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Like to Know PESTLE Analysis of Microsoft

by Shamsul

PESTLE Analysis of Microsoft

Microsoft is one of the top business corporations in the world. It operates in over 100 nations. It is a popular consumer electronics and technology company that offers world-class software, cloud computing services, PCs, and desktop operating systems. While doing a PESTLE analysis of Microsoft, we noticed that the company is operating in an effective manner. The company has achieved colossal success because of the remarkable strategies of Bill Gates who is the most successful and richest man alive in the world.

With over 2 trillion in market capitalization, Microsoft is the most valued and 3rd largest company right now. In order to unearth its success story, you need to conduct its PESTLE analysis which is the best strategic analysis tool. It offers an excellent evaluation of the company’s external business environment.

In this post, we will conduct a comprehensive PESTLE analysis of Microsoft. So, let’s get started!

 
Political Factors | PESTLE Analysis of Microsoft
 
Political factors such as political system and political stability have a huge impact on the processes and operations of the company. The political system is highly stable in the United States, giving Microsoft a big edge. The business environment in the US is very welcoming for software companies as they have flexible and adjusting tax policies. As a software company, you must spend so much on getting contracts and maintaining your products and services. The government has given tax exemptions for software maintenance contracts. As a result, companies can easily save money and can spend it on other projects.
 
After the United States, India is another big consumer electronics and software market. This country is one of the fastest emerging economies right now. India and the US have favorable trading agreements allowing them to cooperate in developing innovative software and consumer electronics. This kind of trading between both countries will highly boost the software industry globally. According to the Indian government policy, anyone can make foreign investments in the software industry in India.
 
 
Economic Factors | PESTLE Analysis of Microsoft
 
The recent economic upheavals are affecting the economy worldwide. Due to this reason, the growth rate of every country has been decreasing since 2020 and the US economy is no exception. In 2021, the growth rate of the United States was 5.7 percent which decreased to 4 percent in 2022. Now, it has dropped to 2.6 percent in 2023. These fluctuations prevent investors from making new investments. These economic problems also affect the sales and profitability of the software sector, including companies like Microsoft. Last year, the companies raised the employees’ salaries, which also created a big difference between revenue generation and business expenditure. This would ultimately impact the consumers’ purchasing patterns and the companies’ sales would automatically decrease.
 
When compared to India, its economy is rising despite facing all the economic ups and downs. Companies in India are spending so much money on cybersecurity. That’s why the Indian software market has a great scope for software companies like Microsoft. In the United States, the software sector is worth 313.70 billion dollars which is going to be 733 billion dollars by the end of 2028. It is important for giant software companies to target the Indian market in order to capture more customers because it is a huge market. At this time, IT and business services have been dominating in the United States market.
 
 
Social Factors
 
The novel virus Covid-19 has greatly impacted companies and businesses in the United States. Many businesses have suffered great losses and some companies have been going out of business completely. This virus will also impact the long-term working and profitability of the company. There are no signs of improvement right now. However, this upheaval has given an enormous boost to digital businesses. Now, most people are working from home. It creates a big business opportunity for software and tech companies to innovate new services that can cater to the demands of remote workers. This will definitely create a positive impact on software companies and tech businesses.
   
 
On the other hand, several Indian businesses are adopting a digitalization culture. This will offer an awesome opportunity to software companies to expand their footprint. Plus, the growing consumer demand is another amazing opportunity for companies like Microsoft. People in India are becoming tech-savvy and it has the youngest population right now. Software and tech companies should exploit this break to grow further.
 
 
Technological Factors | PESTLE Analysis of Microsoft
 
The United States government encourages innovation and technological advancements in the software and tech sector. In 2021, the government invested over 157 billion dollars in research and development in this sector. Many companies have gained immense success using AI (Artificial Intelligence) for different operations. Moreover, UI/UX has also gained colossal popularity because it has improved the overall user experience and interface quality.
 
Serverless computing is also gaining popularity these days. Cybersecurity is another famous technology to prevent the danger of cyber threats. This is a big opportunity for cybersecurity companies to develop and introduce new cybersecurity tools. Data management has become easier with the emergence of innovative cloud computing that is used to store data. Then again, the other emerging technologies such as IoT, Automation, edge computing, blockchain, Robotic Process Automation, and 5G will create so many development opportunities in the software and tech sector.
 
 
Legal Factors | PESTLE Analysis of Microsoft
 
The intellectual property regulations encourage companies to invent new technologies and register their patents for twenty years. The privacy act of 1974 also allows businesses to use, store, and collect data from tech and software companies. So many other laws govern the industry, such as General Data Protection Regulation. These legal norms are made for the protection of the companies and the users.
   
 
Further, India is one of the largest markets for the software sector. But, their laws for the software industry vary when compared to the United States laws and regulations for the software sector. That’s why it is hard for international companies to get contracts in India. These factors can slow down the revenue stream and overall profitability of software companies like Microsoft.
 
