Microsoft: Principles Of Management

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Microsoft Corporation

Principles of Management

Organizational Context

Bill Gates and Paul Allen founded Microsoft on April 4, 1975 in Albuquerque, New Mexico. Their mission statement is “to empower every person and every organization on the planet to achieve more.” They employ a total of 265,521 employees. Redmond, Washington is the home of their headquarters and they have 123 subsidiaries worldwide. Their products consist of Microsoft Windows operating system, Microsoft Office suite of productivity software, Xbox, a line of entertainment games, music and video and Bing, a line of search engines (Facts About Microsoft, 2018).

The environment in which the Organization Operates

Task Environment

Microsoft’s products are designed for businesses and home use customers. The Microsoft Supplier Program is used to supply their products to the customer. The objective is to: Enable new efficiencies for both Microsoft and suppliers, brining new value to the relationship that we are building together (The Microsoft Supplier Program). Their main competitors are Apple, Google, Statutory Accounting Principles and Oracle (Who are Microsoft’s (MSFT) main competitors, 2018). To comply with legal regulations they use the Principle for Engagement in the Public Policy Process in the United States. It states, “Corporate participation in the public policy process is an important and essential means of enhancing shareholder value and is fundamental to free and democratic societies. Microsoft engages with governments around the world on public policy issues that are core to our business. We believe our engagement serves our business interests and also creates, stronger, more informed public policies” (, 2018).

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General Environment

Microsoft operates and provides product to many countries, which will have a huge impact on the different sub-categories of a general environment. The general environment consists of the economy and the technological, sociocultural, and political/legal trends that indirectly affect all organizations (Williams, 2018). A change in one of the listed factors could impact the success of the company. The development of a specific environment will help a company adapt to these changing trends. The Specific environment is defined as the customers, competitors, suppliers, industry regulations, and advocacy groups that are unique to an industry and directly affect how a company does business (Williams, 2018).

Organizational Form

Microsoft is an organic organization with a product departmentalization structure. They are divided into an Engineering Group and Business Functions. The Engineering group has four Subdivisions, which include; Cloud and Enterprise Engineering, Office Products, Window and Devices and Technology and Research. The Business Group has nine subdivisions which include; Business Development Group, Corporate External and Legal Affairs, Corporate Strategy and Planning, Finance Group, Global Sales Marketing and Operations, Human Resources Group, LinkedIn, Marketing Group, and Worldwide Commercial Business. Geographic departmentalization is represented in their corporate structure with segments in the United States and international.

Microsoft Corporation’s organizational structure is based on its ability to concentrate on product development. For instance, their Intelligent Cloud division offers state of the ark computing services. An advantage to their structure is the ability for the competitiveness of Microsoft’s products. A disadvantage is regions have different preferences for Microsoft’s computer hardware and software. An example is there is little regional consideration for smartphone cases. Offering regional market differences in its structure would be an added advantage.

Organization’s Mission and Goals

Microsoft’s vision “is a technology company whose mission is to empower every person and every business on the planet to achieve more. We strive to create local opportunity, growth and impact in every country around the world” (Nadella, 2017). They are creating innovative products & services designed to fit the need of the user. The three major goals of the company are to reinvent productivity and business process, build the intelligent cloud platform and create more personal computing. Their vision and goals has led to their success and help them maintain a competitive advantage. Microsoft founders Bill Gates and Paul Allen understood the future of personal computer was software. Today, they are the leaders in technological advances with the industry.

Organizational Strategy

Microsoft’s strategy “is to build best-in-class platforms and productivity services for an intelligent cloud and an intelligent edge infused with AI.” AI could reinvent productivity and the business process. An intelligent cloud may also create more personal computing. “The way individuals and organizations use and interact with technology continues to evolve. A person’s experience with technology increasingly spans a multitude of devices and becomes more natural and multi-sensory with voice, ink and gaze interactions. We believe a new technology paradigm is emerging that manifests itself through an intelligent cloud and an intelligent edge where computing is more distributed, AI drives and acts on the user’s behalf, and user experiences span devices with a user’s available data and information” (Nadella 2017). Microsoft is attempting to bridge the gap on the relationship between humans technology. Its relationship with the environment in which it exists is relevant because they are attempting to simplify the use of technology.

Organizational Structure

Product departmentalization organizes work and workers into separate units responsible for producing particular products or services (Williams, 2018). Microsoft underwent a structural change in 2015 that focuses on business output.

They have four product types divisions, which are: Productivity and Business Process, Intelligent Cloud, More Personal Computing, Corporate and other. Additionally, they have Global Corporate groups. There are thirteen to include: Office of the CEO, Worldwide Commercial Business, Marketing, Microsoft Global Sales, Marketing and Operations, Corporate Strategy and Operations, Microsoft Cloud and Enterprise Group, Human Resources, Finance, Business, Development, Applications and Services Group, Windows and Devices Group, Technology and Research, Legal. “These groups are based on the functions essential in the computer technology business. For example, the Human Resources group addresses the company’s workforce needs and related concerns. This structural characteristic ensures that the organization functions as a whole” ( Geographic segments are another component of Microsoft’s structure. The United States and internationally are grouped separately for the use of financial reports.

