SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis is a tool for auditing an organization and its environment (Marketing Teacher Ltd, 2012). Internal analysis is the first step in conducting SWOT analysis of a firm. It is an integral part of strategy formulation process of a firm. It provides inputs for effective strategy planning by helping identify a firm’s key strengths, its inherent weaknesses and main competitive advantages over its competitors. The competencies and strengths of a firm are linked to its available resources. Thus, Resource Based View (RBV) framework of strategy is an important tool of internal analysis. The paper aims at conducting an internal analysis of Microsoft Corporation and evaluating the lessons learnt in Module 3 SLP.
The paper is divided into five sections. The first section conducts and internal analysis of Microsoft. The second section identifies its key strengths. The third section highlights its competitive advantages. The fourth section mentions the firm’s internal weaknesses. The fifth section is an evaluation of the lessons learnt in Module 3 SLP.
Internal Analysis of Microsoft
Internal Analysis of Microsoft will be done using an RBV framework. The RBV holds that firms can earn super normal profits on a sustained basis only if they have superior resources (12manage.com, 2012). Superiority of resources and capabilities over others provides competitive advantage to a firm. Barney suggests that the key features of superior resources, that give competitive edge to a firm, are its being valuable, rare, imperfectly imitable and non-substitutable (12manage.com, 2012). There are a few findings on RBV analysis of Microsoft. First, it strong brand salience and acceptability among customers is its biggest intangible resource. Second, Microsoft holds a leading position in the market. Third, Microsoft’s capital resource is its strength. It has a strong balance sheet, consistent financial performance and good financial position (yousigma.com, n.d.). Fourth, Microsoft’s huge network of certified partners is another superior resource (Business Teacher, 2011). Fifth, Microsoft has global reach and customer awareness. Sixth, its products are known for its innovativeness and technological superiority. Seventh, skilled human resource also contributes to the company’s success.
Key Strengths of Microsoft
The key strengths of Microsoft are its:
Strong brand salience.
Leading market position.
Consistent financial performance.
Global reach, innovative products and technological superiority.
Talented human resource with diverse skills.
Competitive Advantages of Microsoft
Competitive advantages are formed from the capabilities and resource integration of a firm. The key competitive advantages of the company are its ubiquity and business productivity. Ubiquity of the products of Microsoft is owing to its strong brand salience, leading market position and financial power. Business productivity means that Microsoft has been providing customers with solutions that simplify the way people communicate, share expertise, gain business insight and find information (Microsoft.com, 2011). Being innovative and technological oriented coupled with existence of a talented human resource and network of certified partners is adding to the company’s advantage of business productivity.
Internal Weaknesses of Microsoft
The key internal weaknesses of Microsoft are:
Less penetration in the internet and search engine segment.
Lack of cost-effective products for economy segment.
High reliance on the operating system software.
Evaluation of Module 3 SLP
The key lessons learnt in this module was that the strengths of a company are integrated and interwoven together to forms its capabilities and competitive advantages. An RBV framework provides deeper insights into the strengths and weaknesses of a firm and highlights its competitive advantages. Overall, internal analysis is an effective tool in strategic planning and managers should treat it as the first step to strategy formulation.
12manage.com (2012). Earning Sustainable Supra-formal Returns by Superior Resources, Explanation of Resource Based View (Perspective) of Barney (’91). Retrieved from http://www.12manage.com/methods_barney_resource_based_view_firm.html
Business Teacher (2011). Microsoft Corporation: A Research Report. Retrieved from http://www.businessteacher.org.uk/free-management-essays/microsoft-corporation-essay/
Marketing Teacher Ltd. (2012). SWOT Analysis. Retrieved from http://marketingteacher.com/lesson-store/lesson-swot.html
Microsoft.com (2011). Microsoft’s Competitive Advantage. Retrieved from http://www.microsoft.com/businessproductivity/en/gb/why-microsoft/default.aspx
Yousigma.com (n.d.). Microsoft (SWOT Analysis). Retrieved from http://www.yousigma.com/comparativeanalysis/microsoft.html