Answer

Introduction

Microsoft Corporation denotes an American multinational company that is based in Washington. The company primarily sells, facilitates, licenses, manufactures, and develops services, personal computers, consumer electronics, and computer software. Microsoft Corporation is renowned for the development of Microsoft Windows, Edge Web Browsers, Internet Explorer, and Microsoft Office Suite. In the year 2016, Microsoft Corporate became the biggest software maker in the world as per revenue. To date, Microsoft Corporation is considered to be one of the most valuable firms in the globe.

Briefly, Microsoft Corporation was founded in 1975 by Bill Gates and Paul Allen. Initially, it was established for the development and sale of BASIC interpreters. By the mid-1980s the company was the dominant operator in the personal computer OS market (Kitzmueller, & Shimshack, 2012). Over the years, the company has significantly differentiated its products and services. Some of the acquisitions made by Microsoft Corporation in the recent past are: Skype Technologies in 2011 for $8.5 billion and LinkedIn in 2016 for 26.2 billion (Nasdaq, 2017).

In 2015, Microsoft Corporation became the predominant player in the market for the office software suite and the IBM PC-compatible OS. Notably, Android has since taken over a large part of the OS market. In addition to its main products, Microsoft Corporation also manufactures enterprise and consumer software for serves and desktops such as Visual Studio, Azure, HoloLens, MSN, and Bing (Epstein, & Buhovac, 2014).

From a general perspective, Microsoft Corporation is a public company. Its industries of operation are: consumer electronics, computer hardware, and software industry. In 2016, its revenue was $85.32 billion. Currently, it has about 114,000 employees (Nasdaq, 2017).

The aim of this paper is to provide a comprehensive analysis of Microsoft Corporation in terms of such elements as: business model, value chain and supply chain analyses, information technology and information systems, external environment and global context, organization and management, and ethical issues.

Business Model

In terms of company products and services, Microsoft Corporation is known for developing, licensing, and supporting software devices, services, and products. It provides Office 365 commercial services and products for businesses inclusive of Skype for Business, SharePoint, Exchange, and Office. Additionally, Microsoft Corporation also offers 365 consumer services like OneDrive, Outlook.com, and Skype. There are also Dynamics business solutions like divisions of enterprises, analytics applications for businesses, supply chain management, customer relationship management, enterprise resource planning, and financial management. In addition, there is also the LinkedIn online professional network. Microsoft Corporation also has an intelligent Cloud element that is used for licensing cloud services and server products like System Center, Visual Studio, Windows Server, and SQL Server. The business conducts marketing and distribution of products via OEMs (original equipment manufacturers), resellers, and distributors. The available Microsoft and online retail stores are also useful. The primary customers of Microsoft Corporation are other companies such as Yahoo, CDW, Ingram Micro, Insight Enterprises, and HP as well as individual customers.

There is a notable increase in Microsoft Corporation’s revenue. For instance, in 2014 the company’s total revenue was $86,833,000; the cost of revenue was $27,078,000, and the gross profit was $59,755,000 (Epstein, & Buhovac, 2014). In mid-2017, the total revenue was $89,950,000; the cost of revenue was high at $34,261,000 and the gross profit was $55,689,000.

The economic environment in which a business operates is crucial to its success or failure. With regards to Microsoft Corporation, USA, its economic environment presents an opportunity due to significant economic stability in the country. Due to economic stability, the company can anticipate stable performance in the American market. Market stability is directly proportional to increased company sale of products and services. Moreover, another opportunity is evident in the considerably high economic growth in the country. Furthermore, there is a third opportunity for the company in the notable growth of the middle class’ disposable income. This economic factor presents the Microsoft with the opportunity for increased revenues. Notably, the middle-class consumers comprise some of the most imperative sources of Microsoft’s revenue. In terms of threats, the biggest threat that Microsoft faces relates to hackers and security (Kitzmueller, & Shimshack, 2012). The general consumer population is rightfully concerned about security of their data. The issue of hackers threatening cyber security has become a global crisis for both individuals and organizations. While the company can take measures to reduce this threat, there is still no definite solution to completely eradicating the threat of hackers and data insecurity.

On the basis of competition, the software industry among other technological sectors is some of the most competitive markets in the contemporary business world. There are numerous companies being established in this line of business regularly. Some of Microsoft’s prominent competitors are: Oracle, IBM, Google, SAP, and Apple (Microsoft Corporation, 2012). In order to gain competitive advantage, there are certain strategies that Microsoft has put in place. Firstly, the company is known to use economic of scale to its advantage. Secondly, the network effect has proven useful to Microsoft whereby it has acquired a large customer base for its products and services, hence making it progressively valuable. Additionally, Microsoft uses the strength of its brand to its benefit in the market (Microsoft Corporation, 2012). Essentially, many customers can identify with Microsoft as a market leader in certain products and services. In addition, through the use of intellectual property the company is able to avoid damaging imitations of its products by its competitors. 

Value Chain and Supply Chain Analyses

Value Chain Analysis

Microsoft Corporation is renowned for the efficiency of its value chain; it offers the customer increased value in its products and services. In this context, a value chain is designed to aid in the creation of competitive advantage, which can be accomplished in variable ways. The value chain is the primary driver of any company and comprises the supply and demand chains. While the supply chain focuses on cost reduction, the demand chain often centers on customer needs.

