In the case of Microsoft, these external factors are an effect of the activities of other firms in the computer hardware and software industry. Such factors are also based on the decisions of customers and suppliers. In relation, substitutes influence Microsoft.
It manufactures, develops, licenses, sells, and supports consumer electronics, computer software, personal computers, and other services. Its renowned hardware products include the Xbox game console and tablet lineup Microsoft Surface. Microsoft has progressed rapidly since its inception and also made a large number of acquisitions such as Skype and LinkedIn.
Microsoft has a workforce ofemployees. Many of the products such as operating systems and other software are now also being made by others companies that provide the same level of features that Microsoft does.
The competition today in this industry is in the rate of innovation and the marketing campaigns. Players in the industry have made huge investments in the research and development facilities in order to be the most innovative in the industry.
There is a certain level of customer loyalty. However, the competitive rivalry is high for Microsoft. Threat of New Entrants — Medium Microsoft porter five forces the software business of Microsoft, the threat of new entrants is low.
The entry barriers are high. Designing and developing enterprise software is very expensive. Its success takes a lot of time. Also, there is a lack of people who have such proprietary knowledge.
The existing players have established absolute cost advantage as a result of their extensive experience and economies of scale. Brand loyalty also plays a role. However, in the hardware sector, many new companies have been able to grow and capture a small share of the market such as in the field of personal computer, video game consoles, tablets, and others.
They are still on the small scale but have been successful Chauhan, Thus, the threat of new entrants is of a moderate level. Bargaining Power of Suppliers — Low Companies in this industry do not have many suppliers. The suppliers supply the components for the making of the hardware products such as tablets, game consoles etc.
These suppliers are large in number. Suppliers feel a prestige to be labeled as the suppliers of Microsoft.
The supplier switching cost is also low Weng, Therefore, the suppliers are not in a position to bargain or influence prices. The bargaining power of suppliers is low against Microsoft. Bargaining Power of Buyers — Moderate The buyers which are making use of software made by Microsoft will not easily switch to the software of the competitor, although it performs the same function.
The reason is that there is a switching cost as the customers have become fluent with the software of Microsoft and can use them very efficiently. Moving onto new software requires time to adapt which they do not want to give Littlepage, Thus, buyers will continue to use them even if Microsoft slightly raises their prices.
This is not the case for hardware products. Buyers switching cost is very low, a lot of variety in the market, and ease of adoption of new products makes the bargaining power of buyers high.
Overall, the bargaining power of buyers is of a moderate level. Threat of Substitutes — Low The substitutes of software are manual writing and record keeping, which have become obsolete now. The substitute of hardware products such as a tablet is to use a writing pad; carry a camera, a counter, and devices that perform the functions a table does.
Thus, there is no threat of substitution against Microsoft. Strategic Analysis of Microsoft Corp.Competitive Position: The competitive position of Microsoft is assessed through Porter five forces in the industry as follows: Bargaining Power of Buyers: The buyer bargaining power is higher because larger number of companies offering highly advanced operating systems and IT project allows them with better options.
WikiWealth’s comprehensive five (5) forces analysis of microsoft includes bargaining power of supplies and customers; threat of substitutes, competitors, and rivals. Microsoft - Five Forces Analysis. Home Five Forces Index Microsoft - Five Forces Analysis. What is Porter's Five Forces Analysis?
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A premier membership is required to view the full essay. View Full Essay. Executive Summery. On January 27, Steve . Competition Analysis Porter’s five forces model analyzes the five competitive forces that shape every industry: intensity of industry competition, potential of new entrants into the industry, the power of substitutes, the power of suppliers, and the power of buyers.
Microsoft is a pioneer in the software industry, well known for their successful “MS Windows” operating system. By the end of , Microsoft dominated 78% of the operating system market (Reference: Image 1).