Microsoft Corporation responds to the internal and external strategic factors identified in this SWOT analysis. The SWOT Analysis is a tool for determining organizational strengths and weaknesses (internal strategic factors) and the threats and opportunities affecting the business (external strategic factors). In the case of Microsoft’s SWOT analysis, such factors emphasize the importance of unique product innovation, cyber security, and business diversification. Through these approaches, the company can achieve long-term growth in the computer hardware and software market. Microsoft must maintain effective responses to address the factors shown in this SWOT analysis.
This SWOT analysis of Microsoft Corporation highlights the necessity of strategies geared toward further innovation and diversification of the computer hardware and software business. Microsoft can also extend its efforts to consider issues beyond the internal and external strategic factors in this SWOT analysis.
Microsoft’s Strengths (Internal Strategic Factors)
This area of the SWOT Analysis model identifies business strengths or internal strategic factors that contribute to business growth and resilience. Microsoft’s continued success is partly based on the following strengths:
- Dominant brand image
- Product alignment with positive externalities
- Strong alliances with other firms
The Microsoft brand is one of the strongest in the computer hardware and software market. This strength contributes to the company’s ability to attract customers, especially those who view brand strength in relation to reliability. Microsoft also benefits from positive externalities with existing products in the market. For example, as more third-party software developers create programs for IBM PC-compatible operating systems, the company’s Windows operating system becomes even more popular. In addition, the strength of alliances with other firms contributes to Microsoft’s capacity to influence the market in its favor. For instance, the company can establish an alliance with a hardware manufacturer to create hardware products that use Windows OS. Thus, the strengths in this area of the SWOT analysis of Microsoft show that the organization has strong foundations to compete against other large firms in the global industry.
Microsoft Corporation’s Weaknesses (Internal Strategic Factors)
Organizational weaknesses or internal strategic factors that slow down or reduce business development are considered in this area of the SWOT Analysis model. In the case of Microsoft, managers must address the following weaknesses:
- Vulnerability to cybercrime
- Imitability of some products
- Lack of dominant computer hardware products
Microsoft’s products are vulnerable to cybercrime. For example, the Windows operating system remains a target of countless cybercrime attacks globally. This factor is a weakness because it limits the attractiveness of Microsoft products. In this regard, cyber security is a product aspect of competition among firms in the computer hardware and software industry. On the other hand, the imitability of some products is a weakness because it could reduce the strength of the Microsoft brand. Moreover, the company’s product portfolio shows dependence primarily on software products, which weakens the business against competitors that have dominant hardware and software products in the market. Based on the strengths outlined in this area of the SWOT analysis, Microsoft needs to improve product features and intensify its hardware development efforts to ensure competitiveness.
Opportunities for Microsoft (External Strategic Factors)
This area of the SWOT Analysis model focuses on opportunities or external strategic factors that can support business growth. The following opportunities are significant in Microsoft’s technology business:
- Business diversification
- Innovation for computer hardware products
- Stronger security against cybercrime
Microsoft Corporation is primarily a software business that heavily relies on the popularity of the Windows operating system. In this regard, the company has the opportunity to grow based on diversification. For example, Microsoft can diversify through new business development or mergers and acquisitions to establish operations in new markets or industries. In this way, the company can take advantage of other avenues of business growth [Read: Microsoft’s Generic & Intensive Growth Strategies]. Another opportunity is for Microsoft to innovate computer hardware products, so as to increase revenues from hardware sales. At present, the company’s hardware products are not as competitively strong as the products from other firms in the computer hardware market. Also, Microsoft has opportunities to improve the attractiveness of its products through continuous improvement of their security features. Thus, the opportunities shown in this area of the SWOT analysis of Microsoft indicates the need for diversification and product improvement.
Threats Facing Microsoft Corporation (External Strategic Factors)
The threats or external strategic factors that reduce or compromise business are considered in this area of the SWOT Analysis model. Microsoft’s strategies must address the following threats against its computer hardware and software business:
- Cybercrime
- Piracy
- Strong competitive rivalry
Cybercrime remains one of the major threats against computer technology businesses. For example, cyber attacks can cripple Microsoft’s organizational processes or compromise customers. Another threat facing the company is piracy, which is especially rampant in many developing countries. In addition, strong competitive rivalry creates market forces that threaten Microsoft’s development as one of the biggest firms in the market. For example, the diversification of other firms that now offer operating systems and computer hardware products, as well as the rising popularity of freeware, limit and potentially reduce the company’s business. This area of Microsoft’s SWOT analysis shows the significance of product uniqueness and improvement.
Microsoft’s SWOT Analysis – Recommendations
Microsoft Corporation has the necessary business characteristics to remain one of the leading players in the computer hardware and software industry. The strong brand image and positive externalities are among the major contributors to such market position. Thus, a recommendation is for Microsoft to continue enhancing its brand image. It is also recommended that the company must increase its alliances with other firms to improve positive externalities.
The weaknesses and threats in the business point to strategic reform in Microsoft. For example, the company must continue innovating to develop products that are less vulnerable to cybercrime. Another recommendation is for Microsoft to diversify its business to boost potential growth. Moreover, it is recommended that the company must increase its computer hardware development efforts to increase its revenues from this segment of the business.
References
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- Jackson, S. E., Joshi, A., & Erhardt, N. L. (2003). Recent research on team and organizational diversity: SWOT analysis and implications. Journal of Management, 29(6), 801-830.
- Leigh, D., & Pershing, A. J. (2006). SWOT analysis. The Handbook of Human Performance Technology, 1089-1108.
- Microsoft Corporation, Form 10-K.
- United States Department of Labor Employment and Training Administration. High Growth Industry Profile – Information Technology.
- Valentin, E. K. (2001). SWOT analysis from a resource-based view. Journal of Marketing Theory and Practice, 54-69.