Microsoft Corporation’s Operations

Management, 10 Decisions, Productivity

UPDATED ONUPDATED ON FEBRUARY 21, 2017 BY NATHANIEL SMITHSON

Entrance sign of the

Microsoft campus in Germany in 2005. Microsoft Corporation’s operations management
maximizes performance and productivity in the 10 strategic decision areas. (Photo:
Public Domain)
Microsoft Corporation’s operations management (OM) in the 10 strategic decision areas
addresses the productivity needs of the computer hardware and software business. The
10 decisions reflect the major business functional areas that require coordination to
achieve optimal business performance. In the case of Microsoft, the 10 strategic
decisions are intertwined with the ability to expand the business. This condition is linked
to the global nature of the company’s supply chain and distribution network. As one of
the biggest firms in the industry, Microsoft must continually develop relevant operations
management approaches to address the 10 strategic decisions for maximizing
performance and productivity.

The 10 strategic decision areas of operations management (OM) are effectively covered
in Microsoft’s approaches. Business productivity depends on the effectiveness of
operations managers in developing solutions corresponding to these 10 decisions to
support Microsoft’s computer hardware and software operations.

Microsoft’s Operations Management, 10 Decision

Areas
1. Design of Goods and Services. This decision area of operations management
deals with the strategies and tactics needed to develop profitable products. Microsoft
Corporation initially focused on software design. However, through continuing
expansion of the product mix and diversification of the business, the company’s
operations managers now make broader strategic decisions. For example, their
operational productivity decision-making processes now include computer hardware
and software products, along with Microsoft’s cloud computing services. This condition
increases the significance of operations management in designing goods and services
for the company. The increasing variety of products also reflects Microsoft’s generic
strategy and intensive growth strategies.

2. Quality Management. Operations managers are concerned with satisfying

customers’ expectations about product quality in this strategic decision area. Microsoft’s
approaches to operations management address these operational objectives through
continuous improvement and innovation. For example, the company uses feedback
systems to collect usage information from customers, and integrates such information in
the next iteration of computer software products. Also, Microsoft heavily invests in
research and development to achieve rapid innovation that keeps the business
competitive against other technology firms. These approaches optimize productivity and
organizational resilience, given market dynamics. Emphasis on quality supports the
aims for helping and empowering customers, as included in Microsoft’s mission
statement and vision statement.

3. Process and Capacity Design. In this strategic decision area, companies focus on
resources and standards applicable to production processes. In Microsoft’s case,
operations management relies on extensive automation to optimize capacity and
processes. For example, in computer hardware production, the company automates
production capacity allocation to minimize productivity bottlenecks. On the other hand,
for software production, Microsoft’s operations managers streamline process design to
reduce errors and increase operational efficiency in correcting software development
issues.

4. Location Strategy. Proximity and access to resources, markets and supply chains
are considered in this strategic decision area of operations management. In software
development and distribution, Microsoft Corporation focuses mainly on human resource
productivity within its corporate facilities. The company’s computer software products
are easily distributed to target markets through the Internet. However, for hardware
products like the Xbox, Microsoft must ensure nearness and accessibility to target
markets around the world. For example, the company maintains business partners,
such as authorized sellers. In addition, the firm adds more distribution channels by
increasing the number of its Microsoft Store locations worldwide. Thus, Microsoft’s
operations management approach in this strategic decision area involves a combination
of virtual and physical locations to reach markets and maximize resource accessibility.
These operational strategies are also reflected in the place element of Microsoft’s
marketing mix.
5. Layout Design and Strategy. Operations management optimizes resources in this
strategic decision area for the purpose of achieving efficient movement of human
resources, information, and materials. Microsoft’s layout design integrates advanced
computing technologies to facilitate such efficiency. For example, efficient movement of
information is achieved through network technology, such as online computers in the
workplace. On the other hand, efficient movement of materials is supported through
Microsoft’s automation of production processes. Business partners are also provided
with technological solutions to achieve operational efficiency and high productivity.
Microsoft’s operations management also uses innovative layouts for ease of employee
movement throughout its facilities.

6. Job Design and Human Resources. This decision area of operations management
considers the recruitment, retention and development of human resources. Microsoft’s
approach to job design emphasizes innovative thinking and a growth mindset. These
characteristics support the firm’s technology innovation and product development goals.
The approach also aligns with Microsoft’s organizational culture. On the other hand, to
develop its human resources, the company uses training programs. For example,
leadership development programs are used to identify and support leaders within
Microsoft’s organization. Through these approaches, Microsoft ensures productivity and
operational efficiency in its expanding computer hardware and software business.

7. Supply Chain Management. Operations managers address this strategic decision

area by maintaining streamlined integration of the supply chain with other business
activities. Microsoft Corporation’s global supply chain is monitored through computer
networks. For example, personnel regularly input current supply status, which is
transmitted to regional and corporate offices for monitoring. The resulting data is
automatically analyzed to determine necessary changes in Microsoft’s supply chain. In
addition, strategic decisions are based on real-time data representing the supply chain,
distribution network, and other areas of the business. Microsoft’s operations
management approach to this strategic decision area maximizes operational efficiency
of the supply chain. The approach also optimizes the productivity of supply chain
personnel. The resulting optimization addresses some of the opportunities and threats
identified in the PESTEL/PESTLE Analysis of Microsoft Corporation.

8. Inventory Management. In this strategic decision area of operations management,

inventory costs and holding are set to satisfy organizational needs, customer
expectations, and supply chain capacity. Microsoft applies automation for managing its
inventory for materials used in maintaining its online systems. For example, the
company uses automated systems to determine when to update and upgrade its cloud
computing services. The upgrades involve new materials like server components in
Microsoft’s facilities. The same operations management approach is used for inventory
management in computer hardware manufacturing, although Microsoft outsources
production processes. The company’s operations managers apply perpetual methods,
periodic methods, and serialized inventory management to maximize operational
productivity in this decision area.
 9. Scheduling. Intermediate and short-term scheduling to address resources and
market demand is covered in this strategic decision area of operations management. In
this regard, Microsoft’s objective is to use market conditions to determine the most
suitable schedules. The company achieves high productivity in this decision area
through decisions based on continuous market analysis. The operational significance of
market analyses is their support for relevant decisions that accurately address current
concerns in Microsoft’s business. For example, operations managers change
intermediate schedules to suit current changes in demand for Microsoft’s Xbox units.

10. Maintenance. Operations management maintains adequate resources and

processes in this strategic decision area. Microsoft Corporation needs to maintain its
software development processes, as well as production capacity to maximize revenues.
In software development, the company focuses on the sufficiency of personnel, such as
programmers, to maintain rapid innovation through software design and iteration. On
the other hand, in terms of production capacity, Microsoft’s operations management
approach maintains high productivity through inter-organizational support. For example,
to support outsourced production, the company provides current data to manufacturers.
Such current data indicates intermediate changes in production to ensure operational
adequacy of Microsoft’s supply chain.

