Final Project of

GLOBAL MARKETING

Group Members:
1. Ali Hassan
2. Raheem Faraz Khan
3. Usman Asghar Cheema
4. M Farhan Zaidi

Submitted To:
Mr. Waqas Qurashi

Due Date:
7/01/2008

1
 ACKNOWLEDGEMENT
A HUMAN BEING CAN NOT CREATE ANYTHING WITHOUT THE HELP AND
GUIDANCE OF ALLAH ALMIGHTY. ALL PRAISES AND GRATITUDE TO
“ALMIGHTY ALLAH” WHO BESTORD UPON US THE INTELLECT AND
SOUND SENSE OF CONCEPTION FOR HIGHER IDEAS OF OUR LIVES.

WE EXPRESS SINSERE GRATITUDE TO OUR RESPECTED TEACHER FOR

HER CONTINOUS SUPPORT, GUIDANCE, SUGGESSIONS,
CONSTRUCTIVE, CRITICISM, ENCOURAGEMENT, AND PERSONAL
INTEREST.

WE ALSO THANK ALL THOSE PEOPLE WHO COPERATED WITH US IN

THIS PROJECT AND SPECIAL THANK FOR A.RAFEH FOR HELPING US IN
THIS PROJECT. WE HOPE THAT PROJECT IS ACCEPTABLE TO THE
TEACHER.

WE HOPE THIS PROJECT WIL BE INFORMATIVE TO ANYONE WHO

REFFERS TO IT.
 DEDICATIONS

We as a team would like to dedicate our project to our parents who have been an
inspiration for us throughout our lives. Last but not least our teacher has been a
great help for us so we would also like to dedicate our effort to our respected
teachers.

INTRODUCTION to MICROSOFT
Historical Background:
Microsoft was formed by a Harvard College Dropout called Bill Gates. Bill Gates
was born William Henry Gates III on October 28, 1955. He was born to a family
that was successful in business, living a comfortable upper middle class life in
Seattle, Washington.

Early in his elementary school days, Bill Gates quickly shot to the head of the
class, consistently outscoring his peers in most subjects, but especially math and
science. His parents soon enrolled him in Lakeside Prep School, where the
atmosphere was intellectual enough to stimulate the young Gates. This move to
Lakeside would prove historic, for it was here, in the spring of 1968, that he was
introduced to computers.

Paul Allen saw the first microcomputer on the cover of a magazine. He bought
the magazine and went immediately to show it to Gates. They realized the time
was right. The home PC business was about to explode and someone would
need to provide software for the machines. By stretching the truth somewhat,
Gates arranged for a meeting with the Altair manufacturers. He had called them
to let them know he had a program written for them. After the appointment was
made, Gates and Allen stayed up for nights, feverishly writing the program he
had promised. It worked perfectly at the meeting, and everyone was impressed.
They sold the program, and saw that this was something they could do for real.
Within a year, Gates had dropped out of Harvard and Microsoft was formed.

The company went through some rough first years, but eventually was able to
license MS-DOS to IBM. The IBM PC took the public by storm, and its success
signaled the success of Microsoft. Microsoft continued writing software, for
businesses as well as the consumer market. In 1986, the company went public,
and Gates became a 31-year old billionaire. The next year, the first version of
Windows was introduced, and by 1993 a million copies per month were being
sold.
In 1995, Gates knew that the Internet was the next area of focus, and the course
of Microsoft shifted dramatically. The popular Internet Explorer browser soon
became a bestseller. Today, Microsoft software is everywhere.

In the beginning, www.microsoft.com was just one computer tucked under a table
at the end of a long hallway. It was designed to test Microsoft's first 32-bit
Windows implementation of TCP/IP, the software plumbing in Windows that
enables internet communication.

Microsoft legend says that this machine once lived under the desk of the site's
first official administrator, Mark Ingalls, but like most legends that's only half true.
A staging server for microsoft.com was actually housed beneath his desk, and it
was relocated because too often Ingalls reached down and turned off the wrong
machine by mistake.

Today, microsoft.com is the fourth-largest Web site powered by internal and

external servers all over the world and visited by an average of 5 million
customers a day. How the site got where it is now in just six high-velocity years is
a story of smart decisions, some very public snafus, and all in all, a story we
thought you might like to read as we close out 1999.

Six years may not sound like a lot of time, but in "Internet time" that's almost half
a lifetime. Internet time is sometimes likened to dog years - the first year is like
14, and every subsequent year is roughly equivalent to seven virtual years. By
that reckoning, microsoft.com is pushing 50.

As we prepare to enter the year 2000, it makes sense to reflect on all that has
happened since 1994 - the year that microsoft.com launched its public Internet
Web domain with a home page. This isn't meant to be an exhaustive account of
the early days of Microsoft on the Web, just a short compilation of history and
reminisces by some of the "old timers" who helped build the foundation for
microsoft.com.

