Analyse the impact and influence which the macroenvironment has on an organisation.Business strategy is very important for an organisation asit can help to achieve a list goals and objectives. A business strategy is usedby the organisations management to obtain higher levels of performance withinthe organisation.
A businesses strategy plan shows the way in which managementwants to achieve their goals and by when they want them achieving. Within abusiness strategy, the organisation may find it hard to compete with theirmarket competitors. However, even with a good business strategy, the success ofthe organisation is not guaranteed and can fail due to external factors thatthe organisation cannot control. To be able to create a successful business strategy, theorganisation needs to be able to conduct strategic planning.
Strategic planningdetermines the organisational strategy, direction, and resource allocation forachieving the desire goals. For determining the direction of the organisation,it is needed to know the current situation of the organisation and what will bethe future of the organisation. To be able to conduct strategic planning,management needs to be aware of; the mission, the vison, goals and objectives.
MissionThe mission of any business or organisation is the basic aimof the business. The aim of the business gives a description of why thebusiness is there and what it will do to obtain the businesses vision. It isimportant that the organisation has a mission statement as this will motivateand inspire the workforce to work together so that the organisation can achievethe overall vision. Vison The vision of a business is a description of what it wantsto be in the future. This can be where the business wants to operate in thefuture or other goals that the organisation wants to achieve in a period oftime. Vision statements are often created based on long term goals of thebusiness GoalsGoal is something that man desires, and it is an end resultand a specific target. It is the main step to achieve the targets of an organisation.Goal is the destination of an organisation and it is the contextual planning toachieve a target.
Top managements decide the goals of a company and every otherperson will follow the contextual planning to attain the goals ObjectivesAn objective is the measure of progress which is needed toreach the target whereas a goal is the details of the destination. Objectivesare the steps to attain goals that means objectives are the part of a goals,but goals are not a part of objectives. PESTLE AnalysisMicrosoft Corporation is a technology firm that deals withmost goods and services related to personal computers. Microsoft createsproduces, licenses and sells computer software such as Microsoft Office.Microsoft also offers free internet services such as Internet Explorer andMicrosoft Edge. The external environmental impact on organisations such asMicrosoft is highly important as it directly impacts its performance anddictates how management needs to development appropriate strategies in dealingwith them. PoliticalGovernment rules and regulations have great influence on thebusinesses.
Microsoft as being in the computer technology business should focuson all of the political features of the business environment like, Environmentrules and safety issues, taxation, global trading policies, height of customersecurity, the level of political stability and enforcement rules. These willhelp to penetrate in the markets with the support of regulated bodies. For atechnology based company that has been around for so many years and is soheavily involved with several other business ventures, it also becomesimperative for Microsoft to abide by all government policies to ensure seamlessoperations throughout the world. Environmental:Environmental factors have become increasingly important forbusinesses in recent years. Microsoft and other technological companies thatmake laptops, PCs and smartphones hold a major responsibility towards theenvironment and the wellbeing of the planet. These products are difficult todispose and contain dangerous materials which can have a significant negativeeffect on the environment if they are not disposed properly.
So, apart fromproper disposal of the products, environmental impact of the entire brand alsobecomes a major concern for any technological company.Microsoft has also focused on maintaining a lowenvironmental impact during its manufacturing processes and has madesignificant investments. Overall, it has been carbon neutral since June 2012.The brand has also invested in renewable energy as a part of its sustainabilitystrategy. SocialSocial and cultural factors can have an impact on thebusinesses and their revenues and growth. Businesses cannot stand away fromthese forces as they can be seen as one of the most influential externalfactor. In the recent years, people have switched to mobile devices with largerscreens. The growing popularity of smartphones has not worked in the favour ofMicrosoft.
Its products are mainly designed for use on laptops and PCs.However, the growing use of mobile devices has created opportunities for theother businesses. Social trends and demographic changes can be favourable orunfavourable for businesses. Similarly, in terms of marketing, culture is animportant factor that international businesses have to mind when operating inthe foreign countries. Technological:Microsoft operates within the technology industry and so thetechnological changes are bound to affect it massively. New technologies comeand leave the old ones out of date and no good anymore, therefore, Microsoftneed to make sure that they conduct innovation, if it is to remain ahead in therace. The pressure from competitors such as Google and Apple is intense and ifMicrosoft fails on any point, it can result in severe losses.
Legal:Legal factors are another major force which can have a deepimpact on business. Law is virtually everywhere and for businesses a legaltussle can mean a big loss. A tussle with the law can be very bad for thefinancial health of the company as well as the company’s reputation. There areseveral laws related to labour and products that affect the business ofMicrosoft.
