Microsoft has developed a customer base of 30 million people. Its reputation was built on the successful development of its computer software-the Windows line of products. The span of their businesses and product portfolio is a competitive advantage. Throughout last fiscal year, Microsoft made important adjustments to the cost structure and streamlined internal business processes; along with strong pipeline of products, including new release of Windows 7 and Office in 2010, Microsoft is well positioned to withstand the current economic downturn.

Due to decreased costs for legal settlements, Microsoft’s legal expenses decreased $1.4 billion in 2009. This illustrates improved corporate image, which causes improvement in staff motivation and morale, along with the increase in customer loyalty.

Weakness:

Microsoft lacks a strong service support centre on the Internet. Since problems must be solved rapidly to achieve efficiency, this will erode the integrity and quality perceived by consumers on Microsoft products.

Chris Liddell’s (Microsoft’s exceptionally adept CFO) recent departure is a huge loss. He managed Microsoft’s finances in better times and bad, overseeing difficult cost cutting as global economic crisis weakened software sales. Liddell has great relationship with Wall Street analysts and had continually offered conservative guidance to them until January 2009.

By withholding guidance, Microsoft let rumours determine perceptions about its performances. Conversely, Apple continued to release guidance and-combined with product launches-generated positive perceptions, which lifted Apple’s share price to new heights. During Window 7’s October launch, Microsoft lost opportunity to create positive perceptions on Wall Street.

Opportunities:

Political: Microsoft’s offices in developing countries will have a less strict legislation. Hence, there are fewer constraints on business activities, reducing the possibility of government policies being barrier to business growth.

Economical: The impact of the economical recession is minimal in China; hence their consumer buying power remains strong. China’s Internet market is a hot spot for global search companies looking to expand overseas and therefore is a vital market for Microsoft.

Social: There’s increasing popularity for Internet access. More importantly, people use computer at much younger age, which broadens Microsoft’s potential market.

Technological: Personal handheld devices are in the trend. This opens up new market segments for Microsoft to develop, which provides opportunities to attract different customers and overpower their competitors.

Threats:

Political: Microsoft is faced with different lawsuits made by independent companies and software developers. These lawsuits not only drain Microsoft’s financial resources but also promote negative image and publicity.

Economical: Unfavourable changes in economic conditions may result in lower information technology spending and adversely affecting Microsoft’s revenue. The impact on Microsoft’s partners, such as bankruptcy of a major distributor, can result in sales channel disruption.

Social: Society’s attitude towards issues like global warming changes recently. To restrain from ruining reputation, Microsoft will follow strict policies with international environmental regulations. However, compliance costs are high, reducing operating income.

Environmental: Microsoft’s corporate headquarters and critical business operations are located near major earthquake faults. And major earthquakes or other catastrophes will cause delays in completing sales and providing critical services.

Technological: Hackers develop viruses that attack Microsoft’s products. Security vulnerabilities in products may cause customers to refund, reduce future purchases, or even use competitors’ products, which negatively affect revenue and lead to claims against Microsoft.

APPLE:

SWOT analysis for Apple:

SWOT Analysis and Strategy Formulation

Strengths: Internal management is one strength Apple capitalizes on. CEO Steve Jobs is a very successful leader who pulled Apple Computer from business declines. Recognizing changes in the personal computer industry, he was able to reduce operating costs and increase Apple’s revenue.

Weaknesses: Portability is an ongoing issue with Apple Computers. There are very few notebook computer lines offered to people on the go. Apple should introduce more lines and reduce the prices to be competitive.

Another weakness for Apple Computer relates to its functionality with the open-systems standards and the portability that are needed to operate on a network. This weakness limits the target market for Apple.

Opportunities: While Apple offers a variety of desktop models, there is only one PowerBook line for mobile computing. Apple has immense opportunities to explore and target the market of portable systems. Further, Apple’s newest notebook computer has the ability for wireless connectivity. As this technology improves, people may take a second look at Apple for both personal and business computers.

