Strategic and Ethical Issues in Microsoft Assessment Answer
STRATEGIC AND ETHICAL ISSUES AND RECOMMENDATION
In this present era, an effective strategic management has become inevitable for organisational success. A better strategic management not only offers an objective view of the problems regarding management but it also offers a better support to the established objectives so that it can be effectively achieved. For business that operates in multiple countries, strategic issues are one of the common facts because the organisational environment is different in different countries. Therefore, no particular strategy can offer a better solution. Along with the strategic issues, ethical issues can be created in an international organisation because ethical consideration is different in different countries. For this reason, a better strategic management is important in an organisation. This assignment sheds lights on the strategic and ethical issues that are created in an international organisation.
Strategic management of an organisation mainly focuses on how an organisation can use strategic planning for making a decision. For the increasing success of an organisation, every managerial action must be linked to the vision, corporate goal and mission of an organisation. For maintaining business internationally, facilitating effective strategic management and following practical ethics is highly essential. Despite a good focus towards maintaining better ethics and implementing effective strategic management, an international organisation can face strategic and ethical issues. The main reasons behind these issues are differences in the external and internal environment in different countries and ineffective planning to resolve the issue. For discussing the ethical and strategic issues faced by an organisation, Microsoft has been considered here.
Identification and description of a global and international organisation:
The organisation that has been identified here is Microsoft. Microsoft is an American technology-based organisation that operates in multiple countries (Fortune, 2019). The organisation is belonging to computer hardware, computer software; cloud computing, internet, consumer electronics and corporate venture capital. The headquarter of the organisation is located in One Microsoft Way, Washington (Fortune, 2019). Paul Allen and Bill Gates founded the organisation. In the year 2016, the organisation has become the largest software development company in the world based on revenue. Microsoft is currently ranked as 29 among 500 largest companies in the USA based on the revenue.
Figure 1: the rank history of Microsoft
(Source: Fortune, 2019)
The products that are offered by the organisation are an office, windows, Skype, servers, visual studio, Xbox, mobile, surfaces and different types of software. The services that are offered by the organisation are Microsoft store, Azