Microsoft case study: Swot & Pestle Analysis

Introduction
As the technology and economy is changing to its fastest pace, to survive in the business
industry, big and small enterprise needs to have business strategy to direct and create vision
for the organisation. The following report is encompasses with the appropriate framework to
outline the macro environment of Microsoft. The report will cover the PESTAL, SWOT
analysis of Microsoft.
L01 Analysis the impact and influence which micro environment has on an
organisation and its business strategies
In the world of technology, there are very few organisations that bring change in the human
life, Microsoft is one of them. Ever since the establishment of the organisation by Bill Gates
and Paul Allen in 1975 the organisation is growing bigger and getting stronger in every
passing day.
The mission of Microsoft is to empower every person and every organization on the planet to
achieve more. The organisation strives to create more opportunities for local and put impact
on the growth on every county they work for. The mission of an organisation provides an
effective and clear guide to make decision (Cochran, 2004). Mission shapes the culture of the
organisation. Mission statement focus on the tactical aspect of the organisation
The vision of Microsoft is to help people and the organisation worldwide and realise the
potential of others. Vision helps to create organisation strategy (Cusumano and Selby, 1995).
Both the vision and the mission of an organisation help the organisation to outline matrices
and performance standard.
Microsoft objectives for 2020 are to empower the tech intensity for the partners and the
customer. Also, to make the organisation and build the highest class performance platform
for cloud-first world and mobile-first (Johnson, 2007).
Strategic intent incorporates with management process to endeavour the organisational
vision, objectives and mission to lead the organisation to survive in a long run. Irrespective
the size of an organisation strategic intent is important for the success and the future growth.
Vision is the blue print of the future growth of an organisation, whereas, Mission delineates
the business and set the path to achieve the goal and cause for the existence (Greenstein and
Greenstein, 2004). On the other hand business model make effective strategy to have an
effective operation of the business.
Stake holder analysis of Microsoft
Stakeholder matrix: The stakeholders are the important group who have and show interest
and effect to the outcomes of the organisation directly or indirectly. The stake holder matrix
is a tool to analyse the importance and the need of the specific stakeholder
(SankaraNarayanan, 2012).

Figure 01: Stakeholder Matrix
The stakeholders of Microsoft are,
 Investors: Investors are the prime stakeholder of the Microsoft who have the right to
put vote, know the relevant information, appraisal right and right to dividend. The
board must ensure that the investor get their right and uphold the market price of the
share of the organisation.
 Customer: Without customer no company can survive despite having effective
strategy as only the customer is the way to generate revenue for the organisation.
Microsoft strives hard to satisfy the customer needs and commit to have continuous
improvement for the product and the services.
 Employees: A happy employee can build a high performance culture for the
organisation. Microsoft continuously trains to minimize the skill gap and bring
development for the employee and implement the skills for the growth. Microsoft
ensures an effective communication in between the organisation and the employee.
 Communities: Microsoft embarks to help the people of the communities, embedding
corporate social responsibility in the business and engage the employee through
volunteer activities.
 Suppliers: Microsoft aspires to have a beneficial relationship with suppliers to uphold
the accountability, integrity, fairness and transparency.
 Environment: Being a technology giant, Microsoft adopt standard, policies and
practices in the workplace and implement them for the betterment of the environment.
The Microsoft Stakeholder Mapping:

Figure 02: Stakeholder Mapping
The stakeholder mapping tool analyse the interest of various stakeholder of the organisation.
It enables the manager to prioritize different opinion effects on different projects of the
organisation. The tool displays the stakeholder group impact and influence on the particular
project on either positive or negative way. Various stakeholder groups have different
expectation and commitment and the manager of the organisation need to resolve any conflict
amicably to run the organisation smoothly and if the opinion of the stakeholder is same than
the betterment of the organisation (Heritage, 2006).
Stakeholder mapping give the manager a visual representation of the people connected with
the particular organisation and help to manage the expectation of them. Microsoft is an
American multinational company having a range of different stakeholder.
PESTAL analysis of Microsoft
As Microsoft is a business organisation, there are some PESTAL factors that affect the
organisation. Those are presented below:
Figure 03 PESTAL analysis
Political:
The 1st factor of PESTAL analysis is political factor. To run any organisation smoothly a
sound political factor is needed. Sometime political issues may demolish any organisation in

