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Microsoft Business and Marketing Strategies

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  1. Corporate Governance

A. Board of Directors

Microsoft Corporation has a weighted size board of directors of ten members including CEO Satya Nadella and Founder and technology advisor Bill Gates. The remaining eight members of the board are Chairman John W. Thompson (CEO of Virtual Instruments), Maria M. Klawe (President of Harvey Mudd College), Teri L. List-Stoll (Former Executive VP and CFO of Kraft Foods Group, Inc.), G. Mason Morfit (President of ValueAct Capital), Charles H. Noski (Former Vice Chairman of Bank of America Corporation), Dr Helmut Panke (Former Chairman of the Board of Management of BMW AG), Charles W. Scharf (CEO of Visa Inc.), and John W. Stanton (Chairman of Trilogy Equity Partners). This board, who is elected by the shareholders, has the primary goal of ensuring that shareholder long-term interests are served, as well as promoting Microsoft’s business and organisational objectives. Among many of the duties of the board, they oversee the company’s business affairs and integrity, work with management to determine the company’s mission and long-term strategy, perform the annual CEO evaluation, CEO succession planning, internal control over financial statements, and risk management and risk reduction approaches (Microsoft.com)

This board is broken up into four different committees, each of which is composed of independent directors. The Audit Committee is composed of Chairperson Mr. Noski, with members Ms. List-Stoll, Mr. Morfit, and Dr. Panke. The Compensation Committee includes Chairperson Mr. Stanton, and members Dr. Klawe, Mr. Morfit, and Dr. Panke. The Governance and Nominating Committee is made up of Chairperson Mr Thompson and members Ms. List-Stoll, Mr. Noski, and Mr Scharf. Finally, the Regulatory and Public Policy Committee consists of Chairperson Dr. Panke, members of Dr. Klawe, Mr. Stanton, and Mr. Thompson. Mr. Gates and Mr. Nadella remain non-independent. The committees are used to assist in discharging the oversight responsibilities. They are also not permanent; committees may be added or removed as needed to fulfill obligations.

Microsoft Business and Marketing Strategies

Microsoft’s board consists of people with strong backgrounds in other technology-related companies, or who come from high leadership positions. For example, Chairman John W. Thompson, an active investor in early-stage technology companies in Silicon Valley, has held some leadership roles at IBM, has served on many government boards, and has been the chairman and CEO of Symantec Corp., and is the current CEO of Virtual Instruments. Old CEO and Board member Steve Ballmer is an example of how much the board and the company’s leaders care about the company. Ballmer is still the largest individual shareholder in the company even though he doesn’t hold a leadership position and has no voice on the board. The shareholders are one of the board’s biggest concerns, though.

B. Top Management

The Chief Executive Officer of the company is Satya Nadella. He just recently became the CEO in February 2014 for a package worth $84 million (Business Insider). He has held leadership positions in both enterprise and consumer businesses across the company before being elected for this position. The job he was in before the CEO was Executive Vice President of Microsoft’s Cloud and Enterprise group. He joined Microsoft Corporation in 1992 after moving to the United States from India to pursue an M.S. Degree in Computer Science.

Along with Satya Nadella, there are fifteen other members that makeup Microsoft’s senior leaders. Some of these members include Amy Hood, (Chief Financial Officer), Chris Capossela (Chief Marketing Officer), B. Kevin Turner (Chief Operating Officer), and Mark Penn (Chief Insight Officer). Among them are the executive vice presidents for the different departments such as Human Resources, Cloud and Enterprise Group, Corporate Strategy and Planning, Applications and services, Business Development, Operating insights, Business Solutions, Technology and Research, and more. This group of individuals works hard for the company and has proved to earn their leadership roles. For instance, Scott Guthrie, the current executive vice president of the cloud and enterprise group, has helped lead Microsoft Azure, made critical contributions to the cloud server and development technologies, and was one of the founders of the .NET project (Microsoft.com)

Satya Nadella gained the position of CEO after the resignation of Steve Ballmer. Since Microsoft founding in 1975, there have only been three CEOs. Since Nadella’s appointment to CEO in this last year, there have been seen various changes in the company. According to Business Insider, some of the changes he has made include building excitement for Windows, building excitement for Windows 10 among developers, making it easier to bring Android and iOS apps to windows, rolling out new products such as Delve Microsoft Sway and Power BI, turning bitter rivals into partners, and has overseen Microsoft’s biggest layoff ever. Some changes have been positive, and some have been negative, but overall he is dedicating himself to the company. Having previously been the Cloud and Enterprise group executive VP, it has helped the company to advance within the Cloud Services industry continually. With cloud computing being one of Microsoft’s biggest areas for potential growth, Nadella’s experience could place him at a point to succeed.

Cohesive SWOT Analysis

II. External Environment: Opportunities and Threats (SWOT)

Natural Environment

Microsoft has recognised a growing global concern of climate change awareness, which carries the direct potential to affect its daily operational planning. As stated on its website, environmental sustainability is essential to the company’s core business practices, affecting its day-to-day operations, inspiring it to develop more efficient IT solutions, and motivating it to provide the tools to employees that will enable overall responsible environmental planning (Our Footprint). With intentions of maintaining operational superiority in the IT field, Microsoft has developed some initiatives to streamline business processes, as well as distinguish themselves as forerunners incorporate environmental responsibility.

Commitments to carbon neutrality have been part of a long-running company effort to place a price on carbon and make the company’s business divisions responsible for the cost of offsetting the carbon emissions associated with their electricity use and air travel (Powering the Future). The company has set a goal for improved efficiencies in the majority of its divisional practices by the implementation of this initiative. Their plan is focused on three strategic pillars: being lean through efficiency targets used to monitor and reduce the energy used in data centres, operations, labs, and offices; being green through the establishment of goals to reduce waste and water usage, and being accountable through quantification of their carbon impact. Beginning in 2013, the company’s business groups began to budget their carbon usage and paid a fee for each metric ton of their carbon emissions. These funds have then been carried over to fund different initiatives, such as the Keechi Wind Project, a long-term power purchase agreement for wind energy, which has allowed the company to transform its energy supply chain toward radically greater efficiency (Our Footprint).

Power wasting has also been a critical focus of Microsoft’s effort within the past several years. The company has recently embraced a new application technology known as Microsoft Hohm, to enable consumers to understand their energy usage better and get recommendations to save energy and money (Powering the Future). Using advanced analytics from the Department of Energy, Microsoft tailors specific household circumstances, to show their consumers where the majority of household energy is being used. By utilising this technology to gain a better understanding of the company’s own excessive energy use, Microsoft can implement divisional restrictions with the potential to save thousands of dollars in wasted energy.

Societal Environment

Economic

The IT industry has a significant impact on the overall economic wellbeing of the modern world. Microsoft alone plays one of the most significant roles. From just a national standpoint, the extent of the company is staggering. In 2011, it was reported that the company was directly responsible for employing 51,952 employees and supported up to 495,223 jobs in the United States (Eicher, T.). This occurred when the country was losing close to 5.5 million jobs in other industrial sectors. It has been reported that every job employed at Microsoft is responsible for adding 8.5 jobs elsewhere in the economy. As for a direct financial impact, Microsoft generated a total of $101.4 billion in total US industry output and added $60.2 billion to the US GDP in 2011 (Eicher, T.).

Technological

Microsoft finds itself at an uncertain point in predicting the outcome of its future of marketing operating systems. What has been considered the biggest producer of software in the world now faces a shifting economic reality that may prove otherwise if not addressed with the utmost concern? While Microsoft stills owns a massive 78.77% share within the computer OS market as of the end of 2014, it has become clear that traditional PC sales were well into a massive decline (Statista, 2015). In 2013 alone, Desktop/Laptop Computer sales have experienced a rise in decrease, going from 5% to 6.5% decline by the 4th quarter (Hartung, A.). The growing popularity of mobile devices has been a significant challenge to Microsoft’s market share of the personal computing industry. This trend poses a severe concern for Microsoft’s wellbeing. As it currently stands, more than 75% of Microsoft’s profits are made from Windows and Office alone, meaning a reality of significant losses if the company cannot manage to stabilise its shifting market share.

While mobile devices have reduced Microsoft’s growth in personal computing, the company has taken a successful financial bet by investing heavily in its Azure cloud computing platform. In 2013, Microsoft reported phenomenal growth in its cloud computing sector, saying a unit advancement of 103% in the third quarter (Lundquist, E.). This accomplishment ultimately resulted in revenue of over $6.3 billion, which is indicative of a bright economic future for the company in this sector (Rosoff, 2015).

Political-Legal

Microsoft has played a highly bipartisan approach in its association with the political spectrum. The company has made massive contributions to political parties on both sides of the political aisle to secure the best position possible for future legislation, which can potentially affect the company. In 2012, it was reported that the Microsoft political action committee spent a combined $2.5 million on federal campaigns, with contributions divided at $1.76 million to Democrats and $782,000 to Republicans (Parkhurst, E.). In the aftermath of the company’s antitrust case in the 1990s, the company has formed a strong opinion that the political process is profoundly affected by corporations, which has positioned it in a unique position to use the knowledge to improve market interest. By looking at the influence of politics an official has on a committee or position. How that relates to Microsoft’s policy agenda, MSPAC determines how best to distribute its lobbyist funding (Parkhurst, E.).

Socio-Culture

Microsoft has committed itself to apply superior technology, talent, and resources for the advancement of community needs around the world. This has been done to secure a better world for the company’s stakeholders at large. The company’s Citizenship and Public Affairs team develops and coordinates global strategies that are implemented through local citizenship teams and nonprofit partners to meet unique local needs and conditions (Citizenship Report.). Several significant initiatives have been enacted to carry out this planning.

Microsoft YouthSpark is a global company-wide initiative to leverage technology ‘s power to connect youth around the world with education , employment, and entrepreneurship opportunities (Citizenship Report.). The program was launched in 2012 and has targeted a specific goal of producing technological opportunities for 300 million young people by 2015. This goal will be achieved through several methods. First, Microsoft has provided Office 365 as free tools for every student and teacher around the world. Second, Microsoft has provided Skype in the classroom as a tool for connecting teachers and students worldwide. Third, Microsoft has launched its TEALS initiative to send its employees to schools around the world to teach programming skills. Fourth, the company has provided students with free access for a significant portion of its designer and development tools in an initiative known as DreamSpark. Finally, the company has utilised its BizSpark startup program to provide young entrepreneurs with the necessary tools and networking foundations for opportunities in starting their businesses.

      The company has also developed a “technology for good” initiative, in which it has invested heavily in securing the technological resources necessary for nonprofit organisation success. In 2014, the company donated approximately $948.6 million worth of software and hardware to more than 86,000 nonprofit organisations (Citizenship Report.).

Task Environment

Industry Rivalry

The software industry has been affected by the considerable rivalry. A vast concentration of competitors within the sector exists between a small number of large multinational vendors and smaller firms that compete at the local level. There is no clear definition for the edges of this industry, however, allowing several of the larger companies to not only produce and consult on hardware and software, but also manufacture operating systems, general computer software, and development platforms (Chauhan, C.). Product differentiation has become a point of concern for competing firms as well, as clients of different enterprise sizes result in high variability of the software and consultation required to meet their desires.

