Microsoft Critical Analysis

please read ( how to do a critical analysis) and sample Critical Analysis for Microsoft Article.

Microsoft Critical Analysis
First Last Name
Section XYZ: TTH 12:30 pm
NOTE: Please review the comments I have made to provide you guidance. The comments do not indicate
incorrect content in the analysis/wrong way to do an analysis. The comments are for guidance.
Background: Personal technology is changing, personal computers (PC) have reached maturity, and people
are beginning to use their tablets and/or phones as alternatives. As a result, despite Microsoft has a control
over operating system market for PC, it has experienced a drop in sales and profit. This decline indicates that
the tech giant must find a way in the post-PC era and must now look to tablets, search engines, and cloud
Commented [S1]: Background information should be less than
1/3rd page.
computer based software and/or operating systems to continue their dominance within the industry. While
Microsot is beginning to make a turnaround with the Surface tablet, BING, and Windows 10, it must create
sustainability in generating revenue going forward.
Strengths: Microsoft is one of the best brands in the industry. The company is skilled in developing hardware
and software to sell them worldwide through its established distribution channel. The company has a
significant amount of dollars to invest in new businesses. Its new operating system, Windows 10, is running
on over 270 million computers and its flagship products, Microsoft Office and previous versions of operating
systems are installed on more than 75% of the PCs. Sales revenue from its new product, Surface tablet, grew
Commented [S2]: Strengths are about skills or resources or
what the company is good at.
55% last year. In addition to the tablet, Microsoft is beginning to see growth in their search engine BING
which provides an additional source of revenue.
Weaknesses: Microsoft’s biggest weakness is that sales and profit from its flagship products are declining. In
addition, the revenue from business software and Internet-based services, known as cloud computing, are
not growing as much as analysts expected. Another weakness for Microsoft is that although they are in the
market for tablets and mobile phones, the company is not one of the leaders in the market. And finally,
Commented [S3]: Weaknesses are about lack of skills or
resources or what the company is not good at.
Microsoft is dependent on the sales of their software and products to generate revenue.
Core Competency: Microsoft’s core competency is its skill in developing new technology and commercializing
Commented [S4]: Core competence is what unique skills or
resources the company has which customers value and competitors
cannot
it in the world using its established distribution channel.
Threats: Demand for PC and associated software, such as MS Office, is shrinking. Competitors, such as Google
and Apple, are introducing innovative products and challenging Microsoft as a dominant technology
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Microsoft Critical Analysis
First Last Name
Section XYZ: TTH 12:30 pm
company. Google is offering free alternatives to Microsoft’s paid software based on a business model that
Commented [S5]: Threats are changes in the environment,
which may hinder company’s ability to create, communicate or
deliver products in the market. It is not about lack of skills or
resources.
rely on advertisements to generate revenue. In addition, Apple is a dominant market share leader for both
tablets and mobile phones.
Opportunities: Microsoft has several opportunities. First, customers are adopting subscription based
systems and cloud computing. Second, the demand for tablet computers are growing. Third, search engines
usage is becoming ubiquitous, and consumers as well as businesses are relaying more and more on
Commented [S6]: Opportunities are about changes in the
environment, which may help company create, communicate or
deliver products in the market. It is not about what action the
company should take. Describe in terms of how the environment is
changing.
technology. Finally, new technology is being invented at a rapid rate.
Problem Statement: Microsoft must focus on the tablet market to overcome its dependent on revenue from
Commented [S7]: You need to state a financial goal.
its flagship Windows operating system and double its profit from the tablet business in three years.
Alternative Solutions: One solution is for Microsoft to be a broad differentiator in the tablet market.
Commented [S8]: I recommend you propose strategic
alternatives. Capsim decisions you make, such as, Increasing R&D or
Advertising are not strategy. They are tactics. Hence, you should
not propose such alternatives here.
Another solution for Microsoft is to be a differentiator with a product lifecycle focus in the tablet market.
Target Segments: Tablet industry comprises of many segments including: high end/high performance
segment, low price segment, slate tablets segments, mini-tablet segments, convertible tablet segments,
gaming table segments, and operating system based segment.
Commented [S9]: You need to list a few segments, not a
complete list. Think about how customers’ needs are different in
the industry. You may want to Google “what are the segments in
XYZ industry”.
