MICROSOFT

STRATEGIC MANAGEMENT
VIPUL GARG
235/2015
PGDM- FINANCE

ABOUT MICROSOFT

Microsoft was founded by Paul Allen and Bill Gates on April 4, 1975.
As on June 30, 2016 No. of independent directors: 9
No. of employees : 114,074
Net Revenue: $85.32B (-9% YoY)
Net Income: $16.79B (+38% YoY)

VISION AND MISSION STATEMENT

Vision
Missio
n

to help individuals and

businesses realize their full
potential.
to empower every person and
every organization on the planet
to achieve more.

VISION AND MISSION STATEMENT

Vision
to help individuals and businesses realize their full potential.
Microsofts vision statement shows the companys target market and product value.
the corporate vision does not contain details on a desired future situation of the
organization.
Mission
to empower every person and every organization on the planet to achieve
more.
Microsofts mission statement presents the global market scope of the business and a
general idea about the benefit of the business to its customers.
Microsofts corporate mission lacks an idea about the strategic direction of the
business.

External Environment
Political

Economic

1.Political
stability in
the majority
of markets
(opportunity)
2.Increasing
governmental
support for
automation
(opportunity)
3.Increasing
international
trade
agreements
(opportunity
& threat)

1.Considerable
economic
stability of
the majority
of developed
countries
(opportunity)
2.High growth
of developing
countries
(opportunity)
3.Growing
middle class
disposable
income
(opportunity)

Social
1.Stable
attitudes
about leisure
(opportunity)
2.Increasing
cultural
diversity
(opportunity
& threat)
3.Stable
demand for
high quality
customer
service
(opportunity)

Technological

Ecological

1.Rapid
adoption of
mobile
technology
(opportunity
& threat)
2.Increasing
volume of
online
transactions
(opportunity
& threat)
3.Increasing
automation in
businesses
(opportunity)

1.Increasing
preference for
green
products
(opportunity)
2.Increasing
focus on
business
sustainability
(opportunity)
3.Increasing
availability of
recyclable
materials
(opportunity)

Legal
1.Increasing
electronic
waste
disposal
regulations
(opportunity
& threat)
2.Improving
patent laws
(opportunity)
3.Energy
consumption
regulations
(opportunity)

INDUSTRY ENVIRONMENT
Moderate switching costs (moderate force)

Competit
High aggressiveness of firms (strong force)
ion
(Strong High diversity of firms (strong force)
Force)
Bargaini
ng Power
of

Custome
rs
(Moderat
e)
Bargaini
ng Power

of
Suppliers
(Moderat
e)

Low substitute availability (weak force)

Moderate switching costs (moderate force)
High quality of information (strong force)

Moderate size of suppliers (moderate force)

Moderate population of suppliers (moderate force)
Moderate overall supply (moderate force)

Low performance of substitutes (weak force)

Threat of

Substitut Low availability of substitutes (weak force)

Moderate switching costs (moderate force)
ion
(Weak)

High cost of brand development (weak force)

New
Moderate cost of doing business (moderate force)
Entry
(Moderat Moderate switching costs (moderate force)
e)

INTERNAL ENVIRONMENT
Strenghts
Dominant brand image (ability to attract customers, especially those who view brand strength in
relation to reliability)
Product alignment with positive externalities (as more third-party software developers create
programs for IBM PC-compatible operating systems, the companys Windows operating system
becomes even more popular.)
Strong alliances with other firms

Weaknesses
Vulnerability to cybercrime
Imitability of some products
Lack of dominant computer hardware products

INTERNAL ENVIRONMENT
Resources
Brand Name
Innovation (Increased focus on cloud services)
Capabilities
Distribution- Customers can access, purchase or download software products through
Microsofts official website and online store. At present, this online place is a major avenue
for the companys revenues.
Organization Structure- The main implication of Microsoft Corporations organizational
structure is the ability to focus on product development. For example, the company uses
its Intelligent Cloud division to offer cutting-edge cloud computing services.
Development- Microsoft continually develops new software products to generate higher
revenues.
Core Competencies
Valuable and rare Capabilities- Microsoft has a strong brand name in the industry and a
widely used Windows OS. The code of windows is accessible only by Microsoft which makes
it rare.

BUSINESS AND CORPORATE LEVEL STRATEGY

Business Level Strategy

Microsoft's business level strategy involves driving andexpanding innovation to achieve
market excellence.(User Friendly Interface, Cloud computing)
Diverse Workforce- In 2009, Microsoft spentmore than $1 billion working with over 1,200
suppliersthat are women, minority or veteran owned. This spending has increasedmore
than 250%in the past few years.
Low Price- Price advantage has been effective and consistent with Microsoft's original goal
enabling PCs that run Microsoft software on every desktop making the use of software is
possible for everybody.

BUSINESS AND CORPORATE LEVEL STRATEGY

Corporate Level Strategy
Microsofthasa divisional organization.Each division or group focuses on a specific good or
service. Customer service staff, researchand development, and sales are allparts of each
individual group.
This allows for better customer support butat a higher expense.
Investments and global expansionthroughout the world.This isbecausein other parts of
the world like China and India, population size allows for a huge market that has maybe not
been effected by all of what Microsoft has to offer.
Collecting money from Cash cows (Windows, XBOX) and investing into Question marks
(One drive, Surface, Windows phones) while the dogs include Bing and Windows server.