a glimpse. Political factors are referred as a systematic risk, which is unavoidable. If the
government has the convenient political policies, then it became easy to do the business for
any organisation.
Economic:
For any organisation adequate level of supply of product is needed. A suitable economic
factor helps an organisation to grow. Proper level of export and imported product is needed to
do run the organisation. If the organisation faces economic problem it may able to serve their
customer their desire product. As for Microsoft if the may not able to import and export their
product properly then they might face problem.
Social:
Social factor create impacts on business. To do any business the organisation has to maintain
the social facts. Just like time value of money, the taste of the people on product is also
changing. Same people may not like the same product as before. For this an organisation
should keep up to date with customer desire, so that they can place a hold in market. In past
people used to like button phone but in fast pace world people are more into in touch phone
and fast technology. As Microsoft is a technological company the social factor also effects on
them. They now produced fast forward technology to satisfy their customer.
Technology:
We are living in a world of technology. There are several group of organisation, which is
innovating new product and services every time. To keep the place in a market every
company should innovate new product to keep a place in customer heart. Like this Microsoft
also innovate new product time to time, so that they can beat the other company.
Environmental:
In today’s fast forward time the environment is getting polluted rapidly. So that for any
organisation that is producing product, should produce those product, which is convenient for
environment. As for any organisations that are producing laptop and computer, they should
produce eco-friendly because this types of products is not easily dispose. In that case
Microsoft is in track, as they are using carbon neutral from 2012, which in better for
environment.
Legal:
For any organisation legality is the most significant factor. Without legality a company
cannot survive in long run. If the company tussles the law, it may face bigger penalty. There
are several laws for labour and product that affect any producing organisation like Microsoft.
For this reason they should maintain the legality.
SWOT analysis of Microsoft:
The analysis are given below (Nentl and Miller, 2004),

Figure 04 SWOT analysis of Microsoft
Strength:
For any organisation strength means some factors, which is only available in the organisation.
No other company has that factor. As we know Microsoft is a technological company it has
Several strength factors rather than other company like Microsoft is the most leading
companies in today’s world. Again it is most vast and leading company in the market place,
which is supply customer desire product swiftly. Microsoft is innovating new thing time to
time to keep place in market for this reason it is growing day by day. It also keep huge
capitalism.
Weakness:
A company should work hard so that they can transform weakness into their strength. A
company should keep the secrecy about their weakness; otherwise other company can use it
against them. There are some weaknesses of Microsoft Company presented below:
As technology based it has cybercrime theft. Some time it struggle with innovation. It may
not have the market adequacy all time.
Opportunities:
A company should always be prepared for grab the future opportunities. Any types of
opportunities can hit the company as a jackpot. The opportunities of Microsoft are:
Cloud business growth, easy innovation product supply, can control the cost strategy.
Threat:
A company may face different threat from Rivals Company. As for Microsoft they are,
Cybercrime piracy, gay controversy of xbox live, several competitors, changing the desire of
the customer.

LO2 Assess an organisation’s internal environment and capabilities
Strategic capabilities is the abilities to harness all the capabilities, skills and resources to gain
competitive advantage and thus increase and survive the value over time. Despite the size of
the organisation, they tend to compete with each other for market share, customer and
revenue. The organisation employs tactics to deliberate strategies. The process of making the
strategies and implant them to action is hereby the responsibility of the manager or the leader
of the organisation. However, not all organisations have the similar advantage in the time of
employing and developing strategies.
Being the maker of operating system Microsoft is also known for their cloud player. Apart
from Google and apple, there were also many other companies who are competing with
Microsoft with their service and the product. So get the faster growth the brand invest their
money in expansion and innovation of their portfolio of the product. As a result the revenue
increases from 85.3 Billion dollars to 90 Billion dollars. The brand also invests in
partnerships and acquisitions to find faster growth.
The Key components of strategic capabilities are outline below,
Ability to Compete: To sustain in the business sector, there is no other way to sustain rather
than to compete. Microsoft is operating in more than 190 countries around the globe. It
develops software and supports a range product, device and service which create greater
convenience and create new opportunities for people, professions and business. Apart from
higher business productivity and efficiency the tools and the platform provided by Microsoft
brought higher competitiveness for different size of business.
Thriving in Free Market: One of the major strategic capabilities for the organisation to remain
financially viable and continue to grow despite having the competitor in the free market.
From investor to employee everyone is concern about the financial viability.
Identifying Critical Competencies: Apart from the cash property, patent and all, all these
contribute in the strategic ability to employ and formulate strategies. Other elements of
organisation are organisation structure and human resource. Since leadership mechanisms
and employee skills all contribute to make the business' competitiveness.
Strategic Value Analysis: Assessing strategic capability of the organisation is a complex
process, because there are number of factors need to be address. The strategic value analysis
refers to the process of evaluating the strategic capability. To adjust with the change needs
reports and analyse them to continually perform to its best.
McKinsey’s 7S model

Figure 03: McKinsey’s 7S model.
To increase effectiveness of the organisation McKinsey’s 7S model component can be
aligned. The components are interconnected with each other, a change in one can cause
change to other also.
Strategy: The business strategy of Microsoft can be segregated as product differentiation.
Microsoft develops a wide range of services and product sells them in premium price.
Microsoft business strategy focused on mobile-first, cloud-first growth through acquisitions
and merges and exploring business opportunities connected with virtual reality and
augmented. The latest business strategy is ‘tech intensity’.
Structure: in 2015 organizational structure of Microsoft is divisional and the structure
resulted to a restructuring initiative introduced by CEO Satya Nadella.
Systems: To run the organisation successfully Microsoft has a range of system which are
critically implant. From employee recruitment to customer service everything is included in
the system. Since 2014 the CEO reduce the bureaucracy and simplifying organizational
systems to increase flexibility and foster creativity.
Style: Microsoft have divisional organisational structure, in June 2015 the senior
management of Microsoft announced the change in organisational structure which cause the
elimination of about 7,400 positions in fiscal year 2016.
Skills: The skills of the employee of Microsoft bring the competitiveness among the other
organisation.
Staff: Recruiting the best staff for the best position and motivate them to achieve the business
goal.

