North South University

Submitted to: Mohammad Hannan Miah.

Course: MGT 489. Section-5. Group-4.

Final Project

Submission Date: April 18th, 2017

NAME ID
Rabiba R. Choudhury 0910281030
Rashidul Islam Rasel 1210678030
Md. Saddam Hossain 1210713030
Mohiuddin Mohammad 1231092630
Zawad
Md. Abu Bakr Siddique 1310758030

Contents
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Executive Summary.....................................................................................................................................4

1. Introduction of Microsoft........................................................................................................................6

History.....................................................................................................................................................6

Development and Growth........................................................................................................................6

2. Companys Internal Environment............................................................................................................7

Microsoft capabilities..............................................................................................................................7

Tangible resources of Microsoft OS........................................................................................................7

Intangible resources.................................................................................................................................8

3. Identification and analysis of companys External Environment.............................................................9

a. i. Competitors of Microsoft Windows:.................................................................................................9

a. ii. Microsoft Windows Competitive Forces Analysis (adapted from Porters Five Forces Model):.....9

a. iii. Microsoft Windows Life Cycle Analysis......................................................................................11

b. Macro Environment Analysis............................................................................................................11

4. SWOT Analysis for Microsoft Corporation..........................................................................................13

5. Define the companys business..............................................................................................................14

6.Identification and analysis of the companys distinctive competencies..................................................14

7. 3I Analysis.............................................................................................................................................16

8. Companys financial performance.........................................................................................................16

9. Value Chain Analysis.17

10. Competitive Advantage18

2|Page
11.Canvas Model..18

12. Business Model19

13. Recommendations for Microsoft Windows for 2017 2022...............................................................22

14. Corporate Level Strategic Planning.....................................................................................................23

15. Business Level Strategic Planning.......................................................................................................25

16. Functional Level Strategic Planning....................................................................................................26

17. Technological Level Strategic Planning...............................................................................................27

18. Business Model (revised)....................................................................................................................29

19. Governance of the Company...............................................................................................................29

20. Strategic Control System.....................................................................................................................31

21. Culture for Microsoft OS.....................................................................................................................33

22. Global Strategies.................................................................................................................................33

23. Ethical value proposition for employees..............................................................................................34

Reference...................................................................................................................................................35

Executive Summary

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Microsoft is a renowned multinational computer technology corporation began its journey on
April 4, 1975. First Windows 1.0 was introduced in market in November 1985. Windows 1.0 is
not a complete operating system but it extends MS-DOS. The shell of Windows 1.0 is a program
that worked as the MS-DOS Executive. Then for market demand Windows 2, Windows 3,
Windows 9x, Windows XP, Windows Vista, Windows 7, Windows 8, last came Windows10.
Windows 10 released on July 29, 2015 and has some changes like Start Menu, Virtual Desktop
System.

Microsoft Operating systems core Competency is easy to use and software monopolization.
Microsofts main business strategy is the acquisition, exploitation and defense of monopoly
power in various marketplaces. Now at last we can explain Microsofts loathing for modularity.
Microsoft delivers the right services at the right time by strengthening IT as a strategically
focused, business aligned organization. The company offers a competitive advantage through
their technological innovations. The company maps IT applications, infrastructures, and
operations into a consistent set of services that support business goals. They help eliminate
redundancies, service delays, and inefficient processes for faster response times, and they also
seize the opportunity to take the competitive lead by applying technology in innovative ways.

This paper would help us to understand how Microsoft works with its management and how they
fulfill their requirements for achieving their strategic goals. After acquiring the necessary and
appropriate data through secondary data sources, analysis and interpretation of the data led us to
finding some managerial issues that Microsoft might have faced which in turn led them to take
the decisions that they took bottle-necking them into a position where they under-performed in
the competitive OS market. It allowed us to figure out some faults that could have been avoided
following the interpretation of the financial reports. Hence, we were able to provide with a
revised business model along with some recommendations.

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Summary of Findings: We can see that Microsoft is not being able to stabilize its business has

been all over the place in regards to performance, a mixture of both good and bad. But 2016 was

a low point compared to the previous years as it can be seen to have underperformed quite a bit.

The sales were high but inventory management was poor. The decisions taken by Microsoft

might have backfired but it might also show that Microsoft has other long term goals that it

wants to achieve and for that the necessary steps were taken which might have caused it to

perform the way it did in its initial stage of strategy implementation.

Recommendations for Microsoft: We have provided strategic decisions that might have a

positive impact of Microsofts current business structure. These strategies include corporate level

strategies, business level strategies and functional level strategies. The strategies have been

talked about in details in their respective section but here is the summarization of that section.

