Microsoft’s Strategic Framework Analysis

Task One

Introduction

According to Ansoff et al (2019), Microsoft Corporation is a multinational technology service provisioning company which was incorporated during September 22, 1993. The headquarters of Microsoft are currently located at Redmond, Washington, United States of America. Microsoft undertakes the development, licensing and supporting of an extensive range of software applications, devices, services and products. The various segments of Microsoft services involve Personal Computing, Business Processes and Intelligent Cloud. Currently, Microsoft has 130000 employees on the international basis. The tech giant organisation had generated $ 110.4 billion as revenue earned during the financial year of 2017-18 and the operating income amount earned by MS during this same period has been $ 35.1 billion. In this context, the corresponding section of the report would highlight analysis of the significance of the utilisation of theoretical constructs, perceptual frameworks and conceptual models for the purpose of development a specific strategic approach of business propagation for a multinational organisation such as that of the Microsoft.

Strategic analysis

Mission

The mission statement of any organisation is the published statement of the specific purpose of the organisational focus of the concerned entity. This is primarily kept unaltered through the passage of time. According to Aversa, Haefliger and Reza (2017), the mission statement of Microsoft is reflective of the organisational commitment towards empowering each and every person as well as organisation throughout the globe to achieve greater benefits. The emphasis is on the projection of organisational efforts to empower the customers through the value which could be provided by the products of the company.

Vision

Bagley (2015) has stated that organisational vision statement consists of the indication of the position which the concerned organisation intends to achieve and sustain in the longer term. This also highlights the future course of action for the organisation. The vision statements provide the direction of organisational businesses and the achievement of the desired market positions is also determined by such statements. The corporate vision of Microsoft is indicative of the organisational commitment to add value to the purchase experience of the customers through the provided products and services.

PESTLE

The PESTLE analysis process is incorporated by the managerial personnel of Microsoft Corporation for the purpose of understanding the existing business situation of the company. Block et al (2015) has outlined that PESTLE analysis process is also utilised as a model tool through which the external factors of influence could be identified and Microsoft managers apply this analysis tool for the determination of the macro-environmental aspects of the existing business environment. The PESTLE analytical tool specifies, for the Microsoft Corporation, the external factors which could reflect the performance measures of the company regarding the software and hardware markets. The issues which could be relevant to the business process of the company could as well be ascertained in this manner and Microsoft managers could develop the necessary and suitable strategies through which greater competitiveness of the company could be achieved through such analysis of the external factors.

Porter’s five forces

Microsoft Corporation deliberately identifies the issues of the existing industrial environment through the application of Five Forces Analysis. Michael Porter had established the Five Forces Analysis model for the purpose of comprehending and understanding the external influents which could shape the business operational strategies and efforts of any such organisation such as the Microsoft Corporation. Regarding the business operational strategies employed by the Microsoft, these external influents are the variegated impacts of the business propagation activities undertaken by the competitive business organisations within the computer hardware manufacturing and software programming industry. Such factors are likewise founded on the choices of clients and providers. In this context, product substitutes generally do impact the business situations of the Microsoft. To keep up the market position as a noteworthy contender, Microsoft has to utilise the Five Forces Analysis model of Michael Porter to identify the issues existing in the technology markets.

Competitive position

Microsoft, as one of the largest and the leading organisation in the technology based product and service development industry within the entire world, as per the observations of Dess et al (2019), prioritises the development of competitive advantage within the existing market scenario. This process is meant to formulate protective barriers to exclude the competing organisations from acquiring the market position of the company under consideration. The various constituent component of this barrier are economies of scale, betterment of networking effect, strength of product and service offering, brand identity, intellectual property and regulations. The dearth of presence of such critical factors, contribute to the situation where operating profit margins depreciate from the competitive influence of the comparable services and products.

Resources

The incremental investment in the research and development into development of greater effective products and services could be considered to be the most significant resource for the Microsoft so that the intense competition in the tech industry could be managed. From a figurative perspective, the greatest resource of Microsoft could be understood to be the leading range in the provisioning of the cloud services. The most popular and successful brand of the cloud based services of the company under consideration has been the Microsoft Azure. Apart from these, Microsoft Corporation also performs designing, manufacturing and sales operations of the devices offered such as personal computers (PCs), tablet computers, gaming and entertainment consoles, phones and the accessories.

Competences

Competences are as the following:

Threshold competences

1: Ability of low priced software and hardware production.

2: Marketing and advertisement innovations.

3: Greater focus on innovation based research and development.

4: Financial buffer stock possession.

