Environment Trends and Strategic Management Issues - Assignment Example

Running Header: Environment trends and strategic management issues Student’s Name: Instructor’s Name: Course Name & Code: Date of Submission: Table of Contents Table of Contents 2 Introduction 3 External analysis- The type of industry 3 General environment and competitive environment 4 Internal analysis 6 The firms’ resources, tangible and intangible; Browsers 6 Online search 6 Operating systems 7 Advertising 8 Core competency analysis 8 Conclusion 9 Introduction The major and emergent initiatives that are taken up by top managers in an organisation involve strategic management. These enable the firm utilize its resources effectively and also be capable of enhancing its performance both in the internal environment and external environment. The organisation specifies its mission, vision and objectives and also develops various policies which enable the firm attain a competitive position in the market. These actions therefore enable a company gains an increase in market share therefore beating competition in the market (Barney, 2001). External analysis- The type of industry For the past few years, Google and Microsoft have been joined into various market strategies for example by merging or using acquisition with other firms in order to gains a competitive position in the market. Hamel and Prahalad (2000) state that this increase in competition linked to innovation and strategies set by Google and Microsoft has facilitated the growth of mobile devices. This growth has also initiated evolving of wireless device where by various applications are now used to improve utilization. This has therefore led to the increase in competition between the two companies. Other global competitors such as Sony and Nokia have also been affected by the rivalry between Google and Microsoft providers. This study examines the companies competing in the wireless devices product category as well as their applications. The situation is then analysed in order to know how these companies achieve their competitive advantage in the global market. General environment and competitive environment Recently, Google has introduced an operating system which competes with Microsoft Windows. Microsoft has also introduced an Office 10 application which is a free online version and is to compete with the Goggles web based application. This increased competition between these firms has initiated major strategies in order to beat the competition for example Microsoft revealed Bing which is its new search engine and is to capture the Google’s market share. Ryan (2009) describes that Microsoft aims at making the search engine their competitive advantage. These evidences show that there is an aggressive technical battle between the two companies which also involves seeking government regulations against the other company. The competition however is not aimed at seeing one company close down but the fight is to see which company manages to become the king of technology. This is because both companies have different competitive advantage and this is what makes them operative. Google’s competitive advantage is by the small advertisements which appear next to search results or at the edges of the web page. Ryan (2009) show that in 2008 for example Google earned about 22 billion dollars and 97 percent of this amount was got from Google advertisements. On the other hand, Microsoft earns its revenue from selling Microsoft Word and PowerPoint which amount to about 20 billion dollars annually and makes 10 billion dollars profit. Microsoft also achieves its market position by sale of operating systems such as Microsoft XP, Vista and Windows mobile. The company is therefore able to use these advantages as its strength and opportunity of beating its competitors. This strategy has facilitated introduction of Google’s operating system which include Android which will provide open information to small devices such as mobile smart phones. The other operating system is the Chrome which focuses on browsing and runs on notebooks and computer desktops. Mintzberg and Quinn (1998) describes that game theory strategies are applied in this nature of competition where top managers anticipate what the other company may be producing and tend to produce something similar or stronger. Microsoft for example organized a behind the scene campaign which was to ruin Google’s plans of advertising. Microsoft has also attempted to derail Google’s settlement with the book search engine. This shows that rivalry between the two competing firms. Microsoft should instead focus on developing workable strategies that are capable of beating its competitor other than acting against the company. According to Kelly (2010) Microsoft would want to have the entire market share where every one in the world uses the Internet Explorer to browse through Bing and to get stories form MSN portal. It would also want people to use Hotmail and Microsoft email outlook while sending messages to friends. With the domination of various software developers, Microsoft is involved in making online games, soft ware for small businesses and photo editing tools. Google uses a different system where Google Chrome browser show various Google news where one can also access Google mail and then safely download a word document attached to the mail. Google attracts its customers who are willing to pay for premium in certain advertisement with the much free technology Google company offers to its customers. These applications have increased Goggle’s competitiveness and have also made other companies such as Sony and Nokia formulate plans of increasing their applications to attract a bigger market share (Hamel and Prahalad, 2000). Internal analysis The firms’ resources, tangible and intangible; Browsers The two companies therefore link up in providing four major areas. One is browsers where the Microsoft’s internet explorer emerges as one with the highest percentage of users who are about 70 percent of the market share. Tom (2010) describes that this shows that Microsoft dominates the market though there are reported problem of lags. Over the last years, Firefox, Opera and Apple’s Safari have been facilitating browser innovation though some people are reluctant to quitting IE even with the presence of other alternatives which are safer and more modernized. On the other hand, the Google chrome browser is presentable. This is due to the presence of a certain feature which enables it to be quick and to show how various tabs are utilised. The address bar in the Google page acts as a search box therefore showing Google as default. The browser is also convenient because many websites can be opened on their own browser and the files opened can not be edited therefore makes it difficult for hackers. Kelly (2010) show Google chrome therefore has the less market share in terms of browsers and it is estimated to be about 2 percent. Online search The recent technological innovation in the online search engines has brought about various changes for example Google’s second name would be search according to most of its customers. Emil (2010) describes that the search engines have enabled