1. Research and develop new products

2. Provide end consumers with customized products

3. Provide end consumers with customized Window

4. Outsource work to cut costs

5. Develop and provide with a new OS for the Windows Smart-Phones

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In accordance with their resource and capability, and financial capabilities Microsoft needs to

focus more on RnD and Diversification, along with sustenance. It is a big, successful company

that should not end just because trends in the technological sector are changing and Microsoft

just has not caught up to it yet.

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1. Introduction of Microsoft-
Microsoft is a renowned multinational computer technology corporation began its journey on

April 4, 1975. Bill Gates and Paul Allen founder of Microsoft Corporation and today Microsoft

Windows which is the leading Operating system in the Pc market. The MICROSOFT word

came from the "Microprocessor" and "Software." Microsoft also has Microsoft Office Suite

software, Xbox, Bing, Windows Mobile etc.

History

First Windows 1.0 was introduced in market in November 1985. Windows 1.0 is not a complete

operating system but it extends MS-DOS. The shell of Windows 1.0 is a program that worked as

the MS-DOS Executive. Then for market demand Windows 2, Windows 3, Windows 9x,

Windows XP, Windows Vista, Windows 7, Windows 8, last came Windows10. Windows 10

released on July 29, 2015 and has some changes like Start Menu, Virtual Desktop System.

Development and Growth

Microsoft developed, marketed, and sold windows which are a multifamily of Graphical

Operating Systems. Active Windows families has 3 categories these are Windows

NT, Windows Embedded and Windows Phone. Windows start its journey with Windows1.0

and now we have Windows10. The development of Windows was made for the demand of more

developed versions and also for the developments of Pc devices and hardware. Over the year

Microsoft became bigger and now this big Multinational company has an Annual revenue of

$86.83 Billion USD and 128,076 employees worldwide. Today we hardly think a Pc or Laptop is

running without Microsoft Windows OS because it is more users friendly than others.

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Microsoft Operating systems core Competency is easy to use and software monopolization.

Microsofts main business strategy is the acquisition, exploitation and defense of monopoly

power in various marketplaces. Now at last we can explain Microsofts loathing for modularity.

Microsoft delivers the right services at the right time by strengthening IT as a strategically

focused, business aligned organization. The company offers a competitive advantage through

their technological innovations. The company maps IT applications, infrastructures, and

operations into a consistent set of services that support business goals. They help eliminate

redundancies, service delays, and inefficient processes for faster response times, and they also

seize the opportunity to take the competitive lead by applying technology in innovative ways.

2. Companys Internal Environment-

Microsoft capabilities

Maintaining resources and technology efficiently and effectively

Innovation and continuous improvements eg; window xp, vista, 7,8,10 etc
Ability to identify and respond to the markets with updated technology
Strong Brand Management
Ability to defense their monopolistic market position

Tangible resources of Microsoft OS

Cash reserves: Microsoft has $90.2 billion approximately cash reserves which give them large

amount of financial flexibility.

Infrastructure: One headquarter and regional office in every country

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Distribution channel and customers: Microsoft OS has used multi channeled distribution

strategy for its products including online vendors and retailers. They also tie up with OEMs such

as Dell, HP others so these companies provide their laptop build in windows software.

Intangible resources

Goodwill: Microsoft OS has a great goodwill from its beginning everyone knows about

Microsoft. Financial times rank Microsoft as the number second most valuable OS in the world.

Intellectual property: Microsoft has more than 40 000 patent and many others intellectual

property.

Research and development: MS has employed approximately 1100 people who are purely

dedicated to long term future focused research throughout the world.

Organizational culture: The work environment is casual, fun team oriented and intense.

Employees are valued for their contributions.

Human resource: they have 114,000 (June 30, 2016) employee. They are educated, dedicated

and committed to their company.

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3. Identification and analysis of companys External

Environment-
a. i. Competitors of Microsoft Windows:

Though Windows is still number one in position in the market of operating system still has many

strong and aggressive competitors. From different aspects rivals of windows will be other

operating systems as Mac OS, Linux, iOS, UNIX, and also Android. From the chart beside we

clearly see that about 92% operating systems market share capture Windows. Among

competitors, Android and iOS are

becoming a threat to windows because

consumers preferring Smartphone more

over windows because carrying a smart

mobile phone is much easier than caring a

laptop or other devices. So the

Smartphone industry is also a competitor for Microsoft Windows. If for any PCs or similar

devices manufacturers want to use other operating systems, then those are also considered

Microsoft Windows competitors.

a. ii. Microsoft Windows Competitive Forces Analysis (adapted from Porters Five Forces

Model):

Threat of New Entrants-

Entry barrier for new entrants is high in operating systems industry because Windows has

efficient Economies of Scale, strong brand loyalty, huge production so price completion is high,

and most important entry barrier is customer switching cost is high.