The Threat of New Entrants

For several reasons, the software industry has little to fear from the possibility of new entrants in the mass-marketed software industry. Capital requirements serve as a significant barrier to entry for would-be competitors. The cost to design and develop enterprise software is exceptionally high due to a considerable amount of time it takes to do so successfully and the limited availability of people who possess the required proprietary knowledge (Chauhan, C.). High product differentiation within the industry, consolidated mainly within company brand names, invokes a high sense of consumer loyalty when associated with technological companies that retain a more substantial history. Technological compatibilities also serve as a detriment to would-be competitors, requiring new companies to design their platforms in ways that work alongside more giant corporations’ software. It is effortless for larger, more grounded firms to create compatibility issues for smaller company software by altering their platforms or halting software and hardware (Chauhan, C.).

Threat of Substitutes

As far as enterprise software is concerned, the industry has little to fear from the possibility of substitute products or services. In the past, paper archives served as the primary way companies persevered their database or system output. The IT field has changed this practice entirely, however, with the advent of enterprise software. A business could continue with building multiple disparate systems, but they would never be able to archive information at the level an ERP suite can provide (Chauhan, C.). It is safe to consider alternatives to these types of software platforms as almost nonexistent, providing opportunities for the companies involved in their development and sales. Also, in this industry, it is difficult to find products of similar performance at a much lower price since competitors in this industry compete more on adding value with their products rather than focusing on the number of their products.

Bargaining Power of Suppliers

The majority of profitability in the prepackaged software industry is generated from intangible CRM and ERP products, rather than physical hardware platforms. While companies have ventured into the hardware field with the production and sales of mobile devices like tablets and phones, the majority of its revenue generation is consolidated in software development. Because of this, major industry players have few suppliers they must negotiate with (Chauhan, C.). Their primary focus remains on intellectual and intangible products, which has kept suppliers’ bargaining power to a minimum. Also, suppliers’ bargaining power is low due to a high number of suppliers in this industry.

Bargaining Power of Buyers

In the software industry, the bargaining power of buyers has been kept to a minimum. Although the concentration of buyers is proliferating, they are, for the most part, a very diverse and non-unified group due to many different backgrounds and needs (Chauhan, C.). Besides, there are only two significant players within the OS market: Microsoft & Apple. No one consumer base retains the ability to demand a majority emphasis on their desires in the software industry. This is due to the limited number of options to choose from, allowing them to allocate resources toward many different market focuses. As far as companies are concerned, the need for advanced ERP suites has become an industry necessity, forcing enterprises to pay the going rate for software. This advantage for software developers has also produced a high switching cost for companies that utilise their packages, due to the high cost of the related infrastructure for these types of systems.

Relative Power of Other Stakeholders

The impact of stakeholders on the IT industry has varied meanings for every respective company. Most productions reflect on their stakeholders as the customers, employees, suppliers, shareholders, government organisations, and non-government organisations that support the majority of their business practices. Microsoft distinguishes itself from other software competitors by considering its stakeholders to be “responsible partners.” Engagements with their partners are not only crucial in allowing Microsoft to become a good corporate citizen but are the fundamental backbone of the company’s overall success. With this in mind, Microsoft strives to support its partners through the development of principled, pragmatic business approaches to dealing with human rights issues, responsible sourcing, environmental sustainability, integrity and governance, and political engagement (Corporate Citizenship.).

EFAS Table

External Factors Weight Rating Weighted Score Comments
Opportunities
Carbon Neutrality 0.05 5 0.25 Huge company emphasis placed on reducing their carbon footprint.
Success in Cloud Computing 0.2 4.5 0.9 Major industry shift trend. Company has had high success in transitioning.
Bipartisan Political Support 0.05 3 0.15 Supporting both ends of the political spectrum has resulted in favorable company policy.
YouthSpark 0.05 3 0.15 Successful publicity for Microsoft and a growing population of youth that favorably associate themselves with the company
Low Supplier Bargaining Power 0.1 3 0.3 Allowed the company to maintain significant resources for application in other industries.
Threats
Diminishing PC Sales 0.1 2 0.2 Major market of Microsoft’s interest. Has done a poor job in designing new devices to compete with rivals.
Mobile Device Competitors 0.15 1 0.15 Completely missed opportunity for Microsoft to take advantage of. Extremely poor response from company.
Intensive OS Competition 0.1 3 0.3 Major market of Microsoft’s interest. Moderate success in addressing through OS updates.
Office Profits 0.1 3 0.3 Biggest portion of Microsoft’s revenue growth. Company has maintained successful brand image.
Reduced Market Share 0.1 2 0.2 Steadily progressing trend. Company has responded strongly in some situations, but continues to fall short in mobile devices.
Total Score 1 2.9

 

III. Internal Environment: Strengths and Weaknesses (SWOT)

A: Corporate Structure

With the massive size of Microsoft, the only way they can operate with their full productivity is by decentralising to many different divisions to focus on their products and tasks. There is the board of directors at the top that makes and gives the overall strategy and direction of the company. Still, it is the individual divisions and product groups that focus on their specific line of goods and services. Microsoft has two main segments; the first is the Devices and Consumer, which helps develop, manufacture, market, and support products and services designed to entertain and connect people to increase their productivity, simplify tasks, make more informed decisions online and help advertisers connect with audiences. These include gaming and computing systems, phone hardware software, and windows licensing. The second segment is the commercial side, which is to develop, market, and support software and services to help individual teams with organisational productivity and efficiency while simplifying everyday tasks. These include commercial licenses with their various Microsoft programs. As there are many different types of functions for each segment and divisions within each, they are all based on their service. There are operations, research, development, distribution, sales, and marketing within each division segment.

The structure of Microsoft is clearly understood by everybody within the corporation, as this is the only way they can have a significant market share within various industries from Operating Systems, gaming systems, smartphones, tablets, and Cloud-Based Computing. With their current structure, it goes along consistently with its corporate objectives and policies. They have their divisions to have teams focus on that product or service. Just as they want to help everybody to reach their full potential, they must first contact their highest level of potential as a company. Just as their internal structure is placed, their international operations are the same.

Just as most large technology companies are run, Microsoft’s corporate structure is run and designed similarly to its competitors. Other competitors, such as Apple, aren’t as vast and expansive as Microsoft as they have fewer divisions and segments to split up.

B. Corporate Culture

  1. Is there a distinct or emerging culture composed of shared beliefs, expectations, and values?

Within a company, there are three ways of operating, “the right way, the wrong way, and the company way.” The company way is the most important and represents the corporate culture the company is trying to implement. They are the beliefs, expectations, and values that each employee strives to pass to another. Microsoft has five simple steps that shape their corporate culture.

The first step is to understand. They feel that an influential culture are more than just paid lunches or designated parking spaces, but instead merely as in communication. They place importance on the basics of figuring out what employees and staff want from each other. Therefore the culture can grow from the employees themselves. The second step is to take action, where after you understand your employees, you can now take their interest and concerns with respect and heart. By knowing what affects them more makes it easier what to prioritise on the wish list, which can when brainstorming what to implement. The third step involves making sure all employees are contributing to the business’s success and encouraging them to take a personal stake within the company. The fourth step is to collaborate. As Microsoft focuses on individual potential, they view this step as necessary as they want to give employees their room to follow their ideas. They must still be guided in the right direction, but it’s up to them to how they get to plan. This helps them enjoy themselves and the way they come with it. The last step is Demanding accountability, making sure every employee is accountable toward the culture and embracing it, or else it will be ignored and pointless. As you can see from the five steps, Microsoft’s culture is based very importantly on the employees and is very natural.

With Microsoft’s corporate culture, they must make sure it is very dependent upon the employees and not forced because of how diverse they are and the many different types of markets they try to target. By keeping it very diverse, they can have many kinds of ideas, thoughts, and developments within the company. Another aspect of Microsoft’s corporate culture is environmental sustainability. One of their newer main goals is to “reduce the amount of time and energy it takes to get things done.” This has to lead them to increase innovations to cloud computing, to rid of plastics from CD’s, Floppies, Cases, paper from covers as almost all programs are downloadable online. If packing and articles are being used, almost everything is reusable and recyclable. They are now trying to use natural resources by using recycled materials and suppliers.

Microsoft’s corporate culture with regards to critical issues facing the corporation, such as productivity, quality of performance, and adaptability to changes, has relatively been the same for many years. To always adapt to the newest trends. As they are in the technology industry, things are ever advancing, and competition is very rough. Therefore they are still trying to modernise and increase efficiency.

C. Corporate Resources

1. Marketing

Microsoft has used the product development strategies in many of their new products. The first example of developing a new product for a new market. With Microsoft, they recently started selling a new hybrid computer/tablet known as the “Surface,” which is a tablet-sized computer that is powerful and capable enough to replace your big bulky laptop/computer. Microsoft also implements a “push” strategy as they try to push more products and software through discounts and special offers, such as student discounts for their Microsoft office software and laptops on their online store.

Microsoft promotions and discounts are clearly stated and are designed to convince people to buy their products. They are specially advertised around school campuses knowing students need computers and the correct software to work and be productive. With their Surface Tablet, it is clear they are attempting to break into a new market, or submarket, as they advertise that it can replace your current desktop or laptop while maintaining the portability of a tablet by showing you that it can replace your existing desktop or laptop can run full desktop programs. At the same time, people put them in their bags and purses.

With Microsoft’s marketing strategy, they stay aligned with their corporate mission statement and objective. Just as Microsoft is always trying to increase people’s productivity and potential, they know they can help achieve this target, especially by marketing towards students. As students are at their prime and continuously learning, they need to have the newest and reliable technology to achieve their potential as one of Microsoft’s main objectives is to emphasise schools, which also goes well with their marketing strategy.

Microsoft performs just as well internationally compared to domestic. Microsoft has seen growth every year globally since 2009, with it growing to 86.83 billion in revenues in 2014. Their local market and international market strategies are relatively the same as Microsoft has shifted its focus on commercial cloud revenue. As Cloud computing is becoming increasingly popular for their use and innovation, many businesses worldwide are paying to implement it in their system. With Microsoft, they mostly depend on marketing toward various types of consumers, as they are one of the major computer software companies. Also, with their technology being expensive, sales are not as high in developing regions. However, Microsoft has worked with computer manufacturers to offer very affordable computers as well as donating many machines to help out. Other trends that have emerged are the increase in adoption of Microsoft Windows 8 licenses sold worldwide, as there were 40 million licenses world worldwide in November 2012.

With new versions of operating systems, it always takes a while for people to adapt to the new changes along with the willingness for them to want to change. As the sales of licenses increase every two years, the trend is for the number to reset as Microsoft offers a new OS every two years. With this two-year release trend, it goes along with their strategy as they have been doing for many years already. With Microsoft’s current marketing strategy of trying to make a new submarket for tablets and computers, they are giving themselves a competitive advantage as no other company can offer the same power and portability in one device. Different marketing strategies, such as their cloud computing service, lets Microsoft catch up to its competitors. With the combination of operating systems and mobile devices, they can use it for a complete competitive advantage.