Microsoft Corporation’s Productivity Criteria

Microsoft’s productivity is based on personnel activity, manufacturing processes,
software development processes, and equipment maintenance, among others.
Operations managers consider these factors in evaluating productivity levels. The
following are some measures or criteria Microsoft uses to assess and monitor
productivity:

1. Units per day (Hardware manufacturing productivity)

2. Servers updated per day (Equipment maintenance team productivity)
3. Units sold per day (Productivity of Microsoft Stores)

Microsoft’s Corporate Social Responsibility

Strategy & Stakeholders (An Analysis)
UPDATED ONUPDATED ON FEBRUARY 21, 2017 BY NATHANIEL SMITHSON
 The west campus of
Microsoft in Redmond, Washington, 2009. Microsoft Corporation’s corporate social
responsibility (CSR) strategy satisfies stakeholders’ interests in the computer
technology business through support for institutions and nonprofit organizations’
programs. (Photo: Public Domain)
Microsoft Corporation’s corporate social responsibility (CSR) strategy is founded on a
number of international concerns regarding the computer hardware and software
business. Archie Carroll developed the corporate social responsibility model to highlight
the mutual influence among stakeholders and businesses. In Microsoft’s case,
stakeholders include persons and groups with significant interest in how the company
performs and interest in the impact of its computing products. As a major player in the
global market, the firm must maintain an evolving corporate responsibility strategy to
ensure that corresponding programs satisfy stakeholders’ interests and enhance brand
and corporate image.

Using a continuously improving corporate social responsibility (CSR) strategy, Microsoft

Corporation addresses stakeholders’ interests that significantly impact the business.
The company satisfies such interests through appropriate corporate citizenship
programs based on international standards and guidelines.

Microsoft’s Stakeholder Groups & CSR Initiatives

A variety of stakeholders and their interests impose a wide scope of issues on Microsoft
Corporation. However, the company focuses on the most significant interests through its
corporate social responsibility initiatives, which emphasize human rights, environmental
sustainability, and business transparency. The following are the major stakeholder
groups significant in Microsoft’s business, arranged according to the company’s
prioritization in its CSR strategy:

1. Customers (highest priority)

2. Employees
3. Communities
4. Investors
5. Governments

Customers (Top-Priority Stakeholders). Considering Microsoft’s business growth

needs, customers are the top-priority stakeholder group in the company’s corporate
social responsibility strategy. These stakeholders are mainly interested in reasonably
priced effective products, along with high quality customer service. These interests
significantly influence the company in terms of customer retention and related sales
revenues. Microsoft’s corporate responsibility approach satisfies these interests through
innovation to provide advanced computer hardware and software products to
customers. In addition, feedback systems enable the company to address customers’
complaints and issues encountered in using the products. To further satisfy the interests
of this stakeholder group, Microsoft offers discounts to some customers. For example,
students and veterans can purchase the company’s computing products at discounted
prices. These discounts are also implemented as part of Microsoft’s marketing mix.
Thus, Microsoft’s corporate social responsibility strategy effectively satisfies the
concerns and interests of customers as the most significant stakeholder group.

Employees. Human rights are among the main thrusts in Microsoft’s corporate social
responsibility programs. As such, employees are the second-priority stakeholder group
in the company’s CSR approach. The interests of employees are competitive
compensation, as well as fair labor and employment practices. These stakeholders are
significant because of their direct effect on Microsoft Corporation’s organizational
performance through human resource competence and productivity. To satisfy
employees’ interests, the company’s corporate responsibility strategy involves highly
competitive compensation along with continuous improvement in employment practices
to protect workers’ rights. For example, Microsoft offers high salaries for qualified
workers, in order to compete with technology firms like Apple (Read: Apple’s Corporate
Social Responsibility & Stakeholders). Also, Microsoft maintains training and leadership
development programs to address workers’ interests in the computer technology
business. These CSR programs support human resource improvement while increasing
morale and competence among employees. Based on these initiatives, Microsoft’s
corporate social responsibility strategy satisfies the interests of employees as a major
stakeholder group.

Communities. Communities are among the major stakeholder groups in Microsoft’s

corporate responsibility strategy, considering that the company includes environmental
sustainability as one of its CSR thrusts. Communities are interested in corporate
support for development, such as through livelihood programs and environmental
protection. These stakeholders are significant because they affect Microsoft’s corporate
and brand image. For example, customers use community impact as a criterion in
evaluating brands. In its corporate social responsibility strategy, Microsoft uses a
number of programs, including discounts for students, military personnel and veterans,
as well as donations and assistance through Microsoft Philanthropies. Such discounts
increase the accessibility of the company’s products for students, military personnel and
veterans. On the other hand, Microsoft Philanthropies provides grants and donations for
deserving nonprofit organizations with programs that support community development,
such as education and youth support programs. Moreover, the emphasis on
environmental sustainability in its corporate social responsibility strategy represents
Microsoft’s commitment to minimize the environmental impact of its business. For
example, the company maintains its carbon neutral status through the use of smart
packaging and renewable energy, as well as renewable materials for its computer
technology products. Thus, Microsoft’s corporate social responsibility strategy satisfies
this stakeholder group’s interests and fulfills the company’s aims as a corporate citizen.

Investors. Microsoft identifies transparency as one of its main thrusts in its corporate
social responsibility strategy. In this regard, investors are among the main stakeholder
groups in the computer hardware and software business. Investors affect Microsoft
through the availability of capital. The interests of these stakeholders are business
growth and accurate financial reporting. Microsoft’s corporate responsibility efforts
satisfy these interests through a variety of disclosures about the business, thereby
benefitting investors. For example, these CSR initiatives enable investors to make
better decisions about the company. The firm’s business stability also addresses
investors’ interest regarding business growth. These initiatives show that Microsoft’s
corporate social responsibility strategy satisfies the interests of investors as a significant
stakeholder group.

Governments. Microsoft’s corporate social responsibility approach considers

governments as stakeholders in the business. This stakeholder group is significant
because they directly influence the company’s limits in doing business. Governments
are interested in Microsoft’s legal and regulatory compliance, as well as contributions to
economic growth. The company satisfies these interests through stringent measures in
the organization. For example, Microsoft’s corporate guidelines require human resource
managers to comply with labor regulations. These guidelines also require compliance
with regulations on environmental impact, product safety, and consumer security. These
corporate social responsibility efforts indicate that Microsoft satisfies the interests of
governments as stakeholders in the business.

Microsoft’s Corporate Social Responsibility

Performance in Addressing Stakeholders’ Interests
As a global computer technology business, Microsoft Corporation has taken the
necessary steps for a corporate social responsibility strategy that satisfies the interests
of its major stakeholders. The company has high performance in addressing its
stakeholders. Microsoft’s emphasis on human rights, environmental sustainability and
transparency ensure that this corporate responsibility strategy remains relevant to
current market conditions. However, an issue typical in large global organizations like
Microsoft is the lack of immediate responses to individual customer complaints and
inquiries. In this regard, a recommendation is that the company must invest in a larger
support community to harness knowledge sharing that can enhance the corporate social
responsibility strategy.

Microsoft Corporation’s Marketing Mix

(4Ps) Analysis
UPDATED ONUPDATED ON FEBRUARY 21, 2017 BY NATHANIEL SMITHSON

A Microsoft
exhibition in Taipei, 2009. Microsoft Corporation’s marketing mix (4Ps) shows reforms
and strategic change in products, prices, places, and promotion activities to improve the
computer hardware and software business. (Photo: Public Domain)
Microsoft Corporation’s marketing mix is a showcase of how rapid innovation combines
with effective approaches to maintain a strong share of the market. An organization’s
marketing mix or 4Ps (Product, Place, Promotion & Price) determines the strategies and
tactics for implementing a marketing plan. In this case, Microsoft uses online technology
and technological measures to protect digital products. As a major competitor in the
computer hardware and software market, the company enjoys high revenues. However,
competitive rivalry and related issues, as shown in Microsoft’s Five Forces Analysis,
threatens such market position. To ensure continued success in the global market,
Microsoft must match its marketing mix with the characteristics of target markets
worldwide.