Porter’s value chain is divided into primary activities and support activities.  The primary activities comprise inbound logistics, operation, outbound logistics, marketing and sales, and service.

1. Microsoft’s inbound logistics

Microsoft has established contracts with numerous international suppliers. Through this, it is able to sustain complex supply-chain operations consistently. Notably, all the company’s suppliers are required to abide by the Microsoft Supplier Requirements and the Microsoft Supplier Code of Conduct. In inbound logistics, the primary sources of value are: comprehensive insight on supply-chain management operations, strategic relationship with suppliers, and economies of scale.

1. Microsoft Operations

There are three primary sets of operations at Microsoft Corporation: productivity and business processes; intelligent cloud, and more personal computing. The company uses third-party manufacturers to produce its devices apart from phones. The company outsources some of its services in order to minimize costs such as transportation and labor. Therefore, outsourcing is the primary source of value in the company’s operations.

1. Microsoft Outbound Logistics

There are three distribution channels that Microsoft uses: Microsoft stores, online sales, distributors and resellers, and OEMs (original equipment manufacturers). In this area, the effective usage of numerous shipment channels is the main source of value.

1. Microsoft Marketing and Sales

The company’s marketing and sales cost in 2016 was $14,697 (Nasdaq, 2017). Microsoft utilizes licensing means to sell its services and products. These include: open licensing, select plus licensing, Microsoft product and services agreement licensing, enterprise agreement licensing. The company’s marketing and sales value is associated with the effectiveness of its involvement in viral marketing and the utilization of licensing sales methods to significantly reduce costs of sales.

1. Microsoft Service

The company has a high level of customer services before, during and after purchase. There are online answer desks to provide customers with buying advice, installation support, technical support, and timely account and billing. There is also an online security centre to guide customers on security elements.

Supply Chain Analysis

The supply chain management resolutions from Microsoft address the practicalities of the contemporary intricate international supply chains and offer the required foundation to modify and enhance supply chains (Microsoft.com, 2011).

1. Supplier relationships

Microsoft has established a solid relationship with its suppliers globally. This relationship is based on collaboration between the company and its suppliers. “We work in partnership with our suppliers to help them establish environmental policies. We also perform audits and conduct regular monitoring activities” (Microsoft Corporation, 2017). The supplier relationship of Microsoft is founded on the values of the company, the business, and the expectations of the company’s stakeholders. The Supplier Code of Conduct seals this relationship. It provides the basic principles of sustainable and ethical business. Additionally, the Microsoft Supplier Requirements is founded on international standards like UN conventions, ILO, OHSAS 18001, SA 8000, and 1S0 14001 (Microsoft Corporation, 2017).

The above figure indicates the supplier locations for Microsoft Corporation worldwide (Ghaffari et al., 2014).

1. Security

Microsoft is renowned for its efforts to secure the digital supply chain. It was a pioneer in the establishment of software license keys and the capacity to authenticate licensed products. According to Vandeerminden, “We have one of the world’s largest identity authentication system, and out active direction is the largest identity management tool used across enterprises” (Slack, 2015).

Information Technologies and Information Systems

A business’ success is often dependent on specific elements. These may include the right future vision, selecting the right technology, and accurate analysis. According to extensive research over the past twenty years, the companies that make considerable investments in technology and select the path of innovation enhance their general competitiveness, financial position, and market share. Information Communication Technology (ICT) is the one technology that can provide a business with the chance for analysis of particular data and play one’s business journey suitably (Wonglimpiyarat, 2012). There are also several tools and techniques attached to ICT that are designed to solve intricate business problems and execute the planning of the scalability of one’s business. In the contemporary times, digital marketing is considered to be a fundamental tool in the promotion of one’s services and products. Similarly, modern communication and cloud computing facilitate one to establish a multinational corporation, and monitor and manage virtual offices worldwide. This section addresses the role that ICT plays, with particular regard to the business activities and functions at Microsoft Corporation, USA.

responsibility obligations.

In the near future, Microsoft may face the challenge of losses due to its overdependence on the PC market. While the company has made attempts to venture into the mobile market through the acquisition of Nokia, its products are failing in comparison with the market leaders like Apple. Another challenge that Microsoft may face is stiff competition. Microsoft has enjoyed monopoly over its industry for a long time. However, the competition in various segments of the industry is irrefutable. For instance, Google Chrome provides major competition for Internet Explorer.

In terms of opportunities, Microsoft has the potential to establish a solution to cyber-crimes and cyber-attacks and gain a significant competitive advantage through this. Cyber-crimes are the most urgent threats to this industry as they reinforce the customer’s reluctance to purchase products. There is still no formidable solution to this threat. Hence, if Microsoft establishes an effective solution it will gain a substantial competitive advantage.

Additionally, Microsoft has the opportunity to expand into the production of other technological products instead of focusing solely on personal computers. For example, it can improve on the quality of its mobile phones in order to compete favorably with Apple and other smartphone companies.