Assignment on Strategic Management of Microsoft

The business model of Microsoft

            It is important to know that Microsoft’s business model is a diversified one, which has its spread across cloud, office products, software licensing, windows, search advertising, LinkedIn, as well as, gaming, etc. These products and services with the utmost quality and variety are serving consumers all around the globe. They have created a value proposition by providing state of the art software solutions, which really gave them great recognition amongst consumers from all parts of the world. Windows is their trademark product as an operating system (Visnji, 2019). The company has been involved in making a variety of other software applications and programs. Microsoft Office is another premium product provided by Microsoft. In recent times, they have tried to give more diversification to their business model by acquiring LinkedIn, which has helped them to enter into the world of Social Media. They are also making great progress in providing cloud services with their Azure services. It is important to mention here that when most successful products of the company are discussed, Microsoft office happens to be the top-performing product in this regards (Cuofano, 2019)

Revenue streams and cost streams

            The revenue stream of a company is the most important thing for them to focus on because this will decide their fate in an industry. It is a fact that Microsoft is one of the lucrative companies in the world. According to 2018 facts and figures, the company earned revenue of $110.36b along with $35b of operating income. There are three major segments to look at the revenue stream of Microsoft. The first segment is related to Office and various other dynamic productivity products. The revenue earned by this segment in 2018 was $35,865m, which accounts for 32.5% out of 100% total revenue of the company. The second segment is related to its intelligent cloud, and revenue for this segment in 2018 was $32,219m, which accounted for 29.2% out of 100% revenue. The third and most successful revenue source for the company is the segment of personal computing. As per 2018 facts & figures, this segment earned $42,276m, which accounted for 38.3% out of 100% revenue of the company (Eassa, 2019). As far as the cost stream of the company is concerned, it is evident that the majority of its costs are related to its Research and Development. To maintain its data servers and centers safe and secure, they also have to bear a lot of costs in this regards (CLEVERISM, 2020)

Changes in Streams and Considerations for the Investors

            Looking at the above facts and figures, it can be said that the company is not going to face any major changes in the revenue streams in nearby future because the process is going very much the same for the last few years. However, there is a lot for the investors to take away from these facts and figures, and the business model of Microsoft. Investors should understand that company is having a diverse range of businesses, and investors can look up for various options in different segments of technology. Investors are allowed in participating in different categories such as the PC market, productivity software, cloud computing market, as well as, growth of the gaming sector. If the company keeps investing in its research & development to innovate more for more diversity, then they are likely to continue on this success path.

References of Strategic Management of Microsoft

CLEVERISM. (2020). Microsoft. Retrieved April 20, 2020, from https://www.cleverism.com/company/microsoft/

Cuofano, G. (2019). How Does Microsoft Make Money? Microsoft Business Model In A Nutshell. Retrieved April 20, 2020, from https://fourweekmba.com/microsoft-business-model/

Eassa, A. (2019). Here's How Microsoft Makes Its Money. Retrieved April 20, 2020, from https://www.fool.com/investing/2019/02/19/heres-how-microsoft-makes-its-money.aspx

Visnji, M. (2019). How Microsoft Makes Money? Understanding Microsoft Business Model. Retrieved April 20, 2020, from https://revenuesandprofits.com/how-microsoft-makes-money-understanding-microsoft-business-model/