Microsoft’s competitors have similar marketing strategies, such as Apple Inc. They always have a consistent student discount for their laptops and tablets, but their products are more expensive overall. Apple also has more of a niche market as it only offers its products and software packaged only with Apple Products.

  1. Our marketing managers using accepted marketing concepts and techniques to evaluate and improve product performance? (Consider product life cycle, market segmentation, market research, and product portfolios.)
  2. Does marketing adjust to the conditions in each country in which it operates?
  3. Does marketing consider environmental sustainability when making decisions?
  4. What is the role of the marketing manager in the strategic management process?

2. Finance

Microsoft’s corporate financial objectives and strategies are to mostly invest in research and development in technology, making them rely heavily on long term funds. They show this example, especially towards the growing market in cloud computing. After critical R&D is placed, they then expect their return on investments. Microsoft usually does not directly imply their financial plans, but with the newest cloud computing they are hoping to reach

$20 billion target revenue by 2018. While Microsoft invests heavily in research and development, it helps them stay consistent with their objective of always trying to push the boundaries by “creating innovative technology that is easily accessible to everyone. ”They are making sure they are not falling behind with other companies and staying competitive. For example, as Microsoft was late in cloud computing, they are investing heavily in advancing their platforms and using other infrastructure to expand in their cloud computing department, making them one of the better and profitable divisions.

Compared to other major technology companies, Microsoft financially sits on top with the best, showing that they rank fourth in revenues compared to its competitors with an $86,833,000,000 income. The top two are Apple Inc and Hewlett-Packard Co. This indicates that Microsoft is one of the top companies in revenue. They are second in highest net income and total assets, right under Apple Inc but beating Google Inc.

b. How well is the corporation performing in terms of financial analysis? (Consider ratio analysis, common-size statements, and capitalisation structure.) How balanced, in terms of cash flow, is the company’s portfolio of products and businesses? What are investor expectations in terms of the share price?

i. What trends emerge from this analysis?

ii. Are there any significant differences when statements are calculated in constant versus reported dollars?

iii. What impact have these trends had on past performance, and how might these trends affect future performance?

iv. Does this analysis support the corporation’s past and pending strategic decisions?

v. Does finance provide the company with a competitive advantage?

d. Are financial managers using accepted financial concepts and techniques to evaluate and improve current corporate and divisional performance? (Consider financial leverage, capital budgeting, ratio analysis, and managing foreign currencies.)

e. Does finance adjust to the conditions in each country in which the company operates?

f. Does investment cope with global financial issues?

d. What is the role of the financial manager in the strategic management process

3. R&D

a. What are the corporation’s current R&D objectives, strategies, policies, and programs?

i. Are they clearly stated or merely implied from performance or budgets?

ii. Are they consistent with the corporation’s mission, objectives, strategies, and policies and with internal and external environments?

iii. What is the role of technology in corporate performance?

iv. Is the mix of basic, applied, and engineering research appropriate given the organisational mission and strategies?

v. Does R&D provide the company with a competitive advantage?

b. What return is the corporation receiving from its investment in R&D?

c. Is the corporation competent in technology transfer? Does it use concurrent engineering and cross-functional work teams in product and process design?

d. What role does technological discontinuity play in the company’s products?

e. How well does the corporation’s investment in R&D compare with the finances of similar corporations? How much R&D is being outsourced? Is the corporation using value-chain alliances appropriately for innovation and competitive advantage?

e. Does R&D adjust to the conditions in each country in which the company operates?

g. Does R&D consider environmental sustainability in product development and

packaging?

h. What is the role of the R&D manager in the strategic management process?

4. Operations and Logistics

a. What are the corporation’s current manufacturing/service objectives, strategies,

policies, and programs?

i. Are they clearly stated or merely implied from performance or budgets?

ii. Are they consistent with the corporation’s mission, objectives, strategies, policies, and internal and external environments?

b. What are the type and extent of operations capabilities of the corporation? How much is done domestically versus internationally? Is the amount of outsourcing appropriate to be competitive? Is purchasing being handled appropriately? Our suppliers and distributors operating in an environmentally sustainable manner? Which

Do products have the highest and lowest profit margins?

i. If the corporation is product-oriented, consider plant facilities, type of manufacturing system (continuous mass production, intermittent job shop, or flexible building), age and type of equipment, degree, and role of automation and robots, plant capacities and utilisation, productivity ratings, and availability and kind of transportation.

ii. If the corporation is service-oriented, consider service facilities (hospital, theatre, or school buildings), type of operations systems (continuous service overtime to same clientele or intermittent service over time to varied clientele), age and type of supporting equipment, degree, and role of automation and use of mass communication devices (diagnostic machinery, video machines), facility capacities and utilisation rates, efficiency ratings of professional and service personnel, and availability and type of transportation to bring service staff and clientele together.

c. Are manufacturing or service facilities vulnerable to natural disasters, local or national strikes, reduction or limitation of resources from suppliers, substantial cost increases of materials, or nationalisation by governments?

d. Is there an appropriate mix of people and machines (in manufacturing firms) or of support staff to professionals (in-service firms)?

e. How well does the corporation perform relative to the competition? Is it balancing inventory costs (warehousing) with logistical costs (just-in-time)? Consider costs per unit of labour, material, and overhead; downtime; inventory control management and scheduling of service staff; production ratings; facility utilisation percentages; and the number of clients successfully treated by category (if service firm) or portion of orders shipped on time (if product firm).

i. What trends emerge from this analysis?

ii. What impact have these trends had on past performance, and how might these trends affect future performance?

iii. Does this analysis support the corporation’s past and pending strategic decisions?

iv. Do operations provide the company with a competitive advantage?

f. Are operations managers using appropriate concepts and techniques to evaluate and improve current performance? Consider cost systems, quality control, and reliability systems, inventory control management, personnel scheduling, TQM, learning curves, safety programs, and engineering programs that can improve the efficiency of manufacturing or of service.

g. Do operations adjust to the conditions in each country in which it has facilities?

h. Do activities consider environmental sustainability when making decisions?

i. What is the role of the operations manager in the strategic management process?

5. Human Resources Management

a. What are the corporation’s current HRM objectives, strategies, policies, and programs?

i. Are they clearly stated or merely implied from performance and budgets?

ii. Are they consistent with the corporation’s mission, objectives, strategies, policies, and internal and external environments?

b. How well is the corporation’s HRM performing to improve the fit between the individual employee and the job? Consider turnover, grievances, strikes, layoffs, employee training, and quality of work life.

i. What trends emerge from this analysis?

ii. What impact have these trends had on past performance, and how might these trends affect future performance?

iii. Does this analysis support the corporation’s past and pending strategic decisions?

iv. Does HRM provide the company with a competitive advantage?

c. How does this corporation’s HRM performance compare with that of similar corporations?

d. Are HRM managers using appropriate concepts and techniques to evaluate and improve corporate performance? Consider the job analysis program, performance appraisal system, up-to-date job descriptions, training and development programs, attitude surveys, job design programs, quality of relationships with unions, and use of autonomous work teams.

e. How well is the company managing the diversity of its workforce? What is the company’s record on human rights? Does the company monitor the human rights record of critical suppliers and distributors?

f. Does HRM adjust to the conditions in each country in which the company operates?

Does the company have a code of conduct for HRM for itself and critical suppliers in developing nations? Are employees receiving international assignments to prepare them for managerial positions?

g. What is the role of outsourcing in HRM planning?

h. What is part of the HR manager in the strategic management process?

6. Information Technology

R&D

As part of a means of gaining a competitive advantage over its competitors, Microsoft is committed to spending more time and energy on R&D. The company is influenced by a plethora of objectives in injecting more time and money into R&D. Correctly, the company has identified different strategies, policies, and programs that are fit to put the company at a competitive advantage. The future face of recognition is a project earmarked to developing algorithms and techniques for an automated system. In this project, the topics include pose estimation, tracking, detection, alignments, and face recognition. Additionally, Microsoft has launched a program of developing tools for advancing productivity. These tools’ objectives include improving the development, design, and debugging as well as a testing software. An ambitious project of bringing graphics to life is aimed at creating pictures in real-time and looking real to the natural environment. The R&D of Microsoft seems to be consistent with the company’s core foundation and seeks to remain the world’s leading software company provider (Advisicon, 2005).

Technology has become a vital component of the performance of Microsoft. Technology is defined as the making and usage of tools, systems, crafts, and techniques to solve a given problem. Through technology, the performance of a corporate can be measured by using various tools and devices. For instance, a decision support system is useful in collecting data from multiple internal sources such as data warehouses, databases, and data marts to model possible characteristics. Additionally, technology has enabled the formation of tools that enhances Microsoft to plan effectively in terms of resources. An enterprise resources system, in particular, is effective in helping corporate managers to have a consolidated view of all, is taking place in their organisations.

As part of the mission and strategy of Microsoft, the mix of basic, applied, and engineering research proves to a resourceful model. Basic research has become the foundation upon which Microsoft has based its decisions on what to do next. Consistent with bringing valuable technology to its customers, Microsoft’s invention and innovation ensure it remains relevant to the ever-changing trends in the world of information technology. An example is building new software for organisations and enterprises. Mobile technology application is also an area Microsoft is venturing into (Advisicon, 2005).

The competitive advantage of a company is gained through a myriad of strategies, and R&D is one such strategy. Through R&D activities, Microsoft can carry out scientific and technical research in developing existing or new products, services, or processes. By investing heavily in research activities, Microsoft places itself in a better position to produce new and unique solutions to its customers, thus defeating any competition from potential competitors. Through research, a company innovates and creates unique processes and features that attract customers to sticking with the company’s services. Through this R & D strategy, Microsoft has gained total control of its customers and warded off any competition from customers. Because of different policies in various countries where Microsoft operates, it always has to adapt its strategies for R&D to run its activities without any friction. Environmental sustainability is another factor that Microsoft takes into account wherever it launches its operations on R&D. Typically, the role of an R&D manager to strategic management is to engage in and support innovation of products in a manner that drives, rather than in a way that dissipates (Advisicon, 2005).

Operations and Logistics

Microsoft is committed to manufacturing solutions to meet requirements for effective performance. Further, the company is motivated to manufacture solutions that will enhance the production and tools that are compliant to quality improvement standards. Most of the strategies, objectives, and policies to manufacture are consistent with Microsoft’s primary principles, which require continuous improvement of production and place the company above the rest in the market.

Microsoft has installed centres in various countries to help it operate effectively. Centres such as customer contact centres, information processing, credit and collections, logistics, and vendor management have expertly been installed in other regions to ease the operation of the company’s activities. Internationally, Microsoft has adopted a strategy of localising most of its products to reflect local conventions and local languages. This has been a successful strategy for helping Microsoft serve the requirements of its customers are around the world, and as well as to help improve the quality and the usability of its products.

Microsoft operates smoothly and efficiently, which takes into account different needs in different countries. This strategy has enabled Microsoft to sell most of its products competitively, making the company fetch high profits than its competitors.

The primary operations of Microsoft are based on five segments: server and tools, live window division, entertainment, devices division, and Microsoft business division. These segments form the basis upon which Microsoft basis its comprehensive view of finances to its key businesses. Besides, the parts, when used in operation, acts to encourage and motivate Microsoft to attain its targets and strategies of sales, marketing, service organisations, and development. In comparison to its competitors, Microsoft has always led in the software market because of the prudent way of its operations and logistics. Though there is steadfast competition from companies like Apple, Microsoft remains the company to beat courtesy of its proper management (Advisicon, 2005).

