Strategic Thinking and Planning at Microsoft Company - Case Study Example

Strategic Thinking and Planning at Microsoft Company Name Institution 1. Organizational Background Ever since its establishment in 1975 by its co-founders Bill Gates and Paul Allen, Microsoft Corporation has steadily and rapidly turned into one of the most successful companies in the world (Ichbiah and Knepper, 1991). The company is ranked as third in the Financial Times Global 500 amongst other top global corporations and it has revenues of more than thirty-six billion dollars. Microsoft is quite active globally and it has offices in more than seventy nations (Davenport, 1997). The organization is actually one of the most famous software companies around the world. It is well known for its Office and Windows software. Apart from software products, the organization is also into the manufacture and development of electronics like tablets and game systems. Vision Microsoft’s vision is to come up with an innovative technology which is accessible to all and which adapts to the needs of everyone. Technology that is accessible actually eradicates obstacles for individuals having disabilities and it allows people to make the most of their capabilities (Microsoft Corporation, 2012). Mission Microsoft’s mission is to allow individuals as well as businesses all over the world to realize their full potential. The company considers their mission statement as promise to its clients. They work on that promise through trying to come up with technology that is accessible to everyone (Microsoft Corporation, 2012). Core Values Microsoft Company values integrity, openness, honesty, individual excellence, positive criticism, continual self-advancement together with mutual respect. The organization is dedicated to its clients and partners and has a great zeal for technology. It takes on big challenges and prides itself for working them out. It holds itself responsible to its clients, partners, personnel, and shareholders through honoring its commitments, offering results, and doing its best to provide the highest quality (Microsoft Corporation, 2012). 2. External stakeholder analysis Microsoft Corporation has been a very successful international company that has several stakeholders associated with it who influence different aspects of the company in different ways. They include personnel, clients, suppliers, students, and the communities as well. Stakeholders Degree of influence Comments Personnel High They are very important in the growth and development of the company. They are majorly concerned with the organization’s financial and economic performance. They work very hard to promote the image of the company (Microsoft Corporation, 2012). Clients High They are actually the driving forces behind sales as well as the generation of revenues. Microsoft provides products and services that are of high quality and at cost-effective prices to their customers. Suppliers High Microsoft Corporation relies on their suppliers to deliver raw materials. The raw materials are used in the manufacture of products associated with the company (Microsoft Corporation, 2012). Students High They are actually the end users of the company’s main products (software). They comprise a huge part of the target market. Communities High Microsoft’s founder, Bill Gates has invested a lot of money in assisting the poor. The community in general is considered as a very important part of the corporation. 3. External Environmental Analysis Having an understanding of the external environment is quite important. The external environment actually contributes to the achievement of the company’s goals. In analyzing the external environment, we utilize PEST (political, economic, social, and technology) analysis. The demographic environment shall also be included in this analysis. Element Description Political This is the general factor which greatly impacts Microsoft Corporation. In 1998, the United States Justice Department filed antitrust accusations against the organization, alleging that the company had suppressed internet browser competition and restricted client choice. In 2004, the European Union also fined the company and demanded it to eliminate its media player software form the Window version of European. The company reached settlement for the first case; however, the worst case scenario would be for the company to split up because of these legal actions (Hitt, Ireland and Hoskisson, 2013). Economic Factors that affect the operations of the company are personal returns, unemployment and interest rates. Each of these factors has an impact on the purchasing power of the clients. Sociocultural Given the rapid development of computer technology, people can now easily communicate via the internet. This new communication style provides Microsoft with an opportunity of promoting Skype and MSN which of convenient and cheap means of communication. Technology Microsoft greatly relies on technology. It needs the most advanced technology so to satisfy its clients’ needs and stay in competition with other organizations, like Apple and Google. Demographic There is a great potential for the information technology industry to expand to various areas because of globalization and technology diffusion (Microsoft Corporation, 2012). 