Strategic Management Report: Analysis of Microsoft's Strategies

This report provides an executive summary and detailed analysis of Microsoft's strategic management. It begins with an introduction to strategic management and its importance, followed by an examination of different strategic approaches like design, planning, and positioning. The report delves into Microsoft's strategies in the global market, including mergers, acquisitions, and diversification. It also analyzes Microsoft's actual market position, utilizing internal and external analysis, and considering factors like Porter's Five Forces model. Furthermore, the report offers recommendations for strategic changes, concluding with a summary of findings and references.

STRATEGIC
MANAGEMENT
ASSESSMENT

EXECUTIVE SUMMARY
These reports show the real position of the business with the help of seeing the current strategy
of the business. Further these report shows the Internal and external analyses with the help of
explaining the relationship between the organisation and its environment. These report than
shows the factor which is affecting the business through Poter's Five model. In the end it
recommends the changing which are required.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
Approaches of Strategy...............................................................................................................4
Strategy used in global Market...................................................................................................5
Actual position of Business.........................................................................................................7
Internal and External Analysis....................................................................................................9
RECOMMENDATION.................................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Strategic management is the process of continuous planning, controlling, monitoring the
activities of the business to achieve the organisational goal. Microsoft corporation is an
American multinational technology company headquartered in Redmond, Washington. Microsoft
was founded in the year 1975 by the founder Bill Gates and Paul Allen. This reports highlights
the various approaches toward the strategy which is used by the organisation. Further thise report
goes on to explain the relationship between the organisation and its environment.
MAIN BODY
Approaches of Strategy
There are generally 3 approaches which is used by the company globally to establish there
strategy in the organisation, These three are unique from each other and requires different sort of
condition to be applied in the organisation as applying more than one in a single organisation is a
tough task, generally company selects the approach depending on the condition of the
organisation the main three approaches are as follows:
Design approach: Design approach is the most common type of approach used by the company
in today's scenario in which top management are the superior power holder or the main authority
to make the strategy, generally these approach is used in the company who is very rich in the
human manpower and invest very good amount on the senior authority to hire them in the
organisation. This is the approach in which senior authority makes the strategy and pass on to all
level of the employee in the organisation. This strategy is also called as a top to bottom approach
of strategic management. Due to this strategy the risk is minimized at the subordinate level as the
strategy pass on by the top level is always included the solution of all the influence factor which
can affect the organisation performance and as the result the project work is also eases at the
bottom level of the employee (Ansoff And et.al., 2018). Top management or senior authority
regularly supervise the performance of the employee regarding the use of the strategy in the firm.
In simple words it can be said about design approach that in these approach top management
employee decides prioritize, manage the work and conduct day to day activity of the
organisation.
Planning approach: These is the approach which is more accurate than the Design approach as
the strategy made in these are made by the planner who used their knowledge and makes the
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strategy to pass on into the organisation (Wheelen and et.al., 2017). This strategy is better than
design approach as in these approach planner makes the strategy who have knowledge of all the
factor as they are the one who have started their learning in the environment scanning, planning,
organizing and many other factor and these are the some big factor which are necessary to look
by the planner before making strategy in the organisation, it may happen that sometime that the
senior authority has the information about all of these factor but not that briefly which is required
in strategy preparation as strategy is the path way on which organisation go on to achieve the
goal but in reality these approach is very costly as for that company requires hiring planner to
make the strategy which increase the operation cost of the company. At the same time planner
not only makes the strategy but also overlooks at the implementation of that strategy and help the
business in overcoming the problem which was faced by the organisation due to the strategy
(Lasserre, 2017).
Positioning approach: These is the approach in which company makes the strategy by looking
at the five factor which is very necessary for the business to adapt and grow in the near future.
These five factors are bargaining power of suppliers, it is the first factor which decides the cost
of the raw material at which company can buy the raw material or semi developed product.
