A strategic review of Microsoft corporation

  1. MICROSOFT CORPORATION

Microsoft Corporation is an American multinational corporation headquartered in Redmond, Washington, that develops, manufactures, licenses, supports and sells computer software, consumer electronics and personal computers and services. The company founded by Bill Gates and Paul Allen on 4th April 1975 to develop and Its best known software products are the Microsoft Windows line of operating systems, Microsoft Office suite, and Internet Explorer web browser. Its flagship hardware products are Xbox game consoleand the Microsoft Surface series of tablets. It is the world’s largest software maker measured by revenues.

1.1THE OBJECTIVES

This assignment is going to discuss about Microsoft Corporation stakeholders interests either in conflict or coincide, the mapping exercise and with analysis.

Also the Porter’s Five Forces Model on Microsoft relating to competitions among the operators in the same industry and the approach this company adopted on its corporate social responsibility (CSR) and how the approach has been of competitive advantage to the organization.

2.0STAKEHOLDERS

A stakeholder is anybody or group that has interest in a project or enterprise who could directly be affected by business operations or its outcomes. They can either be internal or external stakeholders as listed below (Johnson, Scholes & Whittington, 2011):-

(A).Those that are mostly affected by the business operations and outcomes are the investors, the customers, employees, suppliers and communities at large. According to (R. Edward Freeman, 1984)

(B).Those who guide and influence the organization in carrying out the business specifically the government, regulatory authorities, non-governmental organizations and civil societies and the industry organization. According to (Archie B.Carroll, 1991).

FIG.1: MICROSOFT CITIZENSHIP REPORT 2013 – PG. 7

Microsoft recognizes its bigger responsibility in developing and sustaining relationships with diverse stakeholder groups, both internal and external to the organization.

According to Microsoft Citizenship report 2013, stakeholders are categorized into two groups: those who are directly affected by the business operations and outcomes (namely, investors, customers, employees, suppliers, and the community at large) and those who guide and influence us in carrying out our business (specifically, government and regulatory agencies, non-government and civil society groups and industry organization).

  1. Investors

Pursuant to the Corporate Governance (CG) Manual, it is the duty of the Board to promote and uphold stockholders’ rights such as the right to vote, pre-emptive right, right to timely receive relevant information, right to dividends and the appraisal right. The Board shall ensure that the company remains faithful to its undertaking to make timely disclosures of material information and transactions that could potentially affect the market price of the company’s shares.

  1. Customers

Customers are important stakeholders at Microsoft Corporation because they are driven force of sales and revenue generation. Organization must provide products that are of high quality and at affordable price. Microsoft continually strives to satisfy its customers’ expectations and concerns regarding quality of service. They commit us to continually improve the way they do things to better serve their customers.

  1. Employees

Microsoft is committed to the development and welfare of its employees. As the Company sustains its efforts in building a high performance culture to fully respond to the requirements of the new business environment, employees are continuously trained and developed to enable them to achieve excellent performance founded on our Corporate Mission. All employees are required to attend a 5-day training a year which is monitored on a monthly basis. Career development programs are implemented to ensure professional growth through skills and job enrichment opportunities, learning and development programs, performance management and promotion systems.

Yearly employees are mandated to go for a 5-day mandatory training requirement. The training of employees are based on the competencies which are analyzed and evaluated every year to ensure that employees are equipped with the necessary skills and knowledge to handle the job. Each employee has its yearly Training Plan to address the gap on the competencies.

Employees are compensated based on performance and over-all qualifications. Adequate provisions for medical, health and other essential benefits; and workplace safety are provided to promote employee welfare and well-being. Uprightness and impartiality are observed in conflict resolution. Human Resource (HR) Programs for the employees are continuously reviewed and enhanced to ensure their overall effectiveness and responsiveness.

The Company is further committed in sustaining and/or further enhancing the high level of engagement of employees. Guided by the results of an employee engagement survey conducted, focused and deliberate initiatives are undertaken to help ensure employee job satisfaction and motivation. Employee communication is strengthened to keep employees well-informed on significant developments. Employees are likewise encouraged to give feedback and suggestions to Management to further improve on the yearly corporate governance, corporate and operational performance, thereby promoting employee accountability and empowerment. Commendations are given to employees who show exemplary customer service through published emails and the President’s Awards which go with a cash prize to employees who meet the criteria of Customer Service Award, Great Idea Award and Quality Award.

