Microsoft’s Evolution in Digital Era: A Financial Analysis and Porter’s Model

Yiqi Liu

doi:10.54097/7q5nes25

Authors

Yiqi Liu

DOI:

https://doi.org/10.54097/7q5nes25

Keywords:

Common size analysis, Azure, Porter’s five forces, liquidity ratio, return on equity.

Abstract

The world in 2023 is unlike the one in 2019. As the supply chain is expended due to the highest inflation since 1984, and the Russo-Ukrainian conflict is prolonged, the software market is seeing increased rivalry and concerns about the impact of digital transformation. The purpose of this case study is to evaluate the recent performance, identify potential risks, and discuss strategic adjustments that Microsoft may take. By examining key financial metrics from 2019 to 2023, and using common-size analysis, this study analysed the profitability, liquidity, and overall health of Microsoft’s financial structure. Through Porter’s five force model, this study helps understand the company’s competitive force and growth potential. Moreover, this study summarizes and highlights concerns and vulnerabilities within Microsoft. This is essential for developing long-term strategies for both investors and managers. It was discovered that Microsoft has shown weaker performance since 2019, yet it has managed to maintain its dominant position in the software industry by emphasizing cloud-based solutions and artificial intelligence.

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