Recommendation: Microsoft should be a Differentiator with Product Lifecycle Focus because new
technologies are invented rapidly, and existing technology is becoming out of date in a short time. Moreover,
developing new hardware and software technologies, as well as commercializing these technology
Commented [S10]: You need to justify one of the proposed
alternatives and describe how to implement. Please note how the
implemented of description of Differentiator with Product Life Cycle
is adopted from the description given in Section 12 of Capsim
user’s guide.
worldwide, is Microsoft’s core competence. As a result, profit margins are higher in new technology based
products and significant portion of consumers as well as businesses market are demanding and adopting
newer products. Microsoft should introduce the products in high/end/high performance and gaming
segments and eventually move the product to low cost segment.
Implementation: To implement this strategy, Microsoft should develop tablet computers with excellent
design and superior configurations compared to the products sold by its most competitors. For example,
Microsoft tablet should have one of the highest resolution screens, a top of the line processor and other key
2
Microsoft Critical Analysis
First Last Name
Section XYZ: TTH 12:30 pm
components that customers’ desire. To achieve this goal, Microsoft should hire individuals who are known to
be industry experts, as well as employees who have advanced degree and education from top ranked
schools, to develop new products. Microsoft should price its tablet computers in the top 25% price range and
target on the road business customers and gaming consumer segments that need higher performance from a
tablet. Microsoft should sell tablets through many retail and online outlets worldwide. Microsoft should also
advertise so that more than 90% of the targeted segment are aware of its tablets. Finally, Microsoft should
keep up with the new development in technology and create new version/model of tablet computers
frequently. Microsoft should also invest in flexible manufacturing facilities to assemble tablets or contract
with several hardware manufacturing companies to ramp up production of new tablets as needed.
Tracking Metrics
Intermediate: Microsoft should conduct survey to verify that its tablets are known around the world and
perceived as one of the most superior tablets available in the market. Microsoft should compare the price of
its tablet computers with those of its competitors and verify that prices of Microsoft tablets are in the top
Commented [S11]: Here you need to state how would you
verify that the tactics proposed for implementing the strategy are
realized. For example, how would you verify that your cost is below
(or above) average if you are a cost leader (or a differentiator)?
25% price range. Microsoft should also review delivery records to verify that its new tablets have been sold
worldwide and manufacturing capacity is aligned with the demands. Microsoft should verify that new
technological inventions are adopted in its tables with in few months of availability.
Conclusive: Microsoft should verify that its profit from tablet business has doubled in the last three years.
Commented [S12]: Here you need to state how would you
verify that the financial goal(s) stated in the problem statement are
met.
Take Away
Commented [S13]: You need to write a short paragraph.
I learned ….
3
Microsoft reports weak results despite
turnaround effort
By Brandon Bailey, Associated Press
Apr. 21, 2016
SAN FRANCISCO (AP) — Microsoft reported a surprise drop in sales and profit for the first
three months of the year, a sign the tech giant is still trying to find its way in the post-PC era.
Wall Street was expecting the company to show positive results from a series of changes that
CEO Satya Nadella has been making. Instead, revenue for the January-March quarter fell 6
percent to $20.5 billion, while profit plunged 25 percent to $3.76 billion.
Thursday’s report came as other industry stalwarts reported their own struggles with seismic
shifts in the way people use technology.
On Monday, IBM reported its 16th consecutive quarter of revenue decline, as commercial
customers abandon the once-standard model of buying programs to install on their own
computers, and instead use more software online. A day later, Intel said it’s cutting 12,000 jobs
as fewer people buy PCs that run on Intel processors, opting instead for mobile devices such as
smartphones and tablets.
But many analysts were expecting Microsoft to do better. While sales of personal computers
have been sliding for the past four years, Nadella has been working to make Microsoft less
dependent on revenue from its flagship Windows operating system, used mostly on PCs.
Microsoft said revenue from Windows software licenses declined 2 percent during the quarter,
after adjusting for currency fluctuations. That’s better than the overall drop in PC shipments,
which analysts at the Gartner research firm estimated at nearly 10 percent.
But revenue from business software and Internet-based services, known as cloud computing,
didn’t grow as much as analysts expected. In particular, Microsoft saw only a 3 percent increase
in revenue from its “Intelligent Cloud” business, where the company has invested heavily to help
business customers run their operations on Microsoft’s servers. The division’s operating profit
fell by 14 percent.
In a few bright spots, the company said sales of its Surface tablet computers rose 56 percent to
$1.1 billion, while revenue from ads shown with results from its Bing search engine grew 55
percent to $1.5 billion. After spending billions of dollars to develop Bing as a rival for Google’s
highly lucrative search business, Microsoft said the service started showing a profit last fall.