the company gain a core competence in the market. In 2009, about 80 percent if search results pages in US were from Google’s search engines this enabled the company attain about 5.3 billion dollars in revenue. Most of this money was got from AdWords which is a service offered by Google and is based on auction. This service generates more advertisements where search questions are involved. To beat Google in online search competition, Microsoft introduced Bing as a search engine. This has fine innovations and it was a method to show that the company is utilising its strategies well by introducing better techniques of creating information needed by the users unlike where one just retrieves a link to information. In spite of this development, Microsoft got only 8.2 percent in online searches (Emil, 2010). Operating systems According to Liebeskin (1996), since 1980s, Microsoft has been the leading company in making various types of operating systems. The company has therefore spent about 30 years perfecting on production of an innovative OS such as the MS-DOS and Windows NT. This has therefore enabled the company gain about 90 percent of the world’s most run operating system. This has been achieved by using the other competitors’ features and using this to influence customers to purchase the product. According to Kelly (2010) despite the increased competition in the operating system, Microsoft has been the leading provider for almost 30 years. Microsoft’s Windows 7 has received a good welcome to the market due to its effectiveness unlike the other two which include Vista and Windows XP. This therefore dominates the business organizations for example most offices around the world use Microsoft office software while carrying out business activities. Google on the other hand announced the introduction of its Operating System in 2007 which was to be used by small devices such as smart phones and it is estimated that the OS is to run to about 20 phone models. This shows that the Google’s OS will only be used while running a website by allowing web developers to develop their capacities and continually use the browser. It will also allow storage and processing assistance (Woo and Cooper, 2002). Advertising Advertising is the other competitive factor used by Microsoft and Google in order to improve their market share and revenue. Liebeskin (1996) describes that Google for example is powered by its modern auction based advertisements that appear in the web sites. It also expands these ads to other people’s sites by the use of Ad sense program. Google also specializes in serving and profiling double click which is mostly applied in mobile, print and television advertisements. In advertising sector, Microsoft has been struggling to position itself in the market for a long time now. The company has even tried to copy Google’s features to no success. Despite having the MSN.com, Microsoft has not made much on advertising but in the internet. In internet provision, Microsoft has been satisfied with its strategies until when Google shook up categories for example by introducing a massive online storage capacity and introducing other fancy programs. This made Microsoft to change its strategies and copy those of Google for example by introducing web- email service. Google’s introduction of Google Maps led to the introduction of Microsoft’s Live Maps. This competition is seen as beneficial to the internet users as the charges are reducing. The customers are also able to receive a lot of free on line services as well as improved technology. Core competency analysis Microsoft has also many types of offer to its customers for example the introduction of friends chat via its office.com. These include Twitter and Facebook which has received a good number of users. Microsoft has also introduced a public flaw in internet explorer which allows their users to upgrade their operating systems. Recently, Google employees have criticized Microsoft’s operating system alleging that there are various security issues since Chinese hackers could easily access the OS. Recent news also states that Google decides to stop the use of Windows which had been exchanged for the operating systems such as Linux, Mac OS and Chrome OS (Emil, 2010). Google officials have however denied the claim stating that the company would not comment on operational processes of their competitors. The company instead formulates its own strategies in order to achieve efficiency and achieve the company’s goals. According to Tichy (1993) strategic management has been of importance for the two companies since they have been able to come up with better activities to beat the competition in the market. However, strategic management may have its set backs for example it tends to slow creativity especially if strategic management is rigidly enforced into the company. Conclusion The study shows that though the two companies are competing in the technology market. Every company has its own core competence that enables it to position itself in the market. Microsoft for example uses the operating system which includes Windows and also it also has an Internet Explorer that enables the company increase its market share. These bring in a higher return on investment to the company and strategies of improving their OS makes the company beat its competitors. Google on the other hand has various systems that enables it achieve its returns. One is by the use of Auction based ads which appear on the web pages. Google also provide the best search engine which dominates the internet world. These two factors enable the company has a core competence and gain popularity as compared to its competitors. For the last few years, the competition has mostly been won by Google and this shows that the company is stronger and quick in formulating strategies than its competitor Microsoft. However, the pace may be slowing or the competitors may overcome its strength. With the introduction of Microsoft’s Bing and the introduction of free online services, more internet users may be forced to change their preferences as the company is planning to satisfy every user. References Barney, J. (2001). Firm resources and sustainable competitive advantage, Journal of Management, 17(1), pp 45-77. Emil, P. (2010). After Google hack, Microsoft asks users to abandon IE6, XP. New York: Macmillan. Hamel, G. & Prahalad, C. (2000). The core competence of the corporation, Harvard Business Review, 5(3), pp. 89-97. Kelly, F. (2010). Microsoft badmouths Google competition – again. London: Irwin McGraw Hill . Liebeskind, J. P. (1996). Knowledge, strategy, and the theory of the firm, Strategic Management Journal. 5(17), pp. 67-98. winter. Mintzberg, H. & Quinn, J. (1998). The strategy processs. Harlow: Prentice-Hall, Harlow. Ryan, S. (2009). Google vs. Microsoft: What you need to know. Englewood Cliffs: Prentice-Hall. Tichy, N. (1993). Managing strategic change: Technical, political, and cultural dynamics. New York: John Wiley. Tom, S. (2010). Google ditches Microsoft's Windows over security issues. New York: Financial Times. Woo, C. & Cooper, A. (2002). The surprising case for low market share, Harvard Business Review. 7(12), pp. 106–113. Read More