Microsoft's Strategic Management and Business Policies: A Case Study

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STRATEGIC MANAGEMENT
ASSESSMENT

Table of Contents
1. INTRODUCTION.......................................................................................................................3
1.1 Background............................................................................................................................4
1.2 Overview of the organization................................................................................................5
1.3 Mission and vision of Microsoft............................................................................................6
1.4 Strategic Management of Microsoft......................................................................................6
1.5 Business policies in Microsoft...............................................................................................7
1.6 Competitive environmental analysis......................................................................................8
2. PORTER’S FIVE FORCE MODEL...........................................................................................9
2.1 Competitive rivalry with Microsoft Corporation...................................................................9
2.2 Bargaining Power of Microsoft’s Buyers..............................................................................9
2.3 Bargaining Power of Microsoft’s Suppliers........................................................................10
2.4 Threat of Substitution..........................................................................................................10
2.5 Threat of New Entrants........................................................................................................11
3. ENVIRONMENTAL ANALYSIS............................................................................................12
3.1 Porter’s generic model.........................................................................................................12
4. PESTEL ANALYSIS OF MICROSOFT..................................................................................13
5. SWOT ANALYSIS OF MICROSOFT.....................................................................................15
7. CONCLUSION AND RECOMMENDATIONS......................................................................17
REFERENCES..............................................................................................................................18

1. INTRODUCTION
In this report of strategic management, the main aim is to identify the business policy and the
style of strategic management in the organization. The report will cover each aspect related to the
broad concept of strategic management such as the benefits and the fundamental issues related to
strategic management. The report will properly explore the areas of understanding including
strategic approaches, organizational environment, application of strategic analysis and global
strategic thinking. The report will outline a theoretical model of an organization to study the
strategic issues and solutions to wriggle out of those issues. Thus the report will highlight the
styles of strategic management by observing the real practices of the organizations. The report
will cover the above points in concern with Microsoft

1.1 Background
Strategic management analysis is related to the aspects of business policies. The process of
strategic management helps the organizations in assessing the current situation by chalking out
the strategies, approves them and analysing the effectiveness of the strategies after their
implementation (Morden, 2016). The major element of strategic management is to analyse the
cross-functional decisions of the businesses created before their implementation (Jenkins and
Williamson, 2015).
The stages that are required to be analysed under the strategic management analysis of the
company includes strategic issue identification, information objectives, interested strategic
stakeholders, the incentive of stakeholders and the interaction strategies (Morden, 2016).

1.2 Overview of the organization
Microsoft Corporation is a multinational technology company with headquarter in Washington,
US. The company was founded in 1975 by Bill Gates and Paul Allen to introduce technological
advancements in the world. It deals in manufacturing and producing the wide range of products
and operates in selling the computer devices in several industries such as computer hardware &
software, electronics, personal computers and other social networking services (Kreiss and
McGregor, 2018). It introduces cloud computing in 2014 to bring more convenience in the
storage devices and also launched several video games with advanced applications to win
customer loyalty over its products and services.

1.3 Mission and vision of Microsoft
Microsoft works on its mission of "empowering every organization and every person on this
planet to achieve more". This mission statement implies that Microsoft operates its business just
for the empowering of organizations and people (Brinkkemper, 2017). Such empowerment can
be easily achieved by optimising the computing products of the company.
The vision statement of Microsoft directs the growth and enhancement of the business towards
the desired goal. The company's corporate vision is to provide facilities to the individuals and the
organizational customers. Thus, the company's mission and vision statement direct the generic
strategic approach for growing the business and reaching the corporate goal (Deasy et al., 2016).
1.4 Strategic Management of Microsoft
To maintain its service reliability across the world, Microsoft needs to develop effective
strategies in its management operations. It has been studied from an analysis that Steve Ballmer
positioned himself as a CEO of Microsoft by replacing Bill Gates in 2000. After that, he
introduces and effective marketing strategy that brings more focus on management things. The
strategy named "devices and services" strategy. As a result, the company started to focus on its
devices and thus introduced personal computers in 2012 while launching Microsoft tablet
computers (Jenkins and Williamson, 2015). Later, the company launched Microsoft Mobiles and
focused on its hardware scale (Wahl, 2015). The strategy thus results in providing the highest
value of shares since 1999.
Microsoft has to face a large number of strategic issues especially after the launch of
smartphones. As the industry of smartphones grew in 2007, the company has to face challenges
to stay in the competitive market and fought over its rivals such as Google and Apple by
introducing modern and effective smartphone operating systems. As a result, Microsoft in 2010
replaced its Windows Mobile from Windows Phone OS. This shows that a step taken by
Microsoft in implementing its new strategy towards the software industry had worked for it and
rewarded as the leading smartphone manufacturer in the country (Jenkins and Williamson,
2015).
Also, the retail locations of Microsoft stand as a successful strategy in building connection and
positive relations with its customers (Wahl, 2015). In 2012, Microsoft opened its second flagship
store that invites a large number of customers to visit and get the products. Also, the

technological and innovation strategy of the company plays a huge role in delivering the best
products to the customers. Microsoft also follows the strategic management of customer
relationship management (Wahl, 2015).
1.5 Business policies in Microsoft
Microsoft has an extensive foundation i.e. large number of procedures and policies which reveals
the basic values of the company. This includes standards of the business conduct, regulatory
compliance, export policy, diversity, lobbying and fair information practices. Microsoft includes
developing a culture of compliance in its business operations through the standard of training and
policies (Borja, 2018). The business policies of Microsoft are related to several parameters and
this set of policies commonly aims for the business growth (Wahl, 2015). It includes the legal
policies, device policies, supervision policies, corporate policies and many more. Motivating the
company members also comes under Microsoft policies; it uses the company's ability and
employee empowerment to foster the teamwork (Doorhof et al., 2017). Also, the company offers
creative rewards and incentives to encourage and motivate the team members to be productive.
Inclusion and diversity are other foundational factors in the Microsoft culture. These factors deal
in improving the areas of business growth by allowing the company to retain develop and attract
the best-skilled talent from across the world. Microsoft offers a working environment with equal
treatment and free from discrimination. All employees in the company are treated with respect
and dignity all the members are working to fulfil Microsoft's commitment. Microsoft never
makes a difference among the employees based on their demographic characteristics or any
disability (Wahl, 2015).
Microsoft adheres to these policies and principles in all areas of employment that includes
recruitment, selection, hiring, training, promotion, rewards, recreational and social programs &
discipline. In addition to this, providing accommodation to the members and the employees
comes under the business policies of Microsoft (Borja, 2018).

1.6 Competitive environmental analysis
Microsoft has the biggest threat of the substitute products introduced by its competitors. The top
competitors of Microsoft are Apple, SAP, Google, Oracle and IBM; also these are the well-
known brands that have used the prominent technologies in the industry (Doorhof et al., 2017).
Microsoft is continuously trying to adhere to its agenda by bringing several relevant strategies
for it. Also, the company focuses more on producing those products which will not throw any
negative impact on the environment. Further, the competitive analysis of Microsoft can be
effectively analysed by applying relevant theoretical models (Doorhof et al., 2017).

2. PORTER’S FIVE FORCE MODEL
Michael Porter has introduced the model of Porter’s five forces which is now being widely used
to analyse the business environment of any organization. The model is useful in analysing the
current position of the business based on environmental conditions (Kramer et al., 2015). For
Microsoft, this model will analyse the attractiveness of the technological market in the UK &
also investigate each activity of the competitor in the same market.
2.1 Competitive rivalry with Microsoft Corporation
Microsoft needs to compete in the market effectively to remain successful. This factor in porter's
five forces determines how the competitive firms effects on each other. In the case of Microsoft,
the below external factors apply the strong force of competition against its competitors
 Switching cost (moderate force)
 Firm’s aggressiveness (strong force)
 Firm’s diversity (strong force)
The moderate switching cost can influence Microsoft up to a high extent. As the customers don't
rely on the Microsoft products hand also tend to try computer software & hardware products of
its competitors. Aside from this, the competitors of Microsoft are highly aggressive in terms of
marketing campaign and innovation rate (Kramer et al., 2015). As the highest force of
competitor rivalry is a biggest strategic issue for Microsoft, thus the company should bring a

wide range of products with innovation to stay in the competitive market (Mathooko and Ogutu,
2015).
2.2 Bargaining Power of Microsoft’s Buyers
As customers are the one who continually recognises Microsoft's performance, the company
need to take further steps to gain customer satisfaction at all level of management. Microsoft
must emphasize on the intensity of the external factors to evaluate the influence of customers on
the industry environment (Mathooko and Ogutu, 2015).
 Availability of the substitute products (weaker force)
 Switching cost (moderate force)
 Quality of information (strong force)
In terms of the substitute products, no other company having the non-computer network solution
as launched by Microsoft, thus external factors uses the weaker force on the industry
environment of Microsoft. On the other side, the cheaper switching cost attracts consumers to
move on the products of Microsoft’s competitors (Mathooko and Ogutu, 2015). Also, the quality
of information makes customers encourage comparing the products of Microsoft from other
competitors. Thus, the bargaining power of customers is a moderate source for Microsoft.
2.3 Bargaining Power of Microsoft’s Suppliers
As every business operations rely on the supplier’s behaviour, it is necessary to investigate the
influence of suppliers on the industry environment. It is based on the following external factors
 Size of suppliers (moderate force)
 Supplier’s population (moderate force)
 Overall supply (moderate force)
The moderate force of population & size of suppliers throws a limited impact on Microsoft. As
most of the suppliers may modify the price of the computer components, it forces Microsoft to
adjust the company prices. Also, the moderate force of overall supply impacts Microsoft's
business in a limited manner (Mathooko and Ogutu, 2015). If the overall supply decreases, the
intensity of the force will ultimately increase. Thus, the bargaining power of suppliers is also a
significant strategic consideration in the technological industry.

2.4 Threat of Substitution
The introduction of similar products from Microsoft's competitors can impact on the market
share of the company. The power of the following external factors exerts the weak force of
substitutes on Microsoft.
 Substitute’s performance (weak force)
 Substitute’s availability (weak force)
 Switching cost (moderate force)
Substitutes as the manual-mechanical or the non-online processes are having a low level of
performance than Microsoft’s products (Lüttgens and Diener, 2016). Thus, the threat of
substitutes is weaker for Microsoft. Also, the whole industry is indulging in adopting the
advanced technologies in their businesses, the availability of substitution is reduced & weakens
threat for Microsoft. The factor of switching cost is not enough to strengthen substitutes. Thus,
the threat of substitution is not a big issue for Microsoft.
2.5 Threat of New Entrants
In this force, the focus of Microsoft is on the new entries in the technological industry operating
for computer software & hardware (Lüttgens and Diener, 2016). The following external factors
& their power lead to a moderate force for Microsoft.
 Cost of brand development (weak force)
 Cost of business operations (moderate force)
 Switching cost (moderate force)
Due to the high cost of brand development, businesses are not affecting Microsoft. Thus, it
weakens the threat of new entrants for Microsoft. But the moderate cost of doing the business
may influence the new entrants and make them think about competing in the field of computer
technology. Also, the low switching cost contributes to the success of new businesses to compete
against Microsoft (Lüttgens and Diener, 2016). Thus, the entry of new entrants stands as a major
issue for the industry environment of Microsoft.

3. ENVIRONMENTAL ANALYSIS
The technological sector is considered as the most competitive sector in the UK. This is a
dynamic sector and had majorly contributed revenues to the government of the UK. It will be
more effective to apply a strategical tool for analysing the micro and macro-environmental
factors that have a major impact on the operations of Microsoft (Omsa et al., 2017). This will
further help in analysing the troubles of Microsoft in more detail. The internal, as well as
external environmental factors, are affecting the productivity & profitability of Microsoft in
several ways.
3.1 Porter’s generic model
Microsoft generic strategy is aligned with the intensive strategies for competitive advantage and
growth. Microsoft’s generic strategy presents an approach to assess business competitiveness. Its
competitive strategy is supporting the appeal of its computer products among a wide variety of
competitors. Thus, the intensive growth strategy of Microsoft is currently prioritizing market
penetration (Omsa et al., 2017). The remaining strategies stand as a supportive factor in the
computer software & hardware business. This strategy is applied in Microsoft Corporation in
order to enable growth. Market penetration is applied as it is the main strategy to bring intensive
growth in a highly competitive mare of computer technology (Firoz Suleman et al., 2019).