Management of Microsoft Corporation - Case Study Example

Management of Microsoft Corporation One of the most significant characteristics of modern international market is the extensive competition among the companies in all industrial sectors. For this reason, in order for a firm to survive, there are specific guidelines/ procedures that need to be followed. In this context, it has been found by Santos et al. (2000, 2) that “according to its characteristics, objectives and the resources available (human, physical, financial etc.), each company prioritizes some competitive criteria, according to market tendencies and concentrates its efforts to get a competitive position relating to concurrence”. In other words, not all elements of corporate strategy need to be reviewed in order for a particular company to improve its position in its market. However, the structure of the management should be considered as an issue of major importance for all firms in the international market. The ‘corporate hierarchy’ as it is structured in accordance with the relevant decision of the firm’s shareholders is a fundamental requirement for the success of a specific firm no matter in which industrial sector this firm operates. Microsoft Corporation is an indicative example of the interaction between the management structure and the corporate performance as it can be measured through the particular corporate activities. It is for this reason that the above company has been chosen in order to prove the relationship between management and organizational performance and the role of this relationship to the increase of the firm’s profitability both in the short and the long term. The intervention of other – related – issues like the supply chain management and the human resources management will be also examined. Company Overview Microsoft Corporation is one of the leading firms in the area of computer technology worldwide. The company was founded in 1975 in USA and is currently based in Washington (USA). The annual performance of the company is really impressive reaching the 44.3 billion in 2006 while its international presence is noticeable. More specifically, the company currently operates in approximately 102 countries around the world while its employees have been estimated to 71,172 for the year 2006 [2]. The success of the company can be identified in its managerial style which is based on the distribution of tasks and projects within the organization as well as the promotion of innovation in all operational activities. The growth of the particular firm has been continuous and significant, however its starting point is considered to be the design and production of the MS-DOS operating system in mid 1980s. Since then the development of the firm has been intensive referring to several industrial sectors like the research and development, the publishing and the video games. Structure of management in Microsoft Corporation In order to evaluate the structure of management in Microsoft Corporation we should primarily refer to certain aspects of managerial activity. In this context, it has been supported by Gomez et al. (2002, Ch. 15) that in order to evaluate the firm’s profitability “the following ‘stages’ of the firm’s operation management should be examined: inputs (materials, energy, information, management, technology, facilities and labor), transformation (or conversion process) and disposition (marketing and sales)”. At a next level, it has been found the firm’s performance can be influenced by the performance of particular elements of corporate activity like the supply chain management and the HR management. Towards this direction, it has been stated by Krishnan et al. (2001, 259) that “supply chain management has become an important part of strategic planning in both large and small businesses since the 1990s as firms increasingly choose outsourcing as an externally-driven strategic growth path”. In accordance with the above the role of supply chain management (SCM) in the firm’s development should be considered as of primary importance. However, it is necessary for this ‘part’ of organizational activity to be appropriately measured and evaluated in order to lead to the production of credible results. In this context, Cook et al. (2001) presenting the following tools which if implementing by a firm they can ‘guarantee’ the development of the firm’s supply chain management and as a result the improvement of the firm’s financial performance: “making and keeping relationships, implementing new technology in the supply channel, the use of forecasting to increase supply chain effectiveness, outsourcing to increase efficiency, and cost management as a strategic weapon” (Cook et al., 2001, 14). In accordance with the above in order for a company to develop an effective corporate strategy, its management structure should be re-organized while the tasks inside the organization should be ‘re-distributed’ trying to improve the employees’ performance and – as a result – to achieve higher level of financial growth both in the short and the long term. The company is divided in three major departments: ‘a) Platform Products and Services Division: includes the Client Group, the Server & Tools Group, and the Online Services Group; b) Business Division: includes the Information Worker Group, the Microsoft Business Solutions Group, and the Unified Communications Group and c) Entertainment and Devices Division: Includes the Home & Entertainment Group and the Mobile & Embedded Devices Group’ [2]. The existence of these departments ensures the effectiveness of the organization regarding all customers’ demands. Moreover, the potential problems