MgMT20144 Business Case Analysis: Microsoft and H&M Comparison Report

This report presents a business case analysis comparing Microsoft and H&M, two globally recognized ethical companies. It examines their organizational structures, including Microsoft's divisional structure and H&M's matrix structure. The analysis delves into the macro-environmental factors influencing both companies, such as political stability, economic conditions, and social trends, as well as technological advancements. Key risks faced by each company are identified, including the shift to mobile browsing for Microsoft and the rise of online shopping for H&M. The report concludes with recommendations for improving business practices, such as enhancing alliances and expanding product lines for Microsoft, and investing in digital platforms and innovation for H&M. The report emphasizes the importance of proactive decision-making and adapting to the competitive market for both companies to achieve success.

12/17/2019
Running Head: BUSINESS CASE 0
Management and Business context

BUSINESS CASE 1
Contents
Overview....................................................................................................................................2
Organisational Structure.............................................................................................................2
Environmental Aspects..............................................................................................................3
Risk Analysis.............................................................................................................................4
Recommendations......................................................................................................................5
Conclusion..................................................................................................................................6
Reference List............................................................................................................................7

BUSINESS CASE 2
Overview
To any enterprise, decision making is being influenced by various factors present in
the business environment and business success depends on the daily decisions that employees
at all levels make. To improve the decision making environment, an organisation requires to
articulate an ambitious vision based on the effective assessment of business surroundings as
well as on synchronisation of company strategy and team key performance (Kor & Mesko,
2013). This report emphasizes on several aspects including organisation structure, macro
environment and key risks influencing the enterprise. In last, various suggestions are being
stated for the improvement of corporate practices so that to achieve a competitive edge in the
sector. In this business case analysis, the two companies selected for the comparison are
Microsoft and H&M (Hennes & Mauritz) and these two are known under world most ethical
companies.
Organisational Structure
Governance structure of an organisation integrates various junctures in the company
and establish the authority that controls over compliance, legal, risk, finance, management,
audit and almost all organisation matters. Considering Microsoft and H&M, it is important
that the governance design and reporting structure should be made clear to the respective
stakeholders and employees. Considering Microsoft governance structure, it can be classified
as divisional wherein 2015, the senior executives publicised a change in governance structure
of the company with the aim to align to its strategic direction as a productivity and platform
business. In 2016, this decision also leads to dismissal of nearly 7,400 places. Kim, Sting &
Loch (2014) categorised divisional structure as both centralised decision making and de-
centralised management where the top executives get rid of everyday production operations
to become a truly powerful decision making side. Presently, the CEO of Microsoft is Satya
Nadella who is controlling at the top of the governance structure.
Considering H&M (Hennes & Mauritz) governance structure, the organisation have a
matrix form which can be stated as mixed arrangement of functional and divisional structure
and each brand under the group is headed by a responsible individual and has local sales
organisations. Guadalupe, Li & Wulf (2013) defined matrix structure as one of the ideal

BUSINESS CASE 3
approach for sharing skills and talent across departments and offers the team an ability to
draw upon diverse skill sets from multiple disciplines, strengthening the project team. In
relation with H&M, matrix structure allows all its ventures to be structured by regions, areas,
districts and the total number of stores. In each of respective nation, there is a manager that
takes out the responsibility for profitability and welfares. In addition, the manager owns
common accountability of regarding each and every one of its purpose and capabilities within
the range or nation. This leads to more collaboration and transparency in information
exchange within the internal environment of organisation (Eppinger & Browning, 2012). The
benefit of this structure is the less time that is utilized for solving the issues although, there
can be internal conflict within the organisation as groups and employees may create chaos if
they do not find their direct manager or supervisor.
While relating governance structure of Microsoft and H&M, this structure is
appropriate for both the companies as due to presence of several products allowing product
and information offering in the marketplace at a prompt speed. Both H&M and Microsoft
have some aspects of divisional structure near their service and product collections,
geography and market.
Environmental Aspects
Managing strategic decisions is a critical part of operating a business and it is
necessary for the organisation to understand the macro-environmental factors that directly or
indirectly influence corporate strategic directions. In association with Microsoft, the company
operates in nearly 210 nations, however, sales are split between the US, which holds for 51%
of revenue in comparison with other countries. The political stability of US enables Microsoft
to success selling its products in the country and year by year, the revenue of the company is
also increasing such as there is a 14.28% increase in comparison of 2017 (macrotrends.net,
2019). However, government of other countries are placing various rules and regulations on
software development industry so as to safeguard country population personal data and this
may impact on Microsoft performance in other countries. The economic aspect can be
associated to economic crisis of a particular country such as in 2014, China banned Microsoft
windows 8 for government –related systems and there offices were raided on the grounds of
antitrust practices (Shields, 2017). The economic factors impacting Microsoft performance
also includes protectionist policies of Trump administration, benefits of the H1-B work visa
programme overhaul by Trump legal actions. In terms of social aspects, it can include