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 Threat of Suppliers-

Actually, suppliers do not pose any threat to Microsoft Windows because producers of PCs or

Laptops or other similar devices without Windows is tough for satisfy customers need. The

product Windows that Microsoft produces has few substitutes and those substitutes are not able

to meet the need in a satisfactory manner.

Threat of buyers-

Buyers of Windows have no choice but to purchase Windows because this product has monopoly

power over buyers. In Windows, more buyers equal less power for individuals. Buyers have

power over Windows when they buy large volume and want to modify or upgrade it or dont

want to upgrade it.

Threat of Substitutes-

Microsoft Windows has many substitutes but these substitutes are not complete substitutes

against Windows. If any customers want to change Windows operating system they have to

change many things like Microsoft Office and also emotional attachment includes.

Threat of Rivalry-

Microsoft operating system Windows fall in consolidated industry with high growing demand

without capturing market share. Strong rivalry comes from mostly Smartphone like Samsung

Android or Apple iOS etc because customers prefer Smartphone easier to carry than a laptop or

PCs.

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a. iii. Microsoft Windows Life Cycle Analysis

Microsoft Windows is in Operating System Industry and now it is in an Mature Industry. From

the beginning it dominates the Operating System Industry because Microsoft Windows made it

easier to use for users than other competitors. Rivals of windows will be other operating systems

as Mac OS, Linux, iOS, UNIX, and also Android. Though Microsoft Windows IS now the

market leader of Operating System Industry in PC market but the rising popularity of

Smartphone and Smartphones OS has been threatening Microsoft Windows. The Smartphone

and Smartphones OS are now in Growth Stage and also developing more and more. Android

and iOS are becoming a threat to windows because consumers preferring Smartphone more over

windows because carrying a smart mobile phone is much easier than caring a laptop or other

devices. Other Operating System such as Mac OS, Linux, and UNIX has little Market share and

they are in declining stage as their popularity decreasing.

b. Macro Environment Analysis

Political/Legal Environment Analysis: The general environmental factor that highly affects

Microsoft is political. The U.S. Justice Department field antitrust charges against the company in

1998, claiming that Microsoft had stifled internet browser competition and limited consumer

choice. In March 2004, The European Union (EU) fined Microsoft and ordered it to take out its

media player software from Europeans Window version. Microsoft already reached the

settlement for the first case, but a worst case scenario would be that, these legal actions can cause

Microsoft to be split up.

Impact: Based on this area of the PESTEL/PESTLE analysis of Microsoft Corporation, the

political factors present negative impact.

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Economic Environment Analysis: Since early 1990s, Microsoft has become the global leader

of software services and internet technologies for the computing industry. Sales for the global

software and service industry stood at $2,330 billion 2009. Though it experienced decelerating

growth in the recent years, it is forecasted that the industry will experience 50% growth and sales

will reach $3,400 billion by 2014.

Impact: In this area of the PESTEL/PESTLE analysis of Microsoft Corporation, economic

factors represent positive impact.

Social Environment Analysis: With the rapid development of computer technology, people can

easily talk and see each other via the internet.

Impact: In this area of the PESTEL/PESTLE analysis of Microsoft Corporation, socio-cultural

external factors emphasize opportunities (Positive) for growing the computer hardware and

software business.

Technological Environment Analysis: Microsoft strongly depends on its technologies. The

market requires the most advanced technology to meet the consumers preferences and

competition with other rising companies, such as Google, and Apple is intense. Googles web

browser, Google Chrome is compatible with all operating systems. Apples main selling point is

that its operating system is not as vulnerable to attack by virus and hackers as Microsofts

Operating System.

Impact: In this area of the PESTEL/PESTLE analysis of Microsoft Corporation, Technological

Environment factors represent negative impact.

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Environmental Analysis: Microsoft can develop more environmentally friendly products, and

increase the use of green energy in its business operations. In relation, Microsofts effort to

improve its sustainability directly addresses the opportunity based on the increasing focus of

societies on business sustainability.

Impact: In this area of the PESTEL/PESTLE analysis of Microsoft Corporation, Environmental

factors represent positive impact.