Environmental sustainability has been at the centre of Microsoft sustainability over the years it has been operating its business over different countries. They always manufacture products that take into account the conservation and durability of the environment. To ensure that the process of operations has been successful, the operations manager at Microsoft is responsible for supporting the overall strategy of the company. Besides, the operations manager is accountable for achieving parity with the pace at which competitors are moving.

Human Resources Management

Human resource management is a core component of the organisation of Microsoft and its operations. This component is what shapes the culture and the way things are done at this corporation. The values of this department are built upon the principles of developing a kind of lifestyle that comes to the characteristics of Microsoft.

The critical thing with Microsoft is that it has allowed each human resource department to come up with its values but is complementary to the overall mission, the company’s objective. The strategy has enabled Microsoft to motivate its employees to put more effort. The plan includes a practice of retaining, exciting, and attracting new and existing employees. The HR structure, on the other hand, involves the HR manager delegating duties to the junior staff in a well-structured manner to ensure each employee is aligned to a particular function that motivates them.

While some competitors might have better technologies, Microsoft can base its success on human resource management and workers’ efficiency in general. Microsoft human resource values its employees and acknowledges its importance. The success of this company is mainly attributed to the stability provided by the workers. The main objective of the human resource in Microsoft has been to recruit, retain, and employ an adequately skilled and motivated workforce. With over 93,000 employees, the Microsoft human resource department has managed to control this large group without any iota case of an industrial situation.

Under human resource management, there is a group known as departmental heads that charged with the responsibility of controlling their respective projects portfolio. To enhance further efficiency, the human resource department at Microsoft has split the number of projects a particular category can handle. Additionally, these centres are essential in evaluating and proposing and tracking plans.

The department of human resources at Microsoft continuously strives to enhance the management of the portfolio. Consistent with the management scheme theory, the primary aim of this system is to establish proper processes. The company utilised its chances and prepared and defined their processes. While doing this, they decided not to include the software until all members agreed to it. As part of its benefits, the human resource department has so far utilised the 2010 project server to gather, evaluate, and efficiently compare projects. This tool has enabled the company to compile its task portfolio from over 200 to over 25, thus leading to greater accountability, collaboration, and transparency.

Because of the adoption of the 2010 server that is user friendly, the human resource department at Microsoft has been able to gather information regarding the proposed projects effectively. In terms of diversity, the human resource department has guaranteed equal employment rights without any form of discrimination. Employment opportunities at the company are based on merit, but not on racial grounds. All employees at Microsoft are expected to conduct themselves within a code of conduct set by the company.

Just like other companies, Microsoft has consistently been involved in the outsourcing of roles from outside companies. This strategy has helped the company save extra charges for hiring more employees and other useful activities. The manger in the department of human resources is the overall person in charge of the smooth running of activities within the department. The manager is responsible for implementing the company’s strategic plan (Advisicon, 2005).

Information Technology

Microsoft is committed to providing its services by utilising the most technological inventions. The reason behind this is to increase the level of openness of its products as well as driving more significant opportunities for developers, customers, and partners. These objectives have been part of the long-standing mission of the company’s general goal. Microsoft utilises up to date technology to link the various organs of the company to shorten the distance that exists amongst these organs. Additionally, the company has been committed to launching newer technologies that are meant to ensure that there is data portability, an open connection, promoting industry standards, and enhancing more engagement with its customers.

Due to these innovations, Microsoft has been able to run its activities effectively. The company has effectively placed itself in a higher position to head to its head with its competitors in terms of technological supremacy. Comparatively, Microsoft has managed to outdo all of its competitors when it comes to superior technology. Various survey sources have always indicated that Microsoft is the leading company that provides software technology. This milestone has been achieved through the relentless improvement of technological development in the company. Specifically, Microsoft has made this by embracing constant research and innovation of new technologies in the company. Further, Microsoft has been at the forefront of recruiting some of the most exceptional personnel into its working force.

The IT manager is responsible for the company ‘s overall implementation of the technology. The IT manager ensures all about technology is going well, and if there is something that ought to be upgraded, he or she has the responsibility to delegate it.

Summary of Internal Factors

Microsoft Corporation has found its name among the giant companies of this world because of the strengths that include: its brand name has a good reputation; its brand has ensured customers stay loyal to it, has a strong network of distribution lines and channels. Also, its software products are user-friendly and make it enjoy a strong performance in the market. Attributes that Microsoft possesses include: it utilises mobile advertising, acquisition of other tech companies like Skype ensures it grows, and their entry into the mobile devices and smartphone industry. Microsoft has effectively taken advantage of these competencies and which have made it a company it is today. Some of Microsoft’s core competencies include, I believe, has enabled it to realise and engage others in their work. If it were not for its capability to develop windows and office software cloud computing services, Microsoft would not be in the robust financial power as is the case now… Nevertheless, instead of Microsoft to stick to its primary area of competence, it decided to abandon it and venture into competing with other companies such as Google and apple. If Microsoft had not undertaken to compete with Apple and Google and instead focused on its competencies as other companies do, then it could remain competitive enough. (Advisicon, 2005).

D. Summary of Internal Factors 

(List in the IFAS Table 5–2, p.164)

Which of these factors are core competencies? Which, if any, are distinctive competencies?

Which of these factors are the most important to the corporation and to the industries in which it competes at present? Which might be valuable in the future?

Which functions or activities are candidates for outsourcing?

I found this from the book, and it might help you Hang: In Column 5 (Comments), note why a particular factor was selected and how its weight and rating were estimated.

Try to be specific if you can when you write about it in your body paragraphs to avoid obscurity/ambiguity

IFAS Table

Internal Factors Weight Rating Weighted Score Comments
Strengths
Weaknesses
Total Scores

 

IFAS matrix to include SWOT

Provide detailed comments with appropriate quantitative analysis

Prove an abstract to summarize the IFAS matrix

Minimum 3-5 points in each category

Corporate resources

Required: detailed quantitative analysis to support all statements

V. Analysis of Strategic Factors (SWOT)

A. Situational Analysis

The most important strategic factors that affect the corporation’s present and future performance lie in its external factors and its internal factors. Within its external factors, its most robust opportunities revolve around its emphasis on carbon neutrality, its current success in cloud computing, and its relatively low supplier bargaining power. Imposing threats include the overwhelming amount of competition from the mobile device market and the intensive operating system (OS) competition it faces.

As the mobile device market is progressively growing into a formidable market from its propitiousness towards consumers, it is heavily intimidating the personal computer (PC) market’s sales, a source from which Microsoft once generated most of its revenue. The future of Microsoft’s former stronghold hangs in the balance as it is already suffering from significant losses. As mentioned earlier, Microsoft’s current share of the PC market has dropped down to 79% as of 2015 from what was once an astounding 90% in 2012 (Statista, 2015). Continuing further operations without making significant modifications of its strategy within the industry may prove detrimental to the organisation as numbers have shown a dramatic diminishment in PC sales.

Along with the significantly imposing threat of the mobile device industry, Microsoft also faces intense adversity from its other OS competitors. In tandem with its low market share in mobile devices, Microsoft is unable to sufficiently market its operating system to the consumer market due to declining PC sales and rising mobile device sales. Unless Microsoft can successfully revive its operations in the PC industry, stake a strong position in the mobile device industry, or partner with the prominent mobile device or other hardware companies to integrate its OS on a large-scale basis, its operating systems will continue to encounter heavy competition. However, despite the dire threats that Microsoft must confront, there are also favorable opportunities in which it could utilize it to its advantage.

The first opportunity involves the company’s natural environment, and as an environmentally-aware organization concerned about climate change, it is already taking action to reduce its energy usage and waste. Among its various eco-friendly programs, its most impactful one would be its attempt to reduce carbon emissions through carbon usage budgeting. They pay a fee per metric ton of carbon emission. In turn, the funds are then transferred to other energy sustainability projects. This is an opportunity for Microsoft to stand out from other companies by providing a niche and leading by example in environmentally-ethical standards, which will benefit the brand and the organization as a whole.

The second opportunity is about its cloud computing capabilities. Although Microsoft entered the cloud computing arena relatively late, it has immediately caught up to its competitors via its investment in the Azure cloud computing system. In recent years, Azure has transformed into a valuable asset for the organization and, perhaps, one of its most substantial assets. In concurrence with the trending era of the cloud, Microsoft has found the perfect moment to capitalize on its cloud-based operations. As this market is continually expanding into something enormous, so will Microsoft’s revenues derivative of these operations. It must continue to execute in a similar, if not improved, manner to maintain its current successful hold in cloud-based business and not waste this substantial opportunity.

The last significant opportunity for Microsoft to exploit is its low supplier bargaining power, as it has already been doing. The company possesses a low supplier bargaining power since it deals primarily with software development. Due to its lack of need for a software supplier, which brings it little concern, its attention can be diverted towards other operations that require more resources and focus. A large percentage of its revenue stems from software products, and without having to worry about software suppliers posing as a threat, the organisation can further improve its relations with hardware suppliers instead of promoting more robust hardware platforms. This enables concentration in areas that lack prominence and contain fewer prospects, such as its mobile device and tablet operations.

B. Review of Mission and Objectives

In a review of the company’s current mission and objectives, the critical strategic factors and problems presented appear appropriate in light of the information given. The company’s current mission statement to date as posted on its company website states, “At Microsoft, our mission is to enable people and businesses throughout the world to realise Their full potential.” “(Microsoft Accessibility) “The above-mentioned strategic factors and problems are not directly related to the mission of the organization, but they are neither contradictory nor physical confines. Currently, there is no necessity to alter Microsoft’s mission or objectives, as the framework does not conflict with the alignment of strategic factors and implementations. If they are changed, it will affect Microsoft’s goal orientation and impact the structure necessary to facilitate its operations and every intervallic process in between, influencing how product and service design are conducted and company culture.

“Microsoft Accessibility.” Mission, Strategy, and Progress. N.p., n.d. Web. June 8, 2015.

SFAS matrix to include SWOT

Provide detailed comments with appropriate quantitative analysis

Prove an abstract to summarise the SFAS matrix

Minimum 2 points in each category

TOWS Matrix

Aims to identify substantial opportunities

VI. Strategic Alternatives and Recommended Strategy

A. Strategic Alternatives

B. Recommended Strategy

Strategic alternatives are taken from SFAS and TOWS matrixes

Not solely directional (i.e., growth, stability, or retrenchment)

Provide pros/cons analysis using SWOT analysis and numerical support. Also, consider the current situation and strategic posture of the firm when evaluating strategic alternatives.

When taking into consideration the present and future of Microsoft, Microsoft must focus on the strategic analysis of the opportunities they have. The most substantial chances they have are carbon neutralities, its current success in cloud computing, and its relatively low supplier bargaining power. By utilising the strengths to think of strategies, we can take advantage of Microsoft’s opportunities. Besides this, Microsoft is facing multiple challenges within its company. These threats include the overwhelming amount of competition from the mobile device market, as well as the intensive mobile operating system (OS) competition it faces. First, we will focus on the internal environment; then, we will focus on external situations.