An effective marketing mix (4Ps) enables Microsoft Corporation to maximize its sales
revenues. However, an evolving marketing mix is necessary to maintain the company’s
position in the computer hardware and software market.

Microsoft’s Products (Product Mix)

 Microsoft started as a software developer. However, the business has since grown to
include an increasing variety of products, as shown in this element of the marketing mix.
Microsoft categorizes its products, also known as the product mix, as follows:

1. Devices
2. Software
3. Apps
4. Games
5. Entertainment

Microsoft’s devices include hardware products, such as personal computers, tablets,

Xbox, and Windows phones. On the other hand, the company puts systems software or
basic software under the Software category. For example, such software products
include Microsoft Office and Windows OS. In the Apps product line are other free and
proprietary software products from the company, as well as from third parties. For
example, these apps include Microsoft Remote Desktop (from Microsoft Corporation)
and the proprietary Drawboard PDF (from Drawboard). The company keeps a
percentage of all revenues generated through sales of third-party apps on Microsoft
online stores. The Games product line covers the Xbox games, Windows games, and
related gaming software. In the Entertainment category, the company also keeps a
percentage of all movies and songs sold through its website. This element of Microsoft’s
marketing mix reflects the increasing diversification of the company’s products. Such a
condition is connected to Microsoft’s generic strategy and intensive growth strategies,
which emphasize growth by penetrating markets and providing attractive products.

Place/Distribution in Microsoft’s Marketing Mix

Microsoft Corporation needs to maximize its reach in the computer hardware and
software market. In this element of the marketing mix, the locations or places for
transacting with customers are considered. In the case of Microsoft, the following
venues are used to distribute products:

1. Official website
2. Authorized sellers
3. Microsoft Stores

Customers can access, purchase or download software products through Microsoft’s

official website and online store. At present, this online place is a major avenue for the
company’s revenues. In addition, the firm’s authorized sellers provide a direct approach
to sales and marketing. These sellers, typically located in strategic commercial areas
around the world, enable the company to reach target markets. On the other hand,
Microsoft Stores are physical retail stores where customers can access a variety of the
company’s products, such as smartphones and Xbox units. These stores, although
limited in number, are another direct approach to marketing, enabling the company to
enhance brand image and improve customer experience. This element of the marketing
 mix shows an expanding reach to the global computer hardware and software market,
thereby supporting efforts to capture every person as a customer, as highlighted
in Microsoft’s vision statement and mission statement.

Microsoft Corporation’s Promotion (Promotional Mix)

Microsoft’s concern in this element of the marketing mix focuses on effective
communication strategies and tactics used to attract target customers. Considering the
conditions of the computer hardware and software market, the strategies and tactics in
Microsoft’s promotional mix are prioritized as follows:

1. Advertising (most significant)

2. Sales promotions
3. Direct marketing
4. Personal selling
5. Public relations

Microsoft’s biggest promotion expense is on advertising, such as the “Women Made”

Super Bowl ad, which enhances the company’s corporate image. In sales promotions,
the firm uses discounts and other incentives to attract customers. For example, students
and military personnel and veterans can purchase the company’s products at
discounted prices. On the other hand, the company uses direct marketing for sales
deals with organizations, such as academic institutions. In personal selling, Microsoft
Store sales personnel present products and their features to potential buyers. While the
discounts for military personnel also function as a public relations tactic, the company’s
main public relations strategy is implemented through Microsoft Philanthropies.
Donations and related activities are executed through this philanthropic arm. For
example, the company donates computer hardware and software products to nonprofit
organizations and provides financial support for programs that help at-risk youth. In this
element of Microsoft’s marketing mix, advertising is the most important determinant of
the company’s effectiveness in communicating with the target market, and the other
strategies and tactics satisfy stakeholders (Read: Microsoft’s Corporate Social
Responsibility & Stakeholders).

Microsoft’s Prices and Pricing Strategy

Price points affect the attractiveness and sales performance of Microsoft’s products.
The company must apply suitable pricing approaches to ensure effectiveness in
addressing concerns in this element of the marketing mix. Microsoft uses the following
pricing strategies:

1. Market-oriented pricing strategy

2. Freemium pricing strategy
3. Buy Only What You Use pricing strategy
In the market-oriented pricing strategy, Microsoft sets the prices of many of its products,
based on market factors, such as competitors’ pricing and consumer demand. The
company also uses the freemium pricing strategy, which involves offering a product for
free, and requiring payment for additional functionality or features. For example, the
Office 365 cloud productivity suite is free to use on devices with a maximum screen size
of 10 inches. Payment is required to use the suite on larger devices. This pricing
strategy is advantageous because it allows customers to try Office 365 free of charge,
enabling the company to show the benefits of using the products in the suite. Moreover,
Microsoft applies the “buy only what you use” pricing strategy for cloud services. This
strategy involves fees based on how much the customer actually uses, instead of fees
per device. The advantage of this pricing strategy is its ability to attract customers
concerned about extra charges in using multiple computing devices. Thus, this element
of the marketing mix shows that Microsoft has been reforming its pricing strategies to
address changes in the computer hardware and software market, especially amid
competition with other technology firms.

Microsoft Corporation’s PESTEL/PESTLE

Analysis & Recommendations
UPDATED ONUPDATED ON FEBRUARY 21, 2017 BY EDWARD FERGUSON

Microsoft Ireland at
The Atrium Building in Dublin. Microsoft Corporation’s PESTEL/PESTLE analysis shows
the need for competitive computer technology products, based on the remote or macro-
environment. (Photo: Public Domain)
Microsoft Corporation’s managers include PESTEL/PESTLE analysis in their
approaches to understanding the company’s business situation. The PESTEL/PESTLE
Analysis model is a tool for identifying the external factors that influence the remote or
macro-environment of firms. In the case of Microsoft, these external factors reflect the
performance of the computer hardware and software market. Such factors represent the
issues relevant to the company’s business. Through the inclusion of these issues
 determined through the PESTEL/PESTLE analysis, Microsoft can develop suitable
strategies that create business competitiveness and resilience.

A PESTEL/PESTLE analysis of Microsoft Corporation reveals the most significant

issues based on the conditions of the company’s remote or macro-environment.
Considering the situation of the computer hardware and software market, Microsoft can
implement strategies that address such issues and their corresponding external factors
shown in this PESTEL/PESTLE analysis.

Political Factors Affecting Microsoft’s Business

This area of the PESTEL/PESTLE analysis model deals with the effects of governments
on the remote or macro-environment of the computer hardware and software business.
In the case of Microsoft, the following political external factors are significant in strategic
decision-making:

1. Political stability in the majority of markets (opportunity)

2. Increasing governmental support for automation (opportunity)
3. Increasing international trade agreements (opportunity & threat)

The political stability of the majority of markets worldwide creates opportunities for
Microsoft to increase its investments and corresponding performance. For example, the
company can improve its sales and marketing investments in Europe to achieve a
corresponding increase in revenues. On the other hand, the increasing governmental
support for automation presents opportunities for Microsoft to increase its computer
technology sales via governmental clients. This external factor is significant, considering
large-scale purchases involving governmental organizations. Moreover, increasing
international trade agreements develop a remote or macro-environment that supports
an increase in Microsoft’s global sales. Through this external factor, the company
benefits from easier business deals in overseas markets. However, increasing
international trade agreements are also a threat against Microsoft. In these agreements,
foreign firms can increase their competitiveness in developed countries like the United
States. Based on this area of the PESTEL/PESTLE analysis of Microsoft Corporation,
the political factors present major opportunities to boost the business.

