Generic Business Strategy of Microsoft Corporation
Discuss about the Antecedents of Cross Functional Coopetition.
Microsoft Corporation is an American organization which operates in the area of technology and the headquarter of the company is located in Redmond, Washington. The company mainly develops, licenses, manufactures and sells software for computers, consumer electronics, services and personal computers. The most famous software of Microsoft includes, Microsoft Windows, Microsoft Office Suite, Edge Web Browsers and Internet Explorer. The flagship hardware product of Microsoft is the Xbox Video game. The organization has occurred the position of the topmost software company of the world in the year 2016. The company has also gained the position of the most valuable company of the world (Microsoft.com 2018). Microsoft was established in the year 1975 by Bill Gates and Paul Allen for the purpose of developing and selling the Basic Interpreters for Altair 8800. The company further rose to dominate the market of personal computer operating systems with MS-Dos in the year 1980. The organization had shown phenomenal growth from the year 2000 onwards. Microsoft thereby produces a huge range of enterprise software based products and consumer software. In the year 2000 Steve Ballmer replaced Bill Gates as the CEO of Microsoft (Microsoft.com 2018).
The report will be based on the analysis of the generic business strategy that has been used by Microsoft for the purpose of creating a competitive position in the technology industry. The formal structure of the company will be analysed in the report and the ways by which this structure affects the entire culture that is followed by Microsoft will also be discussed in detail. The interrelation of the strategies implemented by the organization with the organizational culture and structure will be discussed in the report in detail.
The generic strategy that has been implemented by Microsoft for the purpose of gaining competitive advantage in the market is integrated and aligned with the intense strategies related to the growth of the company. This alignment helps in the optimization of the performance of the organization to the highest levels. The generic strategy of the company mainly indicates that approach that is taken to ensure the competitive advantage in the industry. The generic strategy of Microsoft thereby supports the attractiveness of the hardware and the software products among the huge number of competitors. The intensive strategy of the company on the other hand helps in ensuring the growth of the company in the industry (Bell, Dyck and Neubert 2017).
Integrated Growth Intensive Strategy
The growth intensive strategy implemented by Microsoft mainly prioritizes the penetration of market with the help of its services and products. The other strategies that are applied by the company thereby play a supporting role for the growth and profitability of the company. The generic strategy of Microsoft Corporation is based on the process of creating competitive advantage in the market. The broad differentiation strategy suggested by Porter is applied by Microsoft in the areas of its operations. This strategy involves the unique products that are offered by the company to the customers. The products of the company are thereby unique in nature and the software products are designed especially for the different segments of the market (Moon et al. 2014).
The generic strategy for gaining competitive advantage is considered to be broad as the organization sells various products to different segments of the market. The company is able to build the competitive advantage in the market with the help of broad differentiation strategy. This helps the company to attract a wide variety of customers from all over the world. The generic strategy further aligns the mission and the vision statements of Microsoft which is based mainly on capturing the global market. The strategic objective that is applicable under the broad differentiation strategy is the development of the business with the help of the competitive advantage that is gained by the company. This strategy applied by Microsoft is based on the continuous innovation of the products that are developed by the company (Salavou 2015). This strategy has helped Microsoft to gain competitive advantage in the market as the products and the services that are offered to customers are unique and helps the company to gain an edge in the industry.
Microsoft has its operations in a market which is highly competitive in nature and is changing on a regular basis. The uniqueness of the design of products is the main strategic objective that has been developed by Microsoft. The strategic objective mainly highlights the importance of the intangible and tangible products attributes of the unique products that are manufactured and offered by the company. For example, Microsoft can aim at developing new computer software and hardware products which are hard to copy. The products developed by Microsoft are made different from those which are manufactured by its competitors in the market. The products and the services that are offered by the company are designed in such a manner which helps the customers to experience something new (Liu and Atuahene-Gima 2018). The Microsoft Office has been provided Microsoft with the hardware like, keyboard, mouse, cooling pad and mobile phones. These products that are made by Microsoft are different from the products that have been introduced in the market by the competitors of the company. The organization has also provided software for Apple Inc. The company has been able to make much more profit than the competitors in the industry in which it operates.
