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Key Topics
Requirement
Project Assignment: Each student will prepare an executive analysis of how a company (select a specific company of your choice) uses and should use at least 5 specific concepts relevant to Production and Operations Management in their business operations. There are two parts to this project:
1. 5-8 page typed Report - The report portion of the project should include:
a) A catchy introduction
b) A brief history of the company
c) A summary and explanation of each of the 5 concepts
d) A “professional” assessment of how the 5 production’s concepts influence and could improve the company you chose. Clearly answer the basic questions of: Who, What, When, Where, and Why as it relates to how your selected company utilizes and should utilize your selected Production topics.
e) Finally, in closing, as a result of your findings in part (d) above, analyze the strengths and weaknesses of the firm as it relates to your chosen topics and explain what opportunities or threats may exist to enable the company increased success. Make at least 1 valid and supported suggestion for the company per concept.
Each of these five sections (a-e) must be clearly identified, explained, and supported. This is not just a research project, instead it is applying research to help a company improve. You should place yourself in the shoes of top management and or consultants. All work must be properly researched using at least Five (5) reliable sources (the library’s website offers an online scholarly database with research and articles that would be perfect for this, click here to access their website: http://gardner-webb.edu/library/index, including your text book and must be cited properly (MLA/APA format). The report must be double-spaced, using a font size of 12, and must include a cover page and works cited page.
Solution
Introduction
Microsoft is an American multinational technology company that has its headquarters in Redmond, Washington. The company majors in the manufacture and production of computer software, computer hardware, and other consumer electronics. The company also provides licensing for the products they produce and sell. The company's major and renowned products are Internet Explorer, Windows operating systems, the Edge Web browser, and the Microsoft Office Suite. Microsoft also develops several flagship products, such as the Microsoft Surface tablets and the Xbox games lineup. Moreover, the company also offers the Cloud product. The Cloud is a service whereby the company provides services and content to the users of their products on the Internet through sharing computer resources in a single network. Microsoft has been ranked as one of the world's largest software developers according to the company's revenue, which also makes the company one of the most successful enterprises in the world. This paper provides an insight into the company and discovers the main components of its increasing viability (Zambelli, 40).
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Company’s Background
Paul Allen and Bill Gates established the Microsoft Company in April 1975. Initially, the company majored in developing BASIC interpreters and selling them on behalf of Altair. The company gained ground and was extending its limits. Thus, it managed to gain the competitive edge and lead the world in the computer operating production industry. The first product that the company produced as its own brand was the MS-DOS in the 1930s. Consequently, the company began to develop the Microsoft Windows. The company decided to go public in 1986, and this immediately instigated the increasing growth of substantial income. It was revealed that after this shift over 12, 000 employees of the Microsoft Corporation became millionaires, and three of them became billionaires. The company has never lost dominance in the operating systems market and has continued to diversify an array of the offered products by making several corporate acquisitions. For instance, in 2011, Microsoft revealed that it had acquired Skype Technologies at the price of $8.5 billion. It is considered to be the largest acquisition that the company has ever made. At present, the company owns a vast number of big corporations.
The five specific and relevant concepts that are crucial for the Production and Operation Management of the company are:
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Managing Processes
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Corporate Structure
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Resource Management
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SWOT Analysis
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Decision Making Process
These important concepts are explained on by one in the following section.
Managing Processes
Microsoft’s management has not been afflicted by any scandals or dissimilarities. The company has managed to have an orderly management ever since its establishment. Being a multinational and publicly traded company, Microsoft has had commendable leadership. The company shares continue to rise, as the company continues to diversify. To improve the management of the company, the board announced that it was going to reorganize the company into divisions according to functions that would encompass devices, applications, operating systems, and the Cloud.
Like all publicly traded companies, a board of directors heads Microsoft. The Board is made up of individuals who appear to be company outsiders(Burlton). Currently, the ten members of the Board are Teri List-Stoll, Bill Bates, John Thompson, Charles Noski, Mason Morfit, Helmut Panke, SatyaNadella, John Stanton, Sandi Peterson, Charles Scharf, and Padmasree Warrior. At the annual shareholders' meetings the Board is disbanded, and new elections are conducted. The voting system that is applied relies on the majority rule. Within the Board, there are several committees that are in charge of overseeing particular matters of the company. The Board has three following committees: the Compensation Committee which is accountable for determining the compensation for the business's employees and CEO, the Audit Committee which is liable for handling the company accounts, the Governance and Nominating Committee which is in charge of corporate matters, such as nominating Board Members, the Finance Committee which is responsible for dealing with the financial issues, such as company's acquisitions and merging propositions, and the Antitrust Compliance Committee which is mainly in charge of ensuring that the company does not violate antitrust laws.