5: Effective recruitment and retention of the suitable human resources and cultivation of the available talent towards innovation manifestation.

6: Comparatively better customer services.

Core competence

1: The ability to innovate and absorb the advent of competitive technologies concerning development of different software applications.

2: Maintaining dependent customer bases and retention of customer loyalty.

3: Retaining and possession immense intellectual capital.

4: Fostering of brand reputation which enables the company to attract best employees and customers alike

Strategic capabilities

The strategic capabilities of Microsoft are as the following:

1: Existence of both tangible and intangible resources as components of threshold resources.

2: Inclusion of subscription and licensing revenues for the Office and Office 365 for both the consumer and commercial customers within the business productivity process segment of the company.

3: Existence of the private, public as well as hybrid servers as definite service offerings within the intelligent cloud segment as part of the Microsoft Dynamic Suite. This could definitely add to the strategic competitive leverage of the company under consideration over the closest market rivals such as Apple.

4: Provisioning of personal computing segments which include the Windows OS licensing, gaming and devices as well as search advertisement applications which ultimately generated 46% of the grows revenue in the fiscal year 2018 alone.

5: As per the observations of Wolf and Floyd (2017), it has been always the objective of Microsoft to focus most on effective innovative practices in the technology industry so that products could be brought to the private and institutional customers which could assist the customers to become more productive on their own terms.

Dynamic capabilities

The dynamic capabilities of Microsoft are as the following:

1: The possession of in excess of $ 800 as market capital with revenue in the fiscal year of 2018 reaching the hitherto unrealised threshold of $ 110 billion.

2: Incremental strengthening of the product portfolio and consistent expansion of the customer base.

3: Ability of development of three different cloud business services as Microsoft Office 365 commercial, Microsoft Azure and Microsoft Dynamics 365. The revenue generated from these segments and the associated cloud applications could be identified to be $3.2 billion in the fiscal year of 2018 which has been an increment of 56% from the previous year.

4: According to Grant (2016), considerable growth registration in the gaming services, advertisement products and server services.

5: Effective and advantageous pricing strategy so as to expand the existing customer base and the retention of customer loyalty. This has been achieved through expansion and formulation of large package ranges so as to address the necessities of various groups of customers.

Value chain

1:The value chain of Microsoft involves two different tiers namely the initial tier with primary activities and the second tier with support activities.

2: Madsen and Walker (2015) have suggested that the value chain has been comprehensively integrated in the overall IT infrastructure of Microsoft known as Corpnet.

3: The outcomes of such integration with technical capability are the central control and management of efficiency in the form of accurate decisions with minimum effort and correctness of suppositions.

4: This involves considerable saving of operating cost.

5: Furthermore, the delivering of software over internal and external network based communication leads to minimisation of logistical management necessity.

6: Microsoft holds greater competitive advantage over the competitors in development and maintaining of technology as integral part of the value chain. This has been the outcome of utilisation of IT based networks to perform advertising, consulting, delivering of software suits, management of customer services, finance allocation, interviewing, maintaining market support and performing recruitment.

SWOT

Strength

1: Microsoft has global leadership in the component of the cloud based sectors 2: According to Morden (2016), the most effective strategic leadership by CEO Satya Nadella is one of the hallmarks of this organisation which has been exemplified in the CEO being with the organisation since the 1990s and this provides ample attestation to the measure of brand loyalty by the employees of Microsoft. 3: Extensive and elevated profitability capability regarding the existing business portfolio and the possession of the most effective and stable financial position. 4: An overarching brand reputation and value perception as a company in the world which provides further strength to the organisation in terms of acceptability amongst the customers. 5: Extensive diversification of the product portfolio.

Weakness

1: Relatively weak position of within the market scenario of the product of Microsoft Edge browser application. 2:The recurrent technical issues and complications regarding Windows updates 3:Overt dependence on the ancillary organisations as hardware manufacturers 4: Recurrent issues involving security of the product applications.

Opportunities

1: Opportunities to undertake extensive mergers and acquisitions 2: Development of greater qualitative and innovative products and services. 3: Greater concentration on the segments of market comprising of smartphone products and related applications. 4: More focused emphasis on the development of mobile handset based advertising and reaching the greatest number of prospective customers at the same time. 5: Incremental investment in the enhancement of security measures of the software product suits against cybercrime.

Threats

1: Risks pertaining to the exchange rates. 2: Intensification of technology market competition through the emergence of greater number of competitors. 3: The implementation of the legal stipulations such as anti-monopolisation of the market and various other lawsuits which have afflicted the growth prospects and brand image of Microsoft. 4: The intermittent emergence of controversies concerning the execution of the CSR by the tech giant.