Economic Factors Important to Microsoft Corporation

The business effects of the economic situation on the remote or macro-environment are
considered in this area of the PESTEL/PESTLE analysis model. Microsoft must include
the following economic external factors in strategies for the computer hardware and
software business:

1. Considerable economic stability of the majority of developed countries (opportunity)

2. High growth of developing countries (opportunity)
3. Growing middle class disposable income (opportunity)

Microsoft benefits from the considerable economic stability of the majority of developed
countries. For example, the company can expect stable performance in these markets.
Microsoft also has potential boosts in sales revenues in high-growth developing
countries. This opportunity translates to steady growth in Microsoft’s global sales.
Moreover, the economic external factor of the overall global rise of middle class
disposable income creates opportunities for the company for higher revenues. This
condition is so because middle-class customers are among the most significant sources
of revenues for Microsoft. Thus, the company can exploit growth opportunities in its
remote or macro-environment. Microsoft must strategically address such opportunities
in the computer hardware and software industry environment, as highlighted in this area
of the PESTEL/PESTLE analysis.

Social/Sociocultural Factors Influencing Microsoft’s

Business Environment
This area of the PESTEL/PESTLE Analysis model considers how the social situation
affects Microsoft’ remote or macro-environment, especially in terms of customers’
behaviors and expectations. In the computer technology market, the following
sociocultural external factors influence Microsoft:

1. Stable attitudes about leisure (opportunity)

2. Increasing cultural diversity (opportunity & threat)
3. Stable demand for high quality customer service (opportunity)

The stable attitudes about leisure present opportunities for Microsoft to develop
products that can satisfy customers’ leisure preferences. For example, the company can
increase its investment in innovating computer gaming products for this purpose. In
addition, increasing cultural diversity is a potential threat against Microsoft in terms of
product-customer mismatch in the remote or macro-environment. For instance,
customer satisfaction could decrease as the company’s products satisfy only the
biggest cultural groups. Nonetheless, Microsoft has an opportunity to improve its goods
and services to address this issue. On the other hand, the stable demand for high
quality customer service creates opportunities for the company to improve its customer
support activities. In this area of the PESTEL/PESTLE analysis of Microsoft
Corporation, sociocultural external factors emphasize opportunities for growing the
computer hardware and software business.

Technological Factors in Microsoft’s Business

The effects of technologies on the remote or macro-environment of the computer
technology industry are identified in this area of the PESTEL/PESTLE analysis model.
Microsoft needs to integrate the following technological external factors in its strategies:
1. Rapid adoption of mobile technology (opportunity & threat)
2. Increasing volume of online transactions (opportunity & threat)
3. Increasing automation in businesses (opportunity)

Microsoft Corporation can improve its performance through rapid innovation of its
mobile devices. This opportunity is based on the rapid adoption of and rising demand
for mobile technology. However, this technological external factor is also a threat that
facilitates competition against Microsoft. More technology firms could exploit such
opportunity to enter the market. On the other hand, the increasing volume of online
transactions provides opportunities for Microsoft to develop more products that support
secure online transaction processing. However, such increasing volume of online
transactions threatens the company in terms of a corresponding increase of cybercrime
attacks, which is one of the threats identified in Microsoft’s SWOT Analysis. Moreover,
the company has an opportunity to grow through products that enable businesses to
automate more of their processes. As shown in this area of the PESTEL/PESTLE
analysis, Microsoft has significant growth opportunities, although the related threats
could limit such opportunities in the remote or macro-environment.

Ecological/Environmental Factors that Define

Microsoft’s Situation
In this area of the PESTEL/PESTLE Analysis model, the impacts of ecological issues on
the computer hardware and software industry environment are considered. Microsoft
faces the following ecological external factors in its remote or macro-environment:

1. Increasing preference for green products (opportunity)

2. Increasing focus on business sustainability (opportunity)
3. Increasing availability of recyclable materials (opportunity)

Based on the increasing preference for green products, Microsoft Corporation has the
opportunity to enhance its sustainability standing. For example, the company can
develop more environmentally friendly products, and increase the use of green energy
in its business operations. In relation, Microsoft’s efforts to improve its sustainability
directly addresses the opportunity based on the increasing focus of societies on
business sustainability. Also, the increasing availability of recyclable materials is an
ecological external factor that the company can use as basis for increasing the use of
recycled materials in its computer hardware and software products and packaging. In
this area of the PESTEL/PESTLE analysis of Microsoft, the remote or macro-
environment presents a number of opportunities for competitive advantage.

Legal Factors Affecting Microsoft’s Industry

 The business significance of laws and regulations are determined in this area of the
PESTEL/PESTLE Analysis model. In Microsoft’s remote or macro-environment, the
following legal external factors affect strategic success:

1. Increasing electronic waste disposal regulations (opportunity & threat)

2. Improving patent laws (opportunity)
3. Energy consumption regulations (opportunity)

Increasing electronic waste disposal regulations are an opportunity for Microsoft

Corporation to implement more effective recycling and disposal programs that improve
brand image. However, this legal external factor is also a threat that could impose
additional challenges for the company in addressing the environmental impact of its
business. On the other hand, the improving patent laws facilitate Microsoft’s global
growth by gradually reducing issues, such as computer software piracy. The company
also has an opportunity to enhance its products to help client organizations reduce their
consumption of energy through more energy-efficient computing technologies. Based
on this area of the PESTEL/PESTLE analysis, Microsoft has growth opportunities in its
remote or macro-environment.

Microsoft’s PESTEL/PESTLE Analysis –

Recommendations
This PESTEL/PESTLE analysis of Microsoft Corporation highlights a variety of
opportunities that can boost the company’s growth and expansion in the global
computer hardware and software market. The remote or macro-environment is
advantageous to the business, considering the opportunities available to Microsoft in
markets worldwide. However, the main threat against the company is competition based
on the expansion of foreign firms, as indicated through the external factor of increasing
international trade agreements. For example, Microsoft experiences rising competitive
rivalry with Asian firms. To address this threat, a recommendation is for Microsoft to
develop innovative products that can outcompete their rivals. It is also recommended
that Microsoft must develop additional strategic alliances with other firms to increase its
competitive strength in overseas markets. As identified in this external analysis through
the PESTEL/PESTLE Analysis model, the opportunities in the industry environment
should be adequate for Microsoft to continue as one of the major firms in the global
computer technology industry.

Microsoft Corporation’s Five Forces Analysis

(Porter’s Model) & Recommendations
UPDATED ONUPDATED ON FEBRUARY 21, 2017 BY EDWARD FERGUSON
 Microsoft Argentina
Headquarters in Buenos Aires, 2007. A Porter’s Five Forces analysis of Microsoft
Corporation on external factors in the computer technology industry environment
stresses the significance of competitive rivalry. (Photo: Public Domain)
Microsoft Corporation strategically addresses the issues highlighted in its Five Forces
Analysis. Michael Porter developed the Five Forces Analysis model to understand the
external factors significant to an organization’s industry environment. In the case of
Microsoft, these external factors are an effect of the activities of other firms in the
computer hardware and software industry. Such factors are also based on the decisions
of customers and suppliers. In relation, substitutes influence Microsoft. To maintain its
market position as a major competitor, Microsoft must consider the issues outlined in
this Five Forces analysis of the technology business.