Also, technology and IT related laws affect its business. Microsoftand all other big technological companies need to remain careful about laws andcompliance. EconomicThe economic factors in terms of increasing threats ofcyber-attacks are posing threats to the organisation like Microsoft in comingup with newer technology in addressing customer needs Stakeholder AnalysisStakeholder Analysis is a pragmatic way of identifying andunderstanding multiple (often competing) claims of many constituencies. As partof a general stakeholder approach, SA is a method to help understand therelationships between an organisation and the groups with which it mustinteract. (Weiss, 2014)Stakeholders Analysis involves identifying and prioritisingkey stakeholders, assessing their needs, collecting ideas from them andintegrating this knowledge into strategic management processes such as theestablishment of strategic direction and the formulation and implementation ofstrategies.
(Harrison & St. John, 2009) List of stakeholders Porters 5 factorsPorter’s Five Forces is a model that identifies and analysesfive competitive forces that shape every industry, and helps determine anindustry’s weaknesses and strengths. Frequently used to identify an industry’sstructure to determine corporate strategy, Porter’s model can be applied to anysegment of the economy to search for profitability and attractiveness. These factors include:- Competitive Rivalry – Threat of New Entry- Buyer Power- Supplier Power- Treat of Substitution Competitive Rivalry Although Microsoft is the market leader for many of the technologiesof personal computers, the technological industry in today’s world is verycompetitive. Many of Microsoft’s products and services such as operatingsystems (Eg. Windows 10) and other computer software (Eg. Microsoft Office) arealso being produced by other large companies that provides the same featuresMicrosoft’s but also has other features that Microsoft’s products do notinclude.
The competition within the technology industry depends on the rate ofinnovation for each company as falling behind a company with such scale of thatof Microsoft can be hard to catch up to. For each of the different companies and the various productsthey produce, customers do have a large feeling of loyalty. This is based onthe known quality of the products but also, they can they can be used as it maytake time to get used to a new product from a different organisation. Competitive Rivalry in different areas of the technology industrywill be different for Microsoft. For example, Microsoft’s Windows operating systemsholds a large portion of the OS market, so the rivalry is low. However, gamingconsole market has a relative even share between Microsoft and Sony so therivalry between them is high.
Threat of New EntryThe Threat of new entrants to the technology industry is incrediblylow as a result of the major companies that have become well-established in thetechnology industry. This is also due to significant industry barriers relatingto financial investments and technological know-how that small, new companieswould not be able to compete the with the market leaders. Moreover, due to itsglobal size and scale of operations, Microsoft offers huge cost advantages becauseof its size and popularity and this advantage is not available to new entrantsof the industry, at least during the initial stages of operations. However, bythen there is a major possibility that the new company has ran its course and collapses.Another consequence of the huge market share of the top three industrycompetitors is the low chance of new companies being able to come up withinnovative ideas that the large companies have already thought of. This leadsto a low change that angel investors and venture capitalists will fund newcompanies.
However, with the increase popularity of digitalisation andthe internet, there is always a slim chance that new companies can squeezethemselves into the market. Buyer PowerCustomers of Microsoft’s software will not easily switch tosoftware produced by a different company (Eg. Apple) although they will performin very similar manners. The main reasons why customers are unlikely to switchis the because of the time and money. Starting on a new software will haveslightly different ways of doing tasks which will take time to get used to.Also starting from scratch on a new software can be costly to re-format all theold files into a format that will work best with the new software. Even though it is possible that customers ofMicrosoft will leave for another company, Microsoft are able to increase theirprices and most buyers will continuing using it. Unlike different software, hardware products are morecommonly switched between different companies because the switching cost isvery low because of the large variations available in the market.
Overall, thisleads to a moderate level of bargaining power of buyers. Supplier PowerThe bargaining power of suppliers of Microsoft is lowbecause of the size of Microsoft as well as what they produce. As most ofMicrosoft’s products are software based, they are intangible and produced atMicrosoft therefore there is limited need for tangible supplies.
Wherever a business engages witha new product or a new market, there is a chance that things will not work outas well as hoped and anticipated. These product and market risks can bemodelled on the Ansoff matrix using the idea of risk contours” (Campbell, Edgar, & Stonehouse, 2011). The Ansoff matrix has two comparing factors, one relating toproducts and the other relating to the market in which the product is sold.With the two-by-two matrix, there are four possible outcomes for theorganisation who are using it;- Market Penetration – Product Development – Market Development – Diversification Market PenetrationMarket penetration is the strategy of selling more to anexisting customer base. Microsoft sells to both individuals and organizations.