In 2015 Microsoft underwent a structural change that focuses on business output. Its focus on product development will help keep them competitive amongst their competitors. A disadvantage is the lack of consideration for regional market differences. “Regions have varying preferences with regard to Microsoft’s computer hardware and software features, such as in the case of smartphones” (

Control Features used by the Organization

Control measures are used to sustain the company’s success and it is implemented through pre-control, concurrent control and feedback control. Microsoft’s hiring process is an example of pre-control. Their website list what they are expecting from future employees. Additionally, it lists how prospective employees will benefit by for working for Microsoft. An informal control would be the interview process. At first the candidate will go through a phone interview to ensure it is worth their time and yours for a further on sight interview. The on sight interview usually last between six to eight hours consisting of multiple rounds of question and answer sessions. The policies Microsoft has implemented to insure their quality of their products and employees would be a concurrent control. Microsoft’s CEO, Satya Nadella stated in a letter the expectations and standards that are expected everyday from employees. “Making good decisions and ethical choices in our work builds trust in each other and with our customers and partners. You should never compromise your personal integrity or the company’s reputation and trust in exchange for any short-term gain” ( How Microsoft’s performance in the marketplace is an example of a feedback control. They produce a quarterly and annual earnings report, which allows them to see their weaknesses and strengths.

Organizational Culture

There are five components listed on Microsoft’ mission and culture page that have led to their success in implementing an organizational culture. These factors consist of: growth mindset, customer obsessed, diversity and inclusion, one Microsoft and making a difference. Microsoft implemented a growth mindset with a culture reset when Nadella took over as CEO. With this key insight, Nadella made lifelong learning a priority at Microsoft–it’s even highlighted on employee badges. The focus shifted from “Know it all to learn it all” ( Microsoft is customer obsessed by innovating new solutions by listening and adapting to customer needs. The benefits of a diverse culture and its impact on business is understood and implemented by Microsoft. “We don’t just value differences, we seek them out. We invite them in. Microsoft is a place where employees can be who they are. We value diverse perspectives and as a result, we have better ideas, better products and happier customers” ( The Microsoft cultural model is the foundation for their success.


Satya Nadella was appointed as Microsoft’s Chief Executive Officer on February 4th, 2014. Under his leadership he encourages employees to continue learning and be creative. With this key insight, Nadella made lifelong learning a priority at Microsoft—it’s even highlighted on employee badges (

Microsoft is now in their fifth year of hosting Hackathons. Senior leadership and the heads of each division get to look at employees potential in promotion or moving them to different teams. Hackathons also allow employees the opportunity to work on their leadership by collaborating with other departments to develop new ideas. These programs are unleashing greater potential across the company and may well be instrumental in attracting new people (Pyne, 2016).

SWOT Analysis (SWOT Analysis and Implications)


  • Effective Leadership. Nadella’s leadership has proven to be effective. His cultural restructuring of the company has led Microsoft’s continued success.
  • Reputed brand. Microsoft’s brand name is trusted and proven within the industry.
  • Cloud sector leadership. Microsoft’s is the leader in creating cloud base services.
  • Product portfolio. They have a diverse portfolio that allows profit from multiple companies and products.


  • Legal issues. They are the defendants in various legal cases against them for product design and other contracts, employment or intellectual property issues.
  • Innovation. Users complain that Microsoft upgrades its products but nothing new from the bottoms up is innovated.
  • Cybercrime. The windows operating system is the target of numerous cyber attacks annually.
  • Internet Explorer. Other browsers such as Google Chrome have become more popular with users.


  • Strategic alliance.  This will create a competitive edge for the development and innovative of new products.
  • Greater cybercrime security. Users would welcome improved product security features to prevent cybercrimes.
  • Hardware innovation. Competitor’s hardware products are performing stronger in the marketplace.


  • Competition. The industry is very competitive and faces stiff competition.
  • Pirated Products. This is a major threat company in its software front. Developing nations are largely responsible for the illegal reproduction of Microsoft’s products.
  • Changes in Technology. The industry is constantly advancing and a company can quickly fall behind in the market if it does produce innovative products.


Microsoft’s business model and contributions has led them to be one of the recognized leaders within their industry. A recommendation is that they continue innovations to strengthen their company image. Microsoft must continue to seek out partnership with other with other companies, which will help create positive externalities. They must develop new strategies to prevent cybercrime and illegal pirating of their product. Additionally, they should boost hardware development to increase financial gains in this area.


  1. Facts About Microsoft. (n.d.). Retrieved Dec 2, 2018, from com/facts-about-Microsoft
  2. Microsoft Corporation’s Organizational Culture & Its Characteristics (An Analysis) – Panmore Institute. (2017, February 21). Retrieved from
  3. Microsoft Corporation’s Organizational Structure & Its Characteristics (An Analysis) – Panmore Institute. (2017, February 21). Retrieved from
  4. Nadella, S. (2017). Letter to Shareholders. Microsoft Corporation Annual Report 2017.
  5. Pyne, S. (2016) “Leadership lessons from Microsoft CEO Satya Nadella” Business Insider, Available at: Microsoft-CEO-Satya-Nadella/articleshow/51528081.cms
  6. (2018). Retrieved December 2, 2018, from
  7. Vander Ark, T. (2018) “Hit Refresh: How A Growth Mindset Culture Tripled Microsoft’s Value” Forbes, Available at: tomvanderark/2018/04/18/hit- refresh-how-a-growth-mindset-culture-tripled- microsofts-value/#601f848a52ad
  8. SWOT analysis and implications. Journal of Management, 29(6), 801-830 “The Microsoft Supplier Program.” Microsoft Supplier Program. Retrieved December 2, 2018, from
  9. Who are Microsoft’s (MSFT) main competitors? January 8, 2018. Retrieved December 2, 2018, from microsofts-msft-main-competitors.asp
  10. Williams, C. (2018). Principles of Management (10th ed). Boston, MA: Cengage. 


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