A Five Forces analysis (Porter’s model) of Microsoft Corporation shows that competition
is the external factor with the highest intensity in the computer technology industry
environment. However, a variety of issues affect Microsoft, as shown in the details of
the Five Forces analysis.

Overview: Microsoft’s Five Forces Analysis

Microsoft must develop appropriate responses to overcome the impacts of external
factors identified in this Five Forces analysis. The ability to strategically address these
concerns influences the company’s resilience. The intensities of the five forces in
Microsoft’s industry environment are as follows:

1. Competitive rivalry or competition (strong force)

2. Bargaining power of buyers or customers (moderate force)
3. Bargaining power of suppliers (moderate force)
4. Threat of substitutes or substitution (weak force)
5. Threat of new entrants or new entry (moderate force)
 Recommendations. The results of this Porter’s Five Forces analysis of Microsoft put
focus on competitive rivalry as the strongest force affecting the business and the
computer technology industry environment. In this regard, the company must implement
strategies that boost competitive advantage. For example, Microsoft must increase its
research and development efforts, along with improved product development, to
maximize competitiveness against other firms’ products. Innovation also
supports Microsoft’s generic strategy and intensive growth strategies. This Five Forces
analysis shows that the company must include the bargaining power of buyers, the
bargaining power of suppliers, and the threat of new entry in strategic formulation.
These three forces have a moderate and significant effect on Microsoft’s performance.
The threat of substitutes is a minimal consideration, although Microsoft can also work
on this force to enhance product attractiveness.

Competitive Rivalry or Competition with Microsoft

Corporation (Strong Force)
Microsoft needs to effectively compete to remain successful. This aspect of the Five
Forces analysis determines the effects of firms on each other and the related conditions
of the industry environment. In the case of Microsoft, the following external factors and
their intensities exert the strong force of competition against the company:

 Moderate switching costs (moderate force)

 High aggressiveness of firms (strong force)
 High diversity of firms (strong force)

Moderate switching costs have a corresponding moderate influence on Microsoft’s

business. For example, customers have a moderate tendency to shift to other firms’
products. While such shifting is not easy, companies upgrading their systems could opt
to use computer hardware and software products from Microsoft’s competitors. On the
other hand, the high aggressiveness of firms leads to a strong force that significantly
affects the company’s industry environment. These technology firms are aggressive in
terms of their rate of innovation and their marketing campaigns. Microsoft must also
consider the strong force based on the high diversity of firms. For example, the
company must innovate products that compete based on a wide variety of features
showcased in other firms’ products. In this aspect of the Five Forces analysis of
Microsoft, external factors support the strong force of competitive rivalry, which is a
priority issue in strategic decision-making.

Bargaining Power of Microsoft’s Customers/Buyers

(Moderate Force)
Microsoft needs to continue satisfying customers, who significantly determine the
company’s performance. The impact of customers or consumers on the computer
hardware and software industry environment is evaluated in this aspect of the Five
 Forces analysis. Microsoft must respond to the moderate force of the bargaining power
of customers, based on the following external factors and their intensities:

 Low substitute availability (weak force)

 Moderate switching costs (moderate force)
 High quality of information (strong force)

The low substitute availability represents the difficulty of access to effective substitutes
to Microsoft’s products. For example, customers face difficulties in finding non-
computer-network solutions that are as effective and efficient as the company’s
products. This external factor exerts a weak force on Microsoft and its industry
environment. However, the moderate switching costs create a considerable force on
Microsoft’s business. Because of this intensity of switching costs, customers have a
considerable tendency to shift from the company’s products and start using other firms’
products, instead. The external factor of the high quality of information further
empowers buyers in terms of adequate information that they can use to compare
Microsoft’s hardware and software products to competitors. For instance, such
information is easily available from online sources. Based on the external factors in this
aspect of the Five Forces analysis, Microsoft Corporation must include the moderate
force of the bargaining power of customers as a significant concern in its business
strategies.

Bargaining Power of Microsoft’s Suppliers (Moderate

Force)
Microsoft’s business depends on supply conditions. This aspect of the Five Forces
analysis outlines the influence of suppliers on the computer hardware and software
industry environment. The following external factors and their intensities maintain the
weak force of the bargaining power of suppliers on Microsoft Corporation:

 Moderate size of suppliers (moderate force)

 Moderate population of suppliers (moderate force)
 Moderate overall supply (moderate force)

The moderate size and population of suppliers enable them to impose a significant but
limited influence on Microsoft’s business. For example, some moderately sized
suppliers of computer hardware components can change their pricing, which ripples to a
potential adjustment in the company’s prices. The moderate overall supply also creates
a significant but limited force on Microsoft. The intensity of this force could increase if
the overall supply decreased. Thus, the external factors in this aspect of the Five Forces
analysis of Microsoft points to the moderate force of the bargaining power of suppliers
as an important strategic consideration in the computer technology industry
environment.
 Threat of Substitutes or Substitution (Weak Force)
Substitutes can reduce Microsoft’s market share. The effects of substitutes on firms and
their industry environment are determined in this aspect of the Five Forces analysis. In
Microsoft’s case, the following external factors and their intensities impose the weak
force of substitution on the business:

 Low performance of substitutes (weak force)

 Low availability of substitutes (weak force)
 Moderate switching costs (moderate force)

Substitutes, such as non-online or manual-mechanical processes, tend to have lower

performance compared to Microsoft’s current products. This external factor weakens the
threat of substitution against the company. In relation, the global adoption of
increasingly advanced technologies reduces the availability of substitutes and further
weakens the threat of substitution that Microsoft experiences. While moderate switching
costs help facilitate substitution, this external factor is not enough to significantly
strengthen substitutes. Based on this aspect of the Five Forces analysis, the weak force
of the threat of substitution is a minor issue in Microsoft Corporation’s industry
environment.

Threat of New Entrants or New Entry (Moderate Force)

In this aspect of the Five Forces analysis, the focus is on the influence of new entrants
on the computer hardware and software industry environment. The intensities of
external factors that lead to the moderate force of the threat of new entry against
Microsoft are as follows:

 High cost of brand development (weak force)

 Moderate cost of doing business (moderate force)
 Moderate switching costs (moderate force)

The high cost of developing the brand of a technology business weakens the effects of
new entrants on companies like Microsoft Corporation. However, the moderate cost of
developing such a business presents considerable chance for new entrants to find
success in competing in the computer hardware and software market. The moderate
switching costs also partly contributes to the potential success of new entrants in
competing against firms like Microsoft. These external factors have a moderate
contribution to the potential competitive concerns of the company. Overall, such
condition corresponds to the moderate force of the threat of new entry against
Microsoft. This aspect of the Five Forces analysis shows that new entry is a significant
issue affecting Microsoft’s industry environment.
Microsoft Corporation’s SWOT Analysis &
Recommendations
UPDATED ONUPDATED ON FEBRUARY 21, 2017 BY EDWARD FERGUSON

An entrance sign at
a Microsoft Dubai office. Microsoft Corporation’s SWOT analysis shows that the
computer firm’s internal and external strategic factors point to the importance of product
innovation and business diversification. (Photo: Public Domain)
Microsoft Corporation responds to the internal and external strategic factors identified in
this SWOT analysis. The SWOT Analysis is a tool for determining organizational
strengths and weaknesses (internal strategic factors) and the threats and opportunities
affecting the business (external strategic factors). In the case of Microsoft’s SWOT
analysis, such factors emphasize the importance of unique product innovation, cyber
security, and business diversification. Through these approaches, the company can
achieve long-term growth in the computer hardware and software market. Microsoft
must maintain effective responses to address the factors shown in this SWOT analysis.