BUSINESS CASE 4
shortage of competent talent in STEM fields affecting local hiring. Microsoft also published
the same in 2012 that there will not be sufficient American college graduates in computer
science to seal all of the available job provisions between now and 2020 (Costa, 2012).
Ultimately, Microsoft increases its performance through various technological factors such as
its huge cash reserves benefit the company to undertake various major R&D investments. For
instance, Microsoft has currently $136.6B in cash and short term investments as of reported
last quarter (Stevens, 2019).
The H&M is also influenced by various environmental factors and the group has
nearly 4000 plus stores in the China, Germany and US. De-globalisation flood over the world
and changing leaders in Asia, USA and Europe are known to be significant political variables
that directly or indirectly impact performance of the business of H&M. In terms of economic
aspect, the company can be benefitted with increasing disposable income in developing
countries with rising middle class in the next 5 years (ibisworld.com.au, 2019). Considering
social factors, more and more customers choices are now movie towards online platform and
social media for the purpose of buying fashion products and this can hamper H&M
performance as well as sales. It is also related with technological factors where the company
requires innovative technologies such as data analytics and AI to improve efficiency.
Risk Analysis
In every organisation, there are different types of risks occurs due to environment
factors or internal management practices and it can cause great threat to sustainability.
Microsoft also faces some risk such as the shifting browsing landscape from desktop to
mobile continues to contribute negatively in the sales performance of the company and in
2016 research by Rubicon, it was the first time when users exceeded personal computers for
the first time ever (Carnette, 2017). The second risk concerns with the competitors coming
with different revenue models as like most businesses. In addition, the company faces further
threats to the company MS office suite products. For example, a recent article in the Wall
Street Journal assessed that various companies CFO are progressively substituting Excel with
customer relationship management (CRM) systems and ERP software’s from providers such
as SAP and Oracle. The last risk is the threats from cyber-attacks and in 2017, Microsoft and
March identified that 62% of respondents saw cyber-attacks as a top-five risk and of course,

BUSINESS CASE 5
since 2017 the world has seen the harm initiated by the WannaCry ransomware outburst,
where the government of US blamed on North Korea (Tung, 2019).
The H&M is a leading fast fashion company also facing several risks such as the
increasing trends of the online shopping stimulating people to purchase different sorts of
clothing and accessories online fulfilling the purpose of their convenience as well as price.
This leads the company to end its 160 physical stores as of increasing competition and high
cost of maintenance and therefore, also wave company decision making to increase or hold
the resources as well as capabilities with the help of its online network. The second risk for
H&M is the fluctuations in the foreign currency. The company sales mostly come in Euro and
US dollar, however, variations in US dollars rate of exchange near the Euro change the
transaction experience for the whole group and influence decision making of H&M while
identifying the way to verge the flow of goods in other currencies. Ultimately, H&M is also
facing the risk in relation with tax rulers in terms of dispute and this impact their decision
making while undertaking significant practices with the adequate tax compliance plan. It will
benefit the company in future to not get bound with any sort of misrepresentation from
adjustments in the tax senate at any part of the world.
Recommendations
In order to progress the business practices, it is recommended to Microsoft to increase
its alliances with the other firms to improve positive externalities. With increasing
competition, Microsoft should redefine the vision and mission as a part of developing
strategic content. Augmented and virtual reality is not just for gaming, Microsoft should have
a strategy targeting many industries with range of cases and solutions focusing on saving of
money, raising revenue and enhancing customer experience. The company should plan to
expand their product line more in the emerging counties as presently the US is their major
share of market in terms of revenue. From future perspectives, the company should apply
various practices for connecting with the people at the node of social media and it will benefit
to gain more insights in terms of customer analytics.
For H&M, it is recommended that being a leading fashion retailer and having a
number of stores globally, the company should robust its digital platform by investing more
on channels, networks and also with increasing association with number of suppliers. In

