make the decision of entering a new industry.The Five Forces Model includes: Buyer power Buyers have other choices when it comes to an operating system, but not many. The Windows operating system faces competition from other software products offered by well-established companies, including Apple and Google, and from the Linux operating system. Since there are few choices, buyer power is low.
Supplier power Since buyers have few choices of whom to buy from, supplier power is high. Threat of substitute products or servicesConsidering that every computer manufactured in the United States and the world has to have an operating system in order to work Microsoft appears to be dominant in this arena. The company has been so dominant over the years that back in 1998 in a complaint filed against Microsoft in the U. S. District Court of the District of Columbia on May 18, 1998, the Justice Department declares unequivocally that “Microsoft possesses (and for several years has possessed) monopoly power in the market for personal computer operating systems” (U.
S. v. Microsoft Corporation 1998). Threat of new entrantsLooking at the sizable market share Microsoft has come to enjoy over the years, a new competitor would face a number of entry barriers before entering this market. Customers are very loyal to the Microsoft brand and would expect any competitor to offer at the very least the same features that Microsoft already has. Rivalry among existing competitors Microsoft continues to experience intense competition across all markets for our products and services.
Their competitors range in size from Fortune 100 companies to small, specialized single-product businesses and open source community-based projects.Although the company believes their breadth of businesses and product portfolio is a competitive advantage, their competitors are focused on narrower product lines may be more effective in devoting technical, marketing, and financial resources to compete with us. In addition, the barriers to entry here are generally are low and products, once developed, can be distributed broadly and quickly at relatively low cost or no cost. Three Generic Strategies for Microsoft Broad Cost Leadership Microsoft has a broad strategy which is to appeal to all computer users Broad DifferentiationMicrosoft has a broad range of hardware and software applications and the largest support network for any operating system. Focused Strategy The strategy is to focus only on computer and internet users.