Organizational Culture and Structure
Another generic strategy that has been used by Microsoft in the industry is the cost leadership strategy that has been described by Porter. The cost leadership strategy can also help Microsoft in gaining a competitive advantage in the market. This strategy has enabled the high profits of the company with the help of low prices that are charged for the products. The other benefits that have been provided to the company related to the application of this strategy is related to the increase of the shares in the market and the increasing demand of the products (Alvesson and Sveningsson 2015).
Microsoft is considered to be the worldwide leader in the area of services, software and solutions that are provided to the huge customer base. The cost leadership strategy has been used by Microsoft in the industry as the company is a leader in the market of the technologies other than the biggest competitor Apple. Microsoft provides five major divisions of business which are, business to the customer with the help of the personal software, software for the business organizations, entertainment for the customers. The company also provides linkages with the distributors and the suppliers (Bortolotti, Boscari and Danese 2015).
The organizational culture of the multinational or global organization, Microsoft is formed to ensure that the capability and resilience of the workforce can be used for addressing the needs of the business organization based on the dynamic market for the software and hardware products. The culture of the company mainly refers to the traditions, values and the expectations related to the behaviour of the employees. The organizational culture is used by Microsoft for the purpose of facilitating the customer satisfaction and innovation based capabilities of the company (O'Neill, Beauvais and Scholl 2016).
The company is considered to be one of the leading firms in the IBM-PC-compatible operating system in the market. The organization thereby needs to maintain that is based on the promotion of the innovation related activities and the high quality of the output. The long-term success of the organization is thereby based on the culture that is followed by the members of the company and the competence of the human resources of the company. The company thereby benefits a lot from the culture that has been developed among the employees. The culture of the global company is important for the success of Microsoft in the industry (Valmohammadi and Roshanzamir 2015).
Broad Differentiation Strategy
Microsoft has distinct characteristics that are related to the culture that is developed by the employees and the management of the company. The main characteristics are thereby based on the nature of the business, the situation in the industry, the conditions in the labour market and the internal processes of the business (Ashkenas et al. 2015). The culture of Microsoft is thereby based on the following characteristics which are,
- Accountability – The culture is described by Microsoft based on the accountability that is held by the management of the various processes that are going on in the company. The culture based feature of the company thereby ensures that the actions that are undertaken by the employees is totally understood by them and they are aware of the various consequences. The accountability has been ensured with the help of the application of the organizational culture of Microsoft (Van der Voet 2014). The employees are evaluated for their accountability based on the Customer Partner Experience or CPE. This is based on the feedback that is provided by the customers regarding the services that are provided to them. This type of institutionalized accountability can contribute to the ability of organizational culture for the purpose of motivating the employees so that they adhere to the rules that are set by the company (Strese et al. 2016).
- Innovation and quality – Microsoft conducts its business in the technology industry and the company thereby needs to invest huge amounts in the innovation based capabilities. The quality and innovation are major features that are successfully integrated in the culture of the company. For example, Microsoft invests heavily on the development and research based activities which can be helpful for the successful operations of the company and improve the culture that is followed by the employees (Van der Voet 2014). The efforts are linked to the organizational culture of Microsoft with the main emphasis on the standards related to the quality and the innovativeness is displayed in the culture of the company. The efforts are thereby linked to the culture of the company which totally based on the innovative minds of the customers. The company also provides rewards to the employees based on their levels of performance in the organization. This characteristic of culture of the company is based on the innovation based competitive advantage that is gained in the industry. The cultural characteristic thereby facilitates the generic strategy that is implemented by Microsoft in the various processes (O'Neill, Beauvais and Scholl 2016).