Bargaining power of the buyer, it is the second factor which decides at what rate product can be
sold in the market so that it can attract the customer. Threat of new entrant, it is the third factor
in which company has to decide and see the competition which can be faced by the company
from the new entrant in the market as they always bring a seance of uniqueness in their
approach. Threat of substitute, it is the fourth factor which relates to the product or service these
is the factor in which company face the competition from the substitute product and the fifth
factor competition which is faced by the company from other established firm. As these are the
five factor which can adversely affect the business in these approach company sees all the above
factor and makes the policy which can easily defend this sort of factor (Frynas and Mellahi,
2015).
Strategy used in global Market
Microsoft Corp is the considered as one of the leading firm that offers software and
hardware products or services worldwide. It is performing well in global market by
implementing effective strategies (Hanson and et.al., 2016).
Merger and acquisitions
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It is one of the most effective approach which is taken by Microsoft to reach in global
market. In order raise product range, capabilities and values enterprise has merged or acquired
many other entities. For example, It has acquired Nokia corporation for USD 9.4 billion and also
enter into agreement with Mojang Synergies company for USD 2.5 billion. This has helped the
firm in entering into Swedish and Indian market successfully and capturing both these foreign
markets. Merger with professional cloud and networks creates amazing experience for Microsoft
and creates new value to the business unit. In 2018 Microsoft has acquired 16 companies which
includes video game firms and artificial intelligence entities etc. This has helped the Microsoft in
raising its product range and offer wide range of products and services to global consumers
(Buckley and Ghauri, 2015).
Diversification
The strategies used by the companies in order to enter into a new market is called as the
diversification strategies. Microsoft used various diversification strategies in order to enhance
their business successfully. As Microsoft is dominating the software market, diversification was
much needed for the growth of the business globally. Microsoft has used various marketing skills
in order to start a new business. Firstly Microsoft has expanded its business to China. Microsoft
has initiated a planned introduction in China and in near about 5 years Microsoft opened its own
office there. After that Microsoft has initiated its working in Taiwan in the year 1984. Microsoft
also diversified their work by entering the new market like in the mobile industry. Microsoft
launched its own handsets in the market and accepted by the public as they have done proper
market research before launching the product in different countries. So market research will
always help for the growth of the business (Lasserre, 2017).
Microsoft also adopted strategy of corporate level. Other than software they have
diversified into the technological products like in the gaming area they launched Xbox and also
in the music players. As Microsoft had a goodwill in the market the customers have the
reliability on Microsoft's products. Microsoft has also kept in mind the income level of the
people of different countries so that they can reach out to more customers.
In 2018, Microsoft also initiated partnership with Toyota Tsusho and introduced fishing
related tools like Azure application for the management of water. Diversification strategies
helped Microsoft in order to expand globally with high customer acceptance ratio.
Market/ product development (Supporting strategies)
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Market product development in Microsoft takes place by various strategies they keep
product and service choice so that customer can choose accordingly. For this they provide
official websites and focus on humanizing the brand by customer centric approach. By analysing
the market they started investing in marketing of communication channel so that they can reach
to customer target segment. They focused on marketing mix for unique selling of product.
Customer target brought efficiency and effectiveness and valued their products. When
they applied the strategy of product segmenting, positioning, targeting that valued advancement
in feature, speedy operation and the strength of technological product and services. For example;
Microsoft365, Skype, linked in etc. were placed in category of productivity and business process.
In the world of digitization Microsoft played a great role in business process and
productivity which leads to customer satisfaction. For example ; over 100 million is and android
device outlook mobile has been installed over 700 million devices are with active window. By
advancing the version they changed the pricing strategies they used different qualities with same
product and charged different prices. Microsoft used penetration pricing price skimming
psychological pricing promotional pricing which lead to income growth. Microsoft stores
provide the facility of after sales service so that if the customer faces any problem related to
products their problem will be solved in minimum time which will help in retaining the
customer. Microsoft stores gives the clear and detailed information about the product so that
customer can easily choose the product according to their need (Frynas and Mellahi, 2015).
