Microsoft Company’s Structure and Strategies

Organizational Structure & Design

Microsoft currently uses a divisional organizational structure. This means that the company is divided into various departments that take the led of their own decisions with the larger picture in mind. Winnubst (2017) argues that the divisional organization structure has several advantages, including easy decision making. This is due to the fact that each department has autonomy in decision-making as long as the decision made is in accordance with the mission and vision of the company. Additionally, the structure allows for easier coordination within departments. The departments are able to make their individual work plans and objectives.

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Also, the fact that each department governs itself ensures that the unique challenges associated with the individual departments are addressed. Winnubst (2017) goes further to state that the structure allows for significant flexibility that has worked well for the company. The flexibility allows the different departments to address their unique market issues independently. Winnubst (2017) reveals that for a divisional organizational structure to be effective, mechanisms on organizational sharing have to be put in place. This sharing ensures that the management is aware of what the separate departments are doing and how their efforts tie together for the benefit of the whole.

Microsoft has five main departments, namely, product development, support, research and development, networking and operations, and retail. To ensure all these departments work seamlessly, the company uses the horizontal management landscape. This is supported by several intra-organizational processes, such as an elaborate enterprise resource planning tool. Additionally, the company also uses an intranet and other information systems to enhance communication. It is arguable that the organization is organic as employees can easily access their superiors. This is also due to the flexible organizational structure.

Strategy

Mission and Vision

The current mission statement of Microsoft is to empower every person and every organization on the planet to achieve more by creating opportunity, growth, and impact (“About,” 2019). The mission is often drawn from the large vision of the company, which can be summarized as a way of changing interaction between human beings and technology to achieve maximum human social satisfaction for growth, opportunity, and positive impact ((“About,” 2019). This section of the essay analyzes the company using Porter’s Five Forces, stakeholders, and its corporate, industry, and firm-level strategies.

Porter’s Five Forces

The five forces are the threat of new entrants, the threat of substitute products, bargaining power of customers, bargaining power of suppliers, and competitive rivalry.

The threat of New Entrants

The threat of new entrants is a weak force. This is due to the fact that the industry is nearly impossible to penetrate due to the monopoly and offer of similar services. The additional fact that new entrants require large capital to compete with the company makes this threat weak.

The Threat of Substitute Products

Just like the first force, the threat of substitute products is a weak force. One reason for this is the fact that there are very few substitute products in the industry. Secondly, the development of these alternative products is extremely expensive. Arguably, there are companies that have come up with these alternative products, but that is considered low quality compared to Microsoft and some of the company’s biggest competitors.

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Bargaining Power of Customers

Arguably, the bargaining power of customers is a moderate force. This is due to the fact that there are few quality products in the industry that can be compared to what Microsoft offers. Thus, the consumers do not have a choice but to pick Microsoft as one of their favorite brands. This premise suggests that Microsoft has the upper hand, and this might be the only reason why this force is not strong. On the other hand, the buyers have the information that Microsoft needs to make its products reliable and efficient. Taking the con and pro highlighted, it is indeed arguable that this is a moderate force.

Bargaining Power of Suppliers

Notably, this is a moderate force. There is a significant number of suppliers in the industry that Microsoft can work with for various services. The number of possible suppliers gives them a significant influence over Microsoft’s core business, but not enough to destabilize the company. An example can be given to explain further. Some hardware suppliers that are preferred by the company can decide to raise their prices, and this action would automatically also affect the pricing of Microsoft’s products. However, Microsoft can reach out to other suppliers and get their preferred hardware at a more reasonable price. This balance ensures that this force is moderate within the industry.

Competitive Rivalry

Debatably, this is a strong force in the market. Some of Microsoft’s biggest rivals include Apple, IBM, Cisco, Facebook, and Google. Although the competition is relatively small compared to the market, the company’s competitors are highly aggressive. They have near-similar structures and business ethics as Microsoft making it difficult for one company to strongly hold onto a competitive edge. Additionally, the competitors are highly diverse to means that they are constantly on the lookout for innovative opportunities that will give them the elusive competitive edge.

