Critical Analysis of Google's Strategies - Case Study Example

of the company Table of Contents Introduction 3 Companys vision and mission ment 3 Critical analysis of Googles strategies as declared by Top management and the gap existing in reality 4 1. Companys Financial Performance 4 2. Stockholder communications 6 3. Corporate governance 7 4. The strategy adopted by Microsoft against its competitors 7 Suggestion to fill the gap 8 References 10 Introduction Microsoft is a renowned name for the present generation, and whenever some body talks about computers, the name Microsoft will obviously arise. It is a multinational technology company that has made its own position in the field of computer technology. The company has its headquarters in Redmond, Washington, USA, but it has its presence through out the world. The company specialized in developing and manufacturing software, they also issue licenses their products and support many software products related to computing devises. Among the wide range of products which the company offers to its customers, Microsoft Windows Operating System and Microsoft Office are quite popular and one of the most profitable products in the company’s portfolio. The other products existing in the companys product portfolio are Microsoft Servers, Microsoft Expression, Windows Live, Microsoft Silver Light, Windows Developer Tools, Games, Xbox Live, Xbox Home, Zune and many more. The hardware that the company offers is supports any kind of personal computers, digital communication, Xbox gaming etc.. Other educational and home software are Autocollege, Healthvault, Office, Home and student, Streets and trips, and few more (Microsoft-a, 2009). Companys vision and mission statement The companys mission is to help people and business organizations throughout the world to realize their full potential. The companys value statement reflects that its organization has strong attachments for integrity, honesty, personnel excellence and openness. The company prefers to take big challenges and then to set its own standards by achieving it. Microsoft holds itself accountable towards its shareholders, customers, partners, employee and all other stakeholders (Microsoft-b, 2009). Critical analysis of Googles strategies as declared by Top management and the gap existing in reality In the annual report of Microsoft, the company provides details regarding many of its present and future strategies, but many a time it has been found that company deviates from their statements and in reality conditions turn to be different. So it is important to find out that what are the major strategies declared by the company and then in-depth analysis should be carried out to identify the existing gap. For analyzing the existing gap in companys policy, all the promises made by Microsoft in their mission statement was analysis, so that prevailing gap can be visualized. 1. Companys Financial Performance Fiscal Year Ended June 30 2008 2007 2006 2005 2004 Revenue $60,420.00 $51,122.00 $44,282.00 $39,788.00 $36,835.00 Operating income $22,492.00 $18,524.00 $16,472.00 $14,561.00 $ ,9,034 Net income $17,681.00 $14,065.00 $12,599.00 $12,254.00 $ ,8,168 Total assets $72,793.00 $63,171.00 $69,597.00 $70,815.00 $94,368.00 Long-term obligations $  6,621 $ 8,320 $ ,7,051 $ 5,823 $ 4,574 Stockholders’ equity $36,286.00 $31,097.00 $40,104.00 $48,115.00 $74,825.00 The above given information has been taken from Microsofts Financial performance report. The figures clearly indicate that with the passage of time, the companys financial performance is increasing. It has improved as its revenue increased by 18 percent, operating income by 21.4 percent and net income by 25.7 percent from 2006-07 to 2007-08. Within the same time frame, its shareholders equity has increased by 16.7 percent. So, the company is performing constantly well and the credit for this goes to the management team. For bringing better balance in capital structure, long term obligations have gone down and total assets are being reduced (Microsoft-c, 2009). Financial performance of Microsoft in past five years After conducting the analysis of financial performance, it has been found that the company managed to retain high profits and it is growing with constant rate. What the top management said in the mission statement regarding financial profitability, company succeeded in attaining it. Hence it can be conclude that there exists no gap. 2. Stockholder communications The company has informed in its Shareholder Letter, that they have invested $8.2 billion in the research and development program, which is 15 percent higher than what the company had invested in 2007. Such high investments will help the company to gain benefits in the long term basis. Such investments help the company to maintain their value statement of delivering high quality technology to their customers. The growth in revenue indicates that the companys market share is constantly increasing year after year. The company declared that their growth will continue 2009-10 onwards, and they will retain their position as the market leader. The company says, the reason behind high market share is their innovation and dedication towards technology (Microsoft-d, 2009). But the company failed to keep their words of introducing world class technology and introducing next generation software. One of such example is Apples iTune. This software organizes and plays videos and music on the computer. Its best feature is that it can synchronize different media with the iphone, ipod and Apple TV and provides an opportunity to store them so that they can be accessed as and when required. So, one can organize an iTune library which can be utilized at any point of time. This not only organizes music on different media at single destination, it also saves time and energy (Apple Inc, 2009). But till date no such software has been introduced by Microsoft. Music has its own value in today world and Microsofts negligence is noticeable. So the existing gap in Microsofts mission statement and their actual attitude is clearly visible. 