Corporate Structure
Microsoft also has several divisions within the company. Specifically, the main branches are the Business Division, the Windows Division, the Server and Tools Division, the Entertainment and Devices Division, and the Online Services Division.
The Windows Division, the Online Services Division and the Server and Tools Division are in charge of almost the same matter. These divisions are accountable for developing the company's main products and ensuring that they are viable. The Server and Tools division, for instance, produces various versions of servers for Windows, such as the Windows Server 2008 R2, and different tools, such as the Microsoft Silver Light, the Microsoft Visual Studio, and the System Center Configuration Manager, which is a set of applications that offer remote control capability, the Microsoft Exchange Server for enterprises that need scheduling and e-mail applications, the Microsoft SQL Server that offers a relational database system, the Microsoft BizTalk Server that provides a business process management application, and the Small Business Server that mainly provides messaging services and other similar applications for business corporations(Heinrich).
Apart from responsibilities of all these divisions, Microsoft also provides customers with consulting services. The IT consultancy services offer certified programs that are mainly designed to help individuals who have little or no knowledge of how to use some of the programs. For instance, the programs, such as the Microsoft Certified Systems Engineer, which is developed for network or system analysts, the Microsoft Certified Solution Developer for developers, the Microsoft Certifies Database Administrator and the Microsoft Certified Systems Administrator for administrators, and the Microsoft Press for publishers. Also, the Online Services Division is accountable for the company's online services, such as Bing and MSN (King, 100-136).
The Entertainment and Devices division, is a division that is in charge of producing Windows operating systems for all the Microsoft mobile devices. The primary operating systems developed by the company are the Windows CE and the Windows Phone. Initially, the company was producing the Windows Mobile operating system. The Windows Phone operating system is designed for Smartphones, whereas the Windows CE is designed for appliances and cars whereby the operating system does not have to be visible to the users. Apart from the production of the operating systems, the division also produces games for the computers and mobile phones. The group also designs electronic gadgets, such as the Xbox 360 game console.
Since the addition of entertainment and devices, businesses are regarded as highly competitive and are characterized by short product life cycles, the division is accountable for the development of new technologies. Therefore, there is constant pricing pressure from Microsoft's competitors, and the department is liable for responding to this pressure developing new high-quality products at reasonable prices. Their primary obligation is to compete on the basis of product innovation, timing of product releases, and effectiveness of distribution and marketing.
Resource Management
In 1986, Microsoft decided to go public. The initial public offering amounted to $21 per stock. On the same day, the stock ended up attaining a cost of $27.75 per one. In 2010, the Microsoft announced that it could divide the IPO shares into nine stock splits and multiply them by 288 times. This meant that the company was selling the IPO at the price amounting to 9 cents. The company began to offers dividends at a rate of 8 cents per share, and the next year the cost of the dividends increased up to 16 cents. From 2005, the company decided to change from yearly dividends to quarterly, and that year the cost of the dividends amounted to 8 cents per share. Therefore, the stock prices have been steady throughout the years.
The Standard and Poor's financial review, contends that the company is worth over $4.1 billion, according to the statistics offered by the corporation in relation to the AAA rating in 2011. The statistics also revealed that the company had $8.5 billion of unsecured debt. In the same year, Microsoft announced that they were releasing a corporate bond which was offered at low prices if to compare with the governmental bonds, and amounted to $2.25 billion (Boreczkyet a 10-33).
As it is mentioned above, in 2011, the company encountered substantial losses due to the weak sales of the computers and also unproductive work of the Online Services Division. Such deterioration precipitated the company's sharp downturn, and its main competitor Apple therefore, outclassed it. According to the company's statistics, the Online Services Division had been making losses since 2006. The company's overall losses amounted to $2.5 billion in 2010 and $726 million in 2011. Despite the considerable losses, the company managed to obtain high revenues during the last quarter of that fiscal year. In 2012, the financial report revealed that the firm had incurred net losses amounting to $493 million, which the Corporation attributed to the fact that it had encountered substantial downturn due to the newly acquired aQuantive company that had been bought for $6.2 billion in 2007.