Stakeholders

Microsoft’s stakeholders can be grouped into consumers, staff, investors, suppliers, and the board. Each of these groups has a specific influence over the company’s operations and profitability. The consumers are the ones who buy the products offered. Additionally, they are the focus group for all products that are developed by the company. This group of stakeholders is affected by the quality of the product, timeliness, and consumer service.

Notably, the staff work towards ensuring the needs of the consumers are met at all times. They are a critical stakeholder group as their work results in both the development of relevant products and consumer satisfaction. Staff relies on the company for their salaries, thus, work to ensure that their financial needs are met as well. They are affected by the quality of work, productivity, work environment, and company profitability.

On the other hand, investors are the people who put their money into Microsoft’s businesses and products in an attempt to get returns and profit. It is arguable that staff are also investors as they offer their time to ensure the success of the company. The investors are affected by the market in regards to competitor rivalry, customer satisfaction, and economies of scale. Additionally, the suppliers offer products Microsoft needs to enhance their own products. Thus, they are affected by the company’s profitability and stability. The last category of stakeholders is the board of directors, who are tasked with the overall decision-making on the strategic direction of the company. They are affected by the company’s profitability and stability.

Strategies

Corporate Strategy

It is arguable that the company’s corporate strategy is to ensure that cloud and mobile are number one (Ulrich, 2017). This means that all their products seek to enhance the use of cloud and mobile. The company has to hold on to its position in the industry due to making its cloud solutions its biggest product development angle. The company’s cloud solutions are considered intelligent to enhance user experience. Additionally, the mobile-first angle seeks to make all the user’s needs and activities easily accessible regardless of where the user is at the time of usage. The mobility of all its services has also given the company a competitive edge in the market.

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Industry Strategy

Notably, the technology intensity that the company has focused on the last few years is an industry strategy. Ulrich (2017) notes that Microsoft has been intensely focused on introducing technology in every aspect of life in an attempt to collect data, make life easier, and also create a perfect fusion between business and culture. It is arguable that the strategy has worked well in ensuring that clients who want to incorporate AI’s in their businesses and even homes seek out Microsoft before any other competitor in the industry.

Firm-Level Strategy

To ensure the company retains its position in the industry, it is arguable that it has used mergers and acquisitions as its firm-level strategy. Any potential new entrant into the market has been absorbed by either Microsoft or its competitors. Recently, Microsoft acquired the professional social network LinkedIn to further diversify its portfolio (Ulrich, 2017). The move to acquire LinkedIn was also strategic as it feeds professional contacts and activities into the cloud, meaning that it also positively impacts the company’s core business.

Leadership

Motivation of Workers

Microsoft uses various methods to motivate its staff. Arguably, the company uses both extrinsic and intrinsic motivation for its workers. Lee and Raschke (2016) explain that extrinsic motivation focuses more on external rewards while intrinsic focus on internal awards. One of the external awards that Microsoft uses to motivate its employees is parental benefits. For example, the company gives all its employees discounts on child-care services (Lee & Raschke, 2016).

The company works to ensure that its workers are comfortable within the work environment. Notably, balancing parenting and professional work is one of the biggest challenges individuals face today. Microsoft motivates its employees by offering child care services in their different locations to ensure that the parents are not overwhelmed worrying about their children while at work. A second extrinsic reward is the 401K plan that is available to employees (Lee & Raschke, 2016). Additionally, workers purchase the company’s stock at a discount. The company also has a financial education program for its staff to ensure they make sound decisions in regards to their finances.

Lee and Raschke (2016) note that one of the intrinsic rewards Microsoft uses to motivate its staff is through philanthropy, where new employees are given a $50 credit to donate to a charity of their choice (Lee & Raschke, 2016).

This gives the new employee a feeling of giving back to the community. It is arguable that many people would appreciate the chance to work for Microsoft. Therefore, giving back to other people, especially vulnerable communities, after joining this organization arguably gives an employee a sense of pride and appreciation. Also, the company uses its work environment to internally motivate staff to be productive. The essence of teamwork, respect for everyone in the organization, and appreciation for all efforts put in a project have also been used to motivate staff.