Strategic Choice with reference to Microsoft

Namada (2018) has outlined that the generic strategies of Porter are completely aligned with strategic growth operations of Microsoft since the optimisation of organisational performance could be ascertained from the enhancement of the effectiveness of general business approach towards fostering greater competitiveness. This is better delineated from the perspective of support generated by the generic strategies towards improvement of computer hardware and software product attractiveness to outperform the competitors. Bowman’s Strategy Clock advocates the competitive advantage to be evaluated in relation to the cost and differentiation advantages. Out of the eight possible strategies of the four quadrants of the strategy clock, the applicable ones relating to Microsoft are the following in terms of price and perceived value:

1: Low Price structure in terms of qualitative product provision.

2: Hybrid price structure in terms of moderation of price in comparison to medium to high quality.

3: Differentiation through branding and comparative higher qualitative value.

From the perspective of integration based strategies, the demonstrable examples could be highlighted as acquisition of Nokia assets during 2014 in the mobile phone industry with the intention of added value creation through combination of hardware assets of Nokia with the software services of Microsoft. The acquisition model has been constituted as the hybrid between the strategic remix and private equity frameworks. The emphasis had been on keeping the new structure post-acquisition to be relatively independent from the overarching working framework of the tech giant MNC. Rothaermel (2015) has outlined that out of the companies acquired by Microsoft, 107 belonged to the USA. Since the year 1987 which witnessed the initial acquisition performed by Microsoft, the company has been acquiring an average of 6 organisations per annum. The global distribution channel of Microsoft for distribution of products and services as well as sales operations utilises the components of Other Equipment Manufacturers (OEMs). These include the direct channels, resellers and distributors. The emphasis is on the establishment of sustainable and long term connection with the private and public sector based customers. Considerable investments in the market research through sales force personnel to recognise the requirements of the customers so as to better instruct the OEMs to efficaciously manage customer relationships.

Strategy evaluation with reference to Microsoft

Dess et al (2019) has asserted that the suitability of the strategic approaches of Microsoft could be understood from the outcomes of the market penetration strategy of the tech giant which is also the primary and intensive strategy of the company for ensuring of growth purposes. The suitability element could be further comprehended from the perspective of aggressive selling of greater number of products to the currently existing operational markets. Furthermore, Bagley (2015) has specified that the acceptability aspect could be ascertained from the intensification of marketing operations within Asia especially and this intensive strategy of growth has been responsible for the global dominance of the market of IBM PC operating system. In this context, it could be understood that application of effective market penetration strategy through broad differentiation in the genetic approaches through emphasising on uniqueness of the products has been feasible enough to attract greater number of customers.

Alignment with reference to Microsoft

The mission and vision statements of Microsoft partially identify the target market of Microsoft as the global market scenario in the form of serving both the individual and organisational customers. The vision statement further outlines the organisational intentions of Microsoft as empowerment. This is achieved through the improvement in the utility of the computing products of the company. Thus, the important and significant components of the corporate mission and vision statement of Microsoft could be understood to be the following:

1: Empowerment of customers. 2: Reaching the maximised numbers of people on the global scale. 3: Maximisation of achievement. 4: Addressing the people and the businesses on the global scale. 5: Complete potential realisation assistance provision to customers.

Conclusion

The preceding strategy acknowledgement process has been formulated on a three staged process where, at the initial stage, various aspects of the market operations strategy of Microsoft have been explored in tandem with the establishment of reference to various theoretical approaches. The second stage has involved the choices of strategic methods in reference to Microsoft. The final stage included the evaluation of the most suitable strategic considerations in context to the organisation under consideration.

References

Ansoff, H.I., Kipley, D., Lewis, A.O., Helm-Stevens, R. and Ansoff, R., 2019. Strategic dimensions of technology. In Implanting Strategic Management (pp. 255-283). Palgrave Macmillan, Cham.

Aversa, P., Haefliger, S. and Reza, D.G., 2017. Building a winning business model portfolio. MIT Sloan Management Review, 58(4), pp.49-54.

Bagley, C.E., 2015. Managers and the legal environment: Strategies for the 21st century. Cengage Learning.

Block, J.H., Kohn, K., Miller, D. and Ullrich, K., 2015. Necessity entrepreneurship and competitive strategy. Small Business Economics, 44(1), pp.37-54.

Dess, G.G., McNamara, G., Eisner, A.B. and Lee, S.H., 2019. Strategic Management: Creating Competitive Advantages. McGraw-Hill Education.

Grant, R.M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.

