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Microsoft Business Strategy

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Microsoft Project

Summer 2006

BUS 597A


In 1975, Bill Gates and Paul Allen created a company called Microsoft. More than thirty years later, Microsoft is a leader in the field of computer programming. Gates and Allen both had big plans for their company and came up with different ways of managing people and products

in order to create possibly the most effective and versatile workforce of any corporation in existence. To study Microsoft's way of doing business is to look at the company from many angles, from a managerial and organizational standpoint to its process of developing products and services for its customers and its competitive environment. The purpose of this paper is to analyze Microsoft from a strategic fit perspective. Hence, the topics included are mission and values, resources and competitive advantages, organizational structure and management systems, Microsoft's customers, Microsoft's competitors, and Microsoft's Suppliers.


Mission of Microsoft

"To enable people and businesses throughout the world to realize their full potential"

"As the world's leading software developer, Microsoft has a passion for helping people reach their potential through the technology we design and deliver. Everything we do is with our customers and partners in mind. How will this help businesses and individuals achieve their goals? What can we make possible?" (

Delivering on Microsoft's mission requires a clearly defined set of values and tenets. Values that guide Microsoft's operations are:

* Integrity and honesty.

* Passion for customers, for our partners, and for technology.

* Openness and respectfulness.

* Taking on big challenges and seeing them through.

* Constructive self-criticism, self-improvement, and personal excellence.

* Accountability to customers, shareholders, partners, and employees for commitments, results and reality.

Tenets that propel Microsoft's mission:

* Customer trust.

* Broad customer connection.

* Innovative, evolving, and responsible platform leadership.

* Enabling people to do new things.

* A global inclusive commitment.

* Excellence.

Resources and Competitive Advantages

The performance of a company within a market is directly related to the possession of key assets and skills. The skills and abilities of Microsoft are fundamental factors in the attainment of its goals and strategic intent. The full use of resources and the development of core competence in to competitive advantages have been critical.

Microsoft has both tangible and intangible resources: a net income growth of more that 45 percent, which gives the ability to generate internal funds. Microsoft has a formal reporting structure with a transparent organizational setup where everyone knows everything about his or her current assignment. In addition, all employees feel included and have the drive and the technical skills to get the job done. Microsoft not only has a formal organizational chain of command, but also what it considers a brain trust of employees from every level who work together to create product ideas and plans of attack. This has helped the employees and the company become innovative. The company creates markets for its products and product ideas by designing new technology and getting in on new technology in the early stage.

In order to be proficient in producing and shipping products on time and with the least amount of problems, Microsoft uses certain methods of production such as continually testing its programs as it builds them. This process of testing frequently also allows Microsoft to keep a close eye on the progress of each project, put more programmers on the project if needed and ship finished products to the market quickly. Microsoft's human resources include a flexible workforce through contingent workers for special projects, qualified people hired through an extensive interview process, and small teams. Even group manager, line manager and program manager not only has leadership and managerial skills needed but technical skills that their subordinates use.

Microsoft's core competency is software development, which has led to the creation of massive sales of software applications. Microsoft has a competitive edge because of the control it exerts in the operating systems segment of the industry. When the company established the intent to make Windows, the standard operating system of the future, it sets its resources into motion. In a way, Microsoft forces other software manufacturers to use Windows as a platform for its software application. The result was major competitive advantage for Microsoft as other software manufacturers were preoccupied converting to Windows platform. Microsoft's dramatic growth and profitability has enabled to invest a large amount of cash flow into its core products as well as core competencies, which has led to economies of scale and scope. Microsoft has been able to develop core competencies resulting from collective learning in the organization, which can come from coordination of diverse production skills or the integration of multiple streams of technologies.

Reputation resources include software products that have high brand recall and recognition, generic corporate and consumer acceptance (Word, Excel, PowerPoint, Access), and numerous powerful features that are in use worldwide, which promote standardization and competitive advantage through their ease of integration and cost-effectiveness. Microsoft's intellectual resources include copyrights, trademarks, trade secrets, trade dress, and technical expertise. In addition, participation in socially relevant



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