Threats: Apple faces ferocious competition from its innovative competitors. Computers continue to increase in performance and drop in price. Apple needs to find newer and more effective ways to do business and meet consumers’ computer needs at competitive price. Even as Apple makes technology improvements, so does its competitors. Competitors have the advantage of operating on the same computer platform whereas the Apple platform is proprietary. Competitors can take advantage of strategic alliances, allowing them to make a better, less costly computer, and increase their customers and suppliers.

SWOT ANALYSIS

Strengths

• Ease of use

• Joint venture with Pepsi

• Product Innovation

• High Corporate reputation

• Cash reserves

• Employee diversity

• Superior OS

• Strong Top management

• Loyal customer base

• Low Debt Levels

Weaknesses

• Creative style

• The ease of use

• High inventory

• Declining share in educational market

• Distribution problems

• Not IBM compatible

• High prices

• Lack of available new and existing software compatibility

• Too many product lines

• Poor stock performance

• High executive turnover

• Premium pricing, higher production costs

Opportunities

• Internet

• Growing industry

• Creating new software markets and selling the hardware into these markets

• Demand for innovation

• Employee benefit programs

• Growing educational market

• Music downloads from ITunes

• International sales

• Outsourced production

• Improved OS to compete with next generation Windows OS

Threats

• Intense competition within the industry

• Substitutes: PDA’s, WebTV

• Loss of market share

• Potential litigations

• Technological and prices discontinuity

• Potential increase in supply’s costs

• Budget deficits in education

• Hostile takeover

• PC industry contraction

• Economic recession

• Price competition

• ISV no longer supporting Mac platform

The driving force in the industry is the market share that each firm tries to secure and keep. Dell’s strategy to keep and gain market share revolves around its niche of custom built and directly marketed products to its customers. Apple’s niche is comprised of customers that aren’t satisfied with Microsoft operating systems and want something different. The software industry is driven by customers needs for increased capabilities of particular programs. The hardware industry is mostly driven by products that can do things faster and more efficient than the previous generation of personal computers. Software innovation and hardware tend to go hand and hand in the industry, particularly in Apple’s case. The personal computer and software industry has experienced rapid globalization. Most American companies engage in an effort to sell their products overseas as well as develop their own niche in overseas markets.

The industry growth rate has slowed down considerably over the past decade. As previously mentioned, the only way to gain market share or to increase sales is at the expense of a competitor. The market is saturated as most offices already have a technological asset and most homes in the United States also own a personal computer. Any big change in technology could possibly cause the customer base to upgrade their systems if the benefits outweighed the costs, causing a short term growth in the industry.

The consumers in the industry are trending more toward demanding wireless or portable equipment. Every major player in the industry has a product that is designed to answer and meet this demand. For example, the Apple iPod is a computer that can play audio music that is downloaded from a personal computer. Apple also has a portable personal computer called an iBook that competes with every portable computer on the market. Every player in the industry has a product that is designed to be more portable and more convenient to use that their competitors.

The key to any company being competitive over a long period of time is for them to offer innovative products that meet an ever changing lifestyle of personal computer users and to offer powerful business computer solutions to companies that strive for a competitive advantage over their peers in information technology. Each player in the computer industry will need to provide their products at a competitive price as they buyers have many options to choose from.

Apple’s obvious strength is its hard assets. Apple has invested millions over the years in research and software development to compliment its line of Mac products. Apple has the knowledge to develop software that can provide nearly every need for personal computer users. Apple’s weakness is the lack of demand for its unique product. Nearly every computer user wants something that is compatible with the computer system at the office, at home, and at school and Apple isn’t able to provide this. This makes one question if Apple’s strategies of providing an alternative to IBM clone computers and providing a different sort of personal computer that doesn’t run on a Microsoft operating system is strategically viable over the long term. Apple must ask itself if “thinking different” is worth the loss in profit.