that may arise in the communication of the firm’s employees across the above departments can be eliminated by the application of certain rules and principles of operation, which will help towards the improvement of the employees’ performance in all corporate sectors. On the other hand, the firm’s governance serves a series of purposes which are specifically described [2] as follows: a) To establish and preserve management accountability to Microsofts owners by appropriately distributing rights and responsibilities among Microsoft Board members, managers, and shareholders, b) To provide a structure through which management and the Board set and attain objectives and monitor performance, c) To strengthen and safeguard our culture of business integrity and responsible business practices and d) To encourage the efficient use of resources, and to require accountability for our stewardship of those resources’. In accordance with the above, the firm’s governance is based on the decisions of its founder and its board of Directors who have the power to alternate the firm’s priorities in accordance with the needs of the market and the firm’s ability to respond to the challenges set by the market at a specific point of time. Managers also have a significant role in the realization of the firm’s targets through the application and the monitoring of the particular terms and plans including in the corporate strategy. Strengths and Weaknesses in firm’s managerial structure In order to evaluate the effectiveness of the firm’s strategy we should primarily examine the feasibility of the targets set by the relevant plans designed b” the firm’s strategic management team. In this context, Rand (1999, 97) noticed that ‘businesses fail because management does not have effective control of the business as management is too far removed from revenue-producing processes”. From another point of view O’Neill (2002) supported the importance of the role of the leader to the increase of the firm’s profits. More specifically, in order for the leadership to guarantee the improvement of the firm’s performance it is necessary that the following questions are answered (2002, 15) “a) what were the critical success factors in previous successful change efforts? b) what caused other efforts to fail? Are you prepared to take on the obstacles? c) who can veto? Can anyone say yes? d) what is the organizations risk profile? e) what has created a window of opportunity? How long might it last? f) what is the up side for stakeholders? g) what Have We Learned?”. In this context, innovation should be regarded as a significant part of the corporate strategy. At a next level, Kesler (2000, 26) found that innovation can be divided into the following categories: ‘1. Finance, 2. Process, 3. Offering and 4. Delivery’. Moreover, the use of e-commerce as a ‘tool’ for the improvement of the firm’s performance cannot be excluded. Indeed, the study of Globerman et al. (2001, 749) showed that “the industrial organizational impacts of e-commerce will reflect two developments: 1) the expansion of relevant geographical markets, and 2) increased competition in those markets”. The above issues need to be considered thoroughly before proceeding to the evaluation of the effectiveness of the firm’s management structure as it can be observed in the particular organizational activities. In the particular firm, the effectiveness of the management structure can be ensured through the application of a series of values and principles in all firm’s activities. More specifically as it is noticed in the firm’s website, the particular company ‘values integrity, honesty, openness, personal excellence, constructive self-criticism, continual self-improvement, and mutual respect and it is committed to its customers and partners and have a passion for technology’ [2]. On the other hand, it is noticed that the firm’s managers ‘hold themselves accountable to the firm’s customers, shareholders, partners, and employees by honouring their commitments, providing results, and striving for the highest quality’ [2]. The values presented above can be characterized as significant however it could be argued that there are no provisions made for the case of the ‘violation’ of the principles presented above by the firm’s employees or by its owners. Another significant issue regarding the effectiveness of the corporate strategy is the promotion of diversity in all firm’s activities. More specifically, it is noticed that “from the beginning, Microsoft has worked to ensure that all employees and applicants are provided equal employment opportunities being in 1989 one of the first companies to expand its nondiscrimination policy to include sexual orientation while in 1992 the Diversity Team officially formed to concentrate on Microsofts affirmative action efforts and community outreach’ [2]. At the same time the introduction and the application of a series of community investment programs have helped towards the improvement of the communication between the firm and the local communities. Indeed, in accordance with a relevant report currently Microsoft is considered to be ‘the largest contributor in the high-tech industry and one of the largest among all businesses in the United States having donated more than US$68 million in cash and $331 million in software to non-profit organizations throughout the world in the last year’ [2]. The above initiatives – as they have decided and implemented by the firm’s management team – should be characterized as really valuable regarding the improvement of the firm’s position within the local community. Conclusions and Recommendations When operating in the global