4. Internal Environmental analysis It is quite important for the leaders of an organization to not only consider the external environment, but also the internal environment as well. They are both important for the success of the company. Below is a description of these important elements: Element Description Human resources Microsoft has employed around 88,400 employees globally. The company has a thorough recruitment procedure whereby only the brightest and best get the chance to work for the company. It also has a highly diversified workforce. Management The company has a very strong management. The managers of the company have been working there for several years and have a good understanding of the vision and values of the company. The top management of Microsoft is made up of leaders that have actually shaped the Computer and Information Technology industry (Microsoft Corporation, 2012). Intellectual property rights The products of the company are protected with intellectual property rights. Microsoft aggressively protects its IP and this actually inhibits its competitors from copying the company’s technology. Production The company has a streamlined process of production. After the creation of a successful product, Microsoft generates more income through releasing newer versions of the same product. The quality of the product gets better with every cycle. Marketing The sales and marketing group of the company is made up of about 37,000 employees globally. Taking into consideration the recent increase in Microsoft’s revenues, we can conclude that these personnel are effective in their job and that the sales per worker are actually on the rise (Microsoft Corporation, 2012). Information systems Bill Gates made sure that the company utilized the most advanced IT available or even create it if it does not exist. 5. SWOT Analysis SWOT analysis is used to summarize the data from internal and external stakeholders. The data from the internal factors are viewed as strengths and weaknesses whereas those from external factors are seen as opportunities and strengths. Strengths Weaknesses Brand loyalty and repute Poor investments and purchases Simple to utilize software Reliance on hardware manufacturers Connections with hardware industry Maturity of PC markets Strong economic performance Slow innovation Skype acquirement Opportunities Threats Mobile marketing/advertising Strong competition Mobile device industry Alternating client habits Cloud based services Possible lawsuits Development via acquisitions Open source projects The implications of SWOT Analysis to Strategic Planning The information in the SWOT analysis is a clear illustration of the strengths, weaknesses, opportunities, and threats which can affect the positive and negative changes of Microsoft Corporation. For example, Microsoft has a good brand loyalty as well as reputation; it is actually ranked as the fifth most valuable brand worldwide. The company also has good connections with manufacturers of hardware such as Samsung and Dell. Apart from these, Microsoft’s software is also simple to use, the company has a strong economic performance, and the acquisition of Skype are the main strengths of the company. Skype has about 300 million users and this is a great boost for the company’s online presence (Hitt, Ireland and Hoskisson, 2013) However, even though Microsoft has all the above strengths, the company also has various weaknesses associated with it. For instance, Microsoft has made some bad investment decisions; most of the acquisitions made by the company were not actually successful (Julian, 2010). The company also heavily depends on manufacturers of hardware; Microsoft does not manufacture its own hardware. Moreover, the maturity in the PC market and the slow pace of innovation are also the weaknesses associated with the company. Thus, the leaders of the Microsoft Company should take good advantage of the opportunities present to fill the gaps of the company and increase on its strengths. The company can, for instance, widen its range of cloud services. Also, with the expected growth expected in the mobile device industry, the company can actually tap into these markets with its mobile operating system. Microsoft also has a massive cash reserve that it could utilize in the acquirement of new startups (Julian, 2010). The company should also adopt preventive practices or actions to address the threats which might lead to negative impacts for the company. Examples of threats experienced by the company include the stiff competition that exists in software products especially from Apple and Google. Clients also have a tendency of changing their behaviors; they shift from laptops, to tablets among others. The new open source projects in the market, which are actually free, are a threat to the expensive Microsoft products. Finally, there is high probability that the company shall face more lawsuits, which are actually quite expensive. Law suits call for a lot of time and money as well (Microsoft Corporation, 2012). References Davenport, T.H. (1997). Knowledge Management at Microsoft. Retreived from http://www.bus.utexas.edu/kman/microsoft.htm Hitt, M., Ireland, R. & Hoskisson, R. (2013). Strategic management : competitiveness & globalization. Mason, OH: South-Western Cengage Learning. Ichbiah, D. & Knepper, S. (1991). The making of Microsoft : how Bill Gates and his team created the world's most successful software company. Rocklin, CA: Prima Pub. Julian, J. (2010). Strategic Analysis Microsoft Corporation. Retrieved from http://zh.scribd.com/doc/41079619/BA7080- Strategic -Analysis-Microsoft. Microsoft Corporation. (2012). Retrieved from http://www.microsoft.com Read More