Challenges of Information Technology - Term Paper Example

IT Systems Strategy Of A Company - Microsoft Corporation, UK Table of Contents Introduction 2. Microsoft Corporation UK– overview 3. The framework of critical success factors for an organization – the role of IT systems 4. External factors that most influence Microsoft Corporation UK 4.1. Pestel Analysis 4.1.1.Political 4.1.2. Economical 4.1.3. Social 4.1.4. Technological 4.1.5 Environmental 5.1.6 Legal 6. Conclusion References Appendix 1. Introduction The survival of firms within their industry is closely related to their ability to be aligned with the market trends and the consumer preferences – as these ones are differentiated under the influence of the global economic conditions. Firms that are already well established in the global market are usually more capable to face the pressure of their rivals; however, in the long term the viability of these firms is depended on the continuous update of their strategies and the establishment of flexible strategic policies that can reduce the risk of major failures in case of strong market turbulences. Current paper focuses on the IT systems strategy of Microsoft – a major competitor in the global application software industry; reference is made not to the parent firm, based in USA, but to its UK subsidiary; the current position of the firm towards its rivals is important (see also Table 1, Appendix); it seems that the IT strategy of the firm has helped towards the achievement of a stable growth; the key aspects of this strategy are presented and evaluated using appropriate theoretical framework – the PESTEL analysis. 2. Microsoft Corporation UK – overview Microsoft Corporation is a global leader in the Software Application Industry; the firm entered the British market in 1982; currently the employees of the firm in UK are 1500. Since its establishment in Britain the firm has focused on the promotion of innovation in technology and the improvement of the technology available in education and in communities. In fact, as in other countries worldwide, Microsoft Corporation UK has helped the British government to improve the technology used in various social and economic activities – enhancing ‘the social and economic well-being of local population’ (Microsoft Corporation, Economic Empowerment). 3. The framework of critical success factors for an organization – the role of IT systems One of the key characteristics of the global market is the continuous increase of competition; firms that try to stabilize their performance and achieve a stable rate of growth need to continuously review their strategies; emphasis should be based on the IT systems involved in the various organizational operations. In firms that are heavily based on knowledge management specific measures should be taken; the firms that would be involved in such effort should meet the following requirements: ‘ a) to be proficient at skills and support infrastructure, to foster innovation and collaboration and to allow self-organization to emerge’ (Rud, 2009, p.38). When the organizational activities are expanded in different industrial sectors, the strategic planning process can be quite complex (Gummings et al., 2008, 294). Moreover, the characteristics of the industrial sector in which a firm operates are of high importance for identifying and evaluating this firm’s critical success factors – for instance, a firm operating in the manufacturing industry is likely to have different critical success factors from a firm operating in the airline industry. This issue is highlighted in the study of Parmenter (2009, 206). Another issue related to an organization’s critical success factors (CSFs) is noted by Mahring (2002); in accordance with the above researcher CSFs are not necessarily related to all organizational activities – they can refer solely to a specific organizational project being aligned with this project’s needs and resources; in this case, CSFs have the form of ‘norms or rules of conduct’ (Mahring, 2002, 169); the application of these rules is of critical importance for the success of the project involved. Hughes et al. (2005) present another aspect of CSFs; CSFs are not easy to be identified; in firms that are expanded worldwide this task can be quite difficult to be developed; in such firms, the role of the corporate leader in the identification of CSFs is quite important (Hughes et al., 2005, 187). The framework of the critical success factors can be understood through the definition of Khosrowpour (2000); in accordance with the above definition, critical success factors ‘are those few key areas where things must go right for business to flourish’ (Khosrowpour, 2000, 1178); it is also noted that if appropriate plans are developed for supporting these areas, then the organizational performance will be adversely affected. It is made clear the CSFs – scheme is used in order to highlight the organizational sectors and activities that have a key role in the organizational growth; in Microsoft, the firm’s IT performance is of critical importance for the development of all organizational activities; the critical success factors for the success of the firm’s IT systems would be the following ones (in the context of the suggestions made by Wade et al., 2001): ‘a) strong technical support, b) reliability, c) small product lines, d) low cost provider, e) innovation and f) strong sales function’ (Wade et al., 2001, 42); the critical factors for the success of the specific strategy could be identified by referring to the key elements of the external organizational environment (see PESTEL analysis in section 4.1 below). 4. External factors that most influence Microsoft 4.1. Pestel Analysis In order to evaluate the effectiveness of the IT strategies adopted by Microsoft it would be necessary to identify the external factors that influence the organization’s daily operations. As already noted, Microsoft is a global competitor in the Application Software Industry; however, despite its size the firm is affected by a series of events in its external environment – referring to the UK market; these events/ factors have been categorized using the PESTEL analysis as follows: 4.1.1.Political The political environment of Britain can be characterized as stable; no major conflicts or turbulences exist; the country’s political parties support entrepreneurial activities and this trend is proved by the fact that Britain is among the centers of business activities worldwide. In the context of the recession, the British government has introduced a series of measures that aim to stabilize the performance of the national economy; these plans would adversely affect the organization but only at the point that an extremely high corporate taxation would be introduced – in this case, the relocation of the firm would be set under consideration. The performance of the firm’s strategies is depended on the ability of the company to align these strategies with the current British political environment – which is stable for the moment but it is always possible for turbulences to appear. 