Microsoft's mission:
To enable people and businesses throughout the world to realize their full
potential.

Our Values
As a company, and as individuals, we value integrity, honesty, openness,
personal excellence, constructive self-criticism, continual self-improvement, and
mutual respect. We are committed to our customers and partners and have a
passion for technology. We take on big challenges, and pride ourselves on
seeing them through. We hold ourselves accountable to our customers,
shareholders, partners, and employees by honoring our commitments, providing
results, and striving for the highest quality.

Competitive Advantage
Real pioneered streaming media on the Internet in 1995 and has been the leader
in technology and business innovations ever since. Today, thousands of the
world's leading enterprises, infrastructure service providers, and media
companies manage media creation, delivery, security and playback with Real's
end-to-end systems technology.

Management and brand

Having great management is important to any company's success in earning
excess returns. I recently discussed how to identify strong management, so I
won't go into much detail here.

The hard work that goes into establishing brand recognition, however, deserves
a closer look. After all, a company can charge a premium if it convinces us that
its product is superior to its competitors'. In some cases, the branding is so
successful that the brand itself becomes synonymous with the type of product
(Kleenex) or enters everyday language (Google). Brand is often based on
customer sentiment, of course, so it tends to be a fickle and fragile thing. But a
well-managed brand can be a useful ally in a long-term investment strategy.

Luxury-goods manufacturers illustrate the power of branding. Does a Rolex

watch, for example, perform any better than a Casio? It's debatable, and in fact,
the Casio watch probably has more features than the Rolex. However, Rolex has
positioned its brand as a status symbol, and people are willing to pay thousands
of dollars more for the product as a result.

Krispy Kreme Doughnuts presents a slightly different lesson. The Krispy Kreme
brand once stood for light, fluffy, melt-in-your-mouth pastries, and people would
wait for hours at Krispy Kreme store grand openings to try the tasty treats. From
its IPO in April 2000 to its high in August 2003, Krispy Kreme's stock rose by
more than 400%. But overexpansion, investigations by the Securities and
Exchange Commission and (according to the company) an increasingly health-
conscious public all caused the company to lose its mojo. The stock price
plummeted and now trades below its IPO price. Fizzling in its fryers, Krispy
Kreme is now hoping that its brand still has enough pull to drag in some more
dough.

Efficient business models

Some companies establish competitive advantages by introducing more efficient
business models. Dell (Nasdaq: DELL), for example, introduced direct-to-
consumer computer sales. By removing the middleman and avoiding expensive
retail showrooms, Dell was able to post high margins while selling products 40%
cheaper than its established competitors, like IBM.

Like Dell, Amazon.com (Nasdaq: AMZN) operates a centralized distribution

model that allows it to manage inventory much more efficiently than traditional
retailers can. Storing inventory is costly, after all, and the inventory itself can
quickly become outdated, especially in technology markets. So the faster a
company can ship its inventory, the better. Amazon.com sells its entire inventory
every 25 days! By contrast, Best Buy (NYSE: BBY) takes 60 days, and Barnes
& Noble takes 146.

Barrier to entry
Some industries present significant barriers to entry and operate in quasi-
monopolistic environments. For example, there are only two main commercial
airline manufacturers: Boeing and Airbus. The expense involved in
manufacturing passenger airplanes and the relatively limited size of the market
make it uneconomical for additional competitors to enter the industry.

In another industry, Freddie Mac and Fannie Mae (NYSE: FNM), once
governmental agencies, control a significant majority of the American secondary
mortgage market. These companies still enjoy certain advantages from their
close association with the government -- specifically, most investors believe that
the government would not allow them to default on their obligations, even though
the government, in reality, does not officially guarantee the debt. As a result of
the perception of a guarantee, Fannie Mae and Freddie Mac are able to borrow
money at reduced interest rates. That and other advantages kept Fannie Mae in
the Berkshire Hathaway portfolio for many years.

The early-mover advantage

Although first movers can get valuable traction in markets, they also tend to
make costly mistakes, in terms of both money and time. Companies that follow
closely behind the trailblazers, though, can gain many of the benefits of being
early to market while avoiding some of the pitfalls.

A classic example is Microsoft (Nasdaq: MSFT). Although Apple introduced the

first personal computers, it limited itself by trying to do everything -- building the
computers, creating operating systems, and developing software. Microsoft,
meanwhile, focused exclusively on the operating system, and MS-DOS soon
emerged as the default standard for personal computing. Microsoft used this
toehold to launch itself into productivity software, and who better to write software
for an operating system than the company that built it? Microsoft was not the first
mover, but its popular Office suite soon left competitors in the dust. The
company's conquest of Netscape in the Web browser market followed a similar
story. In short, Microsoft doesn't invent; it innovates -- and it's done that very well.