4. SWOT Analysis for Microsoft Corporation-

Strengths Weakness
Brand loyalty Dependence on hardware
Brand reputation manufacturers
Easy to use software Criticism over security flaws
Strong distribution channels Slow to innovate In Smartphone OS.
Strong financial performance
Increasing R&D investments
Opportunities Threats
Cloud based service Intense competition in software
Mobile advertising products
Mobile device industry Changing consumer needs & habits
Growth through acquisitions Open source projects
Potential lawsuits
Threat of piracy
Mature PC markets

5. Define the companys business-

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 6.Identification and analysis of the companys

distinctive competencies-
The core competencies of a company are those unique skill assets of the organization which

differentiate them from competitor help attain a larger market share. Infact, core competencies

define the difference in strategic approaches among competitors, which is often a key

denominator of the organizations success rate. An organization can possess one or more core

competencies.

Microsoft believes in providing the best possible solution at the prime moment by strengthening

IT (information technology) as strategically focused, business aligned organization. Their main

competitive advantage is technological innovations. Microsoft has more patents than any other

organization. The company maps IT applications, infrastructures and operations into a consistent

set of services that support business goals, which helps them eliminate redundancies, service

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delays, and inefficient processes for faster response times and also seize the opportunity to take

the competitive lead by applying technology in innovative ways. Furthermore, the system of

Microsofts management strategy and its application has made its core competencies difficult to

imitate as its success rate is greatly dependent on customer perceived value associated with the

brand.

Microsofts core competencies are so exemplary that the organization has its own partner

networks where businesses can showcase their own expertise through Microsoft competencies. It

has two kinds of competencies which help a company distinguish its competition by a proven

skill set to potential customers. Since, Microsoft is careful on maintaining customer

communication, it is easy for the consumers to identify a companys capabilities and expertise.

Microsoft has two types of competencies that they can provide a new business. Gold or silver

competencies can help set a company apart from the competition by demonstrating a proven skill

set to potential customers. Consumers can easily identify a companys capabilities and expertise

because Microsoft is aligned with how customers actually buy companys products.

Another core competency of Microsoft is the fact that they can invest a lot of money on research

and development to optimize one of its products or services. Microsofts operating

system first MS-DOS, then Windows was the core of that company. And Windows, which

emerged as a success in 1995, did not become a hit overnight. The development process for

Windows started around 1984 and it wasnt released in the market till 1995. The whole process

took 11 years to polish and that is a long time to spend behind one project. Time and money both

are spent on development to make things better at the best possible price so that it can attract

customers. Therefore, a lot of conviction is needed from the workforce and the management.

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Microsoft looks at core competencies in a dynamic rather than static manner.

7. 3I Analysis-
Immediate Competitors: These competitors are directly competing in same market. Their target

customers are same. Immediate competitors of Microsoft are iOS & android (Google).

Impending Competitors: These competitors are not direct competitors. These competitors are

growing up to compete. Impending competitors of Microsoft are Linux, Unix.

Invisible Competitors: They are potential competitors. Invisible Competitors of Microsoft are

IBM, Sony.

8. Companys financial performance-

Liquidity Activity Debt Profitability Growth
Calculation Current Quick Cash Asset Days Debt Equity Return on Profit Return EPS

s Ratio Ratio Conversion Turnover Inventory to Ratio Assets Margin of

Cycle Equity Equity

2016 2.35 2.22 30.99 days 0.46 28.69 57% 2.1 9.08 % 23.15 22.09 2.1

times days %
Benchmark 1.5 0.8 Lower Higher Lower 100% 2 Higher % Higher Higher Higher

% % than 1

Liquidity ratios show that Microsoft may not be utilizing or managing their assets and liabilities

properly in return affecting its working capital management. It is seen to be quite above the

required benchmark that a company should be following. Current ratio and acid test shows that

there is a lot liquidity for the company but indicates unprofitable investment of current asset but

if it went but they do have to see that it doesnt fall below the benchmarks cause that might lead

to a financial issue where they might not be able to meet their day to day expenses.

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The activity ratios show that Microsoft is able to manage its payment and collection period

somehow but its not consistent. The values reflect that Microsoft has seen better days and can

achieve that if proper management is done regarding the specified matters. If the assets available

were put to better use than the inventory management might have been more efficient and cash

conversion cycle would go down making Microsoft have a higher chance of growth and lowering

its costs too in return.

The debt ratios shows that Microsoft is not doing a proper job in managing its leverages and

other factors and may be doing something wrong as the values are going in the wrong direction

than that what is expected for a top tier organization. As Microsoft has low debt percentage, it

shows that Microsoft is working with less risk and hence is stress free and being lax with

management. While the equity ratio shows that Microsoft is revolving around the benchmark of

2 which is excellent.