The progressive steps that companies need to take depends on the extent that the consumer market demands a technology push or market pull of the particular technologies. There was management of technology processes that Apple was deficient in during the times of difficulty and there were processes that were evident in the times of success. Apple needed to agree upon a company vision along with a strong long-term strategy, which would lessen the probability of such a high rate of CEO turnover. Secondly, the technology and business plans need to be stronger in terms of incorporating marketing practices, technological innovations, and being able to forecast the future demands based on the customers needs or wants. Thirdly, Apples turnaround was because of its ability to refocus on its core competencies of innovation and product quality. Fourthly, demographic and regional marketing is important for the success of a company. Knowing the demographics helps to know what a potentially successful targeted market will be and helps to determine how to effectively gain the customers’ loyalty. Apple Computers has products that are sold all over the world and importantly are a sole proprietary of Apple. Lastly, to ensure success with management of technology is to place continuous emphasis in the research and development of companies. Corporations naturally cut in areas of R&D when budgets are cut and downsizing occurs; however, this is where it becomes more difficult for companies to continue their innovative process which it depends on for future growth.

Apple’s mission to bring the best personal computing experience to students, educators, creative professionals and consumers around the world through innovative hardware, software, and Internet offerings is a mission that will be constantly evolving due to the market, the competition, and innovative product development. Apple’s product differentiation is a strategy that will help them meet their goals by promoting growth because of their distinctive products. This will also allow Apple to increase revenue with their creativity, drive excellence in product quality, and retain customer loyalty.

Apple’s strength of internal management with their successful leader Steve Jobs and the strength of its versatile managers will produce timely streamlining of internal organizations to increase industry alliances. This effort will propel new inventions for portability and functionality thus allowing them to become more competitive in their targeted market and still be cost competitive. While there is a threat from Apple’s innovative competitors, there are opportunities for Apple to offset these threats by improving and promoting the newest notebook which has the ability for wireless connectivity thus targeting the market for portable systems.

Apple has been in existence since 1976 and has its up and downs. They have rose repeatedly over and over again by utilizing their strategic control. It is my opinion, even though I am not an Apple lover or user that they will continue to be competitive within the computer world and rise above all odds. Apple will continue to rise and soar above the other competitors within the industry.

1)         Political-Legal Forces

Different countries have different legislations and these in some ways restrict the companies or give opportunities to the company.

NAFTA, European Union and other regional trade open doors to market in Europe, Asia, Latin America that offer enormous potential.

Political uncertainties caused by terrorism activities are directly impacting the overall business of the company.

The company relies on access to patent and intellectual property obtained from third parties. The company might unknowingly encounter infringe issues with existing patents of others.

Beatles lawsuit against the company may negatively affect the company’s reputation.

The company has to comply with the environment regulations such as environment safe disposal or recycling.

Socio-Cultural Forces

The computer and internet usage is growing worldwide and is a good source of opportunities for the computer industry.

Customers had become more experienced and computer literate.

has become a primordial issue for the new generation, which is a key factor for the company’s business.

3)         Economic

In the past year, the industry has been affected by the slow economic and that resulted in low consumer spending. However the current economy shows some sign of improvement, consumer spending and investment might increase as well.

Due to weak economic conditions, the U.S. educational is encountering large budget deficits in many states. This factor has a negative impact over Apple’s sales in the educational segment.

of products that include components obtained from foreign suppliers can be adversely affected by currency exchange rate fluctuations and by international trade regulations (tariffs and antidumping penalties).

4)         Technology

Technology is evolving at a rapid pace today, and people appreciate more & more advances in their systems and are switching over to new information appliances.

Internet availability and usage is growing and leads to good opportunities for the industry.

The traditional desktop might become outdated by the entrance of new revolutionary products such as iphone 3g, ipad and nano computers.

Increasing demand for new technology in schools and professionals