Company Report: Microsoft Corporation

Microsoft Corporation is notable among the largest and high-ranking companies found in the personal computer industry. It major attribute is that it enjoy a strong presence in most of computer software starting from programming throughout the application found in the end user.  In terms of buyers and seller concentration, the company being a monopoly seller, it has great benefit of a single entity in the controlling of the market share value.

In terms of buyer concentration, the company enjoys the benefit of having a lot of buyers due to the fact that it is a single entity. Product differentiation which is defined as a process in marketing which bring the differences found in products (squidoo.com). In the Microsoft Corporation, it has been in the forefront in ensuring that there is great difference between its products and that of its competitors. Product differentiation provides a platform into one achieving an effective and productive company.

It is very obvious that Microsoft Corporation is protected by the barrier to enter since it has greatly defined its market for the Intel friendly operating systems. The barrier to entry clearly prevents a hopeful errant into the market from taking away customers from a governing incumbent even when the incumbent has priced its various products way above the competitors' level (Hafner & Hibbert).

What is Microsoft Corporation main line of business?

Being the largest and highly ranked company in the personal computer industry, Microsoft Corporation continue to enjoy the benefit of being  leader in most web services and service oriented architecture (SOA). The company has ensured that it provides a platform which will ensure effective productivity of businesses and information technology (New York Times).

According to Arabies Having dominated the operating system of the home computer in mid 1980s with the ms-dos it later invented the Microsoft windows. Microsoft windows and Microsoft office have and it is still dominating the world market in the computer industry. Microsoft windows consisting of an operating system embedded in software and a friendly user in the graphical interface.

Where does the Microsoft Corporation operate from?

Microsoft Corporation was established in 4^th of April in the year 1975. It is the largest multinational corporation whose headquarter is in Redmond in Washington in the United States of America (squidoo.com).

Who are Microsoft corporation primary customers?

According to Gordon (24) technology have transverse all over the world, Microsoft Corporation being a leader in the computer industries it has established customers from all walks of life. For instance, through its efficiency in the Microsoft office various companies have incorporated the use of the Microsoft office. In the financial sector ms excel is highly used in the provision of various financial activities. In summary every individual who uses a computer is a primary customer of the Microsoft Corporation (Arabies).

Who are the primary competitors of Microsoft Corporation?

Oracle and Apple are the main primary competitors of the Microsoft Corporation though oracle seems to be a major threat to Microsoft compared to Apple. It has been observed that there has been constant movement toward the desktops and notebooks of the Apple Company. This company is experiencing lacking when it comes to the corporate environment as compared to Microsoft. The reason where oracle is acting as a major threat to Microsoft it is its ability to support the use of lintel i.e. the combination between Linux OS and Intel (Koncept).

Its other primary competitor is Google in the provision of internet services.  Its outperforming ability has a larger margin as compared to Microsoft.  In finding a solution of ensuring that it remains as the market leader in the internet services, it has signed partnership with yahoo. This partnership ensures that the internal personnel have the ability to establish a more aggressive sales effort (Morley, 40).

Sony and Nintendo are the two main competitors in the entertainment and devices sectors. Sony has recently launch its own add-on to the play station three whereas the Nintendo company plans to launch a new version of the DS devices that are not likely to use the 3-D googles.

Morley, (67) also notes that it is the percentage of total industry revenues that the company earns by itself - to calculate market share, divide the company's revenues by total industry revenues and express as a percentage

Market share Controlled by the company

According to Koncept Analytics (6), the market share of a company is defined as the total industrial revenue earned by the company. It is calculated through dividing revenue of the company by its total industrial revenue then it is expressed as a percentage. 

The Microsoft market being the largest company with produced the largest amount of revenue i.e. 58.43 US dollars in the year 2009. In December 2009, the company experienced a market share of ninety two percent with a market share of sixty three percent due to its enterprise customer.

Recent mergers/acquisitions

Mergers and acquisitions have been used to formulate strong links in the strategic positioning, positive sector and the growth of the stated objectives. In finding a solution of ensuring that it remains as the market leader in the internet services, it has signed partnership with yahoo. This partnership ensures that the internal personnel have the ability to establish a more aggressive sales effort. Microsoft Corporation is losing up in its efforts in the start-up technologies (Koncept Analytics, 12). The company has not announced any form of acquisition in the past three years.

