Strategic Management: Analysis of Microsoft Corporation

This report provides an analysis of strategic management in Microsoft Corporation, including an overview of the company, its philosophy, and the current business scenario. It also includes a detailed analysis of Porter's Five Forces Model and Porter's Generic Strategies.

Strategic
Management

Table of Contents
Introduction......................................................................................................................................3
Company overview..........................................................................................................................3
Philosophy of Microsoft.........................................................................................................3
Current Business Scenario......................................................................................................3
TASK 1............................................................................................................................................4
Porter's Five Forces Model.....................................................................................................4
TASK 2............................................................................................................................................7
Porter's Generic Strategies......................................................................................................7
TASK 3............................................................................................................................................9
Recommendation....................................................................................................................9
Conclusion.....................................................................................................................................10
References......................................................................................................................................11

Introduction
Strategic management denotes uninterrupted processes of firm that involves developing
plans, tracking performance, conducting analysis and evaluating complete processes that are
required for attaining objectives. It is critical for business to determine the opportunities with
reference to future as well as apply them within their operations through which organisation
goals can be attained in an effectual manner (Barca, 2017). To acknowledge the concept of
strategic management, Microsoft Corporation is taken into account with their headquarters in
Washington. They deliver their services worldwide and are leader within the industry. This
report comprises of identifying and having critical analysis of firm with respect to strategic
management. Different theories will be utilised by Microsoft for executing this concept in
effectual way.
Company overview
Microsoft Corporation is largest technological firm across the world that was founded via
Bill Gates and Paul Allen in the year 1975. They are liable for conducting operations such as
manufacturing, development along with selling computer software, electronics and personal
systems. The firm renders their functionalities across the world as they are trusted by customers
in context of reliability, speed and performance.
Philosophy of Microsoft
Mission statement of firm aims at reaching people worldwide for attaining their aim.
Furthermore, Microsoft’s vision statement is take business into new heights and aid people to
realise their complete potential along with worth of services rendered via them. Basically,
agenda of firm is empowering each person and organisation in an effective manner for
developing as well as evolving further.
Current Business Scenario
At present context, Microsoft is crucial and leading player in electronic subsectors where
other firms are trying hard to have their positioning within the marketplace. The organisation has
already crossed mark of $100 billion by earning near about $110 for the year 2018. They have
high global market as well as effective usage of technology enables them within amplifying their
capabilities. They have opted for innovative creations as well as the perspective that is opted by
them plays critical role to be competent i context of performance. An example can be considered

that will illustrate performance of the Microsoft, they are Windows pro, LinkedIn and Surface.
The other major source that depicts their performance is “commercial cloud” and for illustrating
this category, the services offered by cloud comprises of Dynamics 365, Office 365, Azure and
many more. Firm emphasise on strategies that are being utilised by them as this enables to
conduct their operations in enhanced manner by rendering cloud computing functionalities
(Microsoft Annual Report 2018, 2019). In addition to this, firm have successfully managed
gaming aspects and this has leaded them to attain revenue of around $10 billion.
It is important that each organisation develop and implement strategic management that
enables them to stay one step ahead from their rivals that are present within the marketplace as
this will enable them to enhance overall effectiveness (Bell, Bryman and Harley, 2018). In this
context, Microsoft must conduct detailed analysis that will lead them to conduct critical
evaluation of complete industry and accordingly develop strategies. This is major factor behind
this that leads them within furnishing clear guidelines associated with potential threats as well as
opportunities that organisation can have by successful attainment of strategic management. For
doing so, Microsoft have opted to make use of Porter’s five force model. This will enable them
analyse the entire market in which they are delivering their operations.
TASK 1
Porter's Five Forces Model
The particular model is given in 1980 via Michael E. Porter and this was within the book
named “Strategy techniques for analysing industries and competitors”. After that instance of
time, the specific model is utilised widely for determining industrial structure along with
corporate strategies that have been utilised by organisation. According to, Porter, majorly there
are five factors or forces that are liable for shaping industry as well as market (Chang, 2016).
These forces are accountable for conducting analysis of all the aspects which will provide
organisation with detailed overview of the market in which they are delivering their services.
This enables them to acknowledge the intensity of competition that prevails in marketplace for
captivating as well as improvising profitability of industry will be depicted. These forces
comprises of threat of new entrants & substitutes, power of buyers & suppliers and competitive
rivalry within the market. These factors leads to creation of strong impact on industry as well as
enables them to develop strategies accordingly as this will lead them to make sure that they will