Microsoft’s first option to arrive centers around the company’s natural world. Microsoft is an organisation that strives to be eco-friendly, and they are already taking action into reducing energy usage and waste. Carbon usage has been a problem for Microsoft, and by utilising the correct strategy, they can capitalise on this opportunity. To begin, Microsoft can learn to reduce the energy consumption within their offices, corporations, Microsoft’s products, and services. To manage the energy usage within the corporation and offices, they need to be efficient at diagnosing the faults that their equipment uses. While they do this, they need to keep a record of what machines are consuming the most energy. They must also take note of the temperature of these machines. By locating the faulty devices, they can reduce energy consumption as well as cutting costs. For this strategy to be executed, Microsoft has to be committed to increasing the purchase of energy-saving projects that reduce waste and water. The purchase of renewable energy certificates (RECs) and carbon offsets will help Microsoft reduce costs, energy, and carbon pollution.

To do this, they must change their servers to operate efficiently to save energy and money. For PCs scattered across the office, they must utilise Windows 7 and the power saving technology within the operating system (OS). For air travel, they should utilise the functions within the Microsoft operating system (OS) for business meetings, tourism, etc. Employees should only consider using air travel if it is necessary. By reducing the business trips that Microsoft schedules for employees, they can save up to 2,200 pounds of carbon. In addition to this, Microsoft will reduce the energy output of its products and services. Windows 7 helps decrease power consumption. The functions within Windows 7 helps manage power, thus requiring less work from the processor, ram, video card, power supply, hard drive, etc. This will, in turn, lead to lower costs and a massive reduction in energy for Microsoft. Utilising the power management tools in Windows 7 will allow the products manufactured by Microsoft to save energy, thus cutting costs and reducing energy waste. This will let Microsoft be competitive in the industry for an operating system (OS). For the future, Microsoft plans on allowing consumers of Windows 7 or 8 to upgrade to Windows 10 for free of charge.

The second alternative that Microsoft will execute is based on its cloud computing services and how they can make it more successful. Microsoft Azure has proved to be a growing cloud computing system already. With their cloud computing system, however, they have many opportunities to capitalise on. The most significant opportunity they have is for them to unite services and devices with Microsoft Azure. For the equipment and services to become profitable, they have to reach out to Google and Apple. They must convince Google Android and Apple iOS to join their assistance in providing Windows Azure to them. They need to reach out to companies and show them the benefits of Microsoft Azure and its impact on their company.

The third alternative will focus on its low supplier bargaining. Since Microsoft already researches and develops their software, they need to focus more on a hardware supplier. Microsoft must reach deals with various computer-based companies to package its operating systems with new hardware products (Computers, Laptops, Smartphones) that also ties into their eco-friendly transition. These deals with companies like Samsung and Dell will enrich a user’s value and experience as they touch up their hardware with the latest technology that will not only catch the consumer’s eye but expose more consumers to the Windows and Windows Phone Operating Systems. Most importantly, doing this will reach out to more device manufacturers, resulting in even more customers. This will help Microsoft cut costs while building on newer, more energy-saving hardware and turn their vision into a reality.

Though these are only strategic alternatives, many pros and cons affect how each strategy will affect Microsoft. Within the first strategy, the advantages that are associated with reducing carbon is that it will save money and push Microsoft into an eco-friendly corporation. The cons associated with this strategy is that it will require Microsoft to invest a large amount of cash into energy-saving hardware and will require time for them to replace all machines that prove to be not eco-friendly. This may or may not push Microsoft a few steps back because it will require a lot of time into this project. The second strategy focuses on a cloud-computing system called Microsoft Azure. The pros of this strategy are that it will bring together many corporations to utilise Microsoft Azure. Costs for consumers will also be reasonably low compared to other competitors since this is their first-ever cloud-computing system. Another benefit of this strategy is that it can integrate applications on the cloud to run the apps and services that are stored in Microsoft Azure. It allows users to access data whenever and wherever there is service. The cons of this strategy are that many of their rival competitors like Amazon and IBM, already have a well-established cloud-computing system. Amazon and IBM were some of the first to develop cloud-computing systems, and for Microsoft to convince potential customers to switch over to Azure, it will be a hard task to do. This is one major downfall of Microsoft because it may be hard to convince many companies to utilise Microsoft Azure. The third strategy is focused on its low supplier bargaining. The pros of this are that it will enable Microsoft to use the latest hardware in their devices. Another benefit for this strategy is that Microsoft will be able to save money once they have found a supplier for their hardware,  thus resulting in a more profitable revenue that focuses on the device for the consumer, rather than the software because Microsoft develops their software. The cons of this alternative are that it may be hard for Microsoft to reach out to suppliers. Some suppliers that Microsoft may want to reach out to may already be supplying hardware to Microsoft rival companies, and incorporating Microsoft in their base would be hard. Prices for Microsoft may be high as well because Microsoft demands the latest technology that is eco-friendly. Although there are many pros and cons, the pros outweigh the cons and allow Microsoft to capitalise on these strategies to reach their desired target profit.

Recommended strategies are taken from the best strategic alternatives (Brent Howard)

Be creative with the possible recommendations

Minimum 3-5 detailed recommendations

As is familiar with many technology companies, innovation and changing times have put Microsoft at a strategic crossroads. Its core competency has always revolved around its ability to dominate the PC market with prepackaged software. However, market trends have been reducing the viability of this strategy. The PC market is in decline, and consumers’ preferences have become oriented towards mobility and versatility. For Microsoft to maintain its status as a top software company, it has to reduce its focus. Microsoft’s ability to adapt its core competency to compensate for this changing external environment is crucial to its relevance in the industry and its ability to maintain a sustainable value creation system. Therefore, with all of the internal and external factors considered, our recommended corporate strategy for Microsoft is to grow through bolstering its presence in the emerging cloud services industry, and becoming relevant in the mobile OS industry. Differentiating its product offerings through superior innovation and increased capabilities is the business strategy that Microsoft should adopt to succeed within this focus.

While this is very similar to the approach which Microsoft has adopted, this differs in the sense that we believe Microsoft should continue to be a software provider primarily and thus maintain an operations strategy that relies on partnerships with hardware manufacturers to bring new devices to the market. This has proven to be an essential competitive advantage for the company throughout its history and will be integral to its success. This operations strategy allows the company to reach a broader consumer base because it will enable them to work with different brands.

Given that Microsoft should seek to succeed in emerging markets, its marketing strategy is an essential component of its overall functional strategy. In the past, Microsoft has been known for saturating the market to develop its market position. The company did this almost too successfully, resulting in a series of legal battles with the US governmen t. From this practice, which has proven successful in the PC market, we arrive at our first recommendation for Microsoft- saturate the mobile phone market with the Windows OS to achieve their desired position. As stated before, the advantage of this practice is that it allows the company to tap into a broader consumer base, which is likely to improve its performance in the market. Of course, increased advertising is a component of a market development strategy. These campaigns should specifically target mobile devices to capture a more significant market share. It is essential that, through marketing, Microsoft communicates the superior innovation of their products to align with a differentiation strategy. This way, customers will be more willing to pay for their products even if they cost more than competitors.

For Microsoft to successfully differentiate their products, they need to innovate constantly. This includes: updating the aesthetics of the user interface, increasing the capabilities of its products, and even bringing completely new offerings to the market. As is the case with most technology companies, their investment in research and development is an integral part of achieving superior innovation and becoming the technology leader. This implies increasing the amount they invest in research and development projects. However, this figure mustn’t grow at too quick a rate to maintain quality financial statements. One of Microsoft’s research and development projects’ main goals is increasing the cloud services portfolio. Their existing offerings are too narrow relative to some of the main competition- namely IBM.

VII. Implementation

A.What kinds of programs or tactics should be developed to implement the recommended strategy?

○ Who should develop them?

○ Who is in charge of the programs?

B. Are the programs/tactics financially feasible? Can pro forma budgets be developed and agreed on?

C. Will new standard operating procedures need to be developed?

Each recommended strategy should have its implementation action plan

Minimum 4 program activities and two action steps for each program activity

The responsibility section comes from (II. Strategic Managers)

Start-End should be a reasonable time frame for executing goals

The strategy we have chosen to pursue is an ambitious one that calls for a determined and robust direction; in effect, there must be equally headstrong programs implemented to ensure success. Financially, we aim to increase Microsoft’s cloud revenue through an analysis of our competitors, mainly IBM and Amazon, to learn their strengths and weaknesses to improve our model using theirs as a basis. We want to create awareness of our cloud and mobile products through marketing campaigns on our customer front. In our internal business processes, we want to improve our manufacturing through the use of mergers and partnerships with prospective phone manufacturers, like the acquisition of Nokia, but with a better result. Learning and growth can be improved with the critically needed expansion of cloud services with Azure.

These programs need to be developed and managed by individuals on the board that has had ample experience in the skills that each of the plans calls for. As stated earlier, Microsoft has an incredibly talented board that can contribute significantly to its growth. There should also be specific committees made to push and monitor these programs. Having people monitor and control the programs strictly is critical to their success.

By increasing the cloud revenue through the adoption of IBM’s, Amazon’s, and other’s competitive business models, Satya Nadella and his committee will handle it due to his experience in cloud services. Working close to him should be Amy Hood, with her background in finance and her position as the chief financial officer, and Scott Guthrie, as he had a critical impact on Azure and Microsoft’s cloud services. Frank Holland and RikKooi, Microsoft’s co-presidents in Microsoft’s advertising, would focus on the creation of a marketing campaign that will raise awareness of Microsoft’s products to customers. Mergers/Partnerships should be overseen and handled by Nadella as he is the CEO of the company and should know and decide who the company will work with. Harry Shum, Peter Lee, and Jeanette Wing are the co-presidents of Microsoft’s research division. They have the skills necessary to lead the charge of improving Microsoft’s cloud services for the Learning and Growth action plan.

Microsoft is well known for spending large amounts of money to accomplish their goals, especially when it involves R&D. These programs are aimed to increase revenue and cut unnecessary costs. However, with so many unknown factors, it is challenging to form pro forma due to the radically changing market. Possible mergers and partnerships can be valued differently at a sharp increase or decrease with a few months. R&D projects can find the next iPhone as probable as the next dud. This makes it paramount to tread carefully and surely, ensuring success.

New standard operating procedures will need to be implemented. Most are for monitoring.

Financial Action Plan

Program Objective: Raise cloud revenue through the adoption and implementation of other successful business models, such IBM and Amazon’s business models.
Program Activities:

1.Create committee to push action plan

2.Research IBM’s and other competitive cloud service models for strengths and weaknesses

3.Discuss changes need to add each potential model to Microsoft’s framework

4.Choose most attractive optimal changes to be made to Microsoft’s model

5.Adopt changes and release services into the market

6.Measure results of changes in terms of revenue gained from cloud services

Action Steps Responsibility Start-End
1.A. Screen and select individuals to create committee

B. Create Committee

2.A. Review competitive models

C. decide on potential additions and changes to current model

3.A. debate on changes needed to implement potential additions and changes

B. Look at any legal complications that may arise

C. Discuss with board

4.A. Select best changes and additions

B. Present to the board for consideration and approval

5.A. Develop and implement new services and products into cloud           service model

B. Release for consumer use

6.A. Gather data on cloud revenue

B. Evaluate revenue data

C. Prepare analysis of the new additions and services

Nadella & Guthrie

Nadella & Guthrie

Committee

Nadella & Comm.

