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Microsoft Corporation 15700 NE 39th St Redmond WA 98052 USA Mr Gates Microsoft Corporation 15700 NE 39th St Redmond WA 98052 USA Dear Mr Ballmer Attached is the report you request on 14 May analyzing the viability of the business opportunity We have done a lot of research on making our marketing plan The report provided details on the processes that we analyzing the viability of the business opportunity and the recommendations how we can improve our products Our report proved that the China market is suitable for Microsoft to enter into And Microsoft needs to take advantage of the good environment around it Microsoft Cooperation has more advanced technologies than the other competitors so that there are seldom competitors can defeat Microsoft However as a big firm Microsoft needs to undertake more sociality responsibility to feedback the society We have analysed the variability through 7 aspects to decide if Microsoft has the advantages to compete with other firms We have made out a lot of advices in the report for Microsoft to adapt to the situation We discuss these points in detail in the report Preparing the report has been valuable and challenging If you have any question you can discuss the question with me and I will give a satisfying answer Yours sincerely Zhou Xiangnan A REPORT ON ASSESSING THE VIABILITY OF THE BUSINESS OPPORTUNITY OF MICROSOFT 2012 Prepared for Mr Ballmer Submitted 14 May 2012 Prepared by Zhou Xiangnan Summary This report was commissioned by Mr Ballmer to assess if the China s environment is suitable for Microsoft Cooperation s new product to enter into the market of China The purpose of this report is to help the management in estimating the viability of the business opportunity when Microsoft Corporation intends to sell the Windows 8 operating system in the new market of China This report provides an assessment of the varieties of environment of China and it also refers to some findings and potential implications Microsoft Cooperation needs to note After assess the seven varieties of the environment the report finds that China is suitable for Microsoft Cooperation to enter into to promote Windows 8 The report finds that the economics of China is developing quickly and it provides many opportunities for Windows 8 while the rapidly developing of the economics of will also challenge the position of Windows 8 The political legal and regulatory environment is not very good for Windows 8 to promote since China has put forward Antitrust Law What s more Microsoft Cooperation has the suspicion of monopolizing the computer system and many other countries have sued Microsoft cooperation for monopolizing this industry which can be provided for China government to sue the Microsoft Cooperation The social and cultural environments have little effects on the sales of Windows 8 because many people will use the computers The climate and religions do not obstruct the use of computers Technological environment will affect the products of Microsoft cooperation greatly As an IT company the development of the technologies can enhance the abilities of creativity In the Contemporary environmental considerations aspect Microsoft Cooperation also affects the environment around greatly So change the traditional way to produce products it necessary for Microsoft Cooperation Competitive environment shows that Apple and Google are the biggest competitors for the Microsoft Cooperation The three products all have their own features Internal evaluation shows that the products of Microsoft Cooperation are more superior to the other two companies products The environment analysis method is applied to use to analyse the many kinds of viabilities of the business opportunity in seven aspects And the PEST method is also applied to analyse the micro environment around the firm Porter s five forces model is used in the report to analyse the intensity of the market and if Microsoft can survive in the competition Recommendations have been made that if implemented should minimise the problems Microsoft needs to take advantage of the good environment around it Microsoft Cooperation has more advanced technologies than the other competitors so that there are seldom competitors can defeat Microsoft In addition as a big firm Microsoft needs to undertake more sociality responsibility to feedback the society Thank you for providing us the opportunities to work with you on this program We will be glad to discuss any questions if you have TABLE OF CONTENTS page Summary 4 1 0Introduction 8 1 1 Authorisation and Aim of the Report 8 1 2 limitations 8 1 3 Scope 8 2 0 Background 9 2 1 Background of Microsoft Corporation 9 2 2Background of the Windows 8 Operating System 9 2 3Why Choose China 10 3 0 Environment Analysis 11 3 1 Economic Environment Analysis 11 3 1 1Stage of Market Development 11 3 1 2 Macroeconomic Conditions 11 3 1 3Market Size Analysis 11 3 1 4 Findings and Potential Implications 12 3 2 Political Legal and Regulatory Environments Analysis 13 3 2 1 Political Environment 13 3 2 2 Legal environment 14 3 2 3Findings and Potential Implications 15 3 3The Social and Cultural Environments Analysis 16 3 3 1 The Social and Cultural Environments Analysis 16 3 3 2 Findings and Potential implications 17 3 4 Technological Environment Analysis 17 3 4 1 Technological Environment Analysis 17 3 4 2Findings and Potential implications 18 3 5Contemporary Environmental Considerations Analysis 19 3 5 1Contemporary Environmental Considerations Analysis 19 3 5 2Findings and Potential implications 20 3 6 Competitive environment analysis 20 3 6 1 Introduction of Competitive environment 21 3 6 2Industry analysis 21 3 6 3Analyzing competitors 22 3 7 Internal evaluation 23 3 7 1Resource based View of the Firm 23 3 7 2 Competitive strength assessment 23 4 0 Conclusion 25 List of references 27 Appendics Appendix 1 Per capita of GNI in China in 2010 28 Appendix 2 Three major industries in China in 2010 28 Appendix 3 