- Responsiveness to the customers – Microsoft ensures that satisfaction can be provided to the customers to the highest levels. This satisfaction is based on the responsiveness of the employees and the management towards the feedback that is provided by the customers. The company maintains successful feedback systems that are relate to the experiences of the customers based on the services and products that are offered by the company. The company further provides extensive training to the employees based on the ways by which they can provide responses to the customers and the partners (Alvesson and Sveningsson 2015). Microsoft uses a wide variety of tools to ensure that the cultural features are successfully integrated in the systems of the company. The information that is collected by the organizations is thereby used for the purpose of increasing the innovativeness of the products. The mission and vision statements of the company are supported by the dynamic culture that is followed by Microsoft (Liu and Atuahene-Gima 2018).
- Mind set based on growth – Growth is an important part of the operations of any business organization. Microsoft makes use of the corporate culture of the company to grow the various hardware and software based products that are offered to the customers. The company also trains the employees so that they are able to contribute to the growth potential by offering the best products to customers. This characteristic based on the organizational culture of the company is thereby a major part of the culture that is followed by the employees of Microsoft. This characteristic affects the operations of Microsoft based on the continuous growth in the market (Alvesson and Sveningsson 2015).
- Inclusion and diversity – Inclusion and diversity is another major feature that defines the culture of Microsoft. The company thereby applies these factors in the organizational culture with the help of the training programs organised for the employees. The human resource policies of Microsoft are based on the hiring and recruitment of employees who belong to diverse groups which increases the levels of inclusion in the company. The organizational characteristic is based on the means that is provided to maximize the profits of the company (Bell, Dyck and Neubert 2017). This characteristic provides human resource competence that is based on the unity among the employees and the diverse ideas.
The organizational culture of Microsoft supports the goals of the business for the continuous success in the industry. This success is based on the responsiveness and the innovation based capabilities of the organization so that they are able to address the concerns of the customers. The corporate culture of the company provides many advantages that are related to the ways by which Microsoft can maintain the topmost position in the market and satisfies the needs based on computer software and hardware. The disadvantage related to the organizational culture of Microsoft is based on the lack of the institutional support for the adequate levels of autonomy. The recommendation that can be provided to Microsoft based on the disadvantage that is faced by the culture is related to the increase of the autonomy levels (Liu and Atuahene-Gima 2018).
The culture of Microsoft has also faced many changes after the appointment of the new CEO Satya Nadella. The new book that has been written by the CEO of Microsoft is based on the changes that he has made to the culture of the company for the purpose of achieving the goals. Nadella had experienced a lot of disharmony among the employees who were working in different roles in the company. The two major activities that were performed by Satya Nadella are, the maintaining the activities in which the company can excel and make the teams of the company work together to achieve the common objectives. The cultural change that has been implemented by Microsoft has gone quite well for the employees and the management as a whole (O'Neill, Beauvais and Scholl 2016). The leadership of Satya Nadella has been a major reason behind the success of the company in the technology industry. The company has been able to increase the market capitalisation and the shares in the market with the help of changed culture under the successful leadership of Satya Nadella. All the employees of the company however did not like the steps that were taken by Nadella based on the cultural changes. Nadella thereby started including all the executives and the employees in the strategic decisions taken by the company and the management. Nadella decided to shake the things up with the help of the new procedures and policies (Moon et al. 2014). The founders of the various start-ups that were acquired by Microsoft were invited to the exclusive retreat that was organised for the employees and managers. Another move that was made by Nadella was based on the ways by which the executives of the company were forced to board the shuttles for the purpose of visiting the customers. The executives from the different units of the business were then assigned to same customers. The cross business teams of the company were further asked for suggestions related to the culture that is followed by the employees (Bell, Dyck and Neubert 2017).
Cost Leadership Strategy
The organizational structure of Microsoft helps the business to grow which is due to the structural change that was implemented by the company in the year 2015. The corporate structure of the company has further mainly referred to anatomy and the arrangement of the components. The organizational structure of Microsoft is mainly based on the importance of the output that is provided by the business. Microsoft is a dominant player of the technology industry and the company thereby uses its structure for maintaining the competitive advantage. The long-term success of the company is thereby dependent on the suitability of the corporate structure related to industry forces and the market conditions (Liu and Atuahene-Gima 2018).
