Competitive Environment And Business Level Strategy Essay

Question:

Discusss about the Competitive Environment and Business Level Strategy for a Strategic Business Unit within a larger.

Answer:

Introduction

The business organizations refers to the group of people or individuals who come together to achieve some commercial goals. The business organizations form strategies to achieve maximum profits. The business organizations have some commercial objectives. They have a specific mission, vision, objectives and strategies. They comprises of different departments and which are focused on achieving the goals of the organization. The operations of the business organization are influenced by the external environment in which the organization is working. The external environment of the organization refers to the political, economic, social and the technological factors which may impact its working. The operations of the business organizations are dependent upon the government rules and laws. Moreover, the economic conditions of the target market also influence the working of the organization. If the target market of the organization is lucrative, it will attract a number of companies in the similar industry. Therefore, the firms need to develop a core competency so that they are at advantage in comparison to its competitors. In the following section, a business corporation is identified and its core competency and external environment is evaluated.

Corporation Identification

The corporation can be identified as a legal entity which is distinct from its investors or managers. It has equal rights as that of an individual and can enter into legal contracts, borrow money, hire employees and has its own assets. The firms have to meet certain legal requirements to come under the category of corporation (Bocken, Short, Rana and Evans, 2014). The Corporations are owned by the stockholders who share the profits and the losses attained by the company. There are three distinct characteristics of the organization, namely, it should have a legal existence, it has limited liability and it as a continued existence. The firm should have a distinct legal existence which is separate from its shareholders and like any other individual share profits and losses through the firms operations, sue other persons and be sued by them. It can be rewarded or punished of they commit offense be sued by them. A business corporation has limited liability which means that the owners of the firm have limited liability which extends to resources of the firm unless the stakeholders give personal guarantees. The lifetime of a corporation extends beyond the life span and capacity of its owners. The ownership of the companies can be transferred through sale or gift of shares (Sarbah and Xiao, 2015).


Microsoft Corporation is a multinational company which deals with technology, consumer electronics and computer software. The company is headquartered in Redmond, Washington and conducts business all across the globe. It is one of the leading technology businesses and provides a range of product services (Microsoft, 2017). It has a diversified product portfolio and comprises of different categories of product and product lines. A business organization comprises of different departments and each department of the organization should be focused on increasing the profitability of the organization by optimally using the organization’s resources. The product portfolio can be defined as the range of items which are traded by a business corporation. The mature companies often have diversified product portfolio. It is because large enterprises have the infrastructure and the marketing channels to support broader product offering. Diversification increases the growth potential of the company and reduces its downside risks. Similarly, the service portfolio represents the range of services offered by the company. It has the information of all the services provided by an organization.

Business Unit Research

The strategic business Unit of an organization can be defined as a fully-functional unit of a business organization which works as a separate unit. The strategic business unit of an organization has its own vision and strategy and report to the main company regarding its operations and growth. The strategic business unit works independently but report to the main organization regarding status of operations (Kownatzki et al., 2013). The strategic business unit are focused on a specific target market. It has the infrastructure and resources so that it can support different organizational functions such as human resource development and marketing. The strategic business units are adopted by the organizations that have different product lines. The strategic business unit of the organization is large yet flexible so that they have enough resources as well they can exercise control over the long term performance of the unit. They are more agile and have their own independent mission and objectives (Palia, 2009).

Microsoft Corporation is a large business organization which has a number of strategic business units. The Windows Division of an organization develops and market operating system for the computing devices (Microsoft, 2017). The product line of the organization refers to the group of interrelated products which are sold under a single brand by an organization. The companies add new products to their existing product lines as the customers are more likely to purchase products from the brand they are already familiar with. The product or service line group all the products or services related to one particular division of the business (Pohl, Bockle and Linden, 2005).

Business Unit Revenue

The Windows Operating System of the Organization is its primary revenue source. The revenue of the company can be defined as the amount of money that a company actually earns during a specific time period. It is the gross income of the organization and from this income the investment cost is subtracted to determine the net income of the company. The revenue of a company can be determined by multiplying the price of a single unit of product with the number of units sold by the organization. It is the total amount of money earned by the company by its business activities (Fischer, 2014). The revenue of a company is also referred as top line because it is the first item of the company displayed on its income statements. The revenue of organization is Microsoft Corporation Product line of Windows Operating System is Windows 8. It is highly popular as personal computer and Mobile operating system.

External Environment Analysis

The external environment of the organization refers to the macro environment which impacts on the operations of the organization. There are a number of external factors such as political factors, economic factors, social factors and the technological factors which impact on the organizations business and profits (Liddle, 2014). These are the external factors which cannot be controlled by the organization; however, the organization can adapt its working according to them. The political factors refer the impact of the government policies and the administrative practices which can impact on the business operations (Rosenbusch, Rauch and Bausch, 2013). The political factors refer to the new legislations and the regulatory shifts which can impact on the operations of the business (Lux, 2016). The political stability of the country, the attitude of the government towards the organization and the lobby groups also impact the business of the organization (Castillo-Manzano and Fageda, 2014). Since it is a technology company, it has to follow the privacy and intellectual property laws in Australia. The economic factors refer to the fundamental data of information related to the target market or economy before an investment venture decision is made. The business organizations have to take into consideration the external economic forced along with the intrinsic value of an asset for a successful business decision (Sierzchula et al., 2014). The economic factors include the costs such as wages, interest rates, tax rates and employment rate (Prillaman and Meier, 2014). The factors also impact the revenues of Microsoft Corporation directly or indirectly. The middle-class customers are the primary customer base of the Windows operating system of the company. However, the company requires the high disposable income in the hand of its customers for high revenues.

