Microsoft Corporation also known as MS is one of the biggest multinational technology-based company in America and the headquarter is in Washington. It manufactures, develops, sells, and support computer software, personal computers, consumer electronics, and other related services.
It is best known for the software products like Microsoft Windows, Microsoft Office, Internet explorer and many more (Microsoft, 2019). The company has many competitors in the industry and in order to maintain the position in the market, it is necessary for Microsoft to know the external forces that can help it in competing better. Here is the Porter five forces analysis of Microsoft.
Bargaining Power of Buyers:
The bargaining power of the consumers are low or moderate because of the ow substitutes available in the market, which determines the inconvenience for the buyers, and prefer Microsoft products. For example, consumers find it difficult to get non-computer-networking solutions which are effective as the Microsoft’s products.
However, the low switching cost might increase the bargaining power of the consumers, as there are other brands selling more or less same products but in low rates. More the information customer will have about the product and the market, the high will be the bargaining power they will have (Ferguson, 2017).
Bargaining Power of Suppliers:
The Bargaining power of the suppliers are quite low in Microsoft’s case, as the technology and innovation giants usually exercise the bargaining over suppliers to ensure the low prices and commitment of suppliers to the requirements. For instance, as taking the initiatives of CSR, Microsoft needs from its employees and suppliers the minimum 12 weeks paid parental leaves at around $1,000 per week.
The low level of bargaining power od suppliers is because of the numerous suppliers’ existence in the market for the large volume purchases. The switching cost for the Microsoft is very low, and whoever will offer the lowest rate, Microsoft will buy from it. The cost of the supplies is compared with the selling price to estimate the profitability, and Microsoft choose the supplier who will give the high profits (Dudovskiy, 2019).
Threats of New Entrants
Threats from the new firms in the industry is quite low because of the high cost involve in the capitalization and establishment of the business in the industry where Microsoft operates. There are many rules and regulations that restrict the firms from entering in the market. Moreover, the huge distribution network and strong brand name is needed to compete such giants in the market like Microsoft, IBM etc. which is quite expensive. Achieving the economies of scale is quite difficult for the firms, and Microsoft avail the complete advantages received from economies of scale in the industry to fight against the new entrants. Furthermore, the company also focuses on the innovation and use of advance technologies in order to differentiate its products with the rivals’ one (Murphy, 2018).