This SWOT analysis of Microsoft Corporation highlights the necessity of strategies

geared toward further innovation and diversification of the computer hardware and
software business. Microsoft can also extend its efforts to consider issues beyond the
internal and external strategic factors in this SWOT analysis.

Microsoft’s Strengths (Internal Strategic Factors)

This area of the SWOT Analysis model identifies business strengths or internal strategic
factors that contribute to business growth and resilience. Microsoft’s continued success
is partly based on the following strengths:
1. Dominant brand image
2. Product alignment with positive externalities
3. Strong alliances with other firms

The Microsoft brand is one of the strongest in the computer hardware and software
market. This strength contributes to the company’s ability to attract customers,
especially those who view brand strength in relation to reliability. Microsoft also benefits
from positive externalities with existing products in the market. For example, as more
third-party software developers create programs for IBM PC-compatible operating
systems, the company’s Windows operating system becomes even more popular. In
addition, the strength of alliances with other firms contributes to Microsoft’s capacity to
influence the market in its favor. For instance, the company can establish an alliance
with a hardware manufacturer to create hardware products that use Windows OS. Thus,
the strengths in this area of the SWOT analysis of Microsoft show that the organization
has strong foundations to compete against other large firms in the global industry.

Microsoft Corporation’s Weaknesses (Internal

Strategic Factors)
Organizational weaknesses or internal strategic factors that slow down or reduce
business development are considered in this area of the SWOT Analysis model. In the
case of Microsoft, managers must address the following weaknesses:

1. Vulnerability to cybercrime
2. Imitability of some products
3. Lack of dominant computer hardware products

Microsoft’s products are vulnerable to cybercrime. For example, the Windows operating
system remains a target of countless cybercrime attacks globally. This factor is a
weakness because it limits the attractiveness of Microsoft products. In this regard, cyber
security is a product aspect of competition among firms in the computer hardware and
software industry. On the other hand, the imitability of some products is a weakness
because it could reduce the strength of the Microsoft brand. Moreover, the company’s
product portfolio shows dependence primarily on software products, which weakens the
business against competitors that have dominant hardware and software products in the
market. Based on the strengths outlined in this area of the SWOT analysis, Microsoft
needs to improve product features and intensify its hardware development efforts to
ensure competitiveness.

Opportunities for Microsoft (External Strategic

Factors)
 This area of the SWOT Analysis model focuses on opportunities or external strategic
factors that can support business growth. The following opportunities are significant in
Microsoft’s technology business:

1. Business diversification
2. Innovation for computer hardware products
3. Stronger security against cybercrime

Microsoft Corporation is primarily a software business that heavily relies on the

popularity of the Windows operating system. In this regard, the company has the
opportunity to grow based on diversification. For example, Microsoft can diversify
through new business development or mergers and acquisitions to establish operations
in new markets or industries. In this way, the company can take advantage of other
avenues of business growth [Read: Microsoft’s Generic & Intensive Growth Strategies].
Another opportunity is for Microsoft to innovate computer hardware products, so as to
increase revenues from hardware sales. At present, the company’s hardware products
are not as competitively strong as the products from other firms in the computer
hardware market. Also, Microsoft has opportunities to improve the attractiveness of its
products through continuous improvement of their security features. Thus, the
opportunities shown in this area of the SWOT analysis of Microsoft indicates the need
for diversification and product improvement.

Threats Facing Microsoft Corporation (External

Strategic Factors)
The threats or external strategic factors that reduce or compromise business are
considered in this area of the SWOT Analysis model. Microsoft’s strategies must
address the following threats against its computer hardware and software business:

1. Cybercrime
2. Piracy
3. Strong competitive rivalry

Cybercrime remains one of the major threats against computer technology businesses.
For example, cyber attacks can cripple Microsoft’s organizational processes or
compromise customers. Another threat facing the company is piracy, which is especially
rampant in many developing countries. In addition, strong competitive rivalry creates
market forces that threaten Microsoft’s development as one of the biggest firms in the
market. For example, the diversification of other firms that now offer operating systems
and computer hardware products, as well as the rising popularity of freeware, limit and
potentially reduce the company’s business. This area of Microsoft’s SWOT analysis
shows the significance of product uniqueness and improvement.

Microsoft’s SWOT Analysis – Recommendations

Microsoft Corporation has the necessary business characteristics to remain one of the
leading players in the computer hardware and software industry. The strong brand
image and positive externalities are among the major contributors to such market
position. Thus, a recommendation is for Microsoft to continue enhancing its brand
image. It is also recommended that the company must increase its alliances with other
firms to improve positive externalities.

The weaknesses and threats in the business point to strategic reform in Microsoft. For
example, the company must continue innovating to develop products that are less
vulnerable to cybercrime. Another recommendation is for Microsoft to diversify its
business to boost potential growth. Moreover, it is recommended that the company
must increase its computer hardware development efforts to increase its revenues from
this segment of the business

Microsoft Corporation’s Organizational

Culture & Its Characteristics (An Analysis)
UPDATED ONUPDATED ON FEBRUARY 21, 2017 BY JESSICA LOMBARDO

Defense Secretary
Carter at the Microsoft Cybercrime Center in Seattle, March 3, 2016. Microsoft
Corporation’s organizational culture’s characteristics enable global competitiveness in
the computer hardware and software market. (Photo: Public Domain)
Microsoft Corporation’s organizational culture ensures workforce resilience and
capability to address business needs in the dynamic market for computer hardware and
software products. A company’s corporate culture refers to the values, traditions and
behavioral expectations among employees. Microsoft uses its organizational culture to
facilitate innovation and customer satisfaction. As one of the leading firms in the IBM
PC-compatible operating system market, the company must maintain cultural
characteristics that suitably promote innovation and high quality output. Microsoft’s long-
 term success partly depends on this organizational culture and the corresponding
competence of the company’s human resources.

Microsoft Corporation benefits from its organizational culture, which facilitates human
resource competence. This organizational culture is essential to Microsoft’s success in
the computer hardware and software market.

Features of Microsoft’s Organizational Culture

Companies have distinct cultural characteristics based on the nature of their
businesses, industry situation, labor market conditions, and internal business
processes. Microsoft Corporation’s organizational culture has the following main
characteristics:

1. Accountability
2. Quality and Innovation
3. Responsiveness to Customers
4. Growth Mindset
5. Diversity and Inclusion

Accountability. Microsoft describes its corporate culture as a culture of accountability.

This cultural feature ensures that every employee understands that his actions have
consequences in the company’s context. To ensure accountability, this characteristic of
Microsoft’s organizational culture is applied in the form of all-employee surveys and
reward and recognition programs. For example, an employee is evaluated for
accountability based on Customer Partner Experience (CPE) criteria and related
feedback. Such institutionalized accountability contributes to the ability of the
organizational culture to motivate workers to adhere to Microsoft’s rules and objectives
for its computer hardware and software business.

Quality and Innovation. As a technology business, Microsoft needs to innovate to

maintain its competitiveness against other computer hardware and software firms.
Innovation and quality are features integrated in the company’s organizational culture.
For example, Microsoft heavily invests in research and development efforts for product
improvement and new product development. Such efforts are linked to the company’s
organizational culture through emphasis on quality standards and innovativeness
among employees. In addition, Microsoft rewards workers for their innovative
contributions, based on feedback from customers and business partners. This
characteristic of the corporate culture supports the company’s needs for innovation-
based competitive advantage. This cultural characteristic facilitates Microsoft’s generic
strategy for competitive advantage.