Growth rate of GDP of China in 2010 28 Appendix 4 Balance of payments of China in 2010 29 Appendix 5 CPI of China 30 Appendix 6 Market share of Windows in China in2012 30 1 0INTRODUCTION 1 1 Authorisation and Aim of the Report Mr Ballmer requested this report on May 14 2012 The aim of this report is to help the management in evaluating the viabilities of the business opportunity before Microsoft Corporation intends to sell the Windows 8 operating system in the new market of China It will also provide some strategies and recommendations to minimize the problems of our products 1 2 limitations The environments of the market are fickle so when you receive the report the report may be not the same as I claim And my writing English may be not very good So if you have any question I am glad to discuss the question with you 1 3 Scope The report will assess the viability of the business opportunity of the Windows 8 operation system when Microsoft puts its products in the China market I will use the environment analysis method to assess the viability of the business opportunity in seven aspects And I will also make some strategies which will improve our situation and reputation At last the report also gives some recommendations to improve the situations that the Windows 8 operation system enters into China market I collect the information from many ways while the most of information is collects from the internet 2 0 BACKGROUND 2 1 Background of Microsoft Corporation Microsoft Corporation is the forerunner of the development of the personal computer softwares and the company was founded by Bill Gates and Paul Allen in 1975 At present Microsoft Corporation is the biggest computer software supplier in the word There are at least 64 000 employers are working for the Microsoft Corporation directly and the volume of business reached 60 4 billion dollars in 2009 The main products and services are Windows operating systems Internet Explorer and Microsoft Office In 1999 Microsoft began to offer the MSN network instant messaging client program and began to offer Xbox to participate the game terminal Competition in 2001 Nowadays Microsoft has 7 core businesses Windows operating systems Windows server system Microsoft office tool development Microsoft Business Solutions games and Xbox and Windows Mobile 2 2Background of the Windows 8 Operating System The Windows 8 operation system is a totally new product which is improved on the basis of Windows 7 operation system The system aims to make the operation of the daily computer simpler and shortcut and it can also provide an efficient and convenient working environment The Windows 8 operation system will support the chip framework from Intel AMD and ARM which means that the Windows 8 operation system start to stride forward more platforms including personal computer and tablet personal computer The Windows 8 operation system has many new features Windows 8 enterprise edition can runs in the USB flash disk which is much of importance for the information technology people to change the working environment at any time Hibernation function is a new function which can add the launch speed of the system 2 3Why Choose China I choose China as the target country due to China is a big country and it has a unique market And Microsoft Corporation has produced a Windows 8 China edition for China because of the China s unique market It is suitable for me to write the report 3 0 ENVIRONMENT ANALYSIS 3 1 Economic Environment Analysis 3 1 1Stage of Market Development Figure 1 shows that in 2010 the GNI per capital had reached 4260 so China belongs to upper middle income countries since the GNI per capital of China between 3946 and 12195 Figure 2shows that the percentage of primary industry is 10 18 the percentage of second industry is 46 84 and the percentage of third industry is 42 97 3 1 2 Macroeconomic Conditions The Macroeconomic presents a good condition that the economics is slowly firm up Internal demand firms up obvious since the investment and consuming become the main powers to make the economics increase The investment is growing rapidly and the production of industry is speeding In addition the range of decreasing of the price of commodities is slowing down The Figure 4 shows that the balance of payments presents the trade is increasing greatly Recent years the balance of payments of China always keeping current accounts and the capital and finance both surplus and the scale is keeping expanding Nowadays the exchange rate between U S dollars and RMB is decreasing with small fluctuation 3 1 3Market Size Analysis The Figure 3 shows that the GNP of China in is 40 33 Trillion RMB and GDP is 6 04 Trillion dollars in 2010 And from the income aspect in 2010 the per capita income of China is 1100 dollars The family income per capita of urban residents reached 21033 RMB while the family income per capita of rural residents reached 5919 RMB The disposable personal income of resident is 10046 RMB From the consumption aspect the consumer spending of residents was 13 33 Trillion RMB while because of rising of price of food lead to the Engel s coefficient ranched 39 76 in 2010 From the population aspect China has a population of 1 3 billion and the natural growth rate is 4 79 The 15 64 years people old occupy a percentage of 74 5 0 14 years old people occupy a percentage of 16 6 and the people whose age above 65 year occupy 8 9 Most people are living in the east of China so that the population density is big in the east of China Respectively speaking the urbanization level is much higher in the east of China and in these areas the infrastructure is relatively perfect In the communication aspect the amount of broadband Internet access had reached about 0 19 billion the speed of the increasing of broadband Internet access is rapid World Bank 3 1 4 Findings and Potential Implications The lasting surplus will cause the U S dollar devalue compared to RMB And we can export the Windows 8 system more easily to China From