Case study for Software giant Microsoft to produce the mobiles

Question: Discuss about the Case study for Software giant Microsoft though have taken the strategy to produce mobiles, but it has led to disappointment as it loses apps? Answer: Introduction Microsoft Corporation has been the most successful business enterprise on the last decade. It has delivered the best services and custom software that have resulted the highest revenue. Several products such as MS Office, Skype, Windows OS ( XP, Vista, 7, 8, 8,1, 10) and the latest Microsoft Smartphone makes Microsoft Corporation to be the competitiveleader globally. SatyaNadella the youngest CEO have improved the business of Microsoft by increasing the security system of outlook.com accounts. This approach have led the consideration of many users to gain faith in their security system. In the last decade the company was lacking behind in having a physical product. Most of the products were software based along with integrated platform of windows. On September 2013, Microsoft Corporation took over Nokia which fulfilled its motive of producing physical product. The Smartphone production have led the company to gain more revenue as well as keep the Nokia Brand sustainable on the market . In this report the smartphone production business area of Microsoft Corporation is studied Background of the business On September 4, 2013 it was officially announced that Microsoft will buy Nokias Devices Unit for $7.2 Billion (Microsoft.com, 2015). In order to stay in competition with Apple, Google and Samsung Microsoft thought of producing its own Smartphone. It took over Nokia which was by then struggling hard to survive, so that it has its own physical devices. 32,000 employees were transferred to Microsoft. This approach led in rising 34% shares of Nokia valuing 14.9 billion euros. The market capitalization of Microsoft rose to $265.6 billion (Spence, 2015). In the past year sales volume have increased that led to rise the revenue of Microsoft. Figure below shows the revenue earned by Microsoft in the last quarter. Selection of Customer target Primarily Microsoft thought of targeting the premium customers. Later it came to understand that it needs to target those customers who like the design of model rather than its functionality. For this Microsoft made the Lumia smartphones user interface quite simple yet attractive (CNET, 2015). Such customers were mostly corporate level individuals who like simplicity yet good performance. In consideration to price vs. needs, as the market of Microsoft Lumia is developing it needs to keep the price lower than Apple and Samsung. Targeted customer should be the one whose needs are limited to design and hardware. Such as corporate individuals who have less time to play games and access apps, rather they want the better durability of mobile. Price must not be high enough for the targeted customer as it is known that lower price attracts more customers. As a result, Microsoft Lumia constantly focuses on the design of the devices in context to their product price. Figure below shows the price vs. needs results. Yellow color = price, Green color = needs. With increase in needs, price was kept in balance so that demand is balanced with supply (Hall, 2015). This indicates that with a small change in price can lead to much change in demand of quantity.This makes the product to be elastic that responses to change in price. Thus elasticity and value of Smartphone is responsive to change in price. In future Microsoft has the opportunity to gain more customers if it designs more apps for limited Smartphone. This will drive more attention of customers. Positioning of New Smartphone In consideration to current scenario, Microsoft needs to extend its market in more countries such as Australia, Indonesia, New Zealand, Bangladesh and Sri Lana. Such countries are developing in terms of technology (De Clercq, Danis and Dakhli, 2010). Considering Porter Five forces, these countries have the least substitutes and potential entries are limited. Microsoft image will drive out these customers to buy Lumia devices where the company can set a benchmark. Considering Kim and Mauborgnes article, distinctive tag line will be to reach the deepest customers who like model design more than its applications (Grn and Dolnicar, 2015). Below spider graph shows the relative market position of Microsoft that can be achieved in such countries: 4Ps of marketing Product- according to positioning, product must not have high price. Let the customers taste the product primarily (Hull and Covin, 2010). High price will not seek too much customer attention. Quality or hardware must be high class as software part is not considered. Price- people of the above countries are having average per capita source of income. Thus price much be average so that they can at least buy the products. Place- such countries are well developed in internet services. Thus primarily retail shops are not to be opened. Rather online promotions are to be done. Promotion- too much promotion is needed. Most of the customers tend to buy android devices. Thus discounts and coupons with proper tie-up from e-commerce will lead in better promotion. Business operating Model Business Model relates all the resources that the organization deals with so as to render total quality production and services for long term (Johansen, 2010). This model consist of core activities, costs and resources. The resources indicatefinancial, intangible, tangible and human factors that are quantifiable factors in the model. Core Activities Core activities relate to external customer satisfaction (Chamberlin and Doutriaux, 2010). The company needs to develop strategies in developing the user interface of the smartphone. For this more engineers are needed who will give the best processers idea, how to manage the hard disk and camera sensors. For managing improvement focus should be kept on out factors that what changes the market share and who is creating features of benchmarking (Laforet and Wright, 2010). At certain times audits are to be done and meetings are to be handled in order to identify the best strategic drift that is need for future. The research and patients give the most positive outcome. Innovation must not take much time or otherwise competitors are ready to introduce more substitutes (Chroneer, Johansson and Malmstrom, 2015). Figure below shows the core activities of the production oriented business unit: Costs Costs that are related to tangible asset are