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Internal and External Factors of Management

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Internal and External Factors of Management

Annually, Fortune magazine releases a list of the top 500 largest companies in the United States (Time Warner Co., 2008). Being ranked no. 44 in 2008, Microsoft has increased its revenues 15.4% since 2006 because of its continued efforts to release latest technology (Time Warner Co., 2008). To understand how Microsoft continues to lead in profits, sales and technology, the consumer must realize internal and external factors influence how Microsoft performs and operates. In depth, Microsoft’s planning functions are influenced by the consumer’s need, which continues to influence Microsoft’s products and services. The purpose of this paper is to identify and explain the internal and external factors which impact the planning functions of management within Microsoft Corporation.

The internal desire to conquer all world markets in the software business is very challenging but Microsoft has proven it can be done with careful planning in regard to rapid change. Externally, the information technology sector changes quickly so Microsoft operates a good portion of their resources to keep up with these occurrences. Each locale around the globe is a different market which has to be catered to accordingly. In order to accommodate to these specific markets Microsoft is flexible to change goals rapidly if the local market doesn’t seem lucrative for the future of the company. Sound business planning and monitoring ensure such rapid changes have an advantage for the company.

Microsoft’s global development section has put a great deal of effort into creating software to be used in every country around the world, thus creating an external factor within the planning function. They have standardized operating systems so the whole world is on the same page. Many reasons exist for Microsoft to develop their products globally, including: increased revenue and profit potential, lower support costs, increased customer satisfaction, and moving ahead of the competition (Microsoft Corporation, 2008). Developing software that is world-ready is a way to deliver products quickly and at a lower cost for international markets. Software must have the capability to support all languages in order to be effective in the global market, especially in regard to the input of data using a keyboard. Some of the difficult languages with characters instead of letters (i.e. Japanese) pose a challenge to even the best programmers.

Technology can be viewed as an internal and external factor within the planning function at Microsoft. Internally, management at Microsoft consistently ensures it will “align business and technology goals” (Microsoft, 2008). In order to continue to be prosperous, Microsoft must plan functions efficiently among departments to develop cohesively and market a product. This form of planning ensures the company operates as a whole entity.

An external factor that impacts the planning phase of management within technology is competition. With the rapid changes in technology as well as the abundant resources, companies such as Apple are beginning to serve as an adequate competitor of Microsoft. Microsoft’s management is constantly seeking the next big trend within the technology environment. A journalist at BusinessWeek (Green, 2008) published a statement by Microsoft’s CEO Steve Braham: “"We're very persistent," said Ballmer at a wireless conference last year, "If we don't get it right, we'll keep coming and coming and coming." Planning management at Microsoft is constantly in action to remain competitive, therefore, planning is in continual motion revolving around the latest trend.

Consumer demands along with competition have caused Microsoft’s financial gains to stall. The shortcoming is forcing Microsoft management to plan for a way to make up for the loss in profit (Schenker, 2007, p.1). Electronic business is an external trend that has developed rapidly changing the way in which businesses market their products. These changes have influenced Microsoft’s management to make plans to pursue the advanced abilities the Internet has created. Microsoft’s current goal is to achieve acknowledgement in the business arena of advertisement via the online market. “Microsoft (MSFT) aims to stitch together its software, ad serving, and media properties to become a formidable online power with many of the marketing pieces that advertisers look for as they embark on Internet ad campaigns” (Schenker, 2007, p.1). Microsoft is currently aligning a strategic and management plan which will appeal to its customers by using their reputable name and powerhouse infrastructure.

Innovation continues to affect different planning functions of Microsoft. Innovation is defined as the “introduction of new things or methods” (Dictionary, 2008). Therefore,

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