The main feature of the corporate structure of the company is termed as the product type divisional organizational structure. This structure of the company further involves the divisions which are based on the software and the hardware products and the organizational outputs. The various characteristics that are based on the corporate organizational structure of Microsoft are,
The product type divisions – This is main and primary characteristic of the organizational structure of Microsoft. The company uses the products or the outputs as the major characteristic that is related to the related resources and the grouping personnel. For example, the company has a division of the Intelligent Cloud Products and the separate divisions for other products. The structural feature mainly contributes to the organizational capacity if the company. The product divisions that are formulated by Microsoft are, business and productivity processes, the intelligent cloud, personal computing and the corporate division (Alvesson and Sveningsson 2015).
The global corporate groups – The global corporate groups of the company are the secondary characteristic of the organizational structure of Microsoft. The groups are further based on functions that are essential for the business of computer technology. For example, the group of Human Resources mainly addresses the needs of the workforce of the company and the concerns that are faced by them. This characteristic ensures that the organization functions as a whole (Valmohammadi and Roshanzamir 2015). The various global corporate groups in the organizational structure of Microsoft are as follows,
- Office of CEO.
- Commercial business worldwide.
- Operations and marketing and the Global sales of Microsoft.
- Operations and corporate strategy.
- Enterprise group and Microsoft Cloud.
- Human resources.
- Business development
- Services and Applications Group
- Devices and Windows Group.
- Research and technology
Geographic segments – The corporate structure of Microsoft Corporation further involves the different geographical segments. The segments are used for the group operations in the financial reports of the company. The major geographic divisions of the company are, the United States and International (Bell, Dyck and Neubert 2017).
Changes in Culture under Satya Nadella's Leadership
The major implication of the organizational structure of Microsoft is based on the increased ability of the company to focus on the development of the products. For example, the organization uses the Intelligent Cloud Division for the purpose of offering the cutting-edge services based on cloud computing. The advantage that is provided to Microsoft with the help of its corporate structure is thereby based on the contribution that is made by the structure of the company to the competitiveness in the market (Moon et al. 2014). The disadvantage of the structure of the company is based on the minimal consideration for the differences in the regional market. The regions have preferences that are different from each other with respect to the computer software and hardware that is provided to the customers. The recommendation that is provided to Microsoft that can be provided to the company is to integrate the differences in the regional market and the structural design of the company (Bell, Dyck and Neubert 2017).
The organization structure of Microsoft Corporation was reorganised in the year 2013. The new structure of the company aligns under a single strategy which is mainly intended towards the efforts of the company and the resources based on services and products which offer the highest values to the business and the customers. The activities and the personnel of Microsoft were configured around the individual products before the implementation of structural change in the year 2013 (Valmohammadi and Roshanzamir 2015). With respect to the One Microsoft strategy the organization is structured into nine groups which are based on the essential functions based on business. The functions that are performed by the various groups span across the different product lines. The major functional groups of the company are, Engineering, Advanced Strategy, Operations, Business Development, Human Resources and the Corporate and Legal Affairs (Microsoft.com 2018).
The three major aspects of Microsoft which are the organizational structure, the culture of the organization and the generic strategies are all linked with each other. The strategies that are implemented by the organization further affect the culture and the structure of the company. The culture of the company is also formed based on the levels and the hierarchy in the various organizational processes. The structure and culture of the company had seen many changes after the appointment of Satya Nadella as the CEO of Microsoft.
The report can be concluded by stating that the culture and the structure of the modern organizations are highly influenced by the generic strategies that are implemented for gaining competitive advantage in the market. The analysis of the strategies implemented by Microsoft is based on the ways by which the company can gain advantage in the highly competitive technology industry. The structure and the culture of the organization are linked with each other and changes have been made in the culture and structure according to the changing needs of the customers of the technology industry. The change in the leadership of Microsoft has further brought changes in the organizational culture and the structure that is implemented by the company in the industry. The leader has further changed the structure of the company so that the organization is able to increase its shares in the market. The generic strategy of the company is thereby based on the formation of the structure and the culture of Microsoft in the technology industry. The three dimensions of the company are thereby totally interconnected with each other and further enhance the performance of the organization.
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