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From this analysis, the EFE of Microsoft was 2.51. This figure presents a deficiency from the recent 3.10 EFE matrix found by the organization – probably because of the factors selected for this analysis. Considering the factors used, the author believes these stated external factors present the best approach to analyzing Microsoft's external environment. In the next sections, all the factors tabulated above shall be analyzed fully to understand the external environmental dynamics that may impact the strategic direction of Microsoft.
Potential new markets like India, China, and Brazil (Emerging economies)
China, India, and Brazil are some of the fastest-growing middle-income economies of the world. The three countries are anticipated to be among the global economic giants by 2050. These countries currently hold more than 30% of the world's population. The economies in these countries are furthermore characterized by a growing middle-class community that is characterized by an increased buying power (Tolentino, 2017). Microsoft thereby has the opportunity to explore these markets and target the increasing demand curve in the future economic powerhouses. China, for instance, has become a preferred destination for global businesses. Foreign technology, however, has not found its way into China due to various policy limitations.
Though the policy dynamics in China are volatile for Microsoft, economies like India and Brazil offer fairer trading terms for multinationals. As such, Microsoft already has a huge presence in India and Brazil. It is thereby recommended that Microsoft further foster its hardware and software presence in these economies. It has been determined, for instance, that the use of AI in India may improve the economy by 7% per annum. As a technology company, Microsoft must make use of such innovation opportunities to help in building the country and gaining deeper penetration and acceptance. The R & D approaches should aim to research on contextualized solutions to the issues characteristic to these economies.
Customers continuing preference for tablets
Despite mixed reports by Ozok, Benson, Chakraborty, and Norcio (2008) on acceptance of tablets, the authors noticed that the respondents generally were impressed by the adoption of portable tablet PCs over the larger desktop PCs. The main critique of the tablet by the audience involved the low readability and errors in typing. However, not so many follow up analyses have followed in the strengths provided by respondents on the use of portable tablets. Microsoft should thereby take this chance to explore the tablet market and determine scientifically appropriate means of balancing the readability and portability of the devices.
The preference for tablets also stems from the educational needs of entire families and especially the kids (Williams & Lee, 2016). Microsoft has always stated their interest in leading innovations in the education sector. Thereby, such unexploited research opportunities in tablets for families offer an interesting concern for both research and practice.
R & D opportunities in the new markets
In the above two opportunities, the author restates the necessity of grounding the market directions on contextualized research. Thereby, R & D is a crucial component of an organization that wishes to stay competitive and innovative. Since 2010, Microsoft has had a continued annual jump in R&D investment (Pratap, 2018). Due to continuous scientific analyses and innovation, Microsoft has stayed ahead of the competition in global reach through this period. It is, however, evident that the R&D efforts should continue to provide research and innovation opportunities in the new and emerging economies.
Unprecedented growth in the Smartphone market
Even in struggling economies, smartphones appear to have become an indispensable component of modern society. The smartphone revolution has reached all corners of the globe, including Africa. Due to the global reach of Microsoft, this mobile revolution should provide a potential business area. Microsoft has previously extended its software genius into phone manufacturing. With lessons learned in the phone industry, Microsoft needs to consider re-embarking in the smartphone business. Falaki et al. (2010) appreciate the diverse user needs present in mobile usage. The authors further implore manufacturers to take keen consideration of user behavior. Microsoft already has an established and well-funded R&D with the capability of impacting research and innovation and returning Microsoft into this form of diversity.
Improvement of the organizational structure chart
While benchmarking with successful management teams in various organizations, Microsoft may embark on a redevelopment of the organizational design to foster seamless engagement among the clients and employees. Continuous learning and rebranding offer exciting opportunities to learn from and with customers. Microsoft must, as such, think about creating opportunities for continued restructuring and reinvigorating consumer interest. Organizational structure chart restructures one key method for reaching such goals. Open communication and reciprocal feedback may open the company to endless opportunities (Sherman, 2019).
Reducing reliance on PC hardware
The world of technology has continued to reinvent itself endlessly. PC hardware seems to be changing every day. These hardware parts become obsolescence with the arrival of every other new information sharing method. The advent of cloud-based computing, for instance, declared the floppy disks and DVD drives obsolete (Jang, Johnson, Burnell, & Heimerl, 2017). To keep on toes with these continued changes, Microsoft always needs to aim to jump to the next loop in the innovation journey. Hardware components that change overnight may declare the tech companies obsolete as fast. Luckily for Microsoft, they handle the changes in PC hardware through constant futuristic research a-and design effort.
Diverse markets for Microsoft products involve various vulnerabilities
Microsoft has always been characterized by a high level of diversification. From productivity to computing services and hardware and electronics, Microsoft exists in various market subsets (Carvalho & Gabaix, 2013). Existing in this wide array of software and hardware markets may present a wider variety of challenges in the various fields. The markets may offer restrictive or inflation-based business conditions, for instance, which may make a trusted subset to suffer. Diversification may help spread the company activities to a new environment. However, these diverse settings also distribute industry-wide risk to the company.