Guthrie & Comm.

 

Regulatory Comm.

Nadella

Guthrie & Comm.

Nadella

Nadella, Comm., & R&D

Nadella & Guthrie

Nadella & Hood

Nadella & Hood

Nadella & Hood

6/20-6/29

6/30

7/1-8/1

8/4

8/5-9/1

 

8/5-9/1

9/2-9/3

9/4-9/20

9/21

9/22-12/15

 

12/16-6/22

12/16-6/22

7/1-7/10

7/10-7/15

 

Customer Action Plan
Program Objective: Create marketing campaign to spread awareness of Microsoft cloud and mobile products
Program Activities:

1.Create committee to push action plan

2.Identify five best ad Agencies for new campaign

3.Request Agencies for proposals for a new advertising and promotion campaign for mobile and cloud products

4.Agencies present proposals and are evaluated

5.Select best proposal

6.Present winning proposal to top management

7.Produce Ads

8.Ads become active on TV, online, and in stores, and promotion campaign begins

9.Measure results of campaign in terms of new users and sales

Action Steps Responsibility Start-End
1.A. Screen and select individuals to be on the committee

B. Create committee

2.A. Review previous Ad programs and their results

B. Discuss with board

C. Decide on five agencies

3.A. Decide on campaign’s specifications

B. Write Ad request

C. Send request to five agencies

D. Meet with agency execs

4.A. Agencies work on proposals

B. Agencies submit their proposals

5.A. Evaluate and select best proposal

B. Meet with agency’s execs

C. Inform other agencies of loss

6.A. Fine-Tune proposal

B. Present to Top management

7.A. Gather needed resources and people to begin Ad production

B. Shoot/create/edit Ads

8.A. Campaign begins

B. Ads become active

9.A. Gather Campaign results, record amount of new users and sales

B. Evaluate data

C. Analyze campaign

Holland &Kooi

Holland &Kooi

Committee

Holland, Kooi& Comm.

Committee

Kooi& Comm.

Committee

Committee

Holland & Comm.

Agencies’ Execs

Committee

Holland, Kooi& Comm.

Holland & Comm.

Committee

Agency’s Execs

Agency’s Execs

Committee &

Committee &

Holland &Kooi

Holland &Kooi

Committee

 

Committee

Holland & Kooi

6/15-6/29

6/30

7/1-7/15

7/16-7/20

 

7/21

7/22-7/25

7/26-7/27

7/28

8/5

8/6-8/31

9/1

9/1-9/10

 

9/12

9/12

9/13-9/20

9/21

9/22-9/30

10/1-12/10

12/11

12/11-6/15

12/11-6/15

6/15-6/20

6/20-7/1

 

Internal Business Action Plan
Program Objective: To successfully create a profitable merger/business partnership venture for mobile manufacturing that improves the quality and cost of mobile devices.
Program Activities:

1.Create committee to push action plan

2.Identify best candidate for merger/partnership

3.Give a proposal to best candidate

4.Negotiate terms and conditions

5.Finalize merger/partnership

6.Manufacture mobile devices

7.Sell manufactured products

8.Measure results of merger/partnership in terms of product quality and profit gained

Action Steps Responsibility Start-End
1.A. Screen and select individuals to be on the committee

B. Create committee

2.A. Identify potential companies to form a merger or partnership

B. Pick best candidates

C. Present to board for evaluation and comments

D. Pick optimal choice for venture

3.A. Analyze candidate company

B. Write Initial proposal to give to candidate company

C. Contact and present proposal to other company

4.A. Meet with top management of candidate company

B. Solve concerns and negotiations

C. Write final terms and agreements

5.A. Meet the top management of candidate company

B. Finalize terms and agreements

C. Shake hands and begin merger/partnership

6.A. Set up facilities and begin designing products

B. Start product production

7.A. Ship out products to stores

B. Sell products

8.A. Gather sales and production data

B. Analyze data

C. Evaluate venture

Nadella

Nadella

Committee

Nadella & Committee

Nadella

Board

Nadella & Committee

Nadella & Committee

Nadella

Nadella

Nadella & Committee

Nadella & Committee

Nadella

Nadella & Top Man.

Nadella & Top Man.

Turner & R&D

Turner

Turner

Store management

Committee

Nadella & Committee

Nadella & Committee

6/15-6/29

6/30

7/1-7/30

8/1-8/10

8/11

8/12-8/20

8/21-9/20

9/20-9/30

10/1-10/5

10/6

10/6-10/20

10/20-10/31

11/2

11/2-11/10

11/12

11/13-1/1

1/2

2/1

2/1-6/20

2/1-6/20

6/21-6/30

7/1

 

Learning and Growth Action Plan
Program Objective: Increase Capacity for Enabling Technology, by lowering developer costs and increasing R&D in Cloud services
Program Activities:

1.Create committee to push action plan

2.Lower developer costs

3.Choose most lucrative R&D projects to pursue in cloud

4.Complete and release projects as new products

5.Evaluate success and results of R&D Projects in terms of quality and potential

Action Steps Responsibility Start-End
1.A. Screen and select individuals to be on the committee

B. Create committee

2.A. Lower developer costs

B. Reach out to more developers to add produce projects

3.A. Look over current and potential R&D projects

B. Choose most promising and innovative projects

4.A. Pursue chosen projects

B. Complete projects and develop new devices/services

C. Put products out into the market

5.A. Gather data projects products

B. Analyze and review data

C. Evaluate the project worth and effectiveness

Shum, Lee, & Wing

Shum, Lee, & Wing

Nadella

Shum

Lee & Wing

Shum, Lee, & Wing

Shum, Lee, Wing, & Comm.

Shum, Lee, Wing & Comm.

Turner

Committee

Shum, Lee, Wing & Comm.

Shum, Lee, & Wing

6/15-6/29

6/30

7/1

7/2-12/20

7/2-7/30

8/1-8/10

8/11-12/20

 

12/21-1/20

 

1/21-6/15

1/21-6/15

6/15-6/20

 

6/20-6/30

 

VIII. Evaluation and Control

A. Is the current information system capable of providing sufficient feedback on implementation activities and performance? can it measure strategic factors?

B. Are adequate control measures in place to ensure conformance with the recommended strategic plan?

Balanced Scorecard Framework

Consider performance evaluation as an instrument of control

This is the summary/conclusion of the strategic audit

CEO Project Stage One: Preliminary Report

History and Current Performance

Microsoft has experienced a steadily rising trend of revenue over the past several years, announcing a most recent figure at $26.5 billion as of December 31, 2014. The growth can mostly be attributed to the success of their commercial device and server product lines. Office 365 and the Surface tablet brand have been the most influential performers, accounting for 24% and 30% revenue growth, respectively. Heavily investing in the Bing search engine’s research capabilities has proven profitable as well, reporting an overall market share increase of 19.7% and advertising revenue growth at 23% within the last quarter. Cloud revenue has been among the most substantial investments made by the company, reporting a full 114% increase after the success of Office 365, Dynamics CRM Online, and Azure server systems. Server Products has performed successfully as well, indicating a 9% growth in revenue, primarily driven by SQL Server and Systems Center. The successful figures suggest that Microsoft has found a successful niche in incorporating its popular office services and tablet lines with cloud computing capabilities. With continued investments in the described technologies planned by the company, the revenue trend is expected to continue.

Microsoft’s competitors have been unable to emulate the company’s success in areas related to cloud computing. Major competitors, including IBM, H-P, and Oracle, have all had significant stakes in the industry before Microsoft’s entrance but have struggled to keep up with the company’s investments. Microsoft CEO Satya Nadella has recognised the untapped potential offered by the cloud computing market and has worked to incorporate a competitive strategy aimed at delivering a wide range of server capabilities to business customers. Providing a mix of traditional corporate software with cloud technology has proved highly favourable among consumers, attributing to an overall increase in revenue of approximately $1.9 billion from last year. The competition has not been able to keep up with this growth, and have witnessed an overall loss of their share in cloud computing.

While Microsoft has experienced outstanding success in the cloud computing industry, it continues to fall short of its competitors in the mobile market. While the company experienced some growth after sales of 10.5 million Nokia powered smartphones, the company continues to lag behind Apple and Google. The disconnection can mostly be attributed to mobile operating systems. Google’s Android and Apple’s iOS continue to dominate the industry, offering functionality and features that Microsoft has not to emulate. High licensing fees for developers and a meek mobile market have also played against Microsoft’s fortune. Addressing these problems appropriately, as well as further integrating the mobile lineup into their cloud industry, can potentially help Microsoft to reposition themselves in the mindset of consumers.

Please add support/explanation

Microsoft sells its software to other companies to use in their hardware. They are a significant supplier to other hardware companies. Could maybe reword this a bit by focusing more on cloud computing and mobile OS.

CEO Project – STAGE ONE Microsoft

1. History

  • How was the Company Founded? (Year, Founder, Unique Story)
  • What was the Company’s Purpose?

The Microsoft Corporation has always been a company centered upon people, ever since its founding in 1975. The software and technology conglomerate originated through the partnership of two childhood friends, Bill Gates and Paul Allen, who shared the same passion for computing and programming (Bellis). The two creative geniuses began working together during their younger years living in Seattle, Washington. As teenagers, the two would spend their days in their school’s computer lab, learning and developing new computer applications (Bellis). Bill and Paul showed great promise in computing and business as they created their first company and product, an extensive use named “Traf-O-Data,” which measures traffic city density, all before they even graduated from High School (Bellis). However, Microsoft’s creation was set in motion as Bill Gates began a brief enrollment at Harvard University. It is here where Bill began to develop the necessary programming which Microsoft was based upon. During this time, Bill Gates revised the “BASIC” computer language for personal computers (Hall). After finding success with his “BASIC” language conversion, Bill decided to drop out of college to focus on computer programming with Paul Allen. Soon after, Bill and Paul founded “Microsoft” in their home state of Washington.

  • What Was the Company’s Purpose?

Microsoft stands as a representation Bill Gates and Paul Allen’s values and reasoning behind their work: To make computing more accessible for all to use and to make the lives of all people easier through the use of computing. This purpose is apparent within Bill Gates and Paul Allen’s earlier work, such as their revised version of the “BASIC” computer language, as well as Microsoft’s first operating system “Microsoft Disk Operating System (MS-DOS)” (Hall). Before personal computing became popular, computing was a complicated task that most average Americans weren’t able to understand. Microsoft’s earlier programs were meant to make computing more straightforward and more comfortable for the public. As Microsoft began to develop its operating systems, otherwise known as “Windows,” the company started to expand its purpose to make the lives of its users more accessible and more straightforward through its comprehensive applications such as “Microsoft Office,” meant to simplify tedious tasks such as writing or recording. With today’s generation has grown up in the digital age, Microsoft has expanded its purpose to making its operating systems available for use to the entire world, especially areas with limited access to computers. Microsoft’s mission statement is below:

At Microsoft, our mission is to enable people and businesses throughout the world to realize their full potential. We consider our mission statement a commitment to our customers. We deliver on that commitment by striving to create technology accessible to everyone—of all ages and abilities. Microsoft is one of the industry leaders in accessibility innovation and in building products that are safer and easier to use (Microsoft).