Responsiveness to Customers. To ensure customer satisfaction, Microsoft

Corporation includes responsiveness as a feature in its organizational culture.
Responsiveness is achieved through training, so that employees effectively consider
feedback from customers and partners. For example, Microsoft maintains feedback
systems to allow employees to know what customers think and experience in using the
firm’s computer hardware and software products. In addition, the company trains
employees to listen to such feedback, instead of just reading or delegating them. To
ensure that this cultural feature is integrated in its human resources, Microsoft uses a
variety of tools, such as product support services and social media. The resulting
information is applied in innovating product areas, such as the Windows operating
system and Bing. This feature connects the organizational culture to Microsoft’s mission
and vision statements, which focus on empowering customers and business partners.

Growth Mindset. Growth is a necessary part of every business. Microsoft uses its
corporate culture to grow its computer hardware and software business. For example,
the company trains employees to identify potential avenues for new business growth,
such as new ideas and solutions. Workers are rewarded based on their contributions in
this regard. This characteristic of its organizational culture affects Microsoft in terms of
continued growth and resilience despite competitive rivalry in the global market.

Diversity and Inclusion. Diversity and inclusion is now seen as an essential factor in
business development. Microsoft applies these factors in its organizational culture
through appropriate training programs. Also, the company’s human resource policies for
recruitment and hiring ensure a high level of diversity and inclusion in the organization.
This organizational cultural characteristic provides a means for Microsoft to maximize
human resource competence based on diverse ideas and unity among employees.

Microsoft’s Corporate Culture – Implications,

Advantages & Disadvantages
Microsoft’s organizational culture supports business goals for continuing global success.
Such success is based on innovation and responsiveness to customers’ concerns.
These corporate cultural advantages show that Microsoft has what it takes to maintain
its market position, based on satisfying needs in the computer hardware and software
market.

A disadvantage of Microsoft’s organizational culture is the lack of institutionalized

support for adequate autonomy. Autonomy encourages employees to contribute new
and innovative ideas. Based on such disadvantage, a recommendation is for Microsoft
to integrate considerable autonomy in its organizational culture.

Microsoft Corporation’s Organizational

Structure & Its Characteristics (An Analysis)
UPDATED ONUPDATED ON SEPTEMBER 8, 2018 BY JESSICA LOMBARDO
 Front lobby entrance
of one of the buildings in Microsoft’s Redmond, Washington campus. Microsoft
Corporation’s organizational structure’s characteristics support product innovation.
(Photo: Public Domain)
Microsoft Corporation’s organizational structure enables the business to grow,
especially following the firm’s structural change implemented in 2015. A company’s
corporate structure refers to the anatomy and arrangement of the organization and its
components. In Microsoft’s case, the organizational structure stresses the importance of
business output. As a dominant player in the IBM PC-compatible operating system
market, the company uses its structure to maintain competitive advantage, in
accordance to its strategies [Read: Microsoft’s Generic Strategy & Intensive Growth
Strategies]. The company’s long-term success depends on the suitability of its corporate
structure to market conditions and industry forces.

Microsoft Corporation’s organizational structure reflects the needs of the computer

hardware and software business in response to market dynamics. A responsive
organizational structure ensures the company’s long-term success.

Features of Microsoft’s Corporate Structure

Microsoft Corporation has a product type divisional organizational structure. This
structure involves divisions that are based on certain computer hardware and software
products, or organizational outputs. The following characteristics are significant in
Microsoft’s organizational structure:

1. Product type divisions (most dominant structural feature)

2. Global corporate groups
3. Geographic segments
 Product Type Divisions. Product type divisions are the primary characteristic of
Microsoft’s organizational structure. In this characteristic, the company uses product or
output as the main criterion for grouping personnel and related resources. For example,
the organization has a self-contained division for Intelligent Cloud products and
separate divisions for other products. This structural feature contributes to the
company’s organizational capacity for product innovation. The following are the product
type divisions in Microsoft’s corporate structure:

1. Productivity and Business Processes

2. Intelligent Cloud
3. More Personal Computing
4. Corporate and Other

Global Corporate Groups. Global corporate groups are a secondary characteristic that
defines Microsoft’s organizational structure. These groups are based on the functions
essential in the computer technology business. For example, the Human Resources
group addresses the company’s workforce needs and related concerns. This structural
characteristic ensures that the organization functions as a whole. The following are the
global corporate groups in Microsoft’s organizational structure:

1. Office of the CEO

2. Worldwide Commercial Business
3. Marketing
4. Microsoft Global Sales, Marketing and Operations
5. Corporate Strategy and Operations
6. Microsoft Cloud and Enterprise Group
7. Human Resources
8. Finance
9. Business Development
10. Applications and Services Group
11. Windows and Devices Group
12. Technology and Research
13. Legal

Geographic Segments. Microsoft Corporation’s corporate structure also involves

geographic segments as the least significant characteristic. These segments are used
to group operations in the company’s financial reports. The following are the geographic
divisions in Microsoft’s organizational structure:

1. United States
2. International

Microsoft’s Organizational Structure – Implications,

Advantages & Disadvantages
The main implication of Microsoft Corporation’s organizational structure is the ability to
focus on product development. For example, the company uses its Intelligent Cloud
division to offer cutting-edge cloud computing services. A corresponding advantage of
this corporate structure is its contribution to the competitiveness of Microsoft’s products.

A disadvantage of the company’s organizational structure is its minimal consideration

for regional market differences. Regions have varying preferences with regard to
Microsoft’s computer hardware and software features, such as in the case of
smartphones. Thus, a recommendation is for the company to integrate regional market
differences in its organizational structural design.

Microsoft Corporation’s Generic & Intensive

Growth Strategies
UPDATED ONUPDATED ON FEBRUARY 21, 2017 BY LAWRENCE GREGORY

A stone sign at an
entrance to Microsoft’s Redmond, Washington campus. Microsoft Corporation’s generic
strategy (Porter’s model) and intensive growth strategies support competitive advantage
of the computer hardware and software business. (Photo: Public Domain)
Microsoft Corporation’s generic strategy for competitive advantage is aligned with the
company’s intensive strategies for growth. Such alignment optimizes organizational
performance. A company’s generic strategy indicates the general approach to ensure
business competitiveness. Microsoft’s generic competitive strategy supports the
attractiveness of its computer hardware and software products amid a wide variety of
competitors. On the other hand, a company’s intensive strategies for growth presents
the approaches used to ensure business growth and development. In this case,
Microsoft’s intensive growth strategies currently prioritize market penetration. The rest
of the strategies have a supporting role in the computer hardware and software
business.

Microsoft Corporation’s generic strategy creates competitive advantage while enabling

the business to maintain a broad market scope. On the other hand, market penetration
is used as the main intensive growth strategy to support Microsoft’s growth in a highly
competitive global computer hardware and software market.

Microsoft’s Generic Strategy (Porter’s Model)

Microsoft Corporation uses broad differentiation as its generic strategy for competitive
advantage. Broad differentiation involves unique products sold to a wide variety of
customers. In this case, Microsoft’s products are unique in terms of features, such as
software products specifically designed for business organizations. Also, this generic
competitive strategy is broad in the sense that the company sells its products to various
market segments. For example, individuals, households and organizations buy
Microsoft’s software and hardware products. Through the broad differentiation generic
strategy, the company builds its competitive advantage to attract a large population of
customers globally. This generic strategy also aligns with Microsoft’s mission and vision
statements, which emphasize capturing a global market.