Some of that growth can be credited to Windows 10, which comes with a redesigned Web
browser and Cortana, a Siri-like digital assistant. Both are designed to encourage more use of
Bing.
Microsoft says Windows 10 is now running on more than 270 million machines, a healthy figure
for software that was released only nine months ago. But some of that is the result of free
upgrades offered to users of older Windows versions, rather than as software sales to PC
manufacturers.
Under Nadella, the company has also released free versions of programs like Word and Excel for
smartphones and tablets that run competing operating systems from Apple and Google. The
company hopes to make money by charging users for extra features, and for related services like
Skype messaging and online file storage.
Microsoft is also nudging users to change how they buy software. Subscriptions to its Office 365
service are growing rapidly. And because Microsoft delivers regular updates over the Internet,
analysts say that should help the company sell extra features, particularly to business users.
But the turnaround is taking time to materialize. Microsoft said it earned 47 cents a share for the
fiscal third quarter, or 62 cents after adjusting for one-time charges. Analysts surveyed by
FactSet were expecting adjusted earnings of 64 cents a share and revenue of $22.1 billion.
Microsoft Corp. executives blamed higher-than-expected taxes for cutting into its profit for the
quarter.
“Overall, we had a solid quarter,” Nadella said during a conference call Thursday.
Some analysts were inclined to accept that report. In an email, Mark Moerdler of Bernstein
Research said Microsoft’s earnings per share would have met Wall Street expectations if not for a
“tax technicality.”
Microsoft’s stock price has been rising in recent months, as investors have generally supported
Nadella’s turnaround effort. But the earnings report sent shares down more than 5 percent in
after-market trading, after closing at $55.78.
How to Do a Critical Analysis?
Purpose: Develop a Plan To Compete
Key Objectives:
a) Identifies Strategy to Pursue
•
•
How Do We Want to Compete
Which Segment(s) to Target/Who Are The Customers?
b) Describes Tactics to Implement the Strategy
c) Describes Metrics to Evaluate Performance
Big Picture
An Industry within the Environment
E
N Factors
Changing
V Environment
I Govt. Laws
R Resources
Technology
O Skills
N Economy
M Society
E Weather
…
N
T
Multiple
Suppliers
Factors
Affecting
Suppliers
Goals &
Objectives
Govt. Laws
Resources
Heterogeneous Groups of
Customers
Products
Delta
Environment
-Human Mind
– Norm
– Culture
ABC Products
Charter
Air
Technology
Skills
Have needs which
are affected by
Products
Southwest
-Personal Variables
-Age, Gender,
Income
– Influence of others
– Innovation
-Exchange
-Experience,
Satisfaction
How to Develop A Marketing Plan
Strategy
Tactics
Metrics
2-3
How to Do a Critical Analysis
1. Read the Article Few Times
2. Conduct SWOT Analysis (Search Appropriate Sources
Academia, Google, Wikipedia …)
•
•
Think About Core Competence of the Company
Identify Strength, Weaknesses, Opportunities, and
Threats For the Company
Sustainable Competitive Advantage
How to Do a Critical Analysis
3. Decide on the Opportunity or Threat You Want to
Address. Identify Alternatives To Resolve the Key
Opportunity or Threat The Company is Facing
•
Strategic Alternatives (Preferred) or Tactical Solutions
(to implement an identified Strategy)
Six Basic Strategies
• Broad Cost Leader
• Broad Differentiator
• Niche Cost Leader
• Niche Differentiator
• Cost Leader with Product Lifecycle Focus
• Differentiator with Product Lifecycle Focus
Note: Your Strategy Should Dictate Your Tactics
How Strategy Dictates Tactics
Example: Broad Cost Leader From User’s Guide
A Broad Cost Leader strategy maintains a presence in
all segments of the market. The company will gain a
competitive advantage by keeping R&D, production
and material costs to a minimum, enabling the
company to compete on the basis of price, which will
be below average. Automation levels will be increased
to improve margins and to offset second shit/overtime
costs.
Note: Description For the Other Strategies Given in the
User’s Guide, Section 12 “Six Basic Strategies”
How Strategy Dictates Tactics
Example: Niche Differentiator From User’s Guide
A Niche Differentiator strategy focuses on the high
technology segments (High End, Performance and Size). The
company will gain a competitive advantage by distinguishing
its products with an excellent design, high awareness, easy
accessibility and new products. The company will develop an
R&D competency that keeps designs fresh and exciting.
Products will keep pace with the market, offering improved
size and performance. The company will price above average
and will expand capacity as it generates higher demand.