 
Environmental Factors
 
Both the United States and India are taking initiatives to reduce their carbon footprint, air pollution, land pollution, and water pollution. According to the US government, their carbon emission footprint will decrease to 50 percent by the end of 2030. Also, India is also planning to cut its carbon footprint by 2070. The software and tech sector has a huge impact on the environment. For this reason, companies are manufacturing products that pose no harm to nature. There is a big opportunity for the software industry to enhance its profitability by taking environmental concerns into consideration.
 
 
Conclusion
 
From this PESTLE Analysis of Microsoft, it is clear from this analysis that political, economic, social, and technological factors are extremely favorable for the software sector. But, legal and environmental factors can hurt the industry’s business operations. It is essential for software companies like Microsoft to innovate new services and products in order to take a competitive edge.
 
 
 
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  SWOT Analysis of Microsoft  
 
 
BusinessManagementMarketingSWOT & PESTLE 
 
Microsoft SWOT Analysis | Microsoft Marketing
 
 by Shamsul   
 
 
 
 
 
 
 
Microsoft SWOT Analysis | Microsoft Marketing
 
 
 
Microsoft was established by Bill Gates and his partner Paul Allen on April 4, 1975. It is one of the biggest software industries in the world right and offers hardware and software products, apps, devices, operating systems, and beyond. Mr. Satya Nadella is the existing Chief Operation Officer of Microsoft. This American-based multinational tech company is very popular worldwide. Since then, they have contributed to many tech-based programs and projects. In short, Microsoft changed the face of the world with its innovations and technologies. Let’s discuss Microsoft’s internal and external factors in order to understand its marketing and operation. Read the Microsoft SWOT (strengths, weaknesses, opportunities, threats) analysis and its marketing strategy.
 
 
 
Company Name:  Microsoft
 
Founders:  Bill Gates, Paul Allen
 
Year founded:  April 4, 1975, Albuquerque, New Mexico, United States
 
Headquarters:  Redmond, Washington, United States
 
CEO: Satya Nadella (Feb 4, 2014–)
 
Industry:  Software development, Consumer electronics, Computer hardware, Internet, Cloud computing, Video games, Social networking service, corporate venture capital
 
Type: Public
 
Area Served: Worldwide
 
Employees (Year-end June 2020): 96,000 full-time employees
   
 
Annual Revenue (Year-end June 2020): US$143 billion
 
Profit | Net income (Year-end June 2020): US$44.3 billion
 
 
 
 
 
Microsoft SWOT Analysis | Microsoft Marketing
 
Strengths of Microsoft:
 
 
 
     
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    Biggest Tech Company:
     
    •  
 
Undoubtedly, Microsoft is one of the leading software companies in the world. It is also a leading cloud player and the biggest developer of Windows OS in the world. They generated 23 billion dollars from their commercial cloud in 2018.
 
     
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    Largest Market Share:
     
    •  
 
Microsoft has a market value of 750 billion dollars and it stands at number 4th in the category of the world’s largest companies. It is also leading the chart in the biggest cloud service providers like IBM, AWS, Oracle, and Google.
 
     
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    Immeasurable Market Reach:
     
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According to a survey, Microsoft currently works in more than 10 countries. After the launch of Windows 10, it has 700 million installs globally.
 
     
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    Continuous Expansion:
     
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The constant expansion in revenues makes the company stronger and powerful in the market. According to experts, this kind of constant growth leads the company to touch the figure of 1 trillion dollars in the future.
 
     
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    Accumulation of SKUs:
     
    •  
 
Recently, they added Stock Keeping Units (SKUs) to their portfolio. This SKU consists of Windows 10, Microsoft 365, and Office 365. This thing is a multi-billion dollar business and constantly increasing.
 
     
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    Loyal Customers:
     
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With 1.2 billion Office consumers, and 60 million Office 365 customers, Microsoft has a strong and loyal customer base. New users also attracted after seeing their exponential growth.
   
 
     
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    Huge Capitalization:
     
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Microsoft is one of the leading tech-based companies in the world with 776 billion dollars of market capitalization. It is also on the list of the world’s 10 biggest companies.
 
     
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    Useful Adverting Platform:
     
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The main success of Microsoft is its effective marketing policy. That’s why they easily engage people with their useful marketing strategies and their new ad ‘’The future starts now’’ attracted many people globally.
 
     
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    Strong Brand Image:
     
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Interbrand declared Microsoft as 4th most valuable brand in the world. This kind of fame and image makes the company’s image stronger. This kind of image can be the biggest threat for rivals and this thing also makes them superlative in the eyes of customers.
 