Leadership Theories

One can state that the company uses participative leadership theory. This is because all employees are not only accorded the same respect despite their work position but also that each employee is given a chance to make decisions based on their department and work. Additionally, decision-making in the company is inclusive as there is no one single person who makes all the decisions. Lam, Huang, and Chan (2014) argue that the participative leadership approach allows all employees to feel included in the strategic direction of the company.

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This inclusivity not only motivates the staff but also ensures that they care about the future of the company, therefore, will put as much effort as possible to increase productivity and profitability. It is critical to note that the divisional organizational structure that the company is currently using works well with the stated participative leadership approach.

Motivation Theories

There are two main motivation theories that one can draw from Microsoft. The first is Mayo’s motivation theory that emphasizes the importance of intrinsic motivation (Abyad, 2018). Issues of teamwork and appreciating employees are at times considered more important than physical rewards. Abyad (2018) explains that Mayo argues that the more involved a company has in the employee’s working life, the better. This is due to the fact that the management will be able to see the challenges the employee has and ensure a viable working environment and culture is incorporated (Abyad, 2018). The second theory, which supports the use of extrinsic rewards for purposes of employee motivation, is Herzberg’s motivation theory (Abyad, 2018).

Human Resources

Microsoft has a comprehensive human resource department that is guided by the human resource strategy. The strategy aims to both attract the best talents in the market and to ensure quality provision of services through proper support given to the employees. Staff in the company are considered the most valuable resource. Thus, the HR department is often tasked with ensuring employees in the organization are comfortable and highly motivated.

The HR planning process is fairly simple. First, it considers the size of the department and its “health.” The “health” of the department refers to the analysis of its performance based on its staff capability. The HR then considers issues concerning talent management and their impact on the individual department. Afterward, diversity and manager capability are considered as well to ensure the best hire is selected. Learning, leadership development, and rewards are also considered in the HR planning process. The last stage of the process is monitoring and feedback. Rees and Smith (2017) confirm that the company also uses succession planning indicators and sucking planning usage.

Rees and Smith (2017) argue that the company uses intelligence as its core recruit entry as opposed to experience. The company relied on problem-solving and composure testing interviews as opposed to the traditional interviews for selecting its preferred candidates. Additionally, the company believes in headhunting as opposed to waiting for interviewees to attract the best talents. Since the company mainly prefers employees with little if any experience, they offer various training for their new staff. Training methods such as online learning and even physical learning while on the job have been promoted in the company.

The company does an employee performance appraisal on a yearly basis. Unlike other companies where employees are ranked during their performance appraisals, Microsoft focuses on the accomplishments the employee in question has achieved in the last year. The employee is normally also encouraged to discuss challenges and suggests ways they can achieve their objectives for the upcoming year easily (Rees & Smith, 2017). The process also allows line managers to resolve issues they might have noticed about their supervisees during the said one year. Arguably, performance appraisal in the company is a continuous process that allows everyone involved to achieve their goals and increase their productivity. The company allows subordinates to also appraise their superiors and line managers. This reverse role helps the leadership understand the needs of the junior staff and implement strategies to allow a conducive work environment.

Control and Information

Microsoft values security, control, and protection of information. The company has an elaborate control process that is implemented by the managers. It is important to note that management as a whole is the unit that offers internal control for financial reporting. However, at a departmental level, managers are allowed to either approve or reject data, finances and other work-related materials. Due to the divisional organization structure that the company has adopted, although the managers have the mentioned control, decisions on which actions to take are made as a group, not individually. The internal control over financial reporting enhances the process by making it both accountable and reliable.

Microsoft has an elaborate informational technology infrastructure for both internal and external usage. For instance, the company uses a comprehensive management information system for its internal activities. Only Microsoft employees have access to this system to enhance the protection of company data. Additionally, an office automation system is used to support the employees to be more productive. Taking these examples, one can argue that the company uses digital control methods to enhance productivity and ensure efficiency.