Since it has been selling affordable computing solutions, the brand has beenable to build a large customer base. However, it has added a large series of products and services to itsproduct line which it sells to its existing customer base too. Since it has avery large customer base already, the brand is able to sell the new products itmakes to the individual and organizational customers. Product DevelopmentProduct Development is also an important strategy adopted byMicrosoft to grow its market base and revenue. The brand has grown its salesworldwide and kept adding to its diverse array of products. Apart from softwareproducts, it makes a diverse array of products like servers, CRM and otherbusiness solutions, developer tools, PC games and other accessories. Thisproduct line has kept growing and adding to Microsoft’s revenue. Market DevelopmentMarket development is the process of entering new marketsand new regions to expand the customer base and to grow sales and profits.
Overtime, Microsoft has expanded its market globally from Europe and AsiaPacific. This vast market base means high sales and revenue. Apart from marketpenetration, Market Development is the other main strategy adopted by Microsoftto develop its market base and market share. DiversificationDiversification could be seen as one of the last resortoptions for a business with such size and reputation of Microsoft.Diversification is a strategy of entering a new market of industry in which thebusiness doesn’t currently operate in. Within recent years, Microsoft havestarted to work in the gaming industry as well as continuing to work within thecomputer industry which has helped increase revenue. Assess an organisation’s internal environment andcapabilities.
SWOT AnalysisStrengthsHuge Worldwide Reach: Microsoft has been producing qualityproducts for over 40 years, and have built themselves a name doing so. Theircomputers and software appear in almost every household in the West, showingtheir immense popularity. With this, they have a great (and often loyal)customer base and a platform for advertising, through their existing products. Plenty of Capital: Microsoft is 5th when it comes to theworld’s largest companies which shows just how much money they have availableto spend. With this, they can adopt much more aggressive marketing strategiesand invest more time and money into developing great products. A Good Track Record: With great power comes greatresponsibility. Microsoft may not produce much free software, but they do offerplenty of customer support options and have a line of products which generallywork as advertised. WeaknessesHigh Price Point: With some of Microsoft’s competitorsoffering free versions of publishing and operating systems (OpenOffice andLinus respectively), you can see how much Microsoft charge for their products.
This does have its benefits regarding to the increase of revenue, but it alsocan the possibility of deterring customers to other companies that offer freesoftware or cheaper versions. Plenty of Competition: While this will be discussed furtherunder the topic of ‘Threats’, it’s worth mentioning now that Microsoft hasplenty of competitors in the technology space. Of the four largest companiesabove Microsoft on the list which was mentioned early, two of them (Apple andGoogle) are also multinational technology companies battling Microsoft. Plentyof alternatives exist to the products that Microsoft offer. OpportunitiesMaking the most of their current standings: As mentioned,Microsoft have plenty of money lying around. They have a great opportunity todevelop the world’s best software with their talented programmers and largechunks of money to invest. Microsoft is primarily a software business that heavilyrelies on the popularity of the Windows operating system. In this regard, thecompany has the opportunity to grow based on diversification.
For example,Microsoft can diversify through new business development or mergers toestablish operations in new markets or industries. In this way, the company cantake advantage of other avenues of business growth Another opportunity is for Microsoft to innovate computerhardware products, so as to increase revenues from hardware sales. At present,the company’s hardware products are not as competitively strong as the productsfrom other firms in the computer hardware market. ThreatsLosing out on new markets: Compared to their competitors, Microsoftwas late for the mobile revolution. Companies such as Apple and Samsung sawopportunity in this, and managed to capitalise on it.
If Microsoft doesn’tmanage to stay current, its products will quickly grow out of date, and as acompany they will be pushed aside. Static pricing models: Microsoft products are typically big,expensive purchases that consumers only consider every few years. Microsoftdoesn’t really offer any particularly cheap products, and so lose out on marketshare. Unless they change this to a more modern system, they might lose out tothe microtransactions other companies already employ today. McKinsey’s 7s’ BenchmarkingThe objective of benchmarking is to understand and evaluatethe current position of a business or organisation in relation to best practiceand to identify areas and means of performance improvement. Benchmarking involves looking outward (outside a particularbusiness, organisation, industry, region or country) to examine how othersachieve their performance levels, and to understand the processes they use. In this way, benchmarking helps explain the processes behindexcellent performance.
When lessons learned from a benchmarking exercise areapplied appropriately, they facilitate improved performance in criticalfunctions within an organisation or in key areas of the business. The application of benchmarking involves four key steps: Understand in detail existing business processes Analyse the business processes of others Compare own business performance with that of others analysed Implement the steps necessary to close the performance gap Benchmarking should not be considered a one-off exercise. Tobe effective, it must become an integral part of an ongoing improvementprocess, the goal being to abreast of ever-improving best practice.
Types of benchmarking include:- Strategic Benchmarking- Performance or Competitive Benchmarking – Process Benchmarking- Functional Benchmarking- Internal Benchmarking- External Benchmarking- International Benchmarkinghttps://www.tutor2u.net/business/reference/what-is-benchmarking