be able to sustain within the marketplace for longer duration of time. It is necessary that,
Microsoft makes relevant use of this for identification of ways through which they can attain
more growth, profitability as well as have attractive positioning within the market. In context of
Microsoft, the model is mentioned beneath:
Power of Suppliers: Supplier denotes the people who are liable for rendering firm with
efficacious materials along with components that will allow them to conduct operations in an
impelling manner. They acts like external stakeholders that are responsible for rendering
enhanced support for the organisation which will further allow them to develop their services and
products in the market in systematic manner and ensures that they are able to attain goals in
peculiar instance of time (Coen and Vannoni, 2020). In context of Microsoft, the conditions of
supplier lead to have critical role within identifications of business carried out by them. The
software along with hardware business environment leads to creation of precise influence on
their suppliers. But with reference to Microsoft, population along with size of suppliers is
moderate the reason behind this is that they need to precise and accurate material through which
they can furnish enhanced end products. This will lead to creation of moderate impact on
operations of organisation. For understanding this aspect an instance can be considered like in
case if minimum sized suppliers deals within delivering hardware entities then if they make any
change within the prices then firm will also increase the price of end product that is delivered by
them (Davies, 2016). Suppliers possess restricted force on Microsoft. The other major factor
which acts like a restricting force is that Microsoft Corporation possesses enough capabilities
that enables them to bring in software by their own. They have skilled as well as talented R&D
team through which impact of suppliers can be minimised. Thus, it can be said that bargaining
power that is possessed by suppliers in context of Microsoft is moderate.
Power of Buyers: In this context buyers denote individuals as well as organisations that tend to
have ownership of products as well as services that are being delivered for trading. Firm is liable
to develop strategies by taking into consideration their buyers. These individuals, businesses and
groups act as core for the business and are mandatory reason behind existence of the
organisation. Furthermore, firm possess the capabilities through which they can alter their
operations and furnish innovative products through which requirements of customers can be
addressed in an affirmative manner (Ethiraj, Gambardella and Helfat, 2018). Microsoft
Corporation has ample of consumers who are present worldwide and this means that the

performance is inclined on their buying behaviour. In the customer oriented market, Microsoft
Corporation is liable for furnishing capable products along with services through which their
customer base can be amplified by addressing their technological requirements. There are certain
external factors that lead to creation of strong influence on power possessed by the buyers.
Availability of substitute is driving force but the asset that is being possessed by Microsoft is that
the services or software furnished by them are user-friendly as well as convenient which means
that they can be easily utilised by their consumers. This means that probability that customers
might opt for substitutes present within the market will be declined. This means that firm possess
certain liabilities that they can enhance prices of their offerings which imply that customers
might opt for alternatives (Ghemawat, 2016). But in context of hardware, it becomes easy to
switch as their substitutes. Furthermore, availability of information also creates impact as this
enables them to make comparison between different services and products that are offered by
competitors. This means that bargaining power possessed by buyers of Microsoft is moderate.
Threat of Substitutes: The term substitute implies the alternatives present within the
market who delivers same services or benefits to the customers. Substitutes possess the
capability to decline the market shares of organisation up to certain extent. This leads to creation
of strong on the operations of the organisation. In context of Microsoft, substitutes might be
manual or offline processes. They might not be able to address the quality standards that have
been set up by Microsoft Corporation. In addition to this, firm have restricted number of
substitutes that are available within the marketplace, this minimise the influence of alternatives
(Johnson, 2016). Furthermore, the switching cost will be moderate with respect to ones present
within. Thus, the impact of substitutes is low on Microsoft.
Threat of New Entrants: In the business market, entry of organisations cannot be
avoided as this aids countries to enhance their economy and also provide relevant employment
opportunities to youth. The start-ups brings in innovation that leads to creation of strong
influence on existing firms, thus it becomes important to develop strategies by taking into
consideration all the probable aspects. In software business, it is costly for firms to launch their
new software and meet the needs of customers as Microsoft does. This requires ample of
investment which is practically not possible for a new business (Laudon and Traver, 2016). It is
not easy for any organisation to compete and have their position in front of tech giant like
Microsoft. This implies that threat of new entrants is low.