Personal Perspective

Microsoft is one of the most lucrative companies in the world. I am interested in joining the organization for several reasons. The first impressive thing I noticed about the company is the way it treats its employees. As mentioned previously, the staff are considered the most valuable resource of the company. The management strives to ensure that the company’s working environment and culture are suitable for all staff. One can argue that the company has adopted a people-driven approach in regards to its human resource. Personal development and work training are also crucial in my career development.

Additionally, the fact that the company does not fully focus on experience is inspiring, especially for students such as myself who would have otherwise been limited by little work experience, if any. Additionally, I like the fact that the company motivates its employees with both physical and emotional rewards. The physical rewards are the previously mentioned 401K plans, comprehensive health insurance, and discounted shares, while the emotional rewards are respect and mutual appreciation regardless of job position.

The company is also an ideal working place as it allows its employees to grow in their careers. As stated earlier, the divisional organization structure allows everyone to contribute to decision-making in their individual departments. This gives the staff a sense of responsibility for the success of the department. Notably, I would contribute to the organization through my knowledge in business and economics that has mainly be gained in school. Additionally, as a highly creative individual, I will use my creativity in enhancing the company’s problem-solving approach. I would also use concepts of design thinking to help the company grow.

Conclusion

In conclusion, Microsoft is one of the largest companies in the world in terms of size, reach, and revenue. The company has attributed a lot of its successes to its management style. Arguably, the company values its employees and uses various employee motivations to ensure staff is happy, satisfied, and highly productive. The company currently uses a divisional organizational structure, and it has proven successful. The structure allows individual departments to make their own plans and decisions with the larger organizational picture in mind. Strategies have been put in place to ensure that even though the different departments have autonomy, they work towards the same goals.

It is important to note that an analysis of the industry using Porter’s Five Forces indicates that Microsoft’s biggest threat is a competitive rivalry. This means that competition amongst existing companies in the field is significantly high. Interestingly, one of the weakest threats the industry has is the threat of new entrants. One reason why this force is weak is the fact that it is costly for new entrants to penetrate the market.

This is due to the high competition the industry already has and the additional fact that technology is expensive to advance at first. Many companies that have had potential in the industry have been absorbed by major organizations such as Microsoft, Apple, IBM, and Google. Despite this, many might argue that Microsoft has a competitive advantage over its competitors due to its focus on quality cloud-based solutions.

Notably, the general outlook of Microsoft and how it has become successful all through the years opens up one’s mind in regards to how organizations should treat their employees. I have learned several things about Microsoft and employer-employee relations while working on this assignment. In regards to Microsoft, I have learned that it values intelligence more than experience, setting the company apart from the rest in the industry. On the other hand, I have learned that employees are the most valuable asset of a company. Arguably, if a business is to succeed to the extent and size of Microsoft, it has to treat its employees well.

References

About (2019). Web.

Abyad, A. (2018). Project management, motivation theories, and process management. Middle East Journal of Business, 13(4), 18-22.

Lam, K. C., Huang, X., & Chan, H. C. S. (2014). The threshold effect of participative leadership and the role of leader information sharing. Academy of Management Journal, 58(3), 1-16.

Lee, T. M., & Raschke, L. R. (2016). Understanding employee motivation and organizational performance: Arguments for a set-theoretic approach. Journal of Innovation & Knowledge, 1(3), 162-169.

Rees, G., & Smith, P. (2017). Strategic human resource management: An international perspective (2nd ed.). New York, NY: SAGE

Ulrich, D. (2017). Apple, Amazon, Google, Facebook, Microsoft: Market concentration – competition – innovation strategies. Stuttgarter Beiträge zur Organisations- und Innovationsforschung, 2017(1), 1-12.

Winnubst, J. (2017). Organizational structure, social support, and burnout. In W. B. Schaufeli, C. Maslach, & T. Marek (Eds.), Professional burnout: Recent developments in theory and research (pp. 12-16). New York, NY: Taylor and Francis.

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