Analysis of Strategic Factors for Microsoft Corporation Research Paper

Analysis of Strategic Factors for Microsoft Corporation - Research Paper Example Political/legal forces: Microsoft Corporation runs the risk that its business may be affected by changes in the political landscape of the U.K. However, the political climate of the UK is quite business friendly and this is really not a problem. Moreover, new legislation on tax may come into force. This may have a direct impact on Microsoft Corporation. Value added tax recently witnessed a decline. This is good news for Microsoft Corporation as it means that more customers can now shop for Software given that they will be paying less tax on consumption. Moreover, there has been a renewed increase in environmental protection. This may lead to new environmental legislation that may have a direct or indirect material adverse impact on the operations of Microsoft Corporation. Economic Forces: The main economic forces that may affect Microsoft Corporation include fluctuations in interest rates, which has been the case in the UK recently. Interest rates have fallen significantly recently inducing consumers to spend more. Higher inflation means that the cost of inputs will be rising. Exchange rate fluctuations indicate that cash flows denominated in foreign currency are unstable. Prices of inputs sourced from abroad will be unstable as well. The Great British Pound has depreciated significantly against major currencies such as the euro and the dollar. On the one hand, this is good news for Microsoft Corporation given that tourists from abroad can spend more on Software in the UK. On the contrary, it is bad news to Microsoft Corporation in that the prices of foreign inputs in terms of Great British Pounds will be higher. Fluctuations in GDP have an impact on consumer spending. Increasing GDP indicates that consumers can spend more while decreasing GDP indicat es that aggregate demand will drop which will reduce consumption of Software. The global recession has also affected a number of industries and Microsoft Corporation may have witnessed a decline in the demand for its products as well as a decline in funding for its projects.