Shared Values: Every organisation have their norms and standard to guide their employee
behaviour along with the company action, which is the foundation of the organisation.
A VRIO Analysis of Microsoft
Microsoft is a world known tech giant, who experience market cap which is 1.2 trillion and
the leading cloud player. In one side the tech giant is growing bigger and on other side they
are facing a number of regulatory and legal challenges. Though having challenges in number
of fields Microsoft is maintaining to be the most competent organisation. There are various
source of being the competitive advantage. They are
Brand recognition: Microsoft well-recognized brand and the leading player in cloud and
computing industry. The organisation gain global recognition is bolstered for bring out a rage
of service and product and focus on technological innovation.
Strong financials: The technology industry is hyper-competitive. The free flow of money
helps the organisation to invest more. In 2020 the market cap of Microsoft reaches to $1.2
trillion.
Product portfolio: Over the years the dependency on the main product of Microsoft is reduced
remarkably and the organisation is generating revenue from cloud-based services. With an
increase in income the bottom line and the model of the business become strong.
Technological innovation: Every leading technology brand spends a lot on innovation and
Microsoft is the spender on development and research. In 2018 they append about $14.7
billion dollars for development and research.
Talented human resources: The entire tech giant put focus on retention and hiring of talented
staff. The talented employee ensures the higher productivity and makes the organisation more
competitive.
Marketing: Innovation marketing bring a major improvement in the brand image and help to
re-established as a leading technology brand and make a strong competitive position.
Sales and distribution network: Having a global distribution and sales network which help the
organisation to be accessible globally. The stores are both available in online and offline.
Benchmarking of Microsoft
Benchmarking is a system to discover the best performance of an organisation compare with
a particular or a different competitive company. The information is used to identify the skill
gap or the organization process gap to achieve competitive advantage.
In today's world technology news is a hot topic, where Microsoft promotes their own browser
benchmarking. Comparing with the other browser, Microsoft browser is slow so the company
make their own benchmark and make a video about other competitor and published in the
white paper regarding browser benchmarking. However, the report plays the role of the
stunner and proves other wrong.

Value chain analysis of Microsoft
Value analysis for Microsoft can bring different advantages. In the time of planning process
value analysis the possible source of competitive advantage can be discover. Microsoft value
chain approach suggests the organisation activity as economic rent and cause barrier for other
organisation and cause disadvantage to the competitor. Using value chain lens, Microsoft
identify the external and internal linkage among activities and help to take benefit from other.
Value chain analysis optimises the flow of finances, information and material. For Microsoft
value chain analysis help to take decision making process.
Cost-benefit analysis of Microsoft
Microsoft launch there cloud technology with Dynamics 365, which bring cost benefit for
them. Microsoft embrace digital work force as the number of technical savvy user is more
and cut down the extra cost. Cloud business is one of the popular business strategies among
the other tech giant. Cloud technology brings the opportunity of level playing field for
different size organisation to compete with the big one (Rouwendal, 2012).
Conclusion
With the formation of the organisation, it is mandatory to have the mission, vision and the
objectives of the organisation to make the more competent, strong and successful in the world
of business. Microsoft is one of the biggest multinational organisations of America having a
strong organisation strategy which is a cloud strategy. Initially the cloud strategy was not
popular but now leading the world of strategy. The framework outlines the influences of
macro environment in the report along with the evaluation of the internal environment and
capabilities of the organisation.
Reference
Cochran, J., 2004. Mission-Critical Microsoft Exchange 2003. Amsterdam: Elsevier Digital Press.
Cusumano, M. and Selby, R., 1995. Microsoft Secrets. New York: Free Press.
Greenstein, S. and Greenstein, S., 2004. Diamonds Are Forever, Computers Are Not. London:
Imperial College Press.
Heritage, C., 2006. Microsoft: Innovation through HR’s partnership: Instilling a culture of innovation
and forward‐thinking from the top down. Strategic HR Review, 5(3), pp.24-27.
Johnson, S., 2007. Microsoft Windows Vista On Demand. Indianapolis, IN: Que Pub.
Nentl, N. and Miller, C., 2004. Simmarketing Student Playbook. Boston: McGraw-Hill/Irwin.
Rouwendal, J., 2012. Indirect Effects in Cost-Benefit Analysis. Journal of Benefit-Cost Analysis, 3(1),
pp.1-27.
SankaraNarayanan, A., 2012. Chrome RLZ and Unknown Features. International Journal of
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