Strategic Management: Origins, Approaches, and Analysis of Microsoft

This study explores the origins and approaches to strategic management, with a focus on Microsoft. It discusses Porter's Five Forces and analyzes the impact of political, economic, technological, and environmental factors on the organization.

Strategic Management

INTRODUCTION
Strategic management is system of constant planning, controlling, monitoring and
assessments of all that important factors to meet organization goals and objects. Strategic
management is responsible for providing specific direction to company. It also forces company
for becoming active rather than reactive.
Microsoft corporation is a global brand, which dealing in software services and technical;
services. It provides different computer software to the world like MS-Word, MS-Excel, MS-
Power Point etc. the company provides it services in overall world. This study explains the origin
and various strategies which are used in Microsoft like Porter's Five Force's. These study also
analysis different factors which may impacting on Microsoft environment. These study also
includes international and global strategic thinking of company and applications of strategies
ideas.
MAIN BODY
Origins and approaches to strategies:
Microsoft is a multinational technology based company. It is founded in April 4, 1975 in
New Mexico, US. It develops computer systems, software, electronic and personal computers. Its
best software products are Microsoft word, Microsoft excel, internet explorer etc. Microsoft use
different strategies for managing and improving the business i.e. “ cloud first, mobile first”,
growing through merger and acquisitions, focusing on augmented and virtual reality and
promoting “ tech intensity”.
Porter's 5 force's:
It is a model that analyze and identify five competitive forces that shape an organization.
Also, help firm for identify the strength and weakness. This model can be applied at any segment
of industry to search for attractiveness and profitability. It is business analysis model, helps to
inform why various business are capable to sustain in contrasting levels of profit. This model is
used to measure competitions, profitability, attractiveness of an industries and market. Theses
forces are: Competitive strength of other industry: This model helps Microsoft for identify the
numbers of competitors in market and quality to undercut an organization. It also helps
company to identify the numbers of similar products and services their competitors
supply in market. Microsoft company suppliers and buyers can seek out company

competition if they are able to offer better deal, services and lower prices to their
customers. Antonymous, when organization rivalry is reduced, industry has great
opportunity to charge higher prices and set terms to achieve high sales and profit(Ansoff
and et.al., 2018). Threat of new entrants in industry: The Microsoft performance and profit is also effect
by the new entry in market. The less money and time it costs for a challenger in industries
market and also be an effectual competitor. An organization with powerful obstacle to
entry is a charismatic attribute for companies that let them to charge higher cost and
negotiate in better terms. In Microsoft threat of new entrants is low just because of strong
barriers of competitors and for expensive software. Brand loyalty also play vital role in
company. Therefore, in hardware sectors many industries are grown and capture the
small market, but they are still unstable or small scale industries. Thus, the threats of new
entrants in Microsoft. Power of suppliers:This force address that how well suppliers can drive up the value of
inputs. Power of suppliers is affected by the numbers of suppliers, goods and services,
inputs and how much it cost company to switch one supplier to another. In case of
Microsoft, company don't have many suppliers. The suppliers of the Microsoft supply
only hardware products like tablets, game consoles etc. Because software is a system and
it is produce and design in the house. The suppliers of the company feel prestigious as a
label of Microsoft. The suppliers of industries are not in positions to bragging the price,
because it is already fix by the company. Therefore, in Microsoft bragging power of
suppliers is low (Meyer, Neck and Meeks, 2017). Power of Buyers: This is the ability of customer to drive price down. It is affected by
how many buyers and consumer of company have. In Microsoft, the power of buyer is
moderate. Because, the consumers which are using the products and services of Microsoft
will not easily transfer to the software and services of competitors although it provides
same quality products and services. The reason behind this is the switching cost, as the
consumer of Microsoft they are used to software of company and can use it very
effectively and efficiently. Thus , the customers of company are fluently use the services
even if the company slightly increase the price. But it is not applicable the service of
hardware, consumers switching cost is very low and numbers of products are available in

market. Overall, bargaining power of buyers are average in company(Moutinho and
Vargas-Sanchez, 2018).
 Threat of substitute: Substitute of products and services are used in place of company
goods and services that poses threat in organization. In Microsoft threat of substitute is
low. Because substitute of software are automatic writing and evidence keeping, which
are become outdated now. Hardware substitute such as tablets, are use for writing, for
keeping records also carry camera, it is performed all functions. So, Microsoft don't have
any kind of threat of substitute(Ginter, Duncan and Swayne, 2018).
Illustration 1: Porter five forces
(Source: Porter five force model (Porter analysis) on Microsoft, 2017 )
Complexity of relationship between the organization and its environment:
It is provided great details about challenges of Microsoft company and will face in
prevailing macro environment other than competitors forces. There are some forces which affect
the relationship between Microsoft organization and its environment:
The very first factor which affect the organization and environment of Microsoft, is
Political factor. Microsoft operating their business in a dozen countries and exposure itself to
different types of political environment and risk. Microsoft is closely analyzed following forces
before entering in new market, they examine the political stability in country economy. They
also examine the level of corruption in especially in technology sectors. Company also identify
legal framework, taxation rates in country, trade and tariff related to technologies, business
software and services related anti-trust laws, minimum wages and overtime cost in different

countries, employees benefits as per country norms etc. That all political factor impact on the
culture of Microsoft. The next which is directly affecting the organization and its environment is
economic factors. The macro economics forces like savings and interest rates, inflation rates,
foreign exchanges are determined the economy of Microsoft. There are some economic factors
which are company consider in software and service industry i.e., different types of economic
systems countries has and their stability in market, government intervention in market and the
technology, also affected by the exchange rate of host county, skills workers in technology and
software business, lab our cost and productivity and different types of rates like inflation,
unemployment, economic growth, discretionary etc(Lasserre, 2017).
The another factor which impact Microsoft organization its environment is technological
factors. In these forces effects technologies and macro economic of computer technology
industry. Company needs to combine following technical factors like rapid or quick changes in
mobiles, increasing volume of online transportation and automation in organization. This types
of opportunity are base on high demands of mobiles. Microsoft itself also conduct analysis of
technical factors like impacts of technology on product offering, impact on cost structure of
company, impact of value change and technological diffusion rate etc. this all factors are
responsible for technical changes in environment of firm. Microsoft climate also affected by the
environmental changes in country. Microsoft deals in dozens market in world and each and every
market has different environment standards and norms. It is the policy of Microsoft management
that they are determined all the environmental changes before entering in new markets which
affect their business. These factors are is weather, change in climate, laws regulating
environment pollution, air and water pollution rules, recycling, waste management for technical
sectors, CSR activities etc(Hitt and Duane Ireland, 2017).