Microsoft

In Enterprise Software Industry

Anthony Wang
Gaurav Gada
Team Gowri Ramaprasad
5 Nissim Panchpor
Vaisakhi Mishra
Wang Chen
 Flow of Contents Learning Objectives

Introduction
Overview of
Microsoft in Role in Society Role of Organization in Society – Stakeholder Analysis
Enterprise
Software Ethical Practices Ethics and Social Responsibilities in Organizations
Industry
Porter’s Five Forces Strategic Management Principles

Corporate-level Strategic Management Principles

3 Levels of Business-level Use of IT

Strategies &
Organizatio
Functional-level Organizational Structures and Culture
nal Culture
Organizational
Change Management Techniques
Culture

Leadership
Strategic Management Principles
Strategic Competencies
Leadership
Leadership Changed

SWOT &
SWOT Strategic Management Principles
Suggestions
for
Microsoft Recommendations
 Introduction
Once upon a time, Microsoft dominated the tech industry, especially in
enterprise software industry; indeed, it was the wealthiest corporation in the
world because of its success in enterprise software. But since 2000 it has lost its
competitive advantage as Apple, Google, and Facebook whizzed by, during the so
called ‘lost decade’ of Microsoft. Steve Ballmer who led Microsoft from January
2000 to February 2014, is often labelled as a man who led them astray
(EICHENWALD, 2012). However, a couple of years ago, Satya Nadella took over
and took Microsoft back to the correct path, proven by the continuously
increasing stock price since 2014.
Hence, we decided to do an in-depth analysis of Microsoft with respect to
changes in 3 levels of strategies, organizational structure (Use of IT) and culture
after Satya Nadella took over as the CEO of Microsoft. Our main area of focus is
Microsoft’s enterprise software – mobile and cloud technologies, where
Microsoft has been dominant all the time.

Assessment: Why Microsoft Needs To Change?

Following points describe the certain practices and the state of Microsoft in
general during it’s ‘lost decade’ during Ballmer’s leadership.

• Narrow Organizational Vision

Overview of Microsoft was heavily dependent on Windows and Office for revenue. Nearly all
Microsoft in other products existed to serve Windows and anything that did not serve this
Enterprise purpose died sooner or later due to lack of any meaningful attention with the
Software company (Weinberger, 2016).
Industry
• Cutthroat Industry competition
Microsoft’s core competencies lacked the dynamic nature to maintain a
competitive advantage in the IT industry. Newer companies like Apple and
Google soon outperformed Microsoft in Mobile and cloud markets
(EICHENWALD, 2012).

• Extremely partitioned organization with limited resources

Microsoft had a cutthroat competition among its employees and managers
fighting for supremacy. Microsoft had grown into a very partitioned organization
where each major product line essentially ran like a separate company,
competing for resources and attention (Dua, 2016). This resulted in creating
roadblocks, competing solutions, and confusion for customers.

• Limited Innovation
As a result of excessive partitioning and narrow organizational vision, the product
groups in Microsoft didn't work together unless it directly benefited their piece
of the organization - regardless of whether it was good for the long-term needs
of the company. Many of its products such as Windows 8, Bing search, Windows
Mobile, Microsoft Zune were not gaining adoption (EICHENWALD, 2012). In
October 2013, two years after Windows 8 was launched, it still had a mere 12%
market share, while its predecessor Windows 7, held a 52% market share. Even
MacOS had more market share as compared to a Microsoft OS, which was
unheard of before. (Bort, 2014).
1
 Role In Society – Stakeholder Analysis
According to chapter 5 of the
textbook, Stakeholder are
Stockholder
defined as `the people and
groups that supply a company
with its productive resources Employees Managers
and so have a claim on and a
stake in the company’. we used
stakeholder analysis to check Microsoft
how the changes across
Microsoft benefit its Suppliers
stakeholders. and Customers
Distributors

