Issues That Affect Microsofts Cost of Doing Business - Essay Example

A number of business organizations compete with Microsoft using an open-source commercial model by adjusting and then dispensing open-source software to customers at insignificant costs and thus earning revenue on complimentary products and services. Such businesses do not bear the total costs of development and research for the software. Further, advertising-based firms models look for revenue through delivering third-party adverts to final consumers who get the software at no direct cost as Microsoft pays for the costs indirectly. Benefits in market acceptance of advertising or open source-based software may unfavorably affect the company’s revenue, sales, and operating margins. The total subscription and license costs can vary depending on the available license levels and having a Software Assurance license.

Impact of Technology on Microsoft’s productivity
Microsoft Company has adapted the Elixir Workflow system, which is a rich, web-based setting that lets Microsoft connect many processes and people into certain business projects or activities. By using this technology, predefined business rules are achieved to get the company on its toes. It manages and tracks different tasks linked to a project from distinct actions to approvals. This technology has helped Microsoft to visualize its daily operations and identify areas of productivity advancements. The Elixir Workflow System is configured based on the rights of the users and preferences. This ensures efficiency in production processes and security for the products (Lopatka and Page, 2007)

With the use of Elixir, multiple applications can be achieved with only one interface. This provides Microsoft with a flawless approach to interoperability. For precise productivity, the system offers a full set of trading process management operations including decisions and branching, event-driven interactions, and automated activities. Generally, the Elixir Workflow System is a significant technology to Microsoft’s productivity as it integrates various Computer programs such as Microsoft Outlook and CRM Databases and helps the sales force that resulting in overall increased production and customer satisfaction.

Market Structures
Microsoft Company competes in the pure monopolistic market structure as it is the single seller of computers and there are no close substitutes for computing products and services. Those existing are not as dominant as Microsoft.

The monopolized market structure may lead to an increase in prices. While Microsoft’s practices in licensing led to decreased prices to computer producers and decreased costs to consumers, this practice shut out other competitors in operating systems. For instance, Novell Corp. produces one of the sole operating system options, DR-DOS. Nevertheless, no original computing producer in the US offers DR-DOS., despite the fact that Novell has received great reviews and holds a 5% of the US market. The long-term consequence of this licensing approach is a decreased improvement in the operating system and likely increased prices (Stross, 1997).

There are various non-price strategies that Microsoft can attempt to preserve and enhance its sales. They include private levels where it can increase sales through expanding their private label categories. The current economy has consumers looking for ways to save cash and the value of Microsoft private label products ought to be appealing to the consumers and the company. Another strategy is Leveraging selling General Administrative Expenses (SG &A), where the company can request suppliers to initiate efficiencies in product transportation. This can include supplying PCs to distribution centers, to stores, to enable customers to buy with ease.

On the other hand, Microsoft can take some steps to remain or move into the best competitive position. It can engage in agreements tying competitive producers to Microsoft’s Windows operating system, buying, promoting, exclusionary agreements that prevent other firms from distributing or using Microsoft’s competitor’s products (Walker, 2004). It can also tie its internet browser to its operating system instead of competing on the merits.
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