Size
In many cases, bigger is better. Large warehouse stores like Costco (Nasdaq:
COST), Home Depot (NYSE: HD), and Wal-Mart now dominate the retail
industry that used to be made of small, local stores. They never had a chance
against the bigger and more efficient big-box outlets.

But the size advantage does not stop there. Because Wal-Mart is such a large
customer, it has significant sway over its suppliers. In addition, Wal-Mart has
deep pockets that allow it to underprice its competitors. It even sells some items
at a loss to squeeze out the competition. So the size advantage tends to feed on
itself -- more stores and better operations mean better prices for more customers
because of increased bargaining power over suppliers.

Conclusion
Competitive advantages are like a seatbelt for your investments. They allow a
company to remain in more control of its destiny when facing the uncertainties of
the future. And although competitive advantages don't guarantee that a company
will perform without failures, they do make it easier for a company to recover
from its missteps. Identifying meaningful competitive advantages in your
investments will therefore help you protect your investment dollars.

Target Market
Microsoft is focusing on the business organizations to individual’s home Pc’s they
basically want to give the best possible solutions to the work of business to
individual’s work. Because they think that this era is digital era so they want to
make everything digital to solve any kind of problem or work so that everyone
utilize his work in best possible manner. For this they are trying to innovate the
best possible solutions for organizations and individuals.

SWOT Analysis
All this of course does not guarantee sound sleep to Mr. Bill Gates for too long.
Guarantee of success happens in no business, not even in a long-term
monopoly. Competition, technology compatibility and integration needs, pricing,
delivery and service parameters can precipitate substantial threat to Microsoft
and afford opportunities for other players. It is not that Microsoft is not aware of
this. It is focusing on R&D and business strategies to sustain market shares in its
own way. But is it enough and is it taking the right direction is the big question.

Others have started to seriously innovate and compete. For example changing
technologies like Wireless Communications and Networking (WAN) etc do not
complement Microsoft’s existing competencies. Over the next five years, in all
developed countries, the majority of people will be connecting through broadband
and interacting with information through many devices: PCs at work and at home,
portable PCs, Tablet PCs, and pocket devices such as the phone, evolving from
simply a voice device to a data device. Having all these devices work very well
together and be secure and up to date are very significant challenges indeed.

Therefore there is adequate scope and opportunity to review, audit and

understand through SWOT analysis the company and its competencies and
facilitate a new debate on possible corporate business models and revised action
plans.

SWOT analysis is a tool for auditing an organization and its environment. It is the
first stage of planning and helps marketers to focus on key issues. It has to be a
continuous rather than a need based exercise.

Strengths

A) Key Strengths
• Strong fundamentals-Microsoft has become synonymous to computers
over the last two decades. It has a massive market share and has
recorded impressive sustainability and growth even in the face of disasters
like 9/11.Impressive research base takes care of business cycle changes
and product life cycle limitations
• Strategic tie-ups and Business Process Outsourcing both to utilize
technocrats all over the world and to optimize costs
• Multinational Corporation operating through regional subsidiaries giving it
a truly global perspective of cultural, ethnic and linguistic differences in
more than 60 countries. This certainly affords a better business perception
and applications too
• Relatively rapid product development processes that allow for timely
updating and release of new products
 • Software products have high brand recall and recognition, generic
corporate and consumer acceptance (Word, Excel, PowerPoint, Access),
and numerous powerful features that are in use worldwide, thereby
promoting standardization and competitive advantage through their ease
of integration and cost-effectiveness
B) Other Strengths
• Applications and operations divisions complement each other well
• Recently created online service network divisions (MSN)
• Flexible workforce through contingent workers for special projects
• Very good Human Resource policies, in addition to good compensation,
an opportunity for employees to do well financially through stock
purchases
• Neptune, is a Window's interface and is an example of smart software.
B) Revenues and profits rising at 30% a year with merger/acquisition or
investment in 92 companies over the past few years
• Top rating from Fortune for best company to work at and most admired
company
• Windows series, and Windows NT are globally known as the PC desktop
operating system with a market share of above 80%
• Participation in socially relevant philanthropic work in various countries
has been a significant value addition in terms of corporate PR

Weaknesses
A) Major Weaknesses
• Hardware manufacturers need to be motivated to pre-install Microsoft's PC
operating system. Although training of computer professionals and workers is by
and large done on Microsoft Architecture and this in turn creates a situation of
inevitability for hardware manufacturers, their default support cannot be
assumed.
• Peripheral player in the Internet space and few products for Internet
applications
• Failure on the part of leadership to anticipate the impending growth or
popularity of the Internet
• Marginal or insignificant presence in the wireless market, WAN and Windows
CE
• Leadership is monolithic and a pool of thinkers is invisible if not absent. Mere
compensation/ stock option packages don’t produce leaders.

Other weaknesses

• Software Architecture remains its primary strength but has not yet developed a
substantially new line of products
• Continuous product launches and deadlines contributes substantially to
monotony and employee fatigue
• Employee turnover has increased from 6% for a ten year period to 7.4%
• Falling sales in the operating systems and server software sectors
• Elaborate 5-layers of management leading to red tape and dilution of two way
communication within
• Frequent reorganization, reorientation and autocratic shades do dampen
employee creativity leading to a loss of key personnel and chilling of
communication and dilution of innovation
• Perceived by many as an unethical competitor that dominates competition and
stifles its innovation leading to feeble availability of competing products
• Products have a single application focus in terms of costs and compatibility
• Reputation has suffered because of entanglement in litigation on casual
workers’ compensation package

Opportunities
A) Prime Opportunities
• The demand for personal computers in American and global markets remains
strong despite the growth and increasing popularity of wireless handheld devices.
In fact in developing and under developed countries the demand is in the take off
stage
• Local language adaptations are bound to favorably sustain growth. In India for
example most of the population uses Hindi language and applications software in
Hindi is a certain bet for success given the population and economic growth
process in the offing
• Cheaper Internet connectivity and global telecommunication costs open new
markets and opportunities. Broadband access and affordable wireless
communication tools does present a plethora of opportunities for making gainful
strides in these key areas
• Strategic alliances with Mobile phone applications and exploitation of personal
digital assistants provide Microsoft with opportunity in a market where it currently
has little or no significant presence.

Other opportunities

• Popularity among people for Internet access, information, business and

applications and PC is still the widely used tool for it
• Piracy control measures in various countries shall mean additional revenues
• Internet security tools and reinforcement of LAN applications are going to be
useful value additions to Microsoft’s product mix

Threats
A) Palpable Threats
• IBM, Sun Microsystems, Oracle and others have collaborated on new platform
technologies for their hardware that replicate much of the value of Windows
• Apple and Linux threaten Microsoft's huge market share of the desktop
operating market
• Sun Microsystems, Netscape, Oracle, IBM, AOL, and other companies moved
into the Internet space almost a decade ago and defined it while Microsoft failed
to anticipate its growth, value or popularity

• Demand for application/operation software and hardware is a function of

fluctuating exchange rates of currencies can negatively impact revenues in the
global marketplace
• Software piracy of commercial and consumer applications software on a large
scale threatens revenues especially in the face of free products like Linux.

• Other Threats.
• Hardware manufacturers (Sun Microsystems, Oracle, IBM, AOL, and
Apple) are issuing their own pre-bundled programs on their own hardware
• Linux influence is growing steadily
• Unix dominates high-end mission-critical applications and its customers
do not believe Windows can handle these operations
• Personal computers, mobile-phones, personal digit assistants,
entertainment-oriented hand-held computers, and similar wireless
products for Internet access do not require Window operating system
products
• Rapid development of mobile devices that will displace/replace personal
computers.
• Recession or economic slowdown in the world impacts personal computer
equipment sales and their need for an operating systems
• Technology life cycle is akin to product life cycle and needs to sustain
cash cow stage with updates and alterations/value additions and any
laidback approach to this crucial need shall have a debilitating effect on
future prospects

Conclusion
SWOT is an important marketing management tool. . It can be used in
conjunction with other tools for audit and analysis, such as PEST analysis and
Porter's Five-Forces analysis to enable prospective R&D in marketing
In the light of what has been discussed about Microsoft, it is obvious that present
times are crying for deliberation and brainstorming to ensure continued success
of the company. Market forces are dynamic as is technology and innovation.
The corner stone or benchmark in business is market share. There are four ways
to look at it.
-Improving market share by encashing opportunities of new markets and market
segments.

-Retaining market share in the face of threats and challenges

-Improving market share by utilizing value addition/new application opportunities
of existing customer base.

-Product diversification and innovation leading to altogether new role and share
in the market. This has a telescopic effect on gross market share rather than on
limited niche share.

In the context of Microsoft all the above possible strategies have been discussed.
No doubt the company still enjoys pre-eminent position in its niche market. In the
foreseeable future no major threat is perceived to this position. But the fact is its
niche market of today is threatening to lapse into dilution and redundancy due to
rapid overshadowing by Internet and Wireless devices and applications. This is
not of course going to make the company obsolete by any stretch of imagination.
However there are perceptible warning signals, which the company will do well to
recognize, invest in right research and innovation and sustain its leading edge in
spite of the market dynamics and increasing competition. The focus areas have
to be in tune with evolving technologies and applications. As marketing by
definition is to identify customer needs and to satisfy them, the company cannot
always hope to thrust its products and applications on the customers.
Microsoft has the resources to do it. It should be willing to just do it