Microsoft’s stakeholders are Community,

society, and
divided into (Jones & George, nation-state
2015):

• Stockholders:
Microsoft stock has a volume of 27.35 million and a market capitalization of $
484.84 billion. As of 9/12/2016, their stock trades at $ 61.97. Microsoft’s
shareholders will benefit if the company reports a profit as a result of the
Overview of changed strategy.
Microsoft in
Enterprise • Managers:
Software Microsoft has 14 senior managers (Microsoft, Microsoft News, 2016). The leader
Industry of enterprise software division is Scott Guthrie. `As executive vice president of
the Microsoft Cloud and Enterprise Group, Scott Guthrie is responsible for the
company’s cloud infrastructure, server, database, CRM, ERP, management and
development tools businesses. His engineering team builds Microsoft Azure, SQL
Server, Microsoft Dynamics 365, Active Directory, System Center, Visual Studio
and .NET.’ (Microsoft, Scott Guthrie, 2016). Managers are key elements who drive
the change across the company. They can benchmark the change and evaluate
Microsoft against top performers in the enterprise software industry.

• Customers:
Microsoft enterprise software has customers ranging from Fortune 500
companies to new startups. 49 of the Fortune 50 companies are Microsoft
customers (Frommer, 2014). Further, Microsoft software is also used by
individuals, educational institutes and non-profit organizations. As Microsoft
delivers on its vision, enterprise customers will be able to use productive devices
and be more productive.

• Community, society and nation-state:

Microsoft operates globally, so Microsoft’s stakeholders include the global
community and societies and countries. Through the social initiatives of
Microsoft, non-profit organizations, educations institutions and students can
avail Microsoft software for free. As software quality improves, these entities
also benefit and will be more productive in their work.

2
 • Suppliers and Distributors:
As Microsoft is a knowledge based company which delivers a software product, it
does not have any suppliers the supply raw materials for their core product i.e.
Enterprise Software. Microsoft relies on distributors and retailers for distributing
its software and hardware products. It relies on `EARs ("Enterprise Software
Advisors"), large account resellers ("LARs"), distributors, value-added resellers
("VARs"), OEMs, system builder channels, and retailers’ (Microsoft, 2012) as well
as direct distribution of its software products. As the product quality improves,
distributors will see additional sales revenue and it will be more lucrative for
them to distribute Microsoft enterprise products.

• Employees:
Microsoft consists of 113,616 employees globally of which 64,336 are located in
USA and 45,375 are located in the Puget Sound (Washington) area (Microsoft,
2016). A healthy revenue from enterprise software business will provide
additional cash to Microsoft to invest in its employees. A healthy enterprise
software business also ensure that employees do not get laid off and are
rewarded for their efforts.

Since its founding Microsoft has had a significant impact on society at large
(Stakeholders and Ethics, 2016), we take a further look at Microsoft’s ethical
practices to see how Microsoft is fulfilling its ethical considerations.
Overview of
Microsoft in Ethics and Corporate Social Responsibilities
Enterprise
Ethical concerns about information security in the era of cloud are addessed. In
Software the ‘Standards of Business Conduct’ document (Micros oft, 2016) the core values
Industry of Microsoft are detailed as:
Integrity and Honesty: Microsoft has a strict work compliance policy course
which each employee is expected to complete. Furthermore, there is a toll-free
business conduct hotline which helps in reporting ethical issues.

Open & Respectful: Microsoft has upheld this value to a certain extent by
publishing their privacy and information security policy regarding cloud
computing in their ‘Standards of Business Conduct’ document.

Accountable: Micros oft has strict anti-corruption policies. According to the

policies, no Microsoft employee is allowed to launder money or engage in
corrupt practices across the globe.

Passion: Since Nadella took over he has started several Socratic initiatives such
as “a cloud for good”, “CityNext”. These, indicate a considerable level of passion
to uphold high standards in society.

Big Challenges: Several initiatives have been taken to ensure that enterprise
software technologies are being used for the good of the society:
• Microsoft is empowering communities by providing free mobile
technologies.
• A cloud for good: Nadella announced this initiative to provide data privacy
and security against cyber-crime to its customers. (Bates, 2016)
3
 Enterprise Software Industry Analysis – Porter’s Five Forces
According to (Strategy
Forming Concepts) Chapter 8
of the textbook, planning is a Supplier
three-step activity in most Power
organizations, determining
organization’s mission and
goals, formulating strategies,
and implementing strategies.
When formulating strategies, New Industry Substitu
managers analyze the Entrants Rivalry tes
organization’s current
situation and then conceive
and develop the strategies
necessary to attain the
organization’s mission and Buyer
goals. Power

We used Porter’s Five Forces Model to have a

thorough understanding about the enterprise
Overview of software industry, which Microsoft is currently
Microsoft in in. And then we can fully understand how
Enterprise Microsoft should act accordingly to the industry.
Software
Industry The threat of new entrants is Moderate

Companies like Microsoft, Google, Apple have achieved economies of

scale. The cost to design and develop enterprise software is extremely
high due to the large amount of time it takes to do so successfully and the
limited availability of people who possess the required proprietary
knowledge.

The high cost of developing the brand of a technology business weakens

the effects of new entrants on companies like Microsoft Corporation.
However, the moderate cost of developing such a business presents
considerable chance for new entrants to find success in competing in the
enterprise software market.

The threat of substitutes is Low

There are few substitutes that can replace enterprise software

applications and services. Substitutes, such as non-online or manual-
mechanical processes, tend to have lower performance compared to
Microsoft’s current products. Based on this aspect of the Five Forces
analysis, the weak force of the threat of substitution is a minor issue in
Microsoft Corporation’s industry environment.

4
 The bargaining power of suppliers is Low

Enterprise software applications are intellectual and intangible products.

Compared with physical products, there are fewer suppliers with whom
the companies must negotiate. Microsoft, as a global market leader, the
supplier power is even lower.

The moderate size and population of suppliers enable them to impose a

significant but limited influence on Microsoft’s business. The moderate
overall supply also creates a significant but limited force on Microsoft. The
intensity of this force could increase if the overall supply decreased.

The bargaining power of consumers is High

Microsoft needs to continue satisfying customers, who significantly

determine the company’s performance. Microsoft must respond to the
moderate force of the bargaining power of customers.

The low substitute availability represents the difficulty of access to

effective substitutes to Microsoft’s products. For example, customers face
difficulties in finding non-computer-network solutions that are as effective
and efficient as the company’s products. However, the moderate switching
Overview of costs create a considerable force on Microsoft’s business. Because of this
Microsoft in intensity of switching costs, customers have a considerable tendency to
Enterprise shift from the company’s products and start using other firms’ products,
Software instead. The external factor of the high quality of information further
Industry empowers buyers in terms of adequate information that they can use to
compare Microsoft’s enterprise software products to competitors.

The industry rivalry is High

Microsoft needs to effectively compete to remain successful. This aspect

of the Five Forces analysis determines the effects of firms on each other
and the related conditions of the industry environment.

Moderate switching costs have a corresponding moderate influence on

Microsoft’s business. For example, customers have a moderate tendency
to shift to other firms’ products. While such shifting is not easy, companies
upgrading their systems could opt to use enterprise software products
from Microsoft’s competitors. On the other hand, the high aggressiveness
of firms leads to a strong force that significantly affects the company’s
industry environment. These technology firms are aggressive in terms of
their rate of innovation and their marketing campaigns. Microsoft must
also consider the strong force based on the high diversity of firms. For
example, the company must innovate products that compete based on a
wide variety of features showcased in other firms’ products. In this aspect
of the Five Forces analysis of Microsoft, external factors support the strong
force of competitive rivalry, which is a priority issue in strategic decision-
making.
5
 Conclusions from Porter’s Five Forces Model