Kanagal, N.B., 2017. Development of Market Orientation for Marketing Strategy Formulation. International Journal of Marketing Studies, 9(4), pp.54-65.

Madsen, T.L. and Walker, G., 2015. Modern competitive strategy. McGraw Hill.

Morden, T., 2016. Principles of strategic management. Routledge.

Namada, J.M., 2018. Organizational learning and competitive advantage. In Handbook of Research on Knowledge Management for Contemporary Business Environments (pp. 86-104). IGI Global.

Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education.

Wolf, C. and Floyd, S.W., 2017. Strategic planning research: Toward a theory-driven agenda. Journal of Management, 43(6), pp.1754-1788.

Task Two

Introduction

The subsequent sections of the analytical report would be demonstrating the framework of the organisational structure of Microsoft Corporation in tandem with analysis of the manner of operational resource management within the Microsoft Corporation. Apart from these, the following section would be providing analytical discussion on strategic changes within the business process of the company. The objective would be to evaluate the suitability of business strategy for Microsoft to gain maximum advantage in the intensely competitive technology market.

Organisational structure

Organisational structure of Microsoft would have to be hierarchical to accommodate leadership development and lateral career progression. Regardless, it would have to be primarily a flat structure. It has to operate to foster idea generation. The objective is to facilitate flow of innovative ideas and creativity based solutions through the Flat structures.

Allocation of resources and control

The resource allocation process would have to involves three different resources including tangible (physical and financial resources), intangible resource (brand reputation and technology) and human resources. The allocation process would be constituted by the following steps:

1: Scheduling of activities. 2: Identification of the activities. 3: Considering the availability of resources. 4: Project time management. 5: Scope analysis. 6: Pre-emptive planning for task dependency management.

Controlling processes within Microsoft Corporation involve the following steps:

1: Institution of rewarding programs. 2: Programs of recognition of operational excellence for management of diverse working teams. 3: Annual increment based on performance.

Strategic changes

BPR

1: Microsoft requires investing specific efforts towards standardisation of processes. 2: Strict standardisation methods are to be adhered to in terms of hardware manufacturing logistics management. 3: Particular emphasis is required on the management of legal requirements concerning targeted markets. 4: Localised sales processes are to be kept unchanged if the sales processes could be flexible enough to produce intended outcomes.

TQM

Rugman and Verbeke (2017) have pointed out that priority has been always attached to the sustainability of any competitive advantage in the existing market scenario with total quality management process in terms of strategy formulation, implementation and resource allocation. The objective would have to be that the most number of investors could be attracted adhering to the notions of Warren Buffett or Charlie Munger.

Strategic leadership

The incumbent CEO of Microsoft Corporations, Satya Nadella, has been proven to be able to provide the company with the capable leadership roles which have been effective in providing a new direction to the company concerning the existing challenges. The innovation gap had been one of such challenges and the problems emanating from Nokia acquisition had been only addressed under the leadership of Nadella. Positive outcomes have been the acquisition of Linkedin, the improvement in enlargement of customer segments and of the product ranges and enhancement of the financial performance through cloud industry and gaming software development. These have contributed to the brand image improvement for Microsoft.

Dynamic capabilities

Security Management Information Services (SMIS) would have to be rigorously implemented to ensure that health and safety reporting could be secured access to health modules could be ensured for the working personnel. The other coveted dynamic capabilities are as the following:

1: Listing of the key strategic objectives. 2: Determination of the long term plans. 3: Outlining of the best metrics for evaluation of strategic drivers. 4: Evaluation of initiatives through the performance metrics involving external and internal benchmarks. 5: Ensuring greater alignment between the performance measures and operational initiative.

Conclusion

The preceding report section in this task has been oriented towards the evaluation of the performance objectives of the tech giant for better business propagation. Furthermore, performance objectives in the form of key performance indicators and critical success factors of the company have been assessed before concluding the study with the balanced score card based discussion of the required performance specifics of Microsoft.

Reference List

Rugman, A. and Verbeke, A., 2017. Global corporate strategy and trade policy. Routledge.

Thompson, A., Strickland, A.J. and Gamble, J., 2015. Crafting and executing strategy: Concepts and readings. McGraw-Hill Education.

Wheelen, T.L., Hunger, J.D., Hoffman, A.N. and Bamford, C.E., 2017. Strategic management and business policy (p. 55). Boston: pearson.

Yoffie, D.B. and Cusumano, M.A., 2015. Strategy Rules: Five Timeless Lessons from Bill Gates, Andy Grove, and Steve Jobs. HarperBusiness.