Microsoft Company and How Its Foundation Impacts the World - Assignment Example

Microsoft Company and how its foundation impacts the world Program overview The success of every company isno beneficial to its owners alone; the public is also a direct beneficiary whenever there is success in any business. With many firms, Microsoft included, committed to the Corporate Social Responsibility (CSR), the society tends to have many benefits in case a business booms in its profitability. Companies such as Microsoft have shown great enthusiasm to their CSR programs where besides offering employment to thousands of people from various backgrounds, the larger society benefits through programs initiated by the firm. For instance, in 2012 the firm was listed among the best companies that the best CSR programs (Smith, 2012). Some of these programs include helping people in case of disasters; human rights and online safety are the other ways the firm commits to the CSR programs. Sadly, the opposite happens when a firm fails in realising as much profit as it should especially in the case of Microsoft. Since the company is evidently committed to its CSR programs, it is imperative that constant analysis of its strategies and other factors be carried out. In this paper, the purpose is to analyse Microsoft Company and the effects of its foundation in the world. History Microsoft is a US-based multinational company that specialises in computer technology including software, personal computers and consumer electronics. Some of the best software products include Microsoft windows, Microsoft Office, internet explorer and Office suite. Recently the firm entered into the hardware products including Xbox games tablet, Microsoft Surface. Other services the firm offers including Internet search program, Bing. The company was founded in 1975 by two men, Bill gates and Paul Allen, and is currently headquartered in Redmond, Washington (Carter et al, p.1634). The company’s market share started sharing in the 80s when it produced an operating system called, MS-DOS. The production of Microsoft Windows elevated the company. The number of products it has produced since its inception has evidenced the firm’s commitment to innovation. In the case of operating systems, the company embraced innovation by releasing several versions including Windows XP, Windows vista, Windows 7 and the most recent windows 8 and 8.1. After buying Nokia’s devices, Microsoft has shown great commitment to mobile phone users by enabling windows 8 to be accessible through mobile phones (Pittel, p.63). Facts about Microsoft The market share for Microsoft is has remained the highest among the other firms in the same industry. Additionally, besides being the world’s largest software maker, it has been confirmed to be the world’s most valuable companies, statistics that have been confirmed by the revenues. The company’s revenue as of 2014 stood at $86.84 billion, operating income was $27.75 Billion, Net income $22.05 billion; its total assets totalled to a whopping $172.39 billion while the Equity stood $89.77 billion. Concerning the number of employees it has, the Microsoft corporate offered jobs to over 128,000 people as of 2014 (Pittel, p.64). In a bid to cement its dominance, the company has continued to operate worldwide whereby every person can access their products irrespective of their country. In addition, the firm has continued to engage in key acquisitions starting the 2987 acquisition of a firm called Forethought, followed by a similar trend in 1997 where Hotmail became a subsidiary of the company at a fee of $500 million. The firm’s trend of acquisition did not end with the previous one as Microsoft went on acquire Navision at a fee estimated to be about $1.33 billion. In 2007, Microsoft acquired an advertising firm, aQuantive, after the latter’s ranking as a popular firm (Pittel, p.65). After these, acquisitions, Microsoft has continued in its either mergers or acquisitions with some of the most popular being the acquisition of the Skype and Nokia’s hardware platforms. While the company’s Windows sales have dropped, the company’s overall profit was not adversely affected. Microsoft’s Surface tablet had a 24% increase in the first quarter of 2015 compared to the previous one. In addition, the company’s Xbox sales hit the 6.6 million mark the same period. The company’s search engine service Bing had its advertisement revenue increase by 23%. Nokia Lumia’s sales were estimated at 10.5 million, and this was a 30% increase compared to the previous year. Because of the restructuring currently occurring at the company, the profit fell by at least 11% (Goldman, par.6) How Microsoft impacts the world Earlier it was reported that Microsoft is among the companies committed to its CRS activities, which include showing concern for human rights, environment, and online safety among others. Besides the activities that have continued to impact the world in a positive way, Microsoft in itself has ways it ensures the world advances. First, together with the wife, Bill gates have formed a foundation known as Bill and Melinda Gates foundation, which seeks to improve the lives of people through grants. While the company is a US-based, its activities are extended to other continents including Africa, and there is no sector this funding cannot be extended to (Bill & Melinda Gates Foundation n.p.). For instance, the company funds educational programs as well as other humanitarian-related ones. Besides influencing the lives in needy programs, Microsoft continues to embrace invention and innovation, which keep affecting the lives of others. For instance, upon assuming the role of CEO at the Microsoft Satya Nadella, stated that