Suppli
er
The results of this Porter’s
Power
Five Forces analysis of
Microsoft put focus on
competitive rivalry as the
strongest force affecting New Industr
the business and the Substit
Entran y
enterprise software utes
Overview of ts Rivalry
industry environment. In
Microsoft in this regard, the company
Enterprise must implement strategies
Software that boost competitive
advantage. Buyer
Industry Power

For example, Microsoft must increase its research and development efforts,
along with improved product development, to maximize competitiveness against
other firms’ products. Innovation also supports Microsoft’s generic strategy and
intensive growth strategies. This Five Forces analysis shows that the company
must include the bargaining power of buyers, the bargaining power of suppliers,
and the threat of new entry in strategic formulation. These three forces have a
moderate and significant effect on Microsoft’s performance. The threat of
substitutes is a minimal consideration, although Microsoft can also work on this
force to enhance product attractiveness.

Levels of strategies
Business-level

Corporate-level According to Chapter

8 of the textbook, in
large organizations
3 Levels of planning usually takes
Strategies & place at three levels
of management:
Organizatio corporate, business
nal Culture Functional-level or division, and
functional.

After using Porter’s five forces model to do the industry analysis, we can see
that Microsoft did realize that it could catch up the mobile and cloud trends to
regain its competitiveness in enterprise software industry. And this decides the
fundamentals of their corporate-level strategies.
6
 3 Levels of Strategies

Corporate-level Strategies – in which industries to compete

• Mobile first, Cloud first mantra

Nadella's first public move at Microsoft was to release Office apps for iPad and
make editing Office documents free on the iPhone and Android, a big change
from the previous regime where Office for other platforms was clearly not a goal.
Apple had tried to position the iPad as a post-PC device that could replace a
laptop in most ways, but without official Office apps from Microsoft, the device
didn't have the same appeal in the eyes of the enterprise customers. While the
old Microsoft would've been happy with that situation - holding back apps and
features in the hope users will end up moving to Windows - Nadella's Microsoft
has shown it is happy to meet users wherever they are present (Branscombe,
2014). Microsoft learned to look beyond Windows, and is shipping apps for
Apple's iOS and Google's Android, something that would've been unthinkable a
couple of years ago. Till now, Microsoft has released nearly 80 Android apps and
it has over 100 apps active on Apple's App Store (Dua, 2016).
• Cloud-computing platform supports Linux
15-years after Ballmer termed Linux as “a cancer”, Microsoft has joined the Linux
Foundation. Microsoft has been steadily embracing open source recently,
3 Levels of leading it to become the top organization with the most open source
Strategies & contributors on Github. Microsoft’s cloud platform- Azure’ will now support Linux
Organizatio and John Gossman, an architect on the Azure team, will join the Linux
nal Culture Foundation Board of Directors. (Dua, 2016).
• Windows Universal App platform – Windows 10
Nadella decided to implement a Windows Universal App platform, through which
Windows apps work on all Windows 10 devices- from PCs to mobiles. Hence
Microsoft’s internal product teams don’t have to compete with each other
anymore (Branscombe, 2014).

Business-level Strategies
• Low-Cost Strategy
We see Microsoft’s free upgrade for windows 10 as a leverage of Low-Cost
Strategy. Since Microsoft already has a 3-4 thousand engineers and product
managers in its core team for system development, the cost for Microsoft to
upgrade a system is comparatively lower than any competitors who wants to
compete in operational system market. And obviously, the strategy worked
because of the good feedback of Microsoft from the market. we avoid to discuss
Apple here because their sale of system and hardware is bundled.

• Differentiation Strategy
According to figure 1 Gartner’s Magic Quadrant, both Amazon and Microsoft are
leaders in the Market. But what Azure offers, thanks to Microsoft’s strength in
enterprise software, is a seamless hybrid solution in terms of implementation
and integration with tools companies are currently using.