Competition for cloud services
Windows appears to have won its cloud war against amazon, thus becoming the most popular cloud supplier (Klebnikov, 2020). However, cloud services are a considerably new area in software and computing service delivery. As such, the competition will always exist in the area. Being one of the areas of diversification by Microsoft, the sustained pressure from competition portrays a potential threat to Microsoft's current dominance in cloud computing. Some notable mentions in cloud computing include Oracle, IBM, Google, Salesforce, and Amazon web services (Sahu, 2020). Amazon still tops Azure in performance, in any case.
Product-line integration for the competitors
While competition continues to specialize and integrate product lines, Microsoft continues to diversify and split into various market regions. The integrated product lines improve the outcomes from similar business ventures. Diversified systems, however, requires proper coordination to compete with companies who have their services. While the rivals are working in specific line products and product integration, Microsoft is competing in various market domains with just a single business component. For instance, Microsoft competes Google – which is an entirely web-based service provider – in providing cloud connectivity and service.
Shift from CD office suites to cloud base office suite
Finally, the shift from the offline storage approaches has impacted technology apparatus who set their whole business model around the use of rigid hardware or software. Cloud computing opens the world to the other side. Office suites held on to the offline approach to computing. Currently, though, cloud computing dominates. The fast rise of intelligent cloud computing component in Microsoft offers a way to make use of the opportunity provided with the cloud suite (Botta, Donato, Persico, & Pescapé, 2016).
The External Factor Evaluation matrix was determined to be 2.51 out of 4. This score represents an average score. Emerging economies and the opportunities they present was determined to be the most important external opportunity for consideration. The major threats facing Microsoft involve their great diversification and shift to cloud computing and services. Strategies are thereby necessary to provide research-based innovative practices aimed at making in routes into the emerging economies.
- External Factor Evaluation Template – Microsoft
- External Factor Evaluation (EFE) Matrix
- Company Name:
- Key External Factors Weight Rating Weighted Score
- 1) Potential new markets like India, China and Brazil 0.4 2 0.8
- 2) Customers continuing preference for tablets 0.09 4 0.36
- 3) R & D opportunities in the new markets 0.05 4 0.20
- 4) Unprecedented growth in the Smartphone market 0.08 3 0.24
- 5) Improvement to the organizational structure chart 0.05 3 0.15
- Reducing reliance on PC hardware 0.05 2 0.1
- Diverse markets for Microsoft products involve various vulnerabilities 0.05 4 0.2
- Competition for cloud services 0.1 2 0.2
- Product-line integration for the competitors 0.07 2 0.14
- Office services continue to shift from CD to cloud-based suites. 0.06 2 0.12
TOTAL: 1 2.51
Botta, A., Donato, W. D., Persico, V., & Pescapé, A. (2016). Integration of Cloud computing and Internet of Things: A survey. Future Generation Computer Systems, 56, 684–700. https://doi.org/https://doi.org/10.1016/j.future.2015.09.021
Carvalho, V., & Gabaix, X. (2013). The Great Diversification and its Undoing. American Economic Review, 103(5), 1697–1727. https://doi.org/https://doi.org/10.1257/aer.103.5.1697
Falaki, H., Mahajan, R., Kandula, S., Lymberopoulos, D., Govindan, R., & Estrin, D. (2010). Diversity in smartphone usage. Proceedings of the 8th International Conference on Mobile Systems, Applications, and Services - MobiSys '10. https://doi.org/10.1145/1814433.1814453
Jang, E., Johnson, M., Burnell, E., & Heimerl, K. (2017). Unplanned Obsolescence. Proceedings of the 2017 Workshop on Computing Within Limits - LIMITS '17. https://doi.org/https://doi.org/10.1145/3080556.3080566
Klebnikov, S. (2020, January 7). Microsoft Is Winning The 'Cloud War' Against Amazon: Report. https://www.forbes.com/sites/sergeiklebnikov/2020/01/07/microsoft-is-winning-the-cloud-war-against-amazon-report/.
Ozok, A. A., Benson, D., Chakraborty, J., & Norcio, A. F. (2008). A Comparative Study Between Tablet and Laptop PCs: User Satisfaction and Preferences. International Journal of Human-Computer Interaction, 24(3), 329–352. https://doi.org/10.1080/10447310801920524
Pratap, A. (2018, December 13). Microsoft Research and Development Expenses 2002-2018. https://notesmatic.com/microsoft-research-and-development-expenses/.
Sahu, V. (2020, January 27). Top 6 cloud service providers who'll dominate the cloud war in 2020. https://www.techaheadcorp.com/blog/top-cloud-service-providers/.
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