In 2014, the company succeeded in overcoming a series of losses. The Corporation released a report in which it was stated that it had attained market capitalization amounting to $314 billion. This put the company in eighth on the list of the world's largest companies concerning the market capitalization. Also, due to these results, Microsoft became the second most valuable company, overtaking the Exxon Mobil but coming second after Apple, which had a market value of over $410 billion. Apple's stock registered the price of $50.04 price which was the highest ever recorded in the market.
The company encountered substantial downturn, but it strives to regain a competitive edge(Bresnahan). To reclaim the first position, the company needs to strategize and refine approaches with a view to solving the crucial issues of weak computer sales and low online services usage. Apple, on the other hand, appears to be hard to beat, since it continues to register high mobile phone and computer sales.
SWOT Analysis
Strengths
Undoubtedly, Microsoft's major strength is the worldwide dominance in the realm of personal computer sales. It is estimated that over 90 percent of the computers worldwide run on the various versions of Windows, which is the Microsoft's leading and oldest product. Microsoft Office is another product that is another strong pillar of the company. It is thought that over 1.2 billion people use Microsoft products.
These two products have made Microsoft what it is today, and, as long as the computers remain relevant, the company will still continue to lead the field, assure dominance in the world and obtain high revenues. In 2004, Microsoft managed to attain maximal viability, as this year is considered to be a milestone in the corporation's history. Moreover, the company released data that revealed that the sales had improved in 2004 since they mounted to $36.8 billion. In 2014, the sales were worth $86.8 billion. During this period, the annual revenue had been steadily improving from 75 cents to $2.63 per share. Due to this fact, the company had also been increasing the annual dividends.
Weaknesses
The main weakness of the Microsoft Corporation is that it has been overexposed in the PC market. The company basically depends on it. Thus, if the sales become affected, the company is affected as well. This was the case in 2014 whereby vendors overseas increased the prices of the shipped PCS in order to offset the currency fluctuations. The corporation encountered considerable impact of such slow sales on its general income.
A research company called Gartner predicted PC shipments to fall by 2.4 this year, but there was an actual increase in shipments of Smartphones by 3.5 percent. Microsoft could reap the benefits from this change, but it is estimated that only 2.7 percent of the world's Smartphones run on Windows. Apple, on the other hand, is apt to obtain competitive advantages, since 18.3 percent of the mobile phones are liable to run the Apple's operating systems. 78 percent of the cell phones run the Google Android operating system.
Another significant threat to the company is the introduction of the Chrome operating system by Google. The Chrome operating system comes with an application that Microsoft does not have, and it is called Chromebooks. This offers users free productivity software, cross compatibility with Android applications, and cheap hardware. Chromebooks are easy to use, have a virus protection system and are synchronized with Android mobile phones and tablets, which seems to be the cornerstone of Chrome's success. Garter estimates that Chrome can increase its influence from 1 percent to over 4 percent by 2017, and this prediction appears to be an apparent reality at present.
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For several years, Microsoft has been making little upgrades of their Windows but has been receiving desired revenue. Given the new competition, the Microsoft Corporation has a chance to generate more income by introducing better upgrades to beat the competitors. In the past, Microsoft consumers were satisfied with rather good versions of operating systems, but today the present options do not allow Microsoft to ignore the reality and intense competition.
In order to eliminate this problem, Microsoft has come up with a promotional strategy, which encompasses introduction of the new One Windows product. The One Windows product is a product that has been developed as a free upgrade for the Windows 7 and 8 and, basically, Windows 10. This feature will allow users to configure personal computers, Smartphones, and tablets using one operating system. This new upgrade could be the solution for the Microsoft Corporation since it is likely to instigate re-establishment of the company in the PC market and also the mobile phone or smartphone industry.
Microsoft Cloud is another solution to increase viability and growth, which is of intrinsic value to the Microsoft Corporation at present. The Cloud incorporates various products, such as Azure, Office 365, and the Dynamics CRM. After the introduction of the Microsoft Cloud, the company registered revenue increased by 106 percent during the last fiscal quarter of the year. To capitalize on Cloud, Microsoft has partnered with several companies including the Datazen Company majoring in business intelligence and data visualization, the Aorate Company, which deals with machine learning, and the Green Button Company for monitoring the Cloud.