one way to keep having a positive impact is to embrace technology advancement and invention. With years, Microsoft has continued to offer employment to the previously mentioned numbers. However, it is worth noting that the number was not as it is now; rather it has increased as the company’s profitability rises. The competition that Microsoft has faced, especially from its rival, Apple Inc., has compelled the firm to embrace innovation even in a better. In a survey that was conducted in France, 7 out of 10 respondents said Microsoft impacted their lives in a more positive ways than Apple did (Kumar and Surisetty p.60). Some of the things that have elevated Microsoft is its commitment to ensure that everyone accesses their products distance and region notwithstanding. According to Carter et al, (p.1635), Microsoft’s achievement and impact in the world is felt mainly because of two things: supply of computers and availability of its products to almost everyone. Other scholars have shared the findings. Wilburn and Wilburn (p.62) states that though Microsoft is a firm seeking profits like any other its approach is somewhat different from others. For instance, the company will ensure that if anyone is interested in their products, they can access them with the least of bureaucracy. Secondly, the fact that the company offers support for its products makes it easy for the people to have their problems solved by simply logging in on to their website. Conversely, the Microsoft’s competitors tend to have a different approach, which, tends to work against them. A case in point is the Apple’s products, which are not always easily accessible, and affordable (Kumar and Surisetty p.61). Methodology Having explained the background of the Microsoft Corporation, this section intends to highlight the outcome of the firm’s foundation. One of the areas that are highly contested in the business world pertains to the CSR program. While to some CSR programs tend to distract a firm from its primary rile, which is to make profit, others contend that CSR programs actually increase profitability. CSR programs are often thought to cause a company to deviate from its major work and put the investor’s interests at risk, but this is not always true in all cases. For that reason, this part will use the Impact Assessment model in analysing the effectiveness of Microsoft’s foundation Source (Mohammad p.609) Project objectives Right from the onset, Microsoft’s objectives were not limited to making profit for its owners. Rather, instead, the firm sought to impact the world in a positive way. These assertions are informed by the response the company got upon the launching of the MS-DOS software. People were then struggling with reliable software especially operating system, but the situation changed with production of the software (Pittel, p.66). Therefore, the objectives of Microsoft included availing reliable services to as many people as possible in a bid to positively impact their lives in exchange of profit. The objectives were not achieved through the provision of this software alone; the fact that the company employs people is yet another objective realised. While some of the products the company produces could be purchase through the online platform, there are engineers, customer care and other personnel needed, and this enables the firm to achieve its objective of helping as many people through employment. Thousands of employees earn their livelihoods courtesy of the jobs offered by Microsoft both in the US and elsewhere in the world. Results As earlier indicated, Microsoft’s profitability has risen with time despite spending a considerable amount of its resources on CSR programs. Notwithstanding the argument that profit margins are reduced when a firm decided to embrace CSR programs, the Microsoft’s foundations have not significantly affected its profitability. Secondly, the market dominance by Microsoft has confirmed that with the right strategy, a firm’s success is possible. Every firm is committed to remaining profitable despite the emergence of other players, and in the case of Microsoft, this was not exceptional. As noted earlier on Microsoft has strived to remain profitable, and has achieved this objective. In addition, the foundation by Microsoft has helped in spreading its products to regions it was little known. While the issue of CSR seem valid to many players, it could be said that Microsoft has benefited greatly from its CSR activities. Other scholars have confirmed this fact too. They argue that while CSR programs are often viewed from a negative perspective, they do help in the publicity, which is an important part of every business. Without publicity, it becomes pretty hard for a firm’s products to gain a footing in the market because prospect customers tend to analyse a product before making a purchase (Yoon et al p.203) Impact assessment It was earlier reported that seven out of every 10 respondents that participated in the survey mentioned Microsoft as having more impact than its Apple. Recently, the firm sought to cement its world market share by extending smartphone services to Africa. In an initiative dubbed, ‘Microsoft Afrika’ the company intended to helping in ensuring, “tens of millions of smartphones were placed in the hands of African consumers”. Additionally, the company intended to have over 1 million businesses and NGOs; furthermore, the company pledged to train at least 100, 000 African university graduates and ensure 75% of them got jobs (Powell, par.8). By investing in areas like Africa, the company’s future goals and objectives will be realised since it has been noted that Africa is one of the continents where the smartphone market is still