Competitive Rivalry: This denotes firms that deliver same services within the market for
their customers. Such kind of firms acts as threat because their strategies cannot be anticipated
and same goes with ways in which they work. They might develop strategies that might lead
them to have competitive edge in the marketplace. Thus, it becomes important for firm to make
changes within their operations through which overall capabilities will be enhanced and will lead
them to amplify overall market shares. In context of Microsoft Corporation, there prevails
enhanced competition from firms such as SAP, Apple, IBM, Google, Oracle and many more are
there. These firms have strong reputations as well as have significant market shares across the
world. The major threat is that technologies are used by anticipating the future requirements of
the organisation and they are aggressive when it comes to diversity. Google provides enhanced
range of services that are able to accomplish needs of customers and same goes with other
organisations (Lawton, 2017). Huge investments are being made by them in R&D processes for
identification of values that they have created. This clearly implies that threat of competitive
rivalry is very high for Microsoft Corporation.
From the above analysis, this has been inferred that, the existent competition that prevails
within the marketplace will lead to creation of strong influence on the operations of Microsoft
Corporation. For this, it is crucial that effective strategies are developed by them through which
they can sustain within the market from longer duration of time by ensuring growth in future. For
addressing these threats in an approporiate manner, Microsoft Corporation can opt for making
use Porter’s Generic strategic model.
TASK 2
Porter's Generic Strategies
These strategies are given Michael E. Porter in the year 1980. This strategy can be
executed via organisation irrespective of industry they deals within. Porter have provided an
insight in which they aims that firm must opt for only one aspect in which emphasis is made on
eradication of wastage of resources (Parayitam and Papenhausen, 2018). They aim at furnishing
assistance for acquiring competitive advantage. This entirely depends on kind of customer firm
want to target so that they can retain for longer frame of time. With reference to the Microsoft,
the different strategies associated with this model are specified beneath:

Cost Leadership Strategy: In this case, firms tends to go for low cost within operations
related with production as well as try to seem appealing for their prices sensitive as well as cost
conscious consumers. The firms render low prices with respect to price offered by rivals. The
agenda or strategy behind doing so is to attain higher returns on investments that have been ade
on products and services. For attaining this aspect, it is important for firm to deliver their
services lower cost. This can be done by Microsoft in three different manners. They can have
edge from economies of selling margins. In this firm must opt for utilising their assets to
complete potential. The products can be furnished in larger volumes which will enable to have
low cost per each unit (Petrova, 2017). Other option that Microsoft has is that they can have low
operating cost in which they must offer their consumers with standard services for addressing
their needs except personalised offerings. The last aspect is that firm can gain control over their
value chain that involves finance, marketing, technology and many more. All these aspects will
enable Microsoft to implement cost leadership strategy.
Differentiation Strategy: In this strategy, firm emphasise on developing services along
with products in such manner that they seems more attractive and useful from what is given by
their competitors. In this firm, needs to deliver their services in such manner that they seem
unique in industry. For attaining this, it is important to determine aspects through which they can
position themselves that are critical as well as enable them accomplish overall purposed of doing
so. Microsoft Corporation must utilise this strategy when their target customers do not take in
consideration prices offered for some services and are unique. Through usage of this strategy
firm will be able to charge premium amount and create a brand loyalty.
Focus Strategy: In this strategy firm takes into account niche market for having a slight
competitive scope. Microsoft Corporation can utilise this strategy in case they wanted to possess
niche segment of the market. In addition to this, while opting for this strategy; it is necessary to
make use of peculiar segment of the industry and then opt for strategy accordingly through
which they will be served in enhanced manner. Along with this, firm can utilise this particular
strategy when they do not want to be a part of competition among large organisations (Wheelen
and et. al., 2017). Once this strategy s considered then it becomes essential for them to emphasise
on one aspect that is cost or differentiation focus. The rationale of the strategy is that by ensuring
that something is added into offerings of the niche market. In case of cost focus, firm tries to