2. Current Performance

  • 5 Year financial reports
  • i.e., balance sheet, statement of income, statement of cash flows, statement of owners equity
  • Use corporate website
  • Ratio Analysis (see page 367 or 336) perform all the provided ratio analysis for all five years compare ratios with industry averages
  • Compare with major competitors
  • What is the growth trend?

Microsoft has experienced a steadily rising trend of revenue over the past several years, announcing a most recent figure at $26.5 billion as of December 31, 2014. The growth can mostly be attributed to the success of their commercial device and server product lines. Office 365 and the Surface tablet brand have been the most influential performers, accounting for revenue growth of 24% and 30% respectfully. Heavily investing in the Bing search engine’s research capabilities have proven profitable as well, reporting an overall market share increase of 19.7% and advertising revenue growth at 23% within the last quarter. Cloud revenue has been among the most substantial investments made by the company, reporting a full 114% increase after the success of Office 365, Dynamics CRM Online, and Azure server systems. Server Products has performed successfully as well, indicating a 9% growth in revenue, primarily driven by SQL Server and Systems Center. The successful figures suggest that Microsoft has found a successful niche in incorporating its popular office services and tablet lines with cloud computing capabilities. With continued investments in the described technologies planned by the company, the revenue trend is expected to continue.

○ Where is Your Company Outperforming its Competitors?

Microsoft’s competitors have been unable to emulate the company’s success in areas related to cloud computing. Major competitors, including IBM, H-P, and Oracle, have all had significant stakes before Microsoft’s entrance, but have struggled to keep up with the company’s investments. Microsoft CEO Satya Nadella has recognized the untapped potential offered by the cloud computing market and has worked to incorporate a competitive strategy aimed at delivering a wide range of server capabilities to business customers. Providing a mix of traditional corporate software with cloud technology has proved highly favorable among consumers, attributing to an overall increase in revenue of approximately $1.9 billion from last year. The competition has not been able to keep up with this growth, and have witnessed an overall loss of their share in cloud computing.

○ Where Can Your Company Improve?

While Microsoft has experienced outstanding success in the cloud computing industry, it continues to fall short of its competitors in the mobile market. While the company experienced some growth after sales of 10.5 million Nokia powered smartphones, the company continues to lag behind Apple and Google. The disconnection can mostly be attributed to mobile operating systems. Google’s Android and Apple’s iOS continue to dominate the industry, offering functionality and features that Microsoft has not to emulate. High licensing fees for developers and a meek mobile market have also played against Microsoft’s fortune. Addressing these problems appropriately, as well as further integrating the mobile lineup into their cloud industry, can potentially help Microsoft to reposition themselves in the mindset of consumers.

3. Strategic Posture

  • Mission

Microsoft Corporation has a strong mission statement that is found directly on their website. As written by founder Bill Gates, “Our vision is to create innovative technology accessible to everyone, and that adapts to each person’s needs. Accessible technology eliminates barriers for people with disabilities, enabling them to take full advantage of their capabilities.” The shortened version would be “to help people and businesses throughout the we concentrate heavily on open technology , allowing their customers to configure their apps to make it easier to see, hear and use. An objective that they would have relative to this mission statement would be: To increase the accessibility of all our technology to meet all individuals’ situational needs and preferences. Microsoft also provides a robust global mission statement. Taken directly from Microsoft’s corporate website, the global mission statement is summarized as follows:

Diversity and inclusion are integral to the vision , strategy and success of Microsoft’s business. We acknowledge that leadership in today’s global marketplace needs us to build a corporate culture and an inclusive business climate in which the best and brightest creative minds – workers of diverse backgrounds working together to meet global consumer demands, perspectives, skills and experiences. Collaboration of cultures , ideas, and various perspectives is an organizational asset, bringing about greater creativity and innovation.

Microsoft is on an accelerated path of growth. We recognize that to achieve our aggressive leadership goals; we need to leverage the intellectual power and harness the creative energy of top, highly trained people from all regions of the world the nation, and others from a great variety of backgrounds.

We are actively working to promote higher levels of diversity in our workplace by collaborating with our outreach partners that include academic institutions, professional associations and community advocacy groups, providing scholarships and youth initiatives to encourage technology and science studies and collaborate with our senior management team to ensure that diversity and inclusive best practices are deeply ingrained throughout our work environment. We know that these goals provide a solid foundation for creating a highly engaged workforce with a shared purpose of achieving Microsoft’s mission.

While the general mission statement does not include much relative to its employees, the global mission statement does. It aims to put together the best and brightest diverse minds to meet consumer demands.

Strategies

Corporate Strategy

To achieve its mission, a company must formulate and implement a winning strategy. A winning strategy incorporates all of a company’s resources to achieve goals and overcome obstacles. An essential aspect of this is its corporate strategy. This addresses the direction of the company, the different industries it competes in, and how it manages activities and resources among its various product lines or business segments. In its Annual Report, Microsoft speaks on all of these issues, and how the company plans to address them going forward, thus providing a picture of its corporate strategy.

The guiding theme in any company’s corporate strategy is its orientation towards growth, stability, or decrease. Microsoft displays the signs of a company poised to grow through its various business activities and statements. Business plans to “rely on automation and cloud-based infrastructure” to promote development (Microsoft, 2014). Microsoft employs a concentric diversification approach to grow the company with this focus in mind. Throughout its history, Microsoft’s bread and butter have always been its software. To achieve desired growth, Microsoft is expanding into related hardware and capitalizing on its software expertise to release new cloud-based services.

An example of this is the company’s recent acquisition of Nokia Corporation’s Devices and Services business. Before this acquisition, Microsoft’s presence in the mobile phone market was limited to the operating system it outfitted Windows phones with. In acquiring Nokia, Microsoft has increased involvement in the growing smartphone market by purchasing the means to produce the hardware which is compatible with their existing software. Another example of Microsoft employing concentric diversification is evident when they “announced [their] intention to acquire Mojang the, Stockholm-based game developer of the popular ‘Minecraft’ franchise” (Microsoft, 2014). “Minecraft” has a strong presence in the mobile gaming market, whether on smartphones or tablets. Therefore acquiring Mojang and Nokia aligns with Microsoft’s intention to grow by advancing its position in the mobile industry.

To achieve its mission, a company must analyze what sectors it competes in and decide which business unit to prioritize. As stated before, Microsoft plans to focus on mobility and cloud-based services. This approach implies focusing on releasing newer products as opposed to supporting ones that are older and have proven to be successful. This does not mean that Microsoft is abandoning its older products. The foundation for all of their new products and services rests on the capabilities of their operating system. To ensure compatibility across its various platforms, Microsoft must allocate some resources to update its existing products. For example, the company will release a new iteration of its flagship operating system, Windows 10, sometime later this year. Also, Microsoft continues to update its Office suite with releases every few years. The investments made into these products are primarily just to ensure compatibility and maintain their market share.

Ultimately, Microsoft is investing a lot of its resources on advancing newer products and services. Examples of this exhibited by the recently released cloud-based products and services such as Delve, StorSimple, InMage, and Azure Machine Learning. Microsoft is also taking measures to improve the infrastructure supporting the cloud by “building more data centers and increasing capacity in existing regions” (). In the discussion and analysis of its financial performance in the past year, Microsoft pointed out in the 2014 Annual Report, “Research and development expenses increased $970 million or 9%, due mainly to increased investment in new products and services” (). This tangible evidence, in conjunction with the company’s various statements, affirms how Microsoft intends to focus on newer products and services.

To get a sense of how well certain Microsoft products and services are performing in the market, a BCG Growth-Share Matrix is constructed as follows:

Market Growth Rate High Star

·Azure

Question Mark

·Windows Phones

·Windows Surface tablet

Low Cash Cow

·Windows PC Operating System

·Office Suite

Dog

·Bing

High Low
Relative Market Share

This table is not comprehensive, but rather just goes to show how Microsoft has a product within each of the four BCG classifications. Also, since the matrix distinguishes market share only by high or low, some products would not fit into this framework. For example, the Xbox One has a market share that is not high or small relative to others in the same industry. This matrix also helps rationalize why Microsoft is going forward with a mobile and cloud-based strategy. Both of these markets are growing at a high rate, meaning there is a massive incentive for companies to secure high market share. Therefore, investing significant resources in improving mobile and cloud-based offerings is how Microsoft plans to compete and ultimately win in the market.

Once a company’s portfolio is analyzed, it must implement a parenting strategy to ensure synergy and increase overall performance in its various divisions and activities. Microsoft recently adopted a horizontal approach to their parenting strategy. As opposed to separating their business by product line, they merged multiple business units into one division. These segments are: “Devices and Consumer (‘D&C’) Licensing, D&C Hardware, D&C Other, Commercial Licensing, and Commercial Other” (Microsoft, 2014). Within these segments are complementary product and service offerings. For example, the D&C Hardware segment concerns hardware and accessories for gaming consoles, tablets, and PCs. Developing multiple products within the same division makes it easier for Microsoft to achieve compatibility among its different platforms. Since many customers are likely to purchase products that possess familiar capabilities and interfaces, cross-compatibility is crucial to obtaining loyalty in the market. By leveraging this horizontal approach, Microsoft’s parenting strategy will prove instrumental in achieving its desired growth.

○ Business Strategy

■ Focus on improving the competitive position

■ can be competitive and cooperative

■ Lower Cost strategy (i.e., Walmart)

■ Differentiation (i.e., Staples)

Microsoft’s major competitors are Apple and Oracle. In 2014, Apple’s annual sale was double as Microsoft’s. However, Microsoft managed to maintain a high net profit margin. The reason for Microsoft’s success is because of its differentiation strategy, which “is aimed at the broad mass market and involves the creation of a product or service that is perceived throughout its industry as unique.” (170). In the past ten years, Microsoft has over 20 acquisitions for the most advanced technologies. This helps in creating more unique products and services for their customers. This strategy allows Microsoft to provide a high quality of products and services, and so create brand loyalty. One shortcoming differentiation strategy has high-quality products associated with a high price, thus decreases the value to customers. Apple, like its primary competitor, does better in the differentiation strategy that it provides its product with different configurations so that customers can buy the product with the best price for them. This is what we need to work on to help Microsoft to maintain its leadership in the industry.

○ Functional Strategy

Marketing Strategy

Microsoft’s marketing and distribution strategy operates through OEMs (original equipment manufacturers), distributors and resellers, retail stores, and the internet. Microsoft splits its OEM’s into two categories: Direct OEM’s and System Builders. Direct OEM’s are Microsoft’s largest OEM’s, which consist of global companies like Acer, ASUS, Dell, Fujitsu, HTC, Hewlett-Packard, LG, Lenovo, Samsung, Sony, Toshiba, and more. Direct OEM’s are managed through an agreement directly with Microsoft, hence the name. The distribution agreements executed with each Direct OEM encompass one or more of Microsoft’s products. They are not limited to only the multinational companies, as smaller, similar deals also hold regional OEM’s. The latter category of OEM’s consists of lower-volume manufacturers that Microsoft supplies its software for pre-installation and redistribution purposes. This process takes place mainly through the Microsoft distributor channel, as opposed to holding a direct agreement with Microsoft, as the Direct OEM’s do.