untapped. According to Powel (par.9), only 20% of the African continent owns smartphones meaning this could offer Microsoft an opportunity to extend its dominance in this area. Furthermore, because of this commitment, Microsoft’s brand will keep expanding; this could the company a much-need market for it future products. SWOT analysis While it is true Microsoft’s dominance is stable, its future progress is not disputable especially with other firms engaged in similar services. Furthermore, Microsoft can no longer rely solely on the CSR programs for its publicity since other players have embraced the initiative as well. For that reason, it is imperative that one conducts a SWOT analysis in order to project the future outlook of the company. Subsequently, this section seeks to show the competitors, opportunities, weaknesses and strengths Microsoft faces now and in the future. A SWOT analysis has two major categories, Internal and external origins each containing one positive and one negative factors. On the internal part, there are strengths that a firm has as well as weaknesses, and having a clear understanding of each helps a firm in its preparations. On the other hand, the external part comprises of threats, which are detrimental to the success of the company, and opportunities, which could seized to ensure objectives are achieved. According to Mohammad (p.607), a good SWOT analysis ought to offer all that a business faces, both internal and external, and offer recommendations on how each could be overcome. .The figure below represents the SWOT analysis and its components. Figure 2.0 Source (Mohammad p.607) Strengths Microsoft’s major strengths lie in the brand since the company has become a household name because of its products, which, as noted, can be found almost everywhere (Yoon et al p.204). Secondly, the company’s infrastructure remains atop of the competitors meaning it has a strong distribution channel. In addition, the several acquisitions and mergers especially the Skype, Microsoft has engaged in have helped in shaping its expertise in different areas. In terms of market, the company’s commitment to Research and Development (R&D) will help in remaining competitive. Also, the advancing technology coupled with the need for online communication means the company will continue with its operations. In other words, the services currently sought especially in terms of internet and software does not have a substitute, and this could ensure the company remains afloat. Weaknesses One of the major weaknesses that have been pointed out by a majority of analysts is Microsoft’s reliance on other developers when it comes to hardware. Even though the company is a giant technology firm, it does not invest much on hardware development. Consequently, this gives other firms an opportunity to invest in this area and perhaps merge with the company’s competitors. Bad investment decisions have also been termed as the major weaknesses that Microsoft faces. While some of the acquisitions the company engaged in have been profitable, the amount spent on these activities compared to the profits from the same do not exhibit a good investment decision. Finally, the company is viewed by many as one that cannot handle competition judging from the number of acquisitions. Some argue that the company’s tendency to buy any firm that seems to engage in products likely to increase competition is anti-competitive. For that reason, Microsoft has been accused of being opportunistic, slow innovator and stifling competitors’ products (Akhigbe and Martin p.19) Opportunities Notwithstanding the weaknesses mentioned above, Microsoft could improve in all the areas, and remain as dominant as has always been. One of the opportunities the company has is using the Nokia platform for its products. Having bought the hardware part of the company, Microsoft could ensure that all the phones it releases have its software installed. In addition, since it has started the production of tablets, this means it will have a larger market for its software programs. Further, the company could seize the opportunity of various events to advertise it products including sponsoring events where huge crowds are expected. Others include Cloud services where its clients can save their documents and mobile advertisement. Threats Stiff competition when it comes to software is one threat Microsoft has to overcome. With other competitors such as Google Inc., Apple Inc. and Samsung Ltd all engaged in the software production, Microsoft has to devise ways to mitigate the effects of this intense competition. The ever-changing and unpredictable consumer behaviour could prove to be an issue to Microsoft. Lawsuits could also affect the company as evidenced by the constant suits between Apple and Samsung. While Microsoft tends to follow a strict procedure in acquiring other companies, lawsuit is an unpredictable threat especially in a tightly contested market. Analysis From the data provided in the previous sections of this paper, several things are worth pointing out starting with the Microsoft’s success. It is evident that the company has demonstrated outstanding commitment in innovation especially when it comes to operating programs. Secondly, the company has strived to ensure that almost every region has it products. As a result, this has enabled the company’s brand to remain the best. Through its CSR programs like the Bill &Melinda Gates Foundation, the company’s publicity has hit tremendous levels, and this has worked in boosting the realisation of goals. Nevertheless, it is clear that Microsoft tends to spend heavily on acquisitions and, as pointed out, not all these investments tend to remain profitable. Also, with