have cost assets but in differentiation they tends to provide unique services within the target
marketplace. Thus, both entities are dependent on variation that occurs between market segment
as well as other entities of the industry.
Therefore, it is critically evaluated that with respect to Microsoft Corporation, the best
strategy is differentiation as this important to have competitive advantage. In addition to this, this
strategy involves unlike products that are sold via different consumers. The products that are
furnished by Microsoft are unique in terms of features like software’s are developed by
considering needs of the business administration and they are completely based on new
technologies that prevails within the marketplace. This will enable them to captivate ample of
customers across global along with international levels (Ghemawat, 2016). This strategy is liable
for aligning vision and mission statements of the organisation where focus is made on acquisition
of strong market positioning in international market. The other two strategies are not relevant for
Microsoft Corporation as in case of focus strategy emphasis is laid on only peculiar segment and
this is their mission or vision statement. In case of cost leadership, this do not seems functional
for the organisation as this will lead them yield results for shorter duration of time and will not
be effective in context of long time frame. Thus, it has been found that differentiation strategy is
apt for organisation and to have a unlike positioning.
TASK 3
Recommendation
It has been identified that, Microsoft Corporation can make use of Porter Five forces
model for determination of corporate strategies as well as structure of the industry. This is
recommended that firm i.e. Microsoft Corporation must formulate strategies by taking into
account long term perspectives and accordingly strategies must be formulated via them. This
model will assist them within carrying out analysis with respect to different factors that might
acts like a threat for profitability index of the organisation. This can take place in any context i.e.
new entrants, substitutes, bargaining power of suppliers, buyers and competitive rivalry which
prevails within the market. Firm needs to make sure that all these factors have been analysed as
well as determined by firm for making sure that they can attain long term success and ensure
future growth. Thus, it is suggested that Microsoft Corporation must consider this model while
determination of profitability. Furthermore, it is recommended that firm must conduct aggressive

research and development operations through which they can analyse all the critical factors that
might lead them to have completive edge in the market by analysing overall impact that will be
created on their offerings. It is suggested that firm must make use of differentiation strategy
which will make them different from competitors present in the market thereby will lead to
amplify overall profitability of the firm and also global market will be captured.
Conclusion
From the above report it can be concluded that strategic management is crucial for
organisation to ensure that they are able to attain their goals as well as objectives in peculiar
frame of time. Firm have to develop plans, monitor them, and conduct analysis along with
evaluation for identification of whether they are able to attain their values as per desired
standards. Organisation can make use of porters five forces model for evaluation of different
factors that leads to creation of strong impact on their functionalities. Furthermore,
differentiation strategy must be utilised as it will make them stand out within the industry.

References
Books and Journals
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Auerbach Publications.
Coen, D. and Vannoni, M., 2020. The strategic management of government affairs in
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Davies, A., 2016. Best practice in corporate governance: Building reputation and sustainable
success. Routledge.
Ethiraj, S.K., Gambardella, A. and Helfat, C.E., 2018. Theory in strategic management.Strategic
management journal,39(6), pp.1529-1529.
Ghemawat, P., 2016. Evolving ideas about business strategy. Business History Review. 90(4).
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Johnson, G., 2016. Exploring strategy: text and cases. Pearson Education.
Laudon, K. C. and Traver, C. G., 2016. E-commerce: business, technology, society.
Lawton, T. C., 2017. Cleared for take-off: structure and strategy in the low fare airline business.
Routledge.
Parayitam, S. and Papenhausen, C., 2018. Strategic decision-making.Management Research
Review.
Petrova, E., 2017. Genesis of strategic management.
Wheelen, T. L. and et. al., 2017. Strategic management and business policy. Pearson.
Online
Microsoft Annual Report 2018. 2019. [Online]. Available Through:
<https://www.microsoft.com/en-us/annualreports/ar2018/annualreport/>