7
 Functional-level Strategies
Year 2010 Year 2015

Windows & Live

Windows
Windows & Devices
Server & Software
Group

Online Services Cloud & Enterprise

Application &
Microsoft Business
Services Group
Entertainment &
Devices
One major functional level change brought by Satya is in product development
function, which is critical in Microsoft’s internal value chain. In June 17, 2015,
Satya sent out an email both publicly and internally to announce the change of
Microsoft’s organization structure, as shown above.

WDG-Windows and Devices Group (WDG), focused on enabling more personal

computing experiences powered by the Windows ecosystem.
3 Levels of
Strategies & Executive Vice President Scott Guthrie will continue to lead the Cl oud and
Organizatio Enterprise (C+E) team focused on building the intelligent cloud platform that
powers any application on any device. The C+E team will also focus on building
nal Culture high-value infrastructure and business services that are key to managing business
processes, especially in the areas of data and analytics, security and
management, and development tools.

Applications and Services Group (ASG) focused on reinventing productivity

services for digital work that span all devices

Use of IT in Microsoft
Microsoft has recently admitted to using Linux (Open-source operating systems)
to run some of its internal IT operations. While most of Microsoft’s internal
networking is done using its own proprietary technology: Microsoft Azure, the
basis for the network is run on a Linux platform. This is a remarkable change
under current leadership since Microsoft has historically been quite hostile
toward open-source technology.

To make the organization

more competitive, Azure is
more and more widely used
internally as an important IT
infrastructure in Microsoft’s
business operation and
product development.
8
 The most innovative IT strategies under Nadella’s leadership include (Finley,
2015):
• Since 1997, for the first time Microsoft is using open source technology to run
its Azure networking operations.
• There has been a remarkable shift in attitudes toward open source technology.
From one of hostility to openness.
• Linux is also offered as an option to Azure customers and this shift, has been
instrumental in greater adoption of cloud technologies.

Organizational Structure Change

According to Chapter 10 in
Contemporary Management,
organizational structure design is
affected by organization
environment, technology, strategy
and human resources. And we will
analyze from these four perspectives.
As mentioned previously, upon Satya Nadella’s business strategy of creating
more personal computing, reinventing productivity & business processes and
building the intelligent cloud, organizational change took place accordingly. The
3 Levels of technology strategy of Microsoft is becoming more open, and it includes
Strategies & promoting data connectivity, open source communities, open connections and
enhancing support from industry standards.
Organizatio
nal Culture Satya also brought change in management team to optimize human resources.
There was a big change in 2015 in management team, there were got leaders
promoted and left.

Change Method
The organization change from Microsoft is top down and evolutionary.
The reason for the top down change method. According to a comment from one
staff who’s been Microsoft for more than 15 years, a general impression of the
previous leader and the new leader would be “Steve Ballmer obviously has more
attachment to the organization and the brand itself, that is why he was so
decided to compete against Google and Apple. He’s passionate, perhaps we will
never have any CEO who can be so excite about the brand, but it is clear that
there is something wrong of his vision of the technology industry and the
organization”. But for Satya, he apparently has a better sense in business and
knows how to play in the market.
The management team reorganization led to changes in mid and lower level of
the organization in terms of human resources and structure.
And it is easy to explain evolutionary because the size and impact of Microsoft is
too enormous for it to take revolutionary change. The resistance force of
revolutionary change will be more than evolutionary as well. The last reason is
that the financial status of Microsoft is and will remain healthy and stable just by
selling license of operations system and office product.
9
 Organizational Culture Evolution

In addition to organization structure change, Satya also initiated culture change

within the organization. According to the text book Contemporary Management,
organizational culture comprises the shared set of beliefs, expectations, values,
norms, and work routines that influence how members of an organization relate
to one another and work together to achieve organizational goals. Microsoft
changed its mindset and made it more growth focused. As shown by Chart1.3,
the new culture centers on customer, diversity and unity.