Actual position of Business
As Strategy is the path root which guides the organisation to go on the direction which can help
them to achieve the goal of the business. Microsoft also uses the well planned strategy to grow
their business locally and globally. Microsoft uses different type of strategy to grow in the
different market as all the market offers the different type of challenges so in reality there is no
such strategy which is universally correct for all the situation and market. Strategy used by
Microsoft is as follows:
Market Penetration: It is the strategy which is mainly used by the Microsoft as Microsoft
always believe in expanding the market but prevailing the market in which company has already
gained the name, so company always try to sell their product more in the current market because
company has gained a good name in the market already. As Microsoft is the well known brand in
the Asia and UK micros soft always try to sell their product in the UK and Asia so that they can
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get a good result from that. Microsoft generally applies the market penetration by the help of the
distribution channel and always brings the uniqueness in the product which helps them to attract
the customer.
Product Development: Microsoft is always known for bringing new product with new update
and uniqueness into the market which has helped the firm in attracting new customer toward the
organisation as the product develop by the company is always able to satisfy the need of the
customer. This is the strategy is generally used by the company in the local market to get a
competitive advantage in the competitive environment. This strategy always facilitates the
growth based development process. For example: Microsoft continuously update the software of
the company which brings the unique feature for the customer which helps the customer to have
a better experience and always help the firm in increasing their market share and in improving
the goodwill (Wheelen and et.al., 2017).
Market Development: It is the strategy which is used by the Microsoft but has not gained that
name in proving helpful for the organisation as in this strategy Microsoft used to develop the
new market in which Microsoft can start selling the product, the main difficulty which is faced
by the organisation is that the company is not able to sustain the host country competition but for
removing the same company has done many mergers in the country to get help of the other
company goodwill. For example: Microsoft has applied this theory to sell the product outside
United State also but as Microsoft is already a well known company in the global market it has
not proved that beneficial for them.
Diversification: It is the strategy in which is used by the Microsoft to diversified the business by
developing the new business. Microsoft has diversified the business by acquiring the Nokia
business to enter into the auto mobile industry in the developing country like India but use of
this policy is not able to have a good growth for the business as acquiring the company is not
able to perform as per the expectation. The product which are developed and marketed by the
Microsoft itself has gain more success as compare to the acquisition company product (Ibarra,
Rattan and Johnston, 2018) .
Generally Microsoft uses the Market Penetration Strategy in the business the main reason for that
is Microsoft has already gained a good name in the market and does not want to loose that
market so always try to improve the previous market share only by selling the product in well
known market.
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Internal and External Analysis
Organisation success is always measure on the basis of analysing the environment under which
business is operating as the environment of the organisation shows the strength, weakness,
current position of the business in the market. In the case of the Microsoft environment as played
a very crucial role in the success of the organisation as Microsoft always believes in researching
and development process and invest a very huge amount on the same process, as the global
organisation it is necessary for the Microsoft to understand the environment and enter into the
market and effort which are made by the Microsoft has affected the business in positive way
(Morden, 2016). The relationship between the Microsoft and its environment can be studied in
the following way:
Exchange of Information: It refers to all the information which is shared between the
organisation and the environment. The information includes the outcomes of the environment
scanning which is done by the Microsoft to uncertain the threat or opportunity which is
prevailing in the environment and by the help of that company can easily take the decision or
plans about the future strategy of the business. Microsoft generally do the market research at the
regular time interval to uncertain the information as for the big firm like Microsoft it is very
necessary to be one step ahead of the market otherwise it can harm the position of the business
(Ibarra, Rattan and Johnston, 2018). Microsoft always looks for the information regarding legal,
demography, competition and the government policy of the host country to safeguard the
position of the organisation in that country at the other end Microsoft also passes on the
information regarding the organisation in the external environment through different external
agencies, newspaper and magazines and also many interested parties like stakeholder and
investor always approaches the organisation to have an information regarding the organisation as
they are having a sort of interest in the organisation (Daniels, 2017).