     
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    Easy to Use Software:
     
    •  
 
Microsoft offers innovative and best quality hi-tech products that are user-friendly and easy to use. This is the reason why people love to use their services. Due to this type of offering, they are very popular among users.
 
 
 
Microsoft SWOT Analysis | Microsoft Marketing
 
 Weaknesses of Microsoft:
 
 
 
     
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    Excessive Exposure to the PC Market:
     
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Due to the excessive exposure to the PC market, the change in the prices leaves Microsoft sometimes in a helpless position. This is due to the fluctuation in currency, shipment, and rising price issues.
 
     
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    Cybercrime Theft:
     
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Cybercrimes are one of the biggest issues for Microsoft. Many hackers attacked the operating system of Microsoft. It means the security network system of Microsoft is weak.
 
     
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    Lack of Innovation:
     
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Microsoft continuously faces a decline in its hardware sales. It is due to the lack of innovation and advancement. Apple, Google, Amazon, and many other companies offer better and innovative technologies.
 
     
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    Lacking Market Leadership:
     
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There are several companies like Safari, Firefox, and Google leading in the internet browsing sector by providing innovative features. Microsoft is lagging in this segment due to its poor marketing leadership.
 
     
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    Unproductive Acquisitions:
     
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Microsoft tries to collaborate with many companies like Danger, Massive, and LinkExchange, but all of these resulted in failure. These are the major weaknesses and unprofitable ventures for Microsoft.
 
 
   
 
Microsoft SWOT Analysis | Microsoft Marketing
 
Opportunities of Microsoft:
 
 
 
     
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    Cloud Business Expansion:
     
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The cloud-related offerings of Microsoft have gained huge popularity and growth in the past few years. So, it’s a big opportunity for Microsoft to expand its cloud-related services in order to earn more profits.
 
     
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    Innovation and AI:
     
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Microsoft should focus on gaming and Artificial Intelligence (AI) areas in order to make their brand stronger and popular. These kinds of investments give them a competitive edge over competitors and rivals.
 
     
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    Collaborations and Acquisitions:
     
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It is imperative for Microsoft to pay attention to useful acquisitions and partnerships in order to enter the new markets. In this way, they can increase their market share and expand their reach to every region of the world which is beneficial for the company.
 
     
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    Smartphone Business:
     
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As the android and smartphone industry is growing exponentially, Microsoft should invest in these sectors because it is a great opportunity for them due to their loyal fan-base. This thing will increase its profit games.
 
     
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    Cost Leadership Policy:
     
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Microsoft should offer high-quality products at lower prices. In this way, they can expand their growth and hackers won’t hack their system in order to use their services.
 
 
 
Microsoft SWOT Analysis | Microsoft Marketing
 
Threats of Microsoft:
 
 
 
     
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    Workforce’s Related Backlashes:
     
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Many experts noticed a huge imbalance in Microsoft’s recruited workforce. People from different religions and women are very low in their workforce. Due to this reason, Microsoft faces huge criticism.
 
     
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    Gay Reference Hullabaloo:
     
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After the launch of the Xbox Live game, Microsoft faced severe backlash due to homosexuality and gay references. They won’t include it because they considered it unsuitable for users.
 
     
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    Strict Competition:
     
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The two main rivals of Microsoft like Google and Apple are giving stiff competition. They can also threaten the company’s revenues and profits.
   
 
     
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    Changing Needs of Customers:
     
    •  
 
As people are addicted to smartphones, laptops, and notepads, but Microsoft’s contribution in this sector is very modest. This is one of the biggest threats to their revenue system.
 
     
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    Open Source Projects:
     
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Microsoft offers open-source services at costly rates. But many open-source projects such as Linux OS and Open Source Office provide the same features free of cost. This thing can damage the company’s image and profit.
 
     
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    Piracy and Cybercrime:
     
    •  
 
Different cybercrime thefts are increasing that can affect Microsoft’s security system. It is a big threat for Microsoft and they should resolve this problem immediately.
 
 
 
Microsoft SWOT Analysis | Microsoft Marketing
 
Recommendations:
 
In order to maintain its position in a competitive market, Microsoft should resolve its weak points and focus to expand its opportunities. For this purpose, these recommendations are useful as given:
 
     
  1. Update its working and introduce innovation. Make plans or policies with keeping the future in mind.
    2.  
  2. Use valuable and useful marketing tools in order to expand its reach and enhance the brand value.
    3.  
  3. Enhance market share by introducing new features in the Internet browser market.
    4.  
  4. Construct competitive benefits to compete with competitors such as Apple and Google.
    5.  
  5. Make acquisitions and partnerships with small tech-based companies in order to enhance their position.
    6.  
  6. Address cyber-security problems by developing a strong security network system.
    7.  
  7. Review its pricing policies so that daily wagers can also exploit their facilities.
    8.  
  8. Enhance market share by diversifying their business.
    9.  
 
 
 
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