• Customer Obsessed
Software engineers are encouraged to think more
than just build something upon past success.
Customer
Windows 10 won a good reputation in the market
Obsessed
according a report by Business Insider, one of the
reason is its new “customer obsessed” windows 10
was set free under this new company value.

• Learning with a
beginner's mind
• Boundary spanning

3 Levels of
Strategies & • Diverse and Inclusive
Organizatio Microsoft used to hold a negative attitude towards
nal Culture open source software but Satya changed the
Diverse and
mindset, for example for Linux, which Microsoft
Inclusive
used to hold a negative attitude, is now embraced
by Microsoft. Microsoft also turned some of its
most competitive rivals into partners including
Salesforce and Oracle. Microsoft used to see these
• Open to learning two companies as threaten but now they decided to
and changing work together.
• Value differences

• One Microsoft
Engineers were inspired by the new unification of
the technology standard of windows 10 among
One
different devices. It has become easier for them to
Microsoft
transfer apps from one device to another different.

• Single and shared

mission
• Ability to work
together
• Collaboration
10
 How Nadella’s Leadership Competencies Foster Strategies

Building
Dynamic Core
Competencies

• Satya Nadella took over the reins of Microsoft’s workings and with this
change came numerous changes in tasks, projects and working of the
company. Despite the needed changes, under Satya Nadella the company
has shown itself to be innovative, nimble, and a pragmatic operator.
• Market strengths of Microsoft have always been Operating Systems and
Office Tools and Nadella capitalized on them by taking the strengths on cloud
and mobile devices.

Emphasize
Strategic and Effectively
Leadership Use Human
Capital

• Microsoft’s culture was about not only employing smart and retaining most of
its work force, but building internal skillset by engaging, empowering,
optimizing and transforming talent pool to fit organizational needs. But layoffs
and failed ventures had dwindled employee friendly status of Microsoft.
Nadella brought that status back being more transparent and gaining trust of
his employees ultimately motivating them to work harder.
• One of the first things that Nadella did post the change in leadership was
announcing divisional leaders and goals in new sections of market that
Microsoft was targeting in the next five years and announced shut down of
some sectors giving employees time to show competence in relevant domains
or find an organization that would need their skillset.

Invest in
Development
of New
Technology

11
 • Under Nadella, Office has expanded from a set of document-editing tools
into a whole range of products and services that people actually enjoy
using, from Microsoft Outlook on the iPhone to the funky futuristic
GigJam work-sharing app. It is a new age of development under Nadella.
• Innovate smart and grow fast has become a corporate mantra these days
and Microsoft under Nadella banks on it effectively. In the current market
scenario new and cutting edge technology has become a demand rather
than unique selling point for any firm and hence has become a challenge.
Innovation needs thinking on your toes and thinking out of the box, which
needs to be inculcated in workforce these days rather than just hunting
from people with that skillset. Microsoft has successfully leveraged on its
workforce and has stepped up in terms of technology advancement
constantly. It recently created a wave in the market with its new Surface
Studio and this is just one of many innovative steps it has taken recently.

Build and
Maintain an
Effective
Organization
Strategic Culture
Leadership

• A strategic leader always places emphasis on core values of innovation,

learning, and valuing human capital and team actions all contributing to
organizational culture and goal and Microsoft under Nadella maintains a
culture that envisions futuristic concepts like ‘Vision 2020’ and ‘Cloud for
Office’.
• With a high retention rate of employees it keeps its employees motivated
by developing a sense of belonging and innovation.
• Since Nadella moved up the ladder in Microsoft itself, he knew the pros
and cons of the firm and strategized his change management strategies by
understanding strengths, weaknesses, opportunities, and threats of and to
Microsoft aka performing SWOT Analysis.
• Also "One of Satya Nadella's favorite quotes is 'culture eats strategy for
breakfast. At Microsoft, under the new leadership there has been a change
from a very fixed mind set, know-it-all culture to a more of a growth mind
set, learn-it-all culture. Where there's an openness to learning, the pursuit
of acquiring knowledge, rather than imparting your knowledge on others.
• Being a techy himself he attacked the most futuristic technologies that
Microsoft could envision with its current skillset and just the right amount
of push maintaining the core culture and motive of the company -
Everybody gets a say and we listen to everybody and then...we build a
product that will do everything.