Regulatory and technological challenges been faced by the Microsoft corporation

Like any other company, Microsoft Corporation is faced by both regulatory and technological challenges in its day to day activities (Anderson et al. 271). In the recent past the company has been forced to rely on a regulatory compliance that consisted of various complexities. The company was supposed to work under the stated regulatory compliances. The regulation stated has been major challenges within the company because of its inefficiency especially in the information technology sectors.

According to Koncept Analytics (14) the company saw that it was important for it to come up with the idea of developing a holistic approach towards handling regulatory action set up for the information and technology sector. It has implemented a framework which ensure regulatory compliance have been controlled so that the regulations can be fair for all technologies companies.

Anderson et al (276) further notes that technological challenges' being faced by Microsoft Corporation includes; network bandwidth, system integrations, functionality, and earlier version of version bugs. Due to the listed challengers the company has come up with ways to ensure that it's a head of its competitors by ensuring that it faces and tackle all the challenges it may face.

Financial analysis

Microsoft corporation financial performance and outlook has been impressive so far. Available finical data indicates that the company revenue, though impressive has not been steady. The trend has been the same for the case of the company's profits. The statements for the last three years (2008, 2009 and 2010) in 2008 the revenue was 60, 420 and dropped to 58,437 in 2009 before rising to 62,484 in 2010. The profits also took the same trend dropping form 17,681 in 2008 to 14,569 in 2009 and later rising to 18,760 in 2010 (msn.com).  

The net profit margins for these years were 29.26 in 2008, 24.93 in 2009 and 30.02 in 2010. This replicates the same trend exhibited by the corporation's profits and revenue which keeps fluctuating. The values indicate that the company was very profitable in 2008. This profitability however dropped in 2009 and only to shoot up later in 2010. On the general scale the corporation's profitability is average.

According to msn.com, in 2008 the corporation had a debt of 36, 286. This rose in 2009 to 38,330 then 39,938 in 2010.  Certainly the company's debt is on an increasing trend. The ratios of the total debt capitalization in each of the three of the years were 16.59% in 2008 to16.52 % in 2009 and 20.13%in 2010.

Future prospects

From the above financial statists the future of Microsoft Corporation seems promising. The profitability of the company is likely to rise steadily if all the factors affecting its performance is affected. Previous data from 2006, 2007 and 2008 indicates that the corporation's net income and profitability was on a steady rise before dropping suddenly in 2009. This drop is attributed to the financial crunch that was experienced in this year. However as the world revered in 2010, the corporation managed to beat the 2008 performance realizing a net profit of 18,760, which is a 28% rise against the previous years performance. This performance was better than any other performance the company has ever realized before (Yahoo Finance).

This performance is likely to remain this steady unless another crutch strikes again, the competitor gin a mileage or the market trends changes. However, this is not likely to occur. The corporation invest in the development of new products and new products such as the iPad and Micorsoft Office 2010 have be developed with new enticing features which are likely to keep and increase the corporations market share.  

The performance of the companies stocks is also impressive closing at $25.23 in the last fiscal year that ended on June 30^th 2010. In the past three years the companies share has had an average dividend yield of 1.80%. The market capitalization stands at $219.10 billion. The company also estimates that by the end of 2012 fiscal year the price to earning ration will stand at 9.67. In addition to good profit margin the company's operating margin stands at 39.51% and has an 18.82% return on assests and 43.76% return on equity.

According to the statistic above the corporations debt has been in the increase increasing between 2008 and 2009 by 5.63% and by 4.19% between 2009 and 2010. This trend is a steady trend that is likely to replicate itself over the coming years. Currently the total debt stands at $5.97B while the total debt on equity stands at $12.93 million (Yahoo Finance). The rise in debt is a product of the need for money to improve the production operations and new venture.

The usage of computer is on an upward tended and with the continued innovation exhibited by the corporation will ensure that the firm continues to perform and grow tremendously improving on its market capitalization. The greatest threat of competition however may hinder this if the company doesn't come up with a proper strategy to counter completion.