  1. Communities

Beyond the confines of our boardroom and corporate walls, Microsoft embarks on initiatives to help improve the lives of people in the communities. They do this by embedding corporate social responsibility in its business and engaging her employees through volunteerism initiatives.

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As a responsible corporate citizen, they contribute to building a sustainable society in partnership with non-government organizations, government institutions, and other civic organizations on projects that promote entrepreneurship, education and the environment. In line with this, Microsoft continued to build on the employee-driven volunteer program, “Save a Soul for Better Tomorrow: The Boys Town Orphanage in Pasay is one of the most successful Corporate Social Responsibility (CSR) endeavors of Microsoft. In December 2012, Microsoft instituted a donation drive among its employees and business partners in support of the relief efforts for Typhoon Pablo victims in Eastern Mindanao.

  1. Suppliers

Microsoft aspires to maintain mutually beneficial relationships only with suppliers that uphold fairness, accountability, integrity and transparency in their own businesses. Microsoft is using the list of accredited suppliers of Microsoft which serve the requirements of Microsoft, from capital expenditures to operating expenditure items, as well as service requirements. Suppliers are required to undergo stringent accreditation process before they are authorized to do business with Microsoft. Among the criteria used for accreditation are legitimacy of operations, capacity for continuous business operations, quality and prices for goods and services, track record, compliance with regulatory bodies and transparency in relationship. Microsoft purchases, as a general rule, are made on the basis of competitive bidding through accredited and qualified suppliers.

  1. Environment

As for the environmental responsibility starts from within Microsoft by adopting policies, standards and practices to make our workplace, not just a conducive environment for work, but a place that works toward the betterment of the environment as well.

FIG. 2: THE MICROSOFT STAKEHOLDER MAPPING

http://pubs.opengroup.org/architecture/togaf9-doc/arch/Figures/24_stakeholder_grid.png

This is a tool of analysis that is use to analyze the level of interest of different types of stakeholders in an organization or in a project. It helps manager to prioritize various opinions, influences and interest to go into any project or business. It will display each stakeholder group interest in a particular project that can influence it either positively or negatively.

Different stakeholder groups have different commitment and expectation from the organization, in which the manager has to meet and any conflict should be resolved amicably or diplomatically for the smooth running of the organization and if their opinion is the same, the better for the organization.

3.0 POTER’S FIVE FORCES MODEL ON MICROSOFT CORPORATION

fig. 3: PORTER’S FIVE FORCES MODEL ON MICROSOFT CORPORATION

(www.doughtycentre.info – adapted from core values for the practice of public participation by the international association for public participation – pg.12)

This model consists of five threats, which will be outlined and applied to Microsoft’s current situation below:

3.1.THREAT OF NEW ENTRY The threat of entry for Microsoft is relatively low for all of their divisions. In the personal computing business, they have a strong hold of the majority share of operating systems that are used by consumers. Currently, there is really only one main competitor with any real market share, which would be Apple and the Max OS Open source projects such as Linux do not currently pose much of a threat because it is much more of a tech niche market.

Creating an OS can take years and requires expansive knowledge of computing. Microsoft has been building off of their knowledge from old versions of their OS’s for years.

In this company, all voiced consumer interests and demands are being filled. There would be very little that a new firm could do to differentiate a new gaming console from anything this company currently do or will do with the next generation.

It has also been producing these systems long enough to understand how to minimize its costs with the components they choose, leaving little chance for cost advantage.

3.2.THREAT OF RIVALRY

The threat of rivalry is relatively low for Microsoft. From an operating system standpoint, there are not many competitors who make operating systems. Because of this, Microsoft does not feel that they need to constantly be surveying a large amount of companies to see what price or sales trends are occurring. Prices are rather static because of this.

The only type of differentiation created between operating systems is what software it can run. However, the numbers of software packages that are only available on one platform are getting smaller every year. One thing to mention would be that Windows can be installed on Apple hardware, while Mac OS X cannot be installed on a large majority of non-Apple products (with the exception of building a Mackintosh which would require more knowledge than most casual computer users have.)However, the gaming division of Microsoft is under a high threat of rivalry from Nintendo and Sony.

It is standard practice to make large price cuts to game consoles every six to twelve months as production costs decrease, and there is a constant “console war” going on. As soon as a console is released, a new one begins R&D.

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3.3.THREAT OF SUBSTITUTES

Microsoft’s gaming division has a moderately high threat of substitute. I say this because there are two gaming audiences: casual and hardcore. A hardcore gamer will likely own multiple consoles to make sure they get to play every game they want to due to exclusive titles on separate consoles.