12
 Engaging in
Valuable
Strategies

• For the longest time, Microsoft's mission was to put "a computer on every
desk in every home." Of course in Microsoft's world, that computer ran
Windows. In June 2015, Satya Nadella revealed a new mission statement
that's now printed on the back of every employee badge: to "empower
every person and every organization on the planet to achieve more.“
• Ballmer bought Nokia in hopes of entering the Mobile domain and building
an industry value similar or more than that of Apple and Google, while
Nadella changed his course from building independent mobile units to
building application base to include Android and iPhone applications on
windows OS giving Windows enabled tablets and existing Lumia series not
just a chance to survive, but build base for promoting Surface series. He
also found a way of giving office products a way to penetrate iPhone
market.
• One of the first public moves of Nadella's Microsoft was to release Office
apps for iPad and make editing Office documents free on the iPhone and
Strategic Android, a big change from the previous regime where Office for iPad was
Leadership clearly not a priority.

CEO Approval Rating

44% 93%

CEO Approval rating percentage

•Approval Rating: Ballmer vs Nadella

Nadella enjoys a staggering 93 percent approval rating among current and
former Microsoft employees, well above the industry average. Ballmer's
approval rating was 44 percent when he left the company. (Dua, 2016).

13
 SWOT – Current Situation Analysis

Strengths Weaknesses

Brand loyalty & reputation Missed the emergence of Internet

User-friendly products Missed the mobile computing wave
Product division structure Slow to innovate

Opportunities Threats

Cloud-based services Intense competition

Mobile device industry Changing consumer behavior
Growth with acquisitions

Strengths:

SWOT & • The biggest strength of Microsoft is that it has top of the mind brand recall
among all the PC (personal computer) users in the world.
Suggestions
for • The other strength and a core competency of its business and readymade
Microsoft acceptance by the users of its products is that Microsoft’s software is easy to
use which has won it an increasing base of customers around the world. It can
also be said that Microsoft and Bill Gates have spawned what can be called a
“Second Industrial Revolution” by making computing available to the masses.

• To better align its capabilities, Microsoft organized its engineering effort into 3
groups that work together to deliver their business strategies and ambitions,
which enabled Microsoft to operate more efficiently and react more quickly to
market changes.

Weakness:

• The biggest weakness of Microsoft is that its fabled team did not anticipate
the emergence of the internet as a phenomenon that would take over the
world in addition to reading the market signals about mobile computing. In
case of the former (internet), Microsoft was slow to respond and even when it
did, it was in a manner that attracted monopolistic charges which in earlier
years were the mainstay of the company.

• As for mobile computing, Microsoft completely missed this wave and indeed,
the success of the other computing revolutionary, Steve Jobs and his Apple
Company appeared to blindside Microsoft so much that it has even now failed
to come up with a compelling Smartphone device or operating system.

14
 Opportunities:

• Though Microsoft failed to read the emergence of the internet and was
completely taken aback by the mobile wave, a ray of hope that is still visible to
the company is in the cloud-computing paradigm, which the company is
betting big to take on the competition and regain its leader position.

• The company has a huge cash hoard which means that if it cannot grow
organically (through normal growth) it can still grow inorganically (through
acquisitions) of smaller companies that have good business prospects.

Threats:

• As can be inferred from the industry analysis so far, Microsoft’s biggest threat
is that it’s facing very intense industry competitiveness right now. Microsoft is
a giant, which, however, prevents it from being quick and nimble and seize
market opportunities by proactively reading market signals.

• Customer bargaining power has been increasing nowadays and Microsoft

should always focus on providing customer-centric services and enterprise
software applications to maintain its global market leader position.

SWOT &
Suggestions Conclusions from SWOT Analysis
for In a nut shell, the strengths and opportunities far outweigh the weaknesses and
Microsoft threats. However, the preceding analysis has made it clear that Microsoft cannot
afford to misread emerging trends and changing customer preferences anymore.
Instead, it must be in a position where it senses and intuits market moves and
prepares to act accordingly.

After having a thorough understanding about Micros oft current situation

regarding to the enterprise software industry, we can give out our
recommendations.

Corporate-level & Business-level Recommendations

The enterprise software market is highly competitive. Microsoft needs to focus
on `flexibility’, `speed’, and `responsiveness to customers’ in order to build a
stronger competitive advantage (Jones & George, 2015). Microsoft is already
strong in the other competitive advantage elements: `superior efficiency’,
`quality’ and `innovation’.

`Flexibility’
• There are various licensing challenges that enterprises face when buying
Microsoft software for use (Foxen, 2015). Microsoft can streamline its
licensing model to make it straightforward for companies to adopt. Many
small businesses use Google products (Google apps for work). For example,
Google apps for work has only 2 pricing options whereas Office 365 has 7
pricing options which can turn customers off (Singleton, 2016).

15
 `Speed’
• Microsoft does some great research but the process of commercializing these
research findings into consumer facing products should be accelerated. This
will ensure Microsoft remains competitive in the fast-moving tech market. It
gives Microsoft the first mover advantage to capture greater market share.

`Responsiveness to specific customers’

• Compared to its main competitors like Google and Apple, what Microsoft lacks
and needs badly is the user information. Despite the LinkedIn efforts, another
action can be taken in mailing applications segment. For example, Gmail has
900M active users while Microsoft Outlook Mail has only 400M active users
(Ravenscraft, 2016). Microsoft must try to improve competitive advantage in
this area and increase the number of active outlook users. This would help
Microsoft to compete effectively with Google. As more people use Microsoft’s
outlook email, they will also use more Microsoft products such as Office 365.
As Microsoft is the creator of Office software, gaining competitive advantage
over Google drive, which uses office file formats should be achievable for
Microsoft.

Recommendations for Change Management

Current change in Microsoft has been proved to be a success in terms of its
Market Value in stock market and its feedback from consumer. We think
SWOT & Microsoft should keep on changing on current track.
Suggestions For Organizational Structure Change, compared to its competitor Google and
for Apple, Microsoft has more hierarchy in its organization structure. As mentioned,
Microsoft the product division structure is waved into the global structure, which makes
the communication between department slow. The “One Microsoft” transition
therefore, is what we think critical to Microsoft to get rid of its previous struggle
in hierarchy.
According to our interview of Microsoft employee, the development efficiency of
Windows core team could be hindered by long communication chain. Microsoft
needs to find a way to be more flexible. Either Google’s comparatively flat
structure and/or Apple’s Spoke-and-Wheel structure during development stage
can be followed. Therefore, employee in different teams will have better visibility
towards stakeholders within the organization.
For Culture Change, We have seen many good signs of change in respect to
organizational culture. And we think as the key of technology industry has been
set as open and collaborative by giants like Google and Facebook.
Microsoft should continue changing to become more open both internally and
externally. Internally, though Microsoft has program called “Garage” to
encourage innovation during off time, more actions should be taken to allow
teams to see Microsoft as a whole and to add-value upon this understanding.
Externally, in addition to acquisition and working together with downstream
implementation partners, Microsoft should also be smart and take advantage of
the expertise of each company. For example, developing Office in IOS system is
an example of that. We believe that a positive and collaborative attitude towards
technology industry will strengthen its position.
16
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