the negative side China is always surplus will make more international frictions so that it will affect the market of Windows 8 The consumption structure of residents is more and more reasonable and the Engel s coefficient is getting smaller which presents that the residents are spending less money on food they begin to enjoy the life So the people will buy more computers or some other Electronic Products with the windows 8 system The disposable personal income of resident is increasing year after year which means that the residents have more and more money for them to buy things such as personal computers or some other electronic products with Windows 8 This phenomenon will lead to more residents become the potential consumers of Windows 8 And the middle part of the population structure of China is very large so many of them will use or buy the computer which will provide us a good opportunity for us to enter into China In China the east area is the most well developed area and has the maximum density of people so these areas are the most suitable places for us to develop since these areas have a big population and be equipped with many broadband Internet accesses These all conditions provide us a good economic environment for selling our products 3 2 Political Legal and Regulatory Environments Analysis 3 2 1 Political Environment The political ideology of China is socialism and China is carrying out market economy system The optical system includes system of people s congress system of regional ethnic autonomy System of Community Level Self Governance and Chinese Party single party system The macro risk of China is that RMB is appreciating so that import is favorable and the export is adverse According to the Jinghua newspaper the duty of the laptop reduced 80 after April 14 Nowadays the biggest conflict of China is the territorial dispute of Yanhuan Island between China and Philippines There will be a new election in China in 2012 while the party in power is always Chinese Communist so the basic policies will not change With the unceasing provocation of Philippines China may change the diplomatic strategy to fight back China government decided to put 4 trillion RMB to build infrastructures and add bank credit before 2010 According to the ultramodern trade law the laptop of the duty is 10 and it is lower than the last year drastically Sometimes our home country will restrict China in some industries since these industries may impact greatly in American industries China joined into some international agreements such as WTO and APEC which can promote the communication and development of economy 3 2 2 Legal environment China also needs to obey the international laws such as IMF WTO UNCITRAL and ISO America is paying attention to the intellectual property while China pays a little attention to protect the intellectual property And the two different have two different patent laws Since August 1 in 2008 China put forward the antitrust law to prevent the monopoly phenomenon 3 2 3Findings and Potential Implications The market economy system will make the operating system market more freedom while there are more competitions for our products With the appreciation of RMB it is adverse for our company to export our products to China while the cost will be reduced With the reduction of the duty of the laptop we can export more laptops to China while at the meantime the competition of the laptop will be more drastic When China changes the diplomatic strategy of Philippines we will be affected by the changes such as the war will limit the export of China The Incentives and government programs will boost the market and build up the confidences of consumers so that there will be more potential consumers buy our products When the duty of laptop reduces the costs of the laptop also reduce so that the price will also reduce which can stimulate the consumers to buy our products Though America does not restrict China on the electronics industry directly it will affect our company indirectly China and America join into the WTO and APEC can serve our company well our company can take advantage of the cooperative agreements to enter into China Our company needs to obey the international laws host country laws and home country laws since these laws provide a way for us to obey or we will be punished The American laws are in our favor while the Chinese laws are bad for protecting our high end products The protection and the hit power of Chinese government are not enough so when we enter into China to promote our products we will suffer from some loss Our country had been litigated by many countries so which provide a way for China to litigate us so we need to prepare for this situation 3 3The Social and Cultural Environments Analysis 3 3 1 The Social and Cultural Environments Analysis The first language of the Chinese is Chinese and many of the students are learning English China is a country with many religions while the main religions are Taoism and Buddhism Some religion behaviors will affect the people s consumption patterns greatly especially in the rural area in China Nowadays Chinese people value is pragmatism and most of them have group psychology There are many manners and customs exist in the business negotiations such as the two people need to have the same position if they are going to proceed negotiate The attitude of aesthetics of Chinese is that they pay attention to the brand name and media messages of a product rather than color packaging since Chinese emphasize reality China carries out nine year compulsory education and college education which can foster large quantities of talents From the social institutions aspect in fact China is ruled by only one big political party Chinese communist and there are many small social organizations in the society According to the Hofstede s cultural typology the power distant is 80 and Chinese believe in personal policy making and personal

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