Exchange of Resources: it is the second transaction which is done in between the Microsoft and
its environment. This transaction includes the transfer of the resources business always receives
the input on the resources like finance, human man power, labour from both internal and external
which helps the Microsoft in investing these resources in the working of their business. External
environment also helps the Microsoft to reach a wide customer base as by the help of the
distribution channel only company is able to sell their product into the market. Environment also
helps the business in getting a good talented employee into the business with the help of the
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organisation external environment. But at the other business also improves the quality of the
resources which is presented to the environment such as human man power. Organisation is a
place through which employee gets the training and able to improve their skill which improves
the efficiency level of the human man power and at the same time business also provides the
opportunity for the environment to use their unused resources. Such as by opening job vacancy
or by adding new entity into the business so that environment can invest in that (Hitt, Ireland and
Hoskisson, 2016.).
These are the two big transaction which explains the relationship between the
organisation and environment but there are other than that transaction also which is done in
between them such as it help the business in knowing the competition factor which is faced by
the organisation and also it helps the business in knowing the factor like Supplier, Local
community and the creditor which also plays a critical role in the strategy development of the
Microsoft. After going through all the aspect of the relationship it can be summarised that in this
relationship there is a upper hand of the environment as compare to the Microsoft as the amount
of help done by environment is too high as compare to the organisation return to environment.
Poters Five Factor
Competition: Microsoft has to effectively face the competition in the market to remain
successful in the market. Moderate switching cost, aggressiveness of firm and diversity of firm
are the factor which need to be looked for the Microsoft.
Threat of substitute: No substitute of the most of the Microsoft product helps the business in
getting the best customer from all around the market.
Bargaining Power of customer: Microsoft always try to impress the customer due to their
pricing policy also as every customer requires the good quality product at minimum rate.
Bargaining power of Supplier: Microsoft always face this problem as Moderate size of supplier
and population in the market always affect them.
Threat of new entrant: It is affecting the Microsoft as the policy offered by the new firm
always hurt them as Microsoft need to change the policy to be competitive in the market.
RECOMMENDATION
After going through above report it has been recommended to the organisation that Microsoft has
to look at the strategy which is related to the merger and acquisition as the merger and
acquisition done by the firm is not that successful, company can improve these by investing more
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toward the research process as through that only company can able to known more about the
organisation which Microsoft is using to acquire. As Microsoft is doing well in the market with
there current strategy itself but Microsoft can look to have a greater market area coverage in the
global market area also by making slight changes like evaluating the host country culture more
proficiently to cover the market (Hitt, Ireland and Hoskisson, 2016).
CONCLUSION
After going through above report it has been summarised that there are mainly three approaches
of the strategy development which are used by the organisation. Also, this report explains that
there is good relationship in between the organisation and the environment in which organisation
is dealing and environment is helping the business in improving the performance of the business.
This report also summarised that the strategy used by the Microsoft is proving good to them but
strategy regarding acquisition and merger is not that efficient as expected by the firm so the
organisation need to make some changes in that strategy.
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REFERENCES
Books and Journals
Ansoff, H.I. And et.al., 2018. Implanting strategic management. Springer.
Buckley, P.J. and Ghauri, P. eds., 2015. International business strategy: theory and practice.
Routledge.
Daniels, J., 2017. And Strategy in the Global Context. MAD Ñ KHLAPEIFM Ñ A.
Frynas, J.G. and Mellahi, K., 2015. Global strategic management. Oxford University Press,
USA.
Hanson, D. and et.al., 2016. Strategic management: Competitiveness and globalisation. Cengage
AU.
Hitt, M.A., Ireland, R.D. and Hoskisson, R.E., 2016. Strategic management: Concepts and
cases: Competitiveness and globalization. Cengage Learning.
Ibarra, H., Rattan, A. and Johnston, A., 2018. Satya Nadella at Microsoft: Instilling a growth
mindset.
Lasserre, P., 2017. Global strategic management. Macmillan International Higher Education.
Morden, T., 2016. Principles of strategic management. Routledge.
Wheelen, T.L., and et.al., 2017. Strategic management and business policy (p. 55). Boston:
pearson.
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