Microsoft

INTRODUCTION

Microsoft is a multinational company operating within the rapidly changing technology market. This report will give a brief outline of the history of Microsoft and analyse the key strategic issues Microsoft faces through the theoretical framework of strategic management. The report will also examine the alternative strategies that could have been employed and the future issues that may face the company.

BACKGROUND OF THE COMPANY

Early days:

Microsoft was founded in 1975 by Paul Allen and Bill Gates. They grew by licensing their computer languages to many computer manufacturers around the world. By 1980 the company had expanded to 40 employees and revenues exceeded $7.5 million (Microsoft’s Timeline from 1975-1990 2006). In 1983, Steve Ballmer joined Microsoft in order to establish policies and procedures for finance, resource allocation and organisational structure. Throughout the 1980’s Microsoft continued to develop Windows and released a multitude of other software programs including the hugely popular Microsoft Office (Wikipedia: Microsoft 2006).

1990’s:

The 1990s saw Microsoft use a strategy of market dominance to crush competitors through bundling and alliances (Microsoft’s Problems May Just Be Beginning 2006). MSN used Microsoft’s widespread dominance to integrate accounts for various services into one; Microsoft developed the Microsoft Passport (currently the Windows Live ID) to give it an advantage over AOL. Through the bundling of Windows Media Player with Microsoft Windows, Microsoft was able to defeat Real Networks and their Real Player along with many other developers of media playing software. Microsoft’s aggressive strategy of bundling and destroying its competitors led it to be investigated by various governments for anti-trust violations and anti-competitive, monopolistic behaviour.

Current:

The European Union brought an anti-trust action against the company in 2004 and the South Korean government in 2005 (Wikipedia: Microsoft 2006). While the European Union suit has been settled, the South Korean situation still continues. and due to the likelihood of greater anti-trust scrutiny, Gates and Ballmer the organisation was divided into seven core business groups in 2002 to reduce the information