This group would likely not contribute to a threat of substitute. However, casual gamers will easily substitute for a Nintendo or Sony console, or even just buy a few games on their smart phone. While Microsoft’s Xbox 360 offers many other services (Netflix, Hulu, YouTube, Last.fm, etc.) these services could be found elsewhere if someone is not interested in the games available on the console.

3.4.THREAT OF POWERFUL SUPPLIERS

For both Windows and the Xbox 360, there is a relatively low threat of powerful suppliers. All of the resources that would need to be supplied to Microsoft by outside suppliers are available from a large number of firms. Blank media, circuit boards, processors, etc. are not in short supply in any way. Given the size and brand recognition that Microsoft has and the number of other suppliers available, many suppliers know they would have to offer a good price in order to work with them. None of the items supplied are necessarily unique, and the very few times that a supplier has tried to enter a videogame market through forward vertical integration, it has not gone very well.

The only threat a supplier could hold is that the physical items needed by Microsoft are used in a wide variety of electronics. Memory chips, processors, hard drives, DVDs, capacitors, circuit boards, etc. are all used in everything now. However, a large number of game consoles have been sold by Microsoft (66 million units as of 1/9/2012.).This would suggest that the components inside each console would pass as a decent side of a supplier’s business.

3.5.THREAT OF POWERFUL BUYERS

Microsoft has had deals with almost every major PC company (buyers in this instance) to include a copy of the latest Windows version as part of the cost of a pre-built PC. This has become expected from people buying non-Apple computers and if a buyer was to decide not to include this, it would probably lead to negative repercussions.

There is room for tablets and some netbooks to run versions of IOS or Android OSs, but when some laptop manufacturers tried to switch from Windows being preinstalled to Linux, it did not fare well. The cost of having Windows included is also not a large amount of the cost of the computer, so it does not carry that much weight for the company building the machine. These attributes lead to a low threat from buyers.From a game console standpoint, the threat from buyers is low as well. The console gaming market is a multi-billion dollar industry and there are a large number of retailers who stock Xbox 360s.

There is enough of an economic profit from consoles and associated merchandise to validate whole stores dedicated to just selling these items. The possibility of a retailer attempting to develop and distribute their own console is incredibly unlikely due to the cost and barriers.

4.0MICROSOFT – CORPORATE SOCIAL RESPONSIBILITY {CSR}

FIG.4: MICROSOFT – CORPORATE SOCIAL RESPONSIBILITY {CSR} (http://www.businessrespect.net/definition.php by Mallen Baker)

Compared to just a decade ago, it is now common for business people to talk about social responsibility and the importance of being good corporate citizens. Many business leaders today consider it critical to engage with shareholders, the communities in which their companies operate, and others affected by and interested in what they do. The diverse activities needed to respond to these expanded duties are widely referred to by the catchall phrase “corporate social responsibility.” It incorporates a host of concepts and practices, including the necessity for adequate corporate governance structures, the implementation of workplace safety standards, the adoption of environmentally sustainable procedures, and philanthropy.

Take Microsoft CSR for example: -According to Microsoft 2013 Citizen Report,the company embarked on various CSR programs some of which are listed below:

4.1.GOVERNMENTS:

Microsoft Corporation is working with community-based organizations and NGOs in China to increase employment opportunities for unskilled migrant workers, partnering with law enforcement officials in Canada to develop a customized system that helps police fight computer-facilitated crimes against children, collaborating in Latin America with the Organization of American States and its affiliate The Trust for the Americas to help people with disabilities gain the skills they need to start their own businesses and find employment, or working with leading companies and community organizations in Europe on a grants program to help small and medium sized enterprises improve productivity through technology, their commitment is the same: to make it possible for people to use technology to improve their lives.

“Partnership and collaboration are at the center of how we do business, and that’s also how we work with governments and NGOs. It’s central to our commitment to provide leadership in our industry, to create a safe and secure computing environment, and to advance a worldwide knowledge economy that creates possibilities for hundreds of millions of people previously underserved by technology.” (Steven A. Ballmer – Chief Executive Officer in the Microsoft 2013 citizen report).

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4.2.CUSTOMERS:

As an industry leader, Microsoft recognizes its responsibility to help make the Internet safer and computing more secure. Their ultimate goal is to help create an environment in which adults, children, businesses, and other organizations can enjoy the full benefits of the Internet without concerns about their safety, privacy, or security. Meanwhile, they continue to work toward that goal with the help of government, industry, and law enforcement partners worldwide, and to help consumers and their customers understand what they can do to protect themselves and their systems.