innovating hardware (Lam and Hannah, 2015). Microsoft tries to focus on camera build. Most innovative sensors are present today. This makes the unique features of Lumia phones. This even results in premium pricing. Often it is found that certain models are only concentrated in camera quality (The Verge, 2015). These are budget friendly devices. To increase customer relationship, Microsoft gives the warranty services to be increase for one more year if a least contribution is made by the user.The cash and debt structure is given below: Tangible and intangible resources Microsoft has built up its trust within years by the most custom build services. Current when Lumia smartphone is considered, it is running parallel to Xbox. The tangible resourcesare supplied by the contracts that have been taken by Nokia (Lee, 2015). Most of the hardware is well build. Intangible resources such as customer trust, customer satisfaction has led to increase more diversified features of Lumia. Previously app store consisted of applications that were mostly paid. Currently many apps are free of cost. These are intangible resources. Human Resource Human resource are the most diversified in nature for such a company. Top engineers are recruited to build the design that is performance effective and which keep a balancebetween cost and price (Lusis and Bauder, 2010). Thirty thousand employees are associated globally with Microsoft for production of smartphone. Figure below shows the Quantifiable Human Resource. Value Chain Microsofts unit of business that deal with Smartphone production has comfortably dealt with the logistics and supply chain at present. In future deeper distributers are needed to enhance the customer relationship. Success factors Table below shows the key success factors. Key success factor Current implication Future implication User Interface of Microsoft Lumia Customers those like the designing gets most attracted. Though its percentage is lower than other companies More apps are to be developed that will support the graphic user interface to deliver the best quality images Security system MSN is the trusted online messenger today that has much low usability MSN has to be improved to engage more customers like what Google did for Hangoutmessenger Platform Windows 8.1 OS is still the best operating system of Microsoft. This platform is available for most of the devices. Users get the opportunity to integrate their laptops, Xbox and Smartphone in the same platform Latest update of Windows 10 is to be made available for most of the Smartphone. This will engage more customers interest Resource and Capability Capabilities can be designed for many resources such as Tool, Machine, Vendor and Human Resource (Manikas et al., 2010). Tools are designed in such a way that those are capable to function in any research purposes. Core machine that develops the chipset, processor and hard disk of the Smartphone is best at the present condition. This machine is to be developed more to be integrated with secondary peripheral machines to ensure better productivity of camera lens. In future, wide angle lens is the most required. To retail in completion Human Resource are to be selected from top companies from different part of the world (Menzly and Ozbas, 2010). SatyaNadella though being young have taken certain strategies that raised the limit of Microsoft. Management Agenda Microsoft has taken a lot of strategies to get higher revenue from Smartphone production. But the current condition is not favorable for them. Microsoft thought of concentrating on hardware part. In caparison to other smartphone, Lumia devices are quite hard and sophisticated but it lacks features (The Verge, 2015). Hence to sustain in the competition more investment is need to redesign the software. Application developers are not willing to contribute in windows platform. Microsoft needs to pay them more so that they involve in developing apps. Future Action Plans Cut-down employees At present smartphone department is not generating much revenue. The cost factor is limited and so only way is to cut down employees on the Smartphone department. This will reduce capital investment. The savings are to be utilized in other departments (Mitchell, 2010). Cutting down employees will lead in cost minimization. Responsibility of Microsoft is touHuman appoint those employees to other business unit in Microsoft. Otherwise trust of these employees will be lost. Developers cooperation In comparison to android platform, windows lack in custom apps. Users mostly like the use of apps that attracts them more and more. Developers have refused to generate apps for windows. Hence Microsoft needs to invest more on the developers contract. Sales volume will be increased if new free apps are introduced in the store (Niosi, 2010). Customers can only be deviated if they get the same taste of android on windows. Operating System The latest operating system Windows 10 has been launched. This operating system is till now not available for any of the devices. It is recommended that only few Lumia devices will be having windows 10 update initially. Is will prove to be a market skimming strategy to cover up most of the expenseswithin a short time period. As windows 10 OS is brilliant enough to attract most of the users, it is an opportunity for Microsoft to cover much of the market globally. Blueprint Figure below shows the management agenda Blueprint: Internal Linkage Smartphone production is the latest business unit of Microsoft. The other internal areas of the business are Skype, MSN, Bing Bar, MS Silverlight, Windows Media Center, Microsoft Visual Studio, MS Office and a whole lot more.Xbox being one of the major video game console of Microsoft, Smartphone in future can be interlinked with Xbox to control it via air. Xbox security can even be covered by mobiles. Other area such as the online messenger if improved to support Windows 10 in Lumia Smartphone, then more accounts can be generated which in turn will lead in more customer access. Today most of the customers prefer Whatsapp. Time may arrive when MSN is the leading online messaging app. Windows Media Center is critically accepted globally due to its unique features. At present it only runs in Laptop. Smartphone can be interlinked with WMC in future. Conclusion Software giant Microsoft though have taken the strategy to produce mobiles, but it has led to disappointment as it loses apps. Most of the apps are chargeable. 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