4.1.2. Economical British market is one of the most powerful worldwide (see Graph 1, Graph 2, Appendix); however, the market’s performance has been severely affected by the recession; the firm’s IT management policies should be flexible in order to be easily transformed if strict economic policies are adopted by the British government in order to support the national economy against the recession. 4.1.3. Social British society has been supportive to the entrance in the country of foreign enterprises; Microsoft has been related to the British social ethics and culture reflecting the local values and traditions – a practice followed by the firm since its entrance in the British market. No oppositions would be expected to appear against the firm’s initiatives – unless the economic measures developed in the context of the recession are regarded as decreasing the benefits of natives without influencing the benefits of foreigners; however, such conditions would be quite difficult to exist; it is assumed that British society would not set restrictions or obstacles to the firm’s development in the British market. 4.1.4. Technological The development of technology is highly supported in Britain; innovation in the IT systems is a key part of the culture of firms operating across UK. The involvement of Microsoft in the improvement of technology involved in various political, social and scientific tasks is extremely high; therefore, there would be no problem for the further development of the firm’s infrastructure – referring specifically to its IT systems. 4.1.5 Environmental All business activities in Britain need to be developed in accordance with the principles of sustainability – as possible; in Microsoft sustainability has a key role in the firm’s strategic decisions. There would be no need for the firm’s policies to be changed in order to be adapted to the sustainability framework applied on firms operating in the British market. 4.1.6 Legal The British legislation favours the development of corporate activities – even if the corporate tax can be characterized as rather high; a series of legislative rules (such as the Companies Act 2006, the Enterprise Act 2002 and the Corporation Tax Act 2010) have been introduced by the British legislators aiming to ensure that all disputes appear in the particular sector are effectively resolved; on the other hand, discrimination and inequality in the workplace are not accepted in the context of the British law. Employees in Microsoft can feel as adequately protected by the law; as for the firm’s leaders these are given the chance to compete their rivals under equal terms – a fact that enhances the organizational growth. 6. Conclusion The growth of Microsoft Corporation in the British market has been closely related to the ability of its leaders to develop strategic plans that can be easily transformed in order to meet the conditions of the company’s internal and external environment. The IT systems strategy of the firm is another scheme of this type; due to its structure and content the specific scheme could be perform in various market conditions – even if the status and the forms of the firm’s political, economic, social, technological, environmental and legal conditions change; this change – even if it would be radical – it could not negatively affect the performance of the firm’s IT systems strategy – at least not in the short term. References Burke, W., Lake, D., Paine, J. (2008) Organization Change: A Comprehensive Reader. John Wiley and Sons Gummings, T., Worley, C. (2008) Organization development & change. Cengage Learning Holbeche, L. (2005) Understanding change: theory, implementation and success. Butterworth-Heinemann Hughes, R., Colarelli, K. (2005) Becoming a strategic leader: your role in your organizations enduring success. John Wiley and Sons Khosrowpour, M. (2000) Challenges of information technology management in the 21st century: 2000 Information Resources Management Association International. Idea Group Inc (IGI) Mahring, M. (2002) IT Project Governance. EFI at SSE Parmenter, D. (2009) Key Performance Indicators: Developing, Implementing, and Using Winning KPIs. John Wiley and Sons Reynolds, G. (2009) Information Technology for Managers. Cengage Learning Rothwell, W., Sullivan, R. (2005) Practicing organization development: a guide for consultants. John Wiley and Sons Rud, O. (2009) Business Intelligence Success Factors: Tools for Aligning Your Business in the Global Economy. John Wiley and Sons Wade, D., Recardo, R. (2001) Corporate performance management: how to build a better organization through measurement-driven strategic alignment. Butterworth-Heinemann Online Sources BBC News, 7 November 2010, Microsoft boss Steve Ballmer in sale of shares, available from http://www.bbc.co.uk/news/business-11706067 BBC News, 28 October 2010, Microsoft profits from record first-quarter sales, available from http://www.bbc.co.uk/news/business-11648532 Contractor UK, 23 April 2010, UK software market returning to growth, available from http://www.contractoruk.com/004843.html Microsoft Corporation, UK (2010) available at, http://www.microsoft.com/en/gb/default.aspx Watkins, M. (2010) UK tech sector poised for deal flurry, available from http://www.ft.com/cms/s/2/eed0f540-be9c-11df-a755-00144feab49a.html Appendix Company Symbol Price Change Market Cap P/E Microsoft Corporation MSFT 26.68 0.00% 228.26B 11.47 Oracle Corp. ORCL 28.57 0.00% 143.64B 22.80 SAP AG SAP 50.70 0.00% 60.21B 20.88 Intuit Inc. INTU 48.80 0.00% 15.50B 27.63 Salesforce.com CRM 116.73 0.00% 15.16B 209.19 Adobe Systems Inc. ADBE 29.94 0.00% 15.23B 33.42 Table 1 – Top Application Software Firms – globally, source: http://finance.yahoo.com/q/in?s=msft Graph 1 – UK GDP growth, from 1990 up to 2010 (Source: http://www.bbc.co.uk/news/10613201) Graph 2 – Retail Sales, UK (source: http://www.marketoracle.co.uk/Article8926.html) Read More