Microsoft has done a lot to improve product quality and engineering excellence over the last few years. Every year, 15,000 Microsoft developers, testers, and program managers attend mandatory training on how to write more secure code. They have also integrated security into their software development process. The results have been a significant decrease in the number of security bulletins issued for products like Windows XP and Windows Server 2003 and a significant increase in the security of their esteemed customers’ systems.

4.3.LOCALCOMMUNITIES: Microsoft Local Language Program: This provides people access to technology in a familiar language while respecting linguistic and cultural distinctions. The program aims to empower individuals in local communities to create economic opportunities, build IT skills, enhance education outcomes, and sustain their local language and culture.

4.4.EMPLOYEES:

Microsoft is widely recognized as a leading company for offering one of the strongest and most comprehensive compensation and benefits packages in the US. They start with competitive pay, bonuses, and stock awards to eligible employees based on individual performance. Then they add on unique offerings that might surprise you. Here’s a bird’s-eye view:

Leading health & wellness care:

Medical & hospitalization: Industry-leading health coverage, more than many other companies offer.

Vision care: one annual eye exam and reimbursement for one pair of glasses or contacts per calendar year.

24 – hours health line: receive useful, easy – to –understand information and so much more, including life insurance, disability insurance, accidental death and dismemberment insurance, group legal coverage, dependent and healthcare flexible spending accounts, office ergonomics’ support etc.

You can notice that the company is trying to create a good environment at the office by providing all the staff with good conditions to work and develop themselves. I now recall the word of Jack Welch that says: “The recognition of the contribution of each employee, recognition for each employee the right to have a voice and a role in the success of the company – is the source of true performance. The source from which it can improve not gradually, but significantly”

  1. CONCLUSION

In conclusion, Microsoft being the foremost organization in the information and technology industry worked at its humble beginning in 1975 by Mr. Bill Gates and his youth mate Mr. Paul Allen which has a rapid growth history and finally became a public quoted company in 1986 and have since remained dominant in the IT industry and is affecting people’s life all over the world positively with business partners globally and also providing aids and rescue services on emergencies through its corporate social responsibility programs and can be regarded as employer of first choice

REFERENCES

  • CSR Report. (2012). Microsoft Release 2012 Citizenship Report. Retrieved on February 9, 2012 from http://www.csrwire.com/report/1272/-Microsoft-Release-2012-Citizenship-Report.html
  • Andrews, K.R. (1971), the Concept of Corporate Strategy, Dow-Jones Irwin, Homewood, IL.
  • Blomback, A. &Wigren, C. (2009), ”Challenging the importance of Size as determinant for CSR activities”; Management of Environmental Quality: An International Journal Vol. 20 No. 3 PP. 255-270;
  • Carlisle, Y.M. and Faulkner, D.O. (2004), “Corporate social responsibility: a stages framework”, European Business Journal, Vol. 16 No. 4, pp. 143-52.
  • Carroll, A.B. (1991), “The pyramid of corporate social responsibility: toward the moral management of organizational stakeholders”, Business Horizons, Vol. 34 No. 4, pp. 39-48.
  • http://www.businessrespect.net/definition.php by Mallen Baker
  • http://www.microsoft.com/about/corporatecitizenship/en-us/reporting/
  • Carroll, A.B. (1999), “Corporate social responsibility
  • Garriga, E. and Mele, D. (2004), “Corporate social responsibility theories: mapping the territory”, Journal of Business Ethics, Vol. 53, pp. 51-71.
  • Gyves, S. & O’Higgins, E. (2008), ”Corporate Social Responsibility: An avenue for sustainable benefit for society and the firm?” Society & Business Review Vol. 3, No. 3, pp. 207-223;
  • Henderson, D. (2005), “The role of business in the world today”, Journal of Corporate Citizenship, Vol. 17, pp. 30-2.
  • Hirschland, M. (2005), Taking the Temperature of CSR Leaders, Business for Social Responsibility, San Francisco, CA.
  • http://www.codeproject.com
  • Karnani, A. (2010). The case Against Corporate Social Responsibility. Wall Street Journal. Retrieved on February 9, 2013 from http://online.wsj.com/article/SB100….html
  • www.doughtycentre .info – adapted from core values for the practice of public participation by the international associationfor public participation – pg.12
  • David Thompson. Help employees achieve a work/life balance//URL: http://goo.gl/4Fdh3.28.01.2013.

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