market a firm should apply specific strategies that will support its operations in accordance with the principles set in the corporate plan. In this context, it has been found by Rand (1999, 97) that a firm should use ‘visibility’, i.e. ‘the capability to see and to understand the condition of the revenue-producing process as the revenue plan unfolds’ in order to ‘foresee’ any potential problems related with its particular industry. The implementation of an appropriate HR strategy is considered in this case as absolutely necessary. Regarding this issue it is supported by Lajara et al. (2002, 35) that HR management in modern corporations focuses on the following two issues: “(1) leadership and employee motivation, and (2) HR practices (recruitment and selection, training, performance appraisal, and compensation management); Both areas have peculiar connotations in the context of strategic alliances, although other typical problems associated with cooperation between firms may arise”. However, even if all appropriate measures are taken, it is very likely that problems will appear regarding the application of the rules and the terms including in the firm’s plan. In this context, the accurate measurement of the firm’s effectiveness is necessary in order to retrieve the appropriate plan for the improvement of the firm’s position in the market. Moreover, Robertson et al. (1995, 547) supported that “because private sector organizations are driven primarily by market or consumer preferences, organizational effectiveness is more readily measured in terms of efficiency and profitability”. Shama also noticed that (1993, 68) “since the perceived impact of the economic environment and the resulting management behaviour depend on company size and economic sector, a single policy cannot help all companies recover from a recession. Instead, a policy mix geared to help recovery in different sectors and different sized companies may be necessary”. In other words, corporate strategy should be analytical providing alternative plans in the case of failure of specific managerial proposals including in the firm’s strategy. In accordance with the above, the role of managers in Microsoft is proved to be significant. In this firm – as in all firms worldwide – managers have the power to design and implement specific plans in order to improve the firm’s performance. It should be noticed however that because of the importance of these decisions on the firm’s survival, it is necessary that any managerial plan is submitted to the firm’s authorized department in order to be evaluated. Although personal initiatives are highly appreciated, the risk of a potential failure could be extremely high therefore the evaluation of any relevant plan should be the priority for any company in the international market. In the case of Microsoft, the initiatives taken by the firm’s management team have been proved extremely valuable for the improvement of the firm’s performance within the particular industry. References Cook, J. S., Debree, K., Feroleto, A. (2001) From Raw Materials to Customers: Supply Chain Management in the Service Industry SAM Advanced Management Journal, 66(4), p. 14-23 Globerman, S., Roehl, T. W., Standifird, S. (2001). Inferences from Retail Brokering. Journal of International Business Studies, 32(4), p. 749-765 Gomez-Mejia, L., Balkin, D. (2002) Management The McGraw-Hill Companies Kesler, G. (2000). Four Steps to Building an HR Agenda for Growth: HR Strategy Revisited. Human Resource Planning, 23(3), p. 24-38 Krishnan, H., Park, D. (2001) Supplier Selection Practices among Small Firms in the United States: Testing Three Models Journal of Small Business Management, 39(3), p. 259-269 Lajara, M., Lillo, F., Sempere, V. (2002) The Role of Human Resource Management in the Cooperative Strategy Process Human Resource Planning, 25(2), p. 34-46 O’Neill, R. J. (2002). Governments Change-Management Challenge: Key Questions to Which Government Leaders Should Find Answers as They Embark on Systemwide Reform The Public Manager, 31(1), p. 15 Rand, T. (1999). Why Businesses Fail: an Organizational Perspective Emergence, 1(4), p. 97 Robertson, P. J., Seneviratne, S. J. (1995) Outcomes of Planned Organizational Change in the Public Sector: A Meta-Analytic Comparison to the Private Sector Public Administration Review, 55(6), p. 547-558 Shama, A. (1978). Management and Consumers in an Era of Stagflation Journal of Marketing (July), 43-52 Santos, A., Silva, D., Barros, J. (2000) A study about application and refinement of a production strategy formulation model in a building company, available at http://strobos.cee.vt.edu/IGLC11/PDF%20Files/50.pdf Websites http://informationr.net/ir/11-1/paper242.html [1] http://www.microsoft.com/en/us/default.aspx [2] Appendix Factors Levels of uncertainty Average Score Rank Very low (1) Low (2) High (3) Very high (4) General external environment Social values 16.7 58.3 16.7 8.3 2.1667 12 Educational 25.7 45.7 22.9 5.7 2.0857 15 Political 13.9 38.9 44.4 2.8 2.3611 9 Economic 8.3 30.6 41.7 19.4 2.7222 2 Legal 19.4 44.4 25.0 11.1 2.2778 11 Behavioural 11.4 42.9 40.0 5.7 2.4000 8 Demographic 20.0 57.1 14.3 8.6 2.1143 14 Natural environment 8.6 45.7 28.6 17.1 2.5429 5 Natural resources 14.3 42.9 28.6 14.3 2.4286 7 Technological 25.7 40.0 28.6 5.7 2.1429 13 External task environment Customers 11.1 33.3 38.9 16.7 2.6111 4 Competitors 8.3 33.3 33.3 25.0 2.7500 1 Suppliers 38.2 29.4 20.6 111.8 2.0588 16 Labour market 14.3 31.4 31.4 22.9 2.6286 3 Industry 8.6 37.1 45.7 8.6 2.5429 6 Financial resources 20.0 37.1 34.3 8.6 2.3143 10 Table 1 – Organizational hierarchy in accordance with the external environment [1] Read More