The social factors refer to various social phenomenon which affects the purchase decision of the customers. The social factors of the company refer to the personality, attitudes and lifestyle of the people (Jussila, K?rkk?inen and Aramo-Immonen, 2014). The social factors influence the appeal of a product to the potential buyers (Brown and Vergragt, 2016). The customers desire for highly efficient operating system, whether it is for their PC or their mobile phones. The customers are attracted towards new service and faster operating systems. Recently, a number of competitors have emerged which are giving tough competition to the company.

The technological factors influence the manner in which a business organization operates and use equipment and technological infrastructure (Bhatti, 2015). Since in the present technological era, the companies are heavily reliant on the equipment, the technological factors exert a significant influence on the success of the business organizations (Egdair, Rajemi and Nadarajan, 2015). The technology companies are heavily dependent upon the technology to attract customers. The customers of the company are strongly attracted towards fast and efficient technology; therefore, the companies need to be innovative to deliver efficient systems in comparison to their competitors.

Source of Sustainable Competitive Advantage

Microsoft Corporation is one of the most renowned and largest technology firms in the world. It has established a number of competitive advantages in the form of economy of scale, brand strength, intellectual property and regulation which has created competitive advantage for the organization. In regard to the strategic business unit of Windows Operating System, the company has established a strong competitive advantage. It has about 90% of the market share in desktop operating system market. Its competitive advantages are its strong brand identity and the familiarity of the users with the operating system. It is automatically installed in most of the new desktop computers which has increased its market share. Other than that, the corporation has a number of competitive advantages such as its brand image, resources, pool of money, talent and IP portfolio and the market leadership in IT management.

The sustainable competitive advantage is developed when a business organization acquires or develops an attribute or feature which allows to better perform than its counterpart companies (Bharadwaj, Varadarajan and Fahy, 2015; Boons and L?deke-Freund, 2013). These attributes can increase the access of the companies to the natural or human resources or create an advantage in manufacturing of the products. This competitive advantage must have some life and the competitor companies should not be able to acquire it instantly otherwise it will not be sustainable competitive advantage. The sustainable competitive advantage is an attribute which cannot be easily copied and; therefore, cannot be maintained over a long time. The competitive advantage should be able to ensure superior performance and survival and prominence in the market. The sustainable competitive advantage should become the foundation of the superior performance of the organization (Srivastava, Franklin and Martinette, 2013). There are four criteria of the requirements of sustainable competitive advantage, valuable resources, rare resources, imperfectly imitable resources and non-substitutable resources. The valuable resources allow the companies to increase their efficiency and effectiveness. However, with the changing customer demands, technological developments and the competitors’ strategies the value of the resources becomes less after certain time. In order to attain sustainable competitive advantage, the resources must be rare along with being valuable. The rare resources refer to those resources which are not possessed or controlled by competing firms. Other firms should not be able to imitate or find substitute to these valuable resources. The imperfectly imitable resources are the resources which are extremely costly or difficult to duplicate. The non-substitutable resources are the valuable, rare and imperfectly imitable resources which cannot be replaced or create similar value or competitive advantage for the companies.

Strategic Direction

The strategic direction of the organization refers to the course of actions which lead to the achievements of goals of an organization (Rotemberg and Saloner, 2000). The strategic direction of an organization refer to number of elements such as vision, goals, core competencies and the market definition which develops the strategy for the business organization. The strategic direction of an organization cannot be developed without reference to the external environment (Brecken, 2004).

Microsoft is a leading technology company which deals with computer software and hardware products. It has a dominant market share in the computer operating system in desktop computers. However, the organization is facing strong competition from other companies such as Google and Intel; therefore, it needs to create sustainable advantage which can create competitive advantage for the customers. The company should also focus on increasing its innovation capabilities so that it can provide latest technology products to its customers.

Conclusion

It can be concluded that in the present competitive business world it is important for business organizations to create a competitive advantage to become successful. The business corporations can be defined as individual enjoy individual rights as that of an equal person. The corporations can hire people and enter into independent contracts separately from their investors. Microsoft Corporation is a multinational corporation which deals with software and computer hardware. The organization has a number of strategic business unit which works independently of the parent organization. The Windows operating system of the organization has the dominant market share in the computer user market. The sustainable competitive advantage of the company is its brand image and the user familiarity with the operating system. The companies need to develop its market share in other target markets too to develop its competitive advantage. It should create the strategic direction of the company by considering the external environment of the organization. Thee external environment contain macro environmental factors which cannot be controlled by the organization. These factors include the political factors, economic factors, social factors and the technological factors. The government and the administrative policies in the target market impacts the operations of the company. The strategic direction of the organization refers to the mission, objectives and the vision of the organization and it must be created according to the external environment of the organization.

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