BUSINESS CASE 6
today’s competitive era, innovation is known to be the key to success and following this,
H&M can adopt 3D scanning, virtual and retail merchandising, Novel fabrics and others. It
will assist H&M to attain competitive edge in the fashion industry together with improving
the business practices. In the end, Hennes & Mauritz needs to emphasis on redesign of stores
to gain greater customer attention and with retaining of current customer group as well.
Conclusion
In the limelight of above discussion, proactive decision making plays an important
role for the success and achievement of both H&M and Microsoft. Any businesses that
embrace functional, multidivisional, matrix or any form of structures often have reporting
relationships with considerable complexity and to implement the strategy effectively, firms
need to improve the organisational flexibility. Decisions relating to how to best undertake
legal practices, control systems, delegation of responsibility and authority also requires sound
governance structure. Ultimately, a firm can strive in to this competitive market with
assessing well of external environmental factors.

BUSINESS CASE 7
Reference List
Carnette, J. (2017). 3 Risks Microsoft's Management Wants You to Know. Retrieved from
https://www.fool.com/investing/2017/12/06/3-risks-microsofts-management-wants-
you-to-know.aspx
Costa, D. (2012). STEM labor shortages?. Retrieved from
https://www.epi.org/publication/pm195-stem-labor-shortages-microsoft-report-
distorts/
Eppinger, S. D., & Browning, T. R. (2012). Design structure matrix methods and
applications. New York: MIT press.
Guadalupe, M., Li, H., & Wulf, J. (2013). Who lives in the C-suite? Organizational structure
and the division of labor in top management. Management Science, 60(4), 824-844.
ibisworld.com.au. (2019). Fast Fashion in Australia - Market Research Report. Retrieved
from https://www.ibisworld.com.au/industry-trends/specialised-market-research-
reports/consumer-goods-services/fast-fashion.html
Kim, Y. H., Sting, F. J., & Loch, C. H. (2014). Top-down, bottom-up, or both? Toward an
integrative perspective on operations strategy formation. Journal of Operations
Management, 32(7-8), 462-474.
Kor, Y. Y., & Mesko, A. (2013). Dynamic managerial capabilities: Configuration and
orchestration of top executives' capabilities and the firm's dominant logic. Strategic
management journal, 34(2), 233-244.
macrotrends.net. (2019). Microsoft Revenue 2006-2019 | MSFT. Retrieved from
https://www.cio.com/article/2439502/enterprise-resource-planning/enterprise-
resource-planning-erp-definition-and-solutions.html
Shields, A. (2017). How Trump’s Policies Could Hurt Microsoft. Retrieved from
https://marketrealist.com/2017/01/how-trumps-policies-could-hurt-microsoft/
Stevens, P. (2019). Here are the 10 companies with the most cash on hand. Retrieved from
https://www.cnbc.com/2019/11/07/microsoft-apple-and-alphabet-are-sitting-on-more-
than-100-billion-in-cash.html
Tung, L. (2019). Microsoft: Cyberattacks now the top risk, say businesses. Retrieved from
https://www.zdnet.com/article/microsoft-cyberattacks-now-the-top-risk-say-
businesses/