3. Corporate governance In the corporate governance report Microsoft revealed that their main objective is to preserve management accountability by appropriate distribution of rights and responsibility among the board members, managers and shareholders; the company has the responsibility to safe guard their business culture and integration; the company believes that they have the responsibility to encourage efficient utilization of resources. The company takes care of its environmental responsibility quite seriously, hence, it has been ranked 2nd for maintaining and preserving the environment. So the management succeeded in retaining their corporate governance and whatever the company said in their value statement, they succeed in attaining it. 4. The strategy adopted by Microsoft against its competitors The chief executive officer of Microsoft, Steven A. Ballmer said that the company believes in ethical business practices, he also said that the company strictly follows the legal and regulatory compliance. The statement given by the executive officer made it clear that the company have respect for its customers, shareholders and the global community. The past records reflect another side of the company which is quite different from that which people are aware of. To retain its position as the market leader, Microsoft uses different kinds of tactics against its competitors. Their motto behind these tactics is “embrace, extend and extinguish”. This was the phrase used by US Department of Justice against Microsofts strategy for entering new product categories with a wide range of standards. All these terms have individual meanings like ‘Embrace’ refers to the developing of products which are compatible with the competitors product; ‘Extend’ indicates the introduction of new features which are not compatible with products produced by competitors; ‘Extinguish’ means that as soon the users start adopting new standards and features introduced by Microsoft, the company will extend their market share and engulf the market. The same phrase was used by Intels Vice President Steven McGeady in 1998 (Roger, 1998). In 2006, the rivals of Microsoft filed complain against the company at the European Commission. They complained that Microsoft uses unfair means to suppress the competitors to retain its monopoly. The list of rivals had names like IBM, Oracle, Nokia, Sun Microsystems and few more who wanted the EU to take some serious action against the strategy adopted by Microsoft (BBC, 2006). So such attitude of Microsoft toward its competitor clearly indicates that there exists a strategic gap between what the company pretend to be and what actually they follow. Suggestion to fill the gap To fill the prevailing gap that exist in the companys strategy toward research and development has to be change. It is a fact that with passage of time, Microsoft is loosing its leadership in the technology sector, so the company should identify the requirement of the present generation and should direct their R & D as per that. Today the company failed to realize importance of music for the music lover, and if the same attitude is followed by the company, it may happen that many such incidences will come up soon. With the changing market condition, Microsoft has to modify its strategies against its rivals. No company can retain the top position by suppressing others for a long term. So, to retain its position in the future, the company has to think of the necessary changes that can be introduced to retain its customers’ satisfaction. For example, with the introduction of advanced features like digital photography, entertainment and communication features, functions of Windows has turned out to be more complex, and many users find this uncomfortable. Hence, the company must think of some way to bring back the simplicity of Windows back and to make it more user-friendly. Microsoft can also combine Windows with an online suite as this will make net based tools handy. Such positive changes will help the company to be the market leader and they can come out from use of stringent strategy against their rivals. References Apple Inc, (2009), What is iTune? Retrieved September 23, 2008 from http://www.apple.com/itunes/what-is/. BBC, (February 22, 2006), “Microsoft rivals in new EU action”, BBC NEWS, Retrieved September 18, 2008 from http://news.bbc.co.uk/2/hi/business/4740638.stm. Microsoft-a, (2009). “All Products”, Microsoft Corporation. Doole, I. & Lowe, R. (2008). International marketing strategy: analysis, development and implementation, 5th ed, Cengage Learning EMEA, p. 450. Microsoft-b (2009). “Our values”, About Microsoft, retrieved September 18, 2009 from http://www.microsoft.com/about/default.mspx. Microsoft-c, (2009), “Financial highlights”, Annual report 2008. retrieved September 18, 2009 from http://www.microsoft.com/msft/reports/ar08/10k_fh_fin.html. Microsoft-d, (2009), “To our shareholders, customers, partners and employees”, Shareholder Letter, etrieved September 18, 2009 from http://www.microsoft.com/msft/reports/ar08/10k_sl_eng.html. Roger, W. (November 9, 1998), “Intel exec: MS wanted to extend, embrace and extinguish competition” ZD Net, Retrieved September 18, 2008 from http://news.zdnet.com/2100-9595_22-100925.html. Read More