BUSINESS AND CORPORATE LEVEL STRATEGY

Diversification through Acquisitions:

LinkedIn (2016)- $26.2 bn
Skype (2011)- $8.5 bn
Nokias Phone unit (2013)- $7.6 bn
Aquantive (2007)- $6 billion
Mojang (2014)- $2.5 billion
Visio (2000)- $1.5 billion

STAKEHOLDERS GROUP & CSR INITIATIVES

The following are the major stakeholder groups significant in Microsofts business, arranged according to the
companys prioritization in its CSR strategy:
Customers (highest priority)- Mainly interested in reasonably priced effective products, along with high quality
customer service. Students and veterans can purchase the companys computing products at discounted
prices.
Employees- The interests of employees are competitive compensation, as well as fair labor and employment
practices. Microsoft offers high salaries for qualified workers, in order to compete with technology firms like
Apple.
Communities- Communities are interested in corporate support for development, such as through livelihood
programs and environmental protection. The company maintains its carbon neutral status through the use of
smart packaging and renewable energy. Microsoft uses a number of programs, including discounts for students,
military personnel and veterans, as well as donations and assistance through Microsoft Philanthropies
Investors- The interests of these stakeholders are business growth and accurate financial reporting. The firms
business stability also addresses investors interest regarding business growth.
Governments- directly influence the companys limits in doing business. Governments are interested in
Microsofts legal and regulatory compliance, as well as contributions to economic growth. Microsofts corporate
guidelines require human resource managers to comply with labor regulations. These guidelines also require
compliance with regulations on environmental impact, product safety, and consumer security.
Microsofts emphasis on human rights, environmental sustainability and transparency ensure that this corporate
responsibility strategy remains relevant to current market conditions. Lack of immediate responses to individual
customer complaints and inquiries.

STRATEGIC LEADERSHIP

From: Satya Nadella

To: All Employees
Subject: Aligning Our Strategy & Structure
Microsoft aspires to empower every person and every organization on the planet to achieve more.
Three interconnected and bold ambitions:
Reinvent productivity and business processes (Applications and Services Group (ASG))
Build the intelligent cloud platform (Cloud and Enterprise (C+E) team)
Create more personal computing (Windows and Devices Group (WDG))

STRATEGY DECISION AREAS

1. Design of Goods and Services.- Microsoft Corporation initially focused on software
design. Their operational productivity decision-making processes now include computer
hardware and software products, along with Microsofts cloud computing services.
2. Quality Management.- address these operational objectives through continuous
improvement and innovation. The company uses feedback systems to collect usage
information from customers, and integrates such information in the next iteration of
computer software products. Also, Microsoft heavily invests in R&D to achieve rapid
innovation that keeps the business competitive against other technology firms.
3. Process and Capacity Design.- In computer hardware production, the company
automates production capacity allocation to minimize productivity bottlenecks. For
software production, Microsofts operations managers streamline process design to reduce
errors and increase operational efficiency in correcting software development issues.
4. Location Strategy- The companys computer software products are easily distributed to
target markets through the Internet. However, for hardware products like the Xbox,
Microsoft maintains business partners, such as authorized sellers.

STRATEGY DECISION AREAS

5. Layout Design and Strategy.- Efficient movement of information is achieved through

network technology, such as online computers in the workplace. Efficient movement of
materials is supported through Microsofts automation of production processes.
6. Job Design and Human Resources.- Leadership development programs are used to
identify and support leaders within Microsofts organization.
7. Supply Chain Management.- Microsoft Corporations global supply chain is monitored
through computer networks. Strategic decisions are based on real-time data representing the
supply chain, distribution network, and other areas of the business.
8. Inventory Management.- The company uses automated systems to determine when to
update and upgrade its cloud computing services. The upgrades involve new materials like
server components in Microsofts facilities. Microsoft outsources production processes.

STRATEGY DECISION AREAS

9. Scheduling.- Microsofts objective is to use market conditions to determine the most
suitable schedules. Operations managers change intermediate schedules to suit current
changes in demand for Microsofts Xbox units.
10. Maintenance.- In software development, the company focuses on the sufficiency of
personnel, such as programmers, to maintain rapid innovation through software design and
iteration. To support outsourced production, the company provides current data to
manufacturers. Such current data indicates intermediate changes in production to ensure
operational adequacy of Microsofts supply chain.

Criteria Microsoft uses to assess and monitor productivity:

Units per day (Hardware manufacturing productivity)
Servers updated per day (Equipment maintenance team productivity)
Units sold per day (Productivity of Microsoft Stores)

ORGANIZATION STRUCTURE
The following characteristics are significant in Microsofts organizational structure:
Product type divisions (most dominant structural feature)
Global corporate groups
Geographic segments
Product type divisions - The company uses product or output as the main criterion for grouping
personnel and related resources.
Productivity and Business Processes (Skype, Outlook.com, and OneDrive, Dynamic ERP)
Intelligent Cloud (SQL Server, Windows Server, Visual Studio, System Center, and related CALs, as
well as Azure. )
More Personal Computing (Windows OEM licensing , Surface, Xbox hardware)
Corporate and Other

ORGANIZATION STRUCTURE
Global Corporate Groups.
Office of the CEO
Worldwide Commercial Business
Marketing
Microsoft Global Sales, Marketing and Operations
Corporate Strategy and Operations
Microsoft Cloud and Enterprise Group
Human Resources
Finance
Business Development
Applications and Services Group
Windows and Devices Group
Technology and Research
Legal
Geographic Segments. These segments are used to group operations in the companys financial reports
United States
International