Business and Market Overview Section
For our group project we decided to cover Microsoft and the lack of performance management system within the organization. Microsoft was founded in 1975 by Bill Gates and Paul Allen. The company started when the two wrote basic programming language for an Altair. With this, the original focus of Microsoft was its operating systems, starting with Xenix. Since then Microsoft has expanded. The company made computer mouses, developed the windows operating system, and made the original internet explorer. Today, Microsoft has an estimated net worth of 2.5 trillion dollars.
“ A business model describes how a company produces, delivers, and sells a product or service to create common wealth.” (Laudon, 12) Microsoft provides software and systems for entertainment, but also too businesses. With the business aspect, this can be seen with Microsoft office, cloud computing, and Skype for business. Due to Microsofts divisions and products, you can say Microsoft has multiple business models that produce revenue. The first, and most common, is the selling of software. Microsoft sells software, IE Windows or Microsoft office, to common households, businesses, or even the government. This model arguably generates the most revenue for Microsoft as it does not have to pay for shipping, packaging, or general inventory costs for the software it sells. When it comes to the development of software, Microsoft uses a “trunk based-branching strategy” to help develop software quickly and on a regular basis. This means for every upgrade or bug fix, Microsoft branches off of its original software. They then develop the new upgrade/ fix, push it to its team members, pull the software to have it tested over 60,000 times, and then it is released to its customers. Outside of general software, Microsoft makes produces and profits off of gaming products, subscriptions, and just general cloud services. This can be seen with the xbox, subscriptions for Microsoft office for business, and the cloud. With these products, Microsoft generates revenue off of the sale, but also off of subscriptions and locking in its users. This is due to the high cost to switch to another platform (Apple, Google, etc.) Microsoft sells most of its products digitally. This includes software, the cloud, Microsoft Office etc. As stated before, this means Microsoft does not have to store, deliver, or pay any inventory costs on these products. Regarding the Xbox, surface, and other devices, these can be found in stores and require basic production and inventory handling.
As stated mostly in the business model section, Microsoft offers a variety of products and services for all different needs. For staters, Microsoft offers software, and software applications. This can be seen with Windows, Microsoft office, Skype, outlook, and even cloud computing. These products can be sold to both general customers, or businesses. Microsoft has products developed specially for businesses, Skype for business and Microsoft office, which they offer exclusively to businesses. Regarding services, Microsoft does offer cloud computing to both businesses and consumers. This can be seen with Microsoft one drive. Microsoft also makes money off of subscriptions. with some of these products, including Microsoft office. Outside of its software and cloud services, Microsoft does also offer sell other devices. For gaming, Microsoft does offer the Xbox. Microsoft does also offer other devices like the surface. The surface is an all in one tablet that you can hold in your hand but has the power of a computer. Microsoft also offers Linkedin as a service. This is a site for job applicants to make profiles and search openings. It is also a place for a potential employer to reach out.
Regarding a growth strategy, Microsoft appears to use broad differentiation. This is in an attempt to gain a competitive advantage. Broad differentiation is selling products, usually unique, to a large customer base. This can be seen with the products Microsoft offers, and how it markets and sells them. Microsoft offers unique software, cloud computing, and products for general consumers. Microsoft has a large customer base, as it sells to everyday households, businesses, or even the government. With this, Microsoft has also invested heavily in technological growth. Microsoft invested an additional 2.6 billion into company research and development from 2018 to 2019. This has focused on improvements to windows and cloud computing. Microsoft has also seen incredible growth in Linkedin and made 8 more acquisitions to the organization in 2020.
References
https://www.thoughtco.com/microsoft-history-of-a-computing-giant-1991140
https://docs.microsoft.com/en-us/devops/develop/how-microsoft-develops-devops
https://businessmodelanalyst.com/microsoft-business-model
Laudon, Kenneth C., and Jane P. Laudon. Essentials of Mis. Pearson, 2018.