Note: Description For the Other Strategies Given in the
User’s Guide, Section 12 “Six Basic Strategies”
How to Do a Critical Analysis (Continued)
4. Evaluate Solution(s) and Recommend
•
Reason: Strengths and Weaknesses, Core Competence
•
•
•
•
Select a Strategic Alternative Where the Company’s Core
Competence and Strengths is Applicable or a Tactical
Alternative to Improve the Weakness in Implementing the
Strategy.
If No Core Competence/ is Not Applicable Than Identify it as
a Potential Constraints.
No Personal Feelings/Beliefs
Identify What are the Segments and Which Segment(s)
to Target
How to Do a Critical Analysis (Continued)
5. Identify Tracking Mechanisms
•
How Would You Determine If Strategy/Tactics Have
Been Implemented and Goals/Objectives Stated in the
Problem Statement are Met.
Report Write Up/Format (page 1)
1. Background
i.
First (Short) Paragraph Summary of the Article (5
Points )
ii. Next Paragraph: Discuss Few Strength and Few
Weakness (Internal to the Company; 10 points)
iii. Highlight Core Competence (5 points)
iv. Next Paragraph: Discuss Few Opportunity and Threats
(Based on the Changes in the Environment. Conduct
PEST Analysis or Apply Porter Model; 10 Points).
Report Write Up/Format (page 1)
2. Problem Statement
i.
State What is the Purpose of the Critical Analysis?
Conceptually it is About “How Should Company X
Compete in Y Market? Also State Financial Goals to
Achieve From Implementing the Proposed Solution. (5
Points)
Report Write Up/Format (page 2)
3. Propose and Describe Alternatives (at least two) to
Address the Problem and to Achieve the Goal/
Objective Stated in the Problem Statement. (10 Points)
i.
Either: Strategic Alternatives (which strategy to pursue: e.g.
broad cost leader, niche differentiator etc. given in Section
12 of Capsim Users Guide)
ii. or Tactical Alternatives (state the strategy the company is
pursuing and then describe tactical options such as changes
in R&D, marketing, production and finance Decisions).
iii. Note: You Can Propose to Enter a New Market/Introduce
New Product. However, you still need to suggest
Strategic/Tactical Alternatives to Compete.
Six Basic Strategies
• Broad Cost Leader
• Broad Differentiator
• Niche Cost Leader
• Niche Differentiator
• Cost Leader with Product Lifecycle Focus
• Differentiator with Product Lifecycle Focus
Note: Your Strategy Should Dictate Your Tactics
Report Write Up/Format (page 3)
4. Evaluate Solutions and Recommend an Option
i.
Choose the Solution Where Company Can
Differentiate Through Core Competence.
ii. Describe Why Did You Chose This Solution (10 Points)
iii. Describe how to implement the recommended option.
Use/Apply Tactics Described in Section 12 of Capsim
Users Guide (10 Points)
iv. Identify Segments and point out which segment to
target (10 points).
How Strategy Dictates Tactics
Example: Broad Cost Leader From User’s Guide
A Broad Cost Leader strategy maintains a presence in
all segments of the market. The company will gain a
competitive advantage by keeping R&D, production
and material costs to a minimum, enabling the
company to compete on the basis of price, which will
be below average. Automation levels will be increased
to improve margins and to offset second shit/overtime
costs.
Note: Description For the Other Strategies Given in the
User’s Guide, Section 12 “Six Basic Strategies”
Report Write Up/Format (page 3)
5. Tracking Metrics
i.
Intermediate Metrics: How would you verify that all
the tactics to be implemented for the proposed
strategy are carried out?(15 Points)
ii. Conclusive Metrics: How would you verify that
financial goal stated in the problem statement is
achieved? (5 Points)
6. Take Away (5 points)
Report Write Up/Format: FYI (page 4)
A.
Format: 3 pages maximum, double-spaced using standard font (11 or 12 pt.) and
page format, and page numbers. Write Your Full Name, Course Section and Class
Time/Day similar to the sample analysis, (- 3 points for a different format)
Make sure to use section (Background, Problem Statement.. Metrics) and
subsection titles (Strength, Weakness… Core Competence, Intermediate Metrics)
B.
•
C.
Make sure that strength and weakness are internal (Skills/Something the
company is good/bad at)
•
D.
5 points deduction if not internal
Make sure that opportunities and threats are environment driven (PEST Analysis,
Porter Model).
•
•
•
E.
5 points deduction if missing any.
Discuss how the environment is changing.
Do not focus on what the company could do.
5 points deduction if content is not about changes in the environment
At Least Three Citations Required (-2 points per missing citation)