other players specialising in both hardware and software products, unlike Microsoft, this could detrimental to the firm’s competitiveness ability. Even though a majority of the company’s goals and objectives have been realised, its future ought to be keenly addressed. It is imperative to show more commitment on the R&D areas and diversify in other products to mitigate the competition being fronted by the likes of Apple, Google and Samsung. Recommendations While the opinion of the effectiveness of a CSR program is still subject to debate, it has worked for the good of Microsoft, thus it ought to continue. Additionally, the imitative by the company to invest on young is not only beneficial to the firm, but the entire world as well, thus the need to maintain. The constant innovation the company practices can only be commended since it has helped it in the various ventures it currently is involved in. Nevertheless, Microsoft ought to consider engaging in the hardware productions as opposed to purchasing the already developed ones. While the latter option might save the company’s revenues of production, it seems the purchase is always on the higher side financially. Secondly, there is need to devise methods to encounter the ever-rising competition in the software production. Thirdly, instead of acquiring firms at such a high price, Microsoft ought to consider the option of facing the competition instead. As earlier implied, Microsoft sometimes acquires the emerging firms whose services or products threaten the company’s dominance. Again, the company need to diversify its products and service as it did in the case of Nokia hardware acquisition. Because of the engagement with the cell phone company, Nokia, Microsoft can now benefit from mobile advertisement, sale of software to its subscribers as well as enlarge the market share. This recommendation is informed also by the results witnessed from Microsoft’s sale of its Tablet gadgets. It confirms that if Microsoft embraces diversification in its operations, it could withstand the threat of competition. Lessons learned The entire story of Microsoft offer rich lessons, which could be practical to the real world starting with the power of networking. One of the reasons Microsoft’s dominance is unbowed by the competition is the company’s tendency to have a large market through networking. The company invests heavily on affiliations, CSR programs and advertisement all of which help in creating a strong network. This is one principle, which tends to confirm K. Wilburn and R.Wilburn’s (p.63) assertions that without a strong network, a company will most likely miss profitability. It is not through profitability alone that Microsoft offers precious lessons, but in weaknesses too. Feasibility study is imperative to every business, and no transactions should be carried out before this process is conducted. This lesson has been learnt through Microsoft’s panic-purchase of the companies whose products seemed to offer competition to the Bill-Gate-founded Company. Microsoft has been involved in a number of acquisitions, which either has stalled in terms of profitability or incurred massive losses. Remaining with one product might have dire effects on the future of every organisation as evidenced by the decline of Windows sales. Even though the company brought about phenomena when it launched the operating systems, other factors have affected the sales. Finally, Microsoft commitment to assisting the future leaders, students to be precise, is a clear indication that the company values the value of succession. Even though the students might not even end up working for the company, this initiative means that, the technology will not stall due to lack of competent personnel. Every business ought to have a clear strategy on how other people in the society can attain similar, if not better, knowledge in various matters to ensure there is no lack of development in the future. Overall, Microsoft offers its lessons through both its weaknesses and strengths, and this will greatly benefit those may wish to apply the outlined lessons. Works cited Akhigbe, Aigbe, and Anna D. Martin. Do Microsoft Acquisitions Benefit The Computer Industry?. Financial Analysts Journal 58.4 (2002): 19-20. Bill & Melinda Gates Foundation,. How We Work. N.p., 2015. Web. 15 Apr. 2015. Carter, Elizabeth J., Jessica K. Hodgins, and David H. Rakison. Exploring The Neural Correlates Of Goal-Directed Action And Intention Understanding. NeuroImage 54.2 (2011): 1634-1635. Goldman, David. Microsoft Sales Soar for All Its Non-Windows Products. CNNMoney. N.p., 2015. Web. 15 Apr. 2015. Kumar, Sanjeev, and Sirisha Surisetty. Microsoft Vs. Apple: Resilience Against Distributed Denial-Of-Service Attacks. IEEE Security & Privacy Magazine 10.2 (2012): 60-64. Mohammad Arabzad an, S. Improving Project Management Process In Municipality Based On SWOT Analysis. International Journal of Engineering and Technology 4.5 (2012): 607-609 Pittel, Stuart. The 2010 Bower Award For Business Leadership Presented To William H. Gates III, Microsoft Corporation. Journal of the Franklin Institute 351.1 (2014): 63-65. Powell, Erin. Why Microsoft Invests In African Youth | IREX - Civil Society, Education and Media Development. Irex. N.p., 2014. Web. 15 Apr. 2015. Smith, Jacquelyn. The Companies With The Best CSR Reputations. Forbes. N.p., 2012. Web. 15 Apr. 2015. Wilburn, Kathleen, and Ralph Wilburn. Using Global Reporting Initiative Indicators For CSR Programs. Journal of Global Responsibility 4.1 (2013): 62-65. Yoon, Chal-Hyuk, Gwi-Gon Kim, and Tsedendorj Enkhchimeg. CSR Publicity and Moderating Effect Of Media Credibility. Journal of Digital Convergence 12.5 (2014): 203-211. Read More