Most companies that license Microsoft’s products and services engage directly with Microsoft through enterprise agreements. Sales support stems mainly from EDA’s (Enterprise Agreement Direct Advisors) that recommend companies to license Microsoft’s products and services. EDA’s may consist of anything from independent software vendors, web agencies, developers, to solution integrators. Companies also indirectly license Microsoft’s products through LSP’s (License Solutions Partners), distributors, retailers, OEM’s, system builders, and VAR’s (value-added resellers). Retail packaged products are mainly distributed through retail outlets, resellers, authorized replicators, and independent distributors. Through retail outlets and third-party retailers, products can reach consumers, including hardware products. Phones reach the consumer base through global wireless communications carriers. Sales support is then structured by a network of sales representatives and support personnel who obtain orders from distributors.

Online content and services are offered through various sources, such as Bing, MSN, Office 365, Xbox Live, Skype, Outlook.com, Windows Phone Store, and Windows Store. Additionally, online products are sold in marketplaces online, as well as in retail stores. Commercial cloud-based services are offered through Office 365, Microsoft Azure, and Microsoft Dynamics CRM Online. Many of these cloud-based services are sold through enterprise agreements, which have allowed new sales programs to reach smaller businesses. Through an online advertising platform, advertising services are offered as well, which are targeted towards advertisers and publishers.

R & D Strategy

      Products and services are developed through four main engineering groups: Applications and Services, Cloud and Enterprise, Devices, and Operating Systems. Microsoft’s development strategy operates internally in an attempt to utilize product differentiation and tighter technical control, which it believes are competitive advantages. It believes that this will allow for pinpointing certain more critical modifications and when they should be implemented in particular. Before the release of any new software, Microsoft provides its application vendors guidelines and resources in development, training, and testing.

Microsoft invests in an array of surfacing technological breakthroughs and trends that add value to its growth and its consumers. Microsoft prides itself on its long-term commitment to research and development, looking to span communication, collaboration, and information access and organization. This “span” has come to encompass most of the world, as Microsoft not only has research and development facilities in the U.S., but also in Canada, China, Denmark, Estonia, Finland, India, Ireland, Israel, Norway, Sweden, Taiwan, and the United Kingdom. Microsoft’s approach to globalization is intended to spur and maintain competitiveness within local markets while attracting the best talent from around the world.

Research is funded at the corporate level, as well as the business segment level. Beyond Microsoft’s leading research and development operations, there is also Microsoft Research, a computer science research organization that is one of the world’s biggest. It works with the world’s top universities to advance state-of-the-art computer science technology. In doing so, it contributes to Microsoft’s product innovation while simultaneously allowing insight into future technological trends and other essential growth opportunities.

Operations Strategy

In the first quarter of the 2014 fiscal year, Microsoft transformed its organizational structure to a devices and services company. After that, financial performance has been reported by its new segments: Devices and Consumer (D&C) Licensing, D&C Hardware, D&C Other, Commercial Licensing, and Commercial Other. D&C sections are made up of D&C Licensing, Computing and Gaming Hardware, Phone Hardware, and D&C Other. Primary products and services of D&C Licensing are linked with the Windows Operating System and its licensing, which OEM’s buy to pre-install on the products that they sell. Gaming/entertainment consoles and surface devices, which are the main products that make up the Computing and Gaming Hardware segment, are designed to provide entertainment and help consumers be more productive. With the acquisition of NDS (Nokia Corporation’s Devices and Services Business), the main products and services of the Phone Hardware segment consist of Lumia Smartphones and non-Lumia phones. D&C Other makes up the rest of Microsoft’s operations, which includes online application marketplace transactions and search and display advertising.

Purchasing Strategy

      One purchasing strategy Microsoft uses is to share repurchases. A new share repurchase program was approved on September 16, 2013, which permitted a share repurchase cap of $40 billion. The plan was implemented on October 1, 2013, and is said to last indefinitely until suspended or discontinued, which may occur without notice. Using cash resources for all repurchases, $35.1 billion remains out of the $40 billion as of June 30, 2014.

 Logistics Strategy

Microsoft possesses operation centers that support all its regional operations. These include, but are not limited to, customer contract/order processing, information processing, credit and collections, and vendor logistics and management. The operation center in Ireland supports the European, Middle Eastern, and African regions. The Singapore operation center covers Japan, India, Greater China, and Asia-Pacific. Furthermore, most of the U.S. operation centers include Latin and North America. Aside from all the operation centers, Microsoft also has data centers spanning throughout the Americas, Asia, and Europe.

Human Resource Strategy

Microsoft’s human resource strategy incorporates its technology in coping with human resources. It utilizes the cloud platform to deal with the effects of technological trends in today’s workplace, including mobile productivity, social collaboration, and data insights. Given that employees increasingly use their mobile devices, with social collaboration being more critical in business operations, and with technology now able to predict future HR scenarios, the cloud platform reduces innovation and delivery time and allows for learning management tools and self-service HR portals.

Microsoft technology has the tools to provide employees the opportunity to construct their self-service HR portal to monitor their everyday activities. This allows HR workers more time to help other managers. Automated learning management programs boost career experiences by incorporating talent and performance management tools. Microsoft productivity tools help cut retraining costs associated with applying new technology. Customized training tools allow for scenario-based business application learning. Furthermore, Office 365 bridges void in successful communication by reaching everyone within the organization, including employees without computer access.

Information System Strategy

The information system strategy used by Microsoft is meant to enhance its system efficiency and productivity. Its server software is assimilated with its server infrastructure and middleware to bolster the Windows Server operating system’s software applications. This approach was implemented so that Microsoft could flourish in a cloud-first world. Microsoft has made numerous vital investments in cloud strategy, such as increasing the capacity and amount of data centers, which was meant to enable the emergence of new cloud capabilities.

  • Policies- Peter Villanueva○ Business Policy (Chapter 8.5)

■ Broad guideline for decision making and implementation

■ principles under which a corporation operates on a day to day basis

  • Walmart: “low prices every day.”
  • Nordstrom: The customer is always right.”

Microsoft’s business policy is heavily centered on customer and partner feedback. On their page, they state:

“Our vision is to provide our customers and partners with experiences that they value and recognize across all their interactions with Microsoft and enable them to realize their full potential.

Our goal is to be #1 in satisfaction across all audiences and every market.”

To build value in their products, they utilize their customers’ and partners’ insight to fuel innovation to develop and update their products, from their cloud service to their search engine to their operating system. This process is most visibly displayed with their help and support service center that handles customer issues and problems with Microsoft products and generates feedback to use in their development process.

4. Alignment

  • Is every stage of planning and decision-making in alignment with the company’s mission?
  • How do the corporate objectives help accomplish the mission?
  • How does the corporate strategy help accomplish the mission?
  • How does the business strategy help accomplish the mission?
  • How do functional strategies help accomplish the mission?

Microsoft’s mission statement focuses on creating innovative technology that meets the needs of consumers in many ways. They focus on accessible technology that enables users to personalize their devices to fit their needs. The global mission statement focuses on putting together a staff composed of the best and brightest minds from many different regions to stay competitive globally and to meet their aggressive goals. Microsoft’s objectives reflect the mission statement because it focuses on catering its technology to the individual’s preferences and situational needs. The company understands that every person is different, and their strategy to compete in their market is to have technology that caters to the people’s unique differences and preferences. However, to stay competitive, Microsoft ensures that other parts of its business are aligned with its mission statement and objectives.

The corporate strategy helps obtain the goals Microsoft mentions in its mission statement by focusing on ways to grow and create innovative ways to improve its software expertise. Microsoft does this by expanding its technology into related hardware fields. They are also trying to come up with new and innovative ways to improve their software expertise by focusing on their mobile and cloud-based services. Similarly, the business strategy employed by Microsoft focuses on differentiation. It uses distinction because it aims to be competitive globally. This differentiation strategy also helps the company create a product or service that is unique to the industry they are in and to the consumers. These strategies reflect the mission of the company by ensuring that the company can continue to grow, stay competitive in the marketplace, and also continue to create new and innovative products that cater to the customer’s needs.

Microsoft’s functional strategy is comprised of different parts but mainly consists of its operations, marketing, and research and development strategies. These strategies help offer ways for the company to ensure that its products are easily accessible to its consumers. The research and development strategy, in particular, helps maintain Microsoft’s competitive advantage by utilizing product differentiation and maintaining tighter technical control. All of these strategies help the company follow through with its mission statement in ways such as staying innovative and ensuring that the company does everything it can to continue to grow and be successful while keeping the customer’s needs and wants in mind. Everything that the company does, such as the decisions they make and the people they hire, is done to ensure that the company follows through on its promise provided in the mission statement.

5. Required for Stage One

  • (at least two pages, single-spaced, business block format)
  • Current situation of the corporation
  • Burning strategic issues impacting the Board
  • Major competitive challenges
  • Five-year financial overview
  • Why you want to study this firm
Sources
  • Chauhan, C. (2015). Strategic Analysis of Microsoft Corp.
  • Eicher, T. (2013). The 2011 Microsoft Impact Study. Microsoft Corporation, 3, 1-13.
  • Hartung, A. (2013, January 20). Microsoft Still Can’t Find Its Future. Is It Too Late for the
  • Company?
  • Lundquist, E. (2013, October 28). Azure’s Success Shows Microsoft Gaining Ground in Cloud
  • Computing.
  • Microsoft Corporation (2014). Citizenship Report.
  • Microsoft Corporation. (2015). Corporate Citizenship.
  • Microsoft Corporation. (2015). Our Footprint.
  • Microsoft Corporation. (2015). Powering the Future.
  • Parkhurst, E. (2012, August 31). Microsoft and its employees feeding federal political campaigns at record pace – Puget Sound Business Journal.
  • Computer Operating Systems: Global Market Share 2012-2015. (n.d.). Retrieved June 8, 2015.
  • Rosoff, M. (2015, April 29). Microsoft Vows to Have $20 billion In Cloud Revenue in 2018. Retrieved June 8, 2015.
  • Bellis, M. (n.d.). Microsoft – History of a Computing Giant. Retrieved April 16, 2015, from http://inventors.about.com/od/CorporateProfiles/p/Microsoft-History.htm
  • Hall, M. (2015, January 4). Microsoft Corporation | American company. Retrieved April 16, 2015, from http://www.britannica.com/EBchecked/topic/380624/Microsoft-Corporation
  • Microsoft Accessibility. (n.d.). Retrieved April 16, 2015, from http://www.microsoft.com/enable/microsoft/mission.aspx
  • Microsoft Corporation. (2014). 2014 Annual Report. Retrieved from http://www.microsoft.com/investor/reports/ar14/index.html#discussion
  • “How We Do Human Resources.” How We Do Human Resources. N.p., n.d. Web. April 17. 2015.
  • “Microsoft 2014 Annual Report.” Microsoft 2014 Annual Report. N.p., n.d. Web. April 17. 2015.

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