The profitability ratios show how badly Microsoft has been performing during the latter years

and how the profitability of the organization has fallen with each year. The return on assets and

equity values also reflects how mis-managed the organization has become. The performance has

been declining. All the calculations conducted shows that Microsoft is working profitably but not

performing well enough. Utilizing their capabilities Microsoft can become even more profitable.

Earnings per share (EPS) of Microsoft shows that even though its creating an income based on

per share but the values fluctuates quite rigorously and may be becoming stagnant. But still any

number over 1 show that Microsoft is growing as a company.

We can see that Microsoft is not being able to stabilize its business has been all over the place in

regards to performance, a mixture of both good and bad. But 2016 was a low point compared to

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the previous years as it can be seen to have underperformed quite a bit. The sales were high but

inventory management was poor. The decisions taken by Microsoft might have backfired but it

might also show that Microsoft has other long term goals that it wants to achieve and for that the

necessary steps were taken which might have caused it to perform the way it did in its initial

stage of strategy implementation.

How the acquired data can be interpreted for the particular individuals:

For the investors

Microsoft Corp has current ratio of 2.50 and quick ratio of 2.30 in 2015 indicating a good short-

term financial strength in favor of Microsoft.

For the suppliers

Average payment period has gone down from 87.16 to 77.46 days in 2015. So a decrease in

Average payment period is a good sign for suppliers as they will be able to get their money

faster.

For the management

Gross profit margin, Operating profit margin and Net profit margin are receding throughout the

consecutive financial time periods, which is a warning sign for Microsofts management.

For the shareholders

EPS has gone down which might affect the prospect of future investment in the company by

potential buyers of shares.

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9. Value Chain Analysis-

For the Discussion of the Value Chain Analysis of Microsoft Windows we discuss it in two ways

as Primary Activities and Support Activities. It starts in R&D and end in Customer Service.

For the Research and Development of the Windows operating system, Microsoft has a slew of

programmers, computer engineers, beta testers at their disposal. This will be done with the

market demand information from Information System Management. Production is done now

very easily as Microsoft Build and Develop Windows in virtually that is lower cost structure and

put it in their website or others where customers can download it. Marketing and sales is easy

because mostly everything is done on Internet

And create value by discovering customers needs through internet. Providing after-sales service

and support, solving customer problems and supporting customers after a purchase Microsoft go

through Customer Service where it creates superior utility by satisfying customers. These

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Primary activities are combined with Information System, Material Management, and Human

Resources and also Microsoft Organizational structure, control system, and culture and these all

together done the job Value chain for Microsoft.

10. Competitive Advantage-

1) Universal operating system which is supported almost all types of computer, laptop and

other device.

2) Easy to use then other operating system.

3) Low cost cheaper than other operating system.

4) Competitive advantage through technology innovation.

5) Strong brand image.

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11. Canvas Model (existing)-

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12. Business Model (existing)-

13. Recommendations for Microsoft Windows for

(2017 2022)-
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 Today customers want customized products more and companies focusing on customized

products for Niche markets. So What Microsoft can do is that it focuses on customized

software for niche markets. Suppose a customer wants customized Microsoft Office

Tools. Microsoft can open a Customer- Choice Service in its Website where customers

can tell what kind of customized software they want and Microsoft will do these for

customers.

A customized Window as a customers wants will be Microsofts new focus on sustaining

in the market. Microsoft provided one common Windows for all over the world in the

previous time. But now Microsoft must focus more on customized Windows as a

customers wants. Microsofts competitors are now doing business in customized niche

market where they providing customized OS. So Microsoft windows can bring

customizes Windows & can follow niche market strategy. For example: Architect

windows for architecture students, Accounting windows for accounting students where

will be added necessary things according to them.

IBM is now turned into a software company and cutting its costs by hiring software

engineers from abroad such as India. The advantage is that IBM can hire a software

Engineer from abroad in cheaper rate and also the idea from there is different than home

country. So Microsoft can hire their software engineers from abroad to reduce production,

Research and Development cost and use these cost for other purposes.

Microsoft can bring New Operating System for Smartphone which will be more updated

and modified as it will overcome the limitations of Android and previous Windows

phones. Microsoft can alliance with renowned Smartphone brand by providing an new

operating system. For example: Huawei, Oppo, Xiomi, etc. With these Mobile companies

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 Microsoft can make a Technical Standards of Microsoft OS (for Smartphone) and

Smartphone Companies and name this as Smart OS /SOS (as Wintel).

14. Corporate Level Strategic Planning-

Related diversification: Microsoft os can diversify their business to the Smartphone and tab

market. Because the behavior of consumer is changing people feel more comfortable on

Smartphone and tab rather than desktop and laptop pc. They already have the Smartphone

version OS but this is not enriched and upgraded like android. As a result it was failed to capture

market. We can introduce updated OS which will more flexible and enriched with variety of apps

and cloud solution.

Strategic Alliance: they can make strategic alliances with market leader of the Smartphone

industries like Samsung, Huawei, Oppo and other company to use new os on their Smartphone.

Google android was successful because almost all Smartphone and tab manufacturer uses

android os on their devices. Microsoft previously made alliance with NOKIA but it was failed

because the OS features were backdated and lack of apps on their windows store. But through

new os they can overcome those problems by making more upgradable and flexible os. So, if

they can do the alliance with Smartphone manufacturer than they can sustain in the long run.

They also can make strategic alliance with their competitor OS to sell their customize software

for example android OS dont have Microsoft office software full version they can make alliance

with the different OS to use their office apps.

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Leveraging technical competency to IT: Microsofts one of the competency is their

technological knowhow efficient human resource. So they can leverage their technological

knowhow and R&D knowledge to open a software company or IT solution firm. From where

they can make apps and software to enrich their operating system and also can sell their software

to different customer.

Microsoft can impose certain amount of updating fee form the user of previous version os. Ex: if

someone wants to upgrade windows to latest version they have to pay certain amount of money.

In this case customer couldnt shift to other os because shifting cost is high and there is no option

for consumer because windows os cover almost 82 percents of the computer industry.

Outsourcing: Microsoft can outsource their app developments unit. To solve this problem they

faced on thir windows os .They should allow developers to make apps. and give the flexibility to

developer to modify them. It can also helpful for them because they can reduce cost.

Horizontal integration: Microsoft windows can acquire their main competitors of pc os market

LINUX so that they can leverage competitive advantages and get more power over their

suppliers and customers,

They also can buy tweeter which is a social networking apps which will enrich their windows

features and can be a good source of income.

Microsoft has already is in mature industries so there isnt any threat form new entrants of

competitors. So they dont need to think much about promotion or expansion. They can just

defend their current position by upgrading themselves with the changing trends and technologies.

And also cope up.

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15. Business Level Strategic Planning-
From the analysis we can say Microsoft has already is in mature industries so they will not face

the threat of new entrants. So they dont need to think much about promotion. They can just hold

their current position by upgrading themselves with the changing trends and technologies.

Year Strategy Benefits

2017-2022 Product Development It will differentiate
their product.

It will help to increase

the product value.

It will create new

sources of revenue.
Product Proliferation It will help to develop
the stable industry.
New product
development by non-
price competition.
Leadership Strategy It will help to
consolidate established
competitors.
Making new
investments in
productive capacity.

16. Functional Level Strategic Planning-

Generate functional level strategies for the next 5 years [2017 2022] to support your corporate

level strategy, business level strategy, and recommendations. Explain and defend your decision

making for generating these functional level strategies, especially given your recommendations

and corporate level strategies and your business level strategy.

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 1. Related Diversification:

The functional level strategies for this corporate strategy will include the following:

- Higher capital investment

- Increased investment in R&D

- Research on finding new industries and manufacturing based markets

2. Leveraging technical competency to IT:

Microsoft needs to increase its efficiency by:

- Developing their core competencies furthermore

- Up taking further specialization

- Enrich and implement application of R&D

3. Outsourcing:

To make effective outsourcing attempts, Microsoft should:

- Realize Economies of scale and realize cost reduction

- Time management

- Stress management

4. Horizontal integration:

Microsoft should seriously consider horizontal integration in the following sectors, given

that they already have the gaming arena covered:

- Cybercrime prevention and tracking tools

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 - Smart car OS systems (i.e. Apple had already been pursuing to buy out McLaren

motors for a long time to diversify into that industry. Microsoft has the right

resources and capabilities necessary for this endeavor.)

5. Strategic Alliance:

Functional strategies for strategic alliances:

- Better use of EOS due to alliances

- Faster manufacture

- Increased revenues

- R&D facilities

17. Technological Level Strategic Planning-

Microsoft is the market Leader in Operating system for a long time but in the future situation can

be changed. Competitors can bring new more advanced and more user friendly Operating system

and for this Microsoft should focus on technologcal strategy and continue the Innovation to stop

the attack of competitors. Microsofts competitors (like Apple) bringing customized software and

it will be red alert that if customers find these customized software more advanced than they will

shift to them. So Microsoft can customize their software before its competitors and make the

software more user-friendly as needed in market. Also Microsoft Windows need to modify

continuously as Microsoft did in the past so customers face high switching cost. One important

thing is that Windows Development must be easy to consumers that consumers can easily use

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and understand future versions. Microsoft must always make a strong relation with PC

manufactures (HP, Dell, etc) and develop the Windows with PC market demand. Market of

Technology is changing rapidly and to keep the pace with it Microsoft must strengthen the IT

and MIS department to get the Market Knowledge. Network Effect is other factor for Microsoft

where need more attention because Microsoft Windows has strong relation with PC

manufacturers. Microsoft can use positive feedback loops as increase demand for Windows and

this increase demand for electronic Devices. The outcome is that alternative use of Operating

System will be locked as consumers are unwilling to bear the switching costs. As Smartphone

market getting bigger day by day now Microsoft can focus on Smartphone industry and make a

standard (as WINTEL) where Microsoft and Smartphone producers can make SmartOS

standard (Smartphone+ Microsoft new OS).

18. Business Model (revised)-

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19. Governance of the Company-
Microsoft always tries to create value for their stockholders, and now for the future. They should

ensure accountability and transparency on each and every activity.

Microsoft current corporate governance is well enough for implementing those strategies we

discussed in previous part. Just a little bit change in corporate, business and functional strategy

can help Microsoft to gain competitive advantages over other OS company. To solve copy or

piracy problem they should be hire some technicians to look after the security and copyrights

issue.

They need to provide a structure for management and the board to set objective and monitor

performance and evaluate.

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They need to hire well qualified researcher to improve the quality of the software and providing

more user friendly experience.

For implementing corporate level strategy they for next five years they need to hire some outside

consultant who monitor the internal performance and evaluate with the standards and provide

feedback so that evaluation of the whole process will be easier.

For implementing business level strategy low cost to differentiation thy need to employee more

people to their research and development team like apple and Google did. Redesign their

operating system and make more user friendly and universal so that anyone can get the windows

experience on all devices (tab, Smartphone) rather than only computer.

To implement their business level strategy and they need to employee more eligible marketing

team like apple. Because, existing marketing team isnt well qualified to communicate with

different types of consumer groups.

In terms of HR department they need to upgrade their organizational culture and redesign their

HR policy to ensure more coordination between every department. It seems that due to lack of

coordination between marketing team and the R&D dept windows phone failed to capture the

Smartphone market. So they need to develop a decentralize organization culture to motivated

existing employees to the work and also attract new employees.

They should change their organizational culture in such a so that every individual departments

communicate with their employees and took comments and recommendation before talking any

decisions.

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They should open up more display center globally to promote their product and services. And it

will also helpful to know the global needs and demands so that they can get location of

economics.

For ensuring better work performance they need to use some evaluation criteria for each and

every department they need to set some target standards and compare the standards with real

output and take corrective actions. And a decent employee reward system is also necessary to

motivate employees.

20. Strategic Control System-

Strategic control involves tracking a strategy as it is being implemented along with detection of

problems and changes in the strategy and making necessary adjustments. Based on our

recommended strategic plan, the following strategic control systems are applicable:

Premise Control:

Premise control should be implemented on the following matters:

- Developing better interfaces for Windows App store. The store needs to be richer, more

available, instigate multipurpose use and be compatible with various devices (related to

R&D budget and related diversification)

- Create awareness and diversify into Cybercrime prevention and Smartcar OS

(Diversification and horizontal integration)

- Restructure and improve the HR department. (Improved management)

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Implementation control:

Implementation control should be carried out as events unfold:

- Invest more to innovate flagship products such as: Windows OS, Office etc. (capital and

budget management and R&D)

- Make appropriate acquisitions (horizontal integration and diversification)

- Brand image development (better marketing and management strategies)

- Hardware segment development (R&D and capital budget management)

- Refreshed marketing approach

Strategic Surveillance:

These are the internal and external factors that affect the organizations strategy:

- Competitors performance and market share (market analysis and management)

- Stakeholders current affairs (Finance dept. and top-level managerial affairs)

- Current world affairs

The CEO and CFO of Microsoft are the ones, along with the other top level management, who

should take these decision after careful consideration and in-depth research on the matter.

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21. Culture for Microsoft OS-
Microsoft Corporations organizational culture focus on business needs in the dynamic market

for computer hardware and software products. Microsoft corporate culture has the values,

traditions and behavioral expectations among employees. Microsofts long-term success mostly

depends on this organizational culture and the corresponding competence of the companys

human resources. Companies have distinct cultural characteristics based on the nature of their

businesses, industry situation, labor market conditions, and internal business processes.

Microsoft Corporations organizational culture has the following main characteristics:

Accountability, Quality and Innovation, Responsiveness to Customers, Growth Mindset,

Diversity and Inclusion. Microsoft has some disadvantages in organizational culture is the lack

of institutionalized support for adequate autonomy. Lack of Autonomy not encourages

employees to contribute new and innovative ideas. Based on such disadvantage, a good

recommendation is for Microsoft to integrate considerable autonomy in its organizational

culture.

22. Global strategies-

To expand the business and growth beyond the local market and achieve foreign market

proportion Microsoft Windows must focus on Global strategy. Microsoft took the world as

largely one market and one source of supply with little local variation. Importantly, Microsoft

should focus on local demand which is developed largely on a local basis. Global expansion

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provides the opportunity for new sales and profits and so Microsoft mostly focus on foreign

markets such as South Asia where demand for technology and adapt new technology is high.

Global standardization strategy- For Microsoft Windows (for PCs) and SmartOS for

Smartphone Microsoft should focus on Global standardized products. Microsoft will market

standardized Operating Systems worldwide to get maximum benefit from economies of

scale. Microsoft must focuses a Business model based on pursuing a low-cost strategy on a

global scale.
Transnational strategy- Microsoft focuses on increasing profitability by customizing

Windows or software for customers. Here Microsoft must keep its cost low because

Microsoft has strong competitors.

Wholly Owned Subsidiary- Microsofts distinctive competency is its technological

expertise so Wholly owned subsidiary should be given preference. Microsoft is pursuing

global and/or transnational strategies so prefer for establishing a wholly owned subsidiary.

23. Ethical value proposition for employees-

Microsoft is the worlds one of the largest software company which is do its business on trust of

its customers. From management level in internal and external, Suppliers, Distributors, Retailers,

etc all of whom Microsoft do business must need to follow Microsoft code of conduct.

Microsofts commitment to corporate responsibility and integrity is important for customers

because this company run by trust of customers. To maintain the trust of Microsoft customers

Microsoft must strengthen the Microsoft code of conduct for all of its stakeholders especially for

employees. Law is not enough to stop corruptions done by Microsoft employees also needs

ethics and morality to stop corruptions. Common corruptions done by Microsoft employees are

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passing confidential information, presenting false information, Self-dealing, Information

manipulation, Anticompetitive behavior, Opportunistic exploitation, etc. To stop and prohibited

this kind of crime Microsoft must monitor all the information passed, contract revised, check if

have any complain for employees, and strengthen the Ethics and morality

References-
Microsoft Corporation. Retrieved from: https://msdn.microsoft.com/en-

us/library/aa292124(v=vs.71).aspx

Microsoft Corporation. Retrieved from: https://news.microsoft.com/facts-about-

microsoft/#sm.00000w2ypsthm4dawr2ixxfe5wfca#B4CimscmKYA1ecDv.97

Kanooni, A. (2006). The Microsoft Corporation Company analysis. Retrieved from:

http://drarmankanooni.com/research/microsoftfinancialanalysis.pdf

Microsoft Corporation. (2012). Retrieved from: http://www.microsoft.com

Sifert, T., & Rigby, B. (Feb3, 2011). Microsoft sells $2.25 billion of debt at low rates. Reuters.

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idUSTRE7128EZ20112004

Jurevicious, O. (Feb16, 2013). SWOT analysis of Microsoft. Retrieved from:

https://www.strategicmanagementinsight.com/swot-analyses/microsoft-swot-analysis.html

Sun, L. (Jun28, 2015). SWOT analysis of Microsoft Corporation. Retrieved from:

https://www.fool.com/investing/general/2015/06/28/swot-analysis-of-microsoft-corporation.aspx

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Bhasin, H. (Dec6, 2016). SWOT analysis of Microsoft Microsoft SWOT analysis. Retrieved

from: http://www.marketing91.com/swot-analysis-of-microsoft/

http://financials.morningstar.com/ratios/r.html?t=MSFT&region=usa&culture=en-US

CHART OF THE DAY: Windows Is Still Massive, (2014),

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Computer Hope, Operating System, (2017), http://www.computerhope.com/os.htm

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https://www.microsoft.com/investor/reports/ar12/financial-review/business-

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