Threats
Apple and Google are regarded as Microsoft's major threats, but Google is considered to be its main competitor at present since Google is threatening Microsoft's line of business. Moreover, Google is using its outreach and advertisement revenue in order to launch free alternatives to the products developed by the Microsoft Corporation. In the past, Microsoft had a total dominance in the realm of operating systems, but the new Google products, such as Google Docs and Chrome, are gaining steady growth in the low-end market, and this has alarmed Microsoft and even forced the corporation to lower the prices for their products.
The impact of Google is substantial, as in 2014 Microsoft decided to drop the Windows licenses fees for smartphones and tablets and also reduced the price of licenses for some laptop production companies due to the business activity of its competitor. This move did no good to the enterprise. Moreover, the Windows OEM Pro and non-Pro revenues dropped by 19 percent during the first fiscal quarter and 26 percent during the last one. Apart from free licenses, Microsoft also offered a one year free trial for the Office 365 and OneDrive products to laptop and tablets users. Both strategies were thought to be detrimental to the company, and it was considered that they would not be sustainable enough and serve as an efficient long-term solution to the problem. Microsoft needs to provide an in-depth insight into this issue and establish the right long-term strategy to beat both Apple and Google. The Windows 10 could be one of the best strategies, unlike the one as mentioned earlier. The Windows 10 could possibly mend the fractured reputation of the introduced operating systems and could also increase the target market (Thatte, 21-60).
Decision Making Process
In terms of decision making process, Microsoft was able to concentrate on making long term investments to jump-start growth. Traditionally, Microsoft has used massive strategy memos in order to render the new directions to the country and its entire workforce. As per the CEO, SatyaNadella, the recent decision taken by the management of the company, the memo lays out the vision that says “mobile first and cloud first”. The aim of this move is to empower customers and reinvent the productivity.He further clarifies that the company has outlined a new effort to unleash the company groups of the company in order to achieve the streamlined decision making which would let the management to be more responsive to the customers and trends in the market(Stratmann).The important steps that have helped improve the business of Microsoft are: Giving credit where credit’s due, first things first and Pressure-test and prioritize assumptions to improve the quality of proposals. As Microsoft’s technology has evolved from traditional software to online services and cloud computing, privacy has become increasingly essential to its business.
Conclusion
Microsoft has manifested and held its dominance in the operating systems market for years. The company has managed to remain reputable and maintain improving revenue, but now it appears to face eminent threats. At present, the Microsoft Corporation encounters two major issues, since its main competitor is trying to lead the field in two particular spheres. Specifically, Apple is threatening the company by targeting the PC, tablets and mobile phones market that Microsoft has been fully dependent on. Moreover, Apple is targeting the operating systems industry developing products similar to those offered by Microsoft. The company has felt Apple's influence over the years, but now it also faces intense competition with the Google. Therefore, it is possible to arrive at the conclusion that the Microsoft Corporation should definitely re-strategize its operating model in order to boost viability and win the competition.
References
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Boreczky, J. S., Girgensohn, A., and Foote, J. T. U.S. Patent No. 6,366,296.Washington, DC: U.S. Patent and Trademark Office (2002): 10-33.
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Chidlovskii, B., Glance, N. S., and Grasso, A. U.S. Patent No. 6,327,590. Washington, DC: U.S. Patent and Trademark Office (2001): 23-35
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King, R. K. Enhancing SWOT analysis using triz and the bipolar conflict graph: a case study on the Microsoft Corporation. Proceedings of TRIZCON2004, 6th Annual Altshuller Institute (2004): 100-136.
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Thatte, S. XLANG: Web services for business process design.Microsoft Corporation, (2002): 21-60.
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Zambelli, Alex. IIS smooth streaming technical overview. Microsoft Corporation 3 (2009): 40.
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Bresnahan, Timothy F. "The Economics Of The Microsoft Case". SSRN Electronic Journal n. pag. Web.
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Burlton, Roger T. Business Process Management. Indianapolis, Ind.: Sams, 2001. Print.
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Heinrich, Ralph P. "Complementarities In Corporate Governance: Ownership Concentration, Capital Structure, Monitoring, And Pecuniary Incentives". SSRN Electronic Journal n. pag. Web.
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Stratmann, William C. "Method For Assisting Individuals In Decision Making Processes". (2016): n. pag. Print.
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