A strategic objective applicable under Microsoft’s broad differentiation generic strategy

is to develop business competitive advantage through continuous product innovation.
This strategic objective is crucial to long-term success, considering that Microsoft
operates in a rapidly changing and highly dynamic industry. Uniqueness of product
design is another strategic objective linked to the broad differentiation generic strategy.
This strategic objective highlights the importance of tangible and intangible attributes of
products to ensure Microsoft’s competitive advantage. For example, the company can
develop new computer hardware and software products that are difficult to copy
because of its specificity to the Windows operating system.

Microsoft’s Intensive Strategies (Intensive Growth

Strategies)
Market Penetration (Primary Strategy). Market penetration is the primary intensive
strategy that Microsoft uses to grow its business. This intensive growth strategy involves
selling more products to the markets where the company currently has operations. For
example, the company grows by intensifying its marketing and sales in its current
markets in Asia. This intensive growth strategy is responsible for Microsoft’s global
dominance in the IBM PC-compatible operating system market. The company
effectively applies market penetration through the broad differentiation generic strategy,
which uses product uniqueness to attract more customers from various market
segments. A strategic objective based on this intensive strategy is to ensure Microsoft’s
growth through aggressive sales and marketing.
Product Development (Secondary Strategy). Microsoft Corporation uses product
development as a secondary intensive growth strategy. This intensive strategy
facilitates growth based on the development and sale of new products. For example,
Microsoft continually develops new software products to generate higher revenues.
Through new products that address market needs, the company supports its generic
strategy, which requires product uniqueness as a competitive advantage. This intensive
strategy points to the strategic objective of enabling Microsoft’s growth through product
innovation.

Market Development (Supporting Strategy). Market development is a supporting

intensive growth strategy that has considerable but minimal impact on Microsoft’s
current business performance. Market development supports business growth through
the firm’s entry into new markets. For example, in its early years, Microsoft applied this
intensive strategy to sell its computer software products outside the United States.
However, considering that these products are already globally popular, market
development is no longer as significant in the company’s growth. The generic strategy
of broad differentiation empowers Microsoft in applying market development as an
intensive growth strategy. For instance, through unique business-specific computer
products, the company initially entered overseas markets. A strategic objective linked to
this intensive strategy is to grow Microsoft by entering new markets, likely in developing
countries or regions.

Diversification (Supporting Strategy). Microsoft Corporation considers diversification

as a supporting intensive growth strategy. In this intensive strategy, the company grows
by developing new businesses. For example, Microsoft diversified its business when it
acquired Nokia’s devices and services division to re-enter the smartphone hardware
market. The company can effectively apply this intensive growth strategy through new
product development in new business ventures, based on the broad differentiation
generic strategy. A strategic objective based on this intensive strategy is to facilitate
Microsoft’s growth through mergers and acquisitions.

Microsoft’s Mission Statement & Vision

Statement (An Analysis)
UPDATED ONUPDATED ON FEBRUARY 24, 2019 BY LAWRENCE GREGORY
 A Microsoft building in the European Union.
Microsoft’s corporate mission statement and corporate vision statement are
synonymous in representing the computer software, hardware, and cloud services
business. (Photo: Public Domain)
Microsoft Corporation’s success as a global computer technology company is founded
on the fulfillment of its corporate mission and vision statements. The vision statement
directs the development of the business toward a desired future condition. Microsoft’s
corporate vision includes what the company can do for individual and organizational
customers. On the other hand, a company’s mission statement presents the general
strategic approach to grow the business and reach the corporate vision. Microsoft’s
corporate mission specifies what the business aims to do to empower its customers.
Also in this case, the corporate mission is strongly aligned with the vision statement.
This alignment is essential to optimize strategic decision making, especially in
addressing competition with firms like Apple, Google, and IBM. The Porter’s Five Forces
analysis of Microsoft Corporation shows that the company deals with the strong force of
competitive rivalry involving these firms and many smaller businesses that operate
internationally, regionally, and locally.

Microsoft’s corporate vision and mission statements emphasize empowerment as a

value or benefit that the company’s products can provide to customers. The corporate
mission directly reflects the corporate vision of the computer hardware and software
business. This matching enables the company in developing and applying strategies
and tactics to motivate workers to achieve more, in support of business growth. This
condition also ensures value for customers, especially through the implementation
of Microsoft’s corporate culture. The company’s managerial decisions lead to strategic
objectives based on the mission statement. These objectives are similar to the points
included in the vision statement, and reflect strategic coherence in the organization, as
observable in the generic competitive strategy and intensive growth strategies of
Microsoft Corporation.

Microsoft’s Corporate Mission Statement

Microsoft’s corporate mission is “to empower every person and every organization
on the planet to achieve more.” This mission statement shows that the business is all
about empowerment of people and organizations. Such empowerment is achieved
 through the utility of the company’s computing products. The following components are
significant in Microsoft’s corporate mission statement:

1. Empowerment
2. Every person and every organization on the planet
3. To achieve more

The first component of the corporate mission shows what Microsoft’s products can do
for customers. For example, such empowerment can take the form of speedy data
processing in offices and enhanced information access in homes. The second
component of the company’s mission statement specifies the target market, which in
this case involves all individuals and organizations worldwide. The company’s corporate
mission also specifies that its computer technology and software products benefit
customers in terms of achieving more. Microsoft’s corporate mission statement is similar
to the company’s vision statement, considering that both statements pertain to
empowerment. However, the corporate mission statement puts more emphasis on the
practical benefit of achieving more. This benefit or value is reflected in strategies and
tactics included in Microsoft’s marketing mix or 4P.

Microsoft’s Corporate Vision Statement

Microsoft’s corporate vision is “to help people and businesses throughout the world
realize their full potential.” This vision statement shows that the company presents its
business and computing products as tools that people and business organizations can
use for their development. Microsoft’s corporate vision statement has the following
components:

1. People and businesses throughout the world

2. Help to realize
3. Full potential

The first component of the vision statement partly defines Microsoft’s target market,
which is the global market. Instead of selling software products to individual customers
only, the company also sells its products to organizations. The second component of
Microsoft’s corporate vision statement shows what the business intends to do. For
example, the company aims to provide products that assist customers toward the
achievement of their full potential, which is specified in the third component of the
corporate vision. Thus, Microsoft’s corporate vision presents the target market, what the
company’s technology products do, and what customers can achieve through such
products.

Microsoft’s Corporate Vision & Corporate Mission –

Recommendations
Microsoft’s mission statement presents the global market scope of the business and a
general idea about the benefit of the business to its customers. However, the corporate
mission does not clearly define the business in terms of its nature or what it does.
Ideally, mission statements must provide a general idea about the nature of the
business and about what the organization wants to achieve. In this case, Microsoft’s
corporate mission needs improvement. A recommendation is to improve the company’s
mission statement by including how the organization achieves its corporate vision. For
example, in terms of growing its computer technology and software business, the
corporation can specify rapid innovation in computing networks and related products.
Also, to improve the corporate mission statement, information about Microsoft’s
strategies may be included.

Microsoft’s vision statement shows the company’s target market and product value.
However, the corporate vision lacks details to effectively guide the organization’s
development. Ideally, vision statements must include details on a desired future
situation of the organization. In Microsoft’s case, the corporate vision does not contain
such information. Thus, it is recommended that the company revise its vision statement
to include information about where the business is heading. For example, Microsoft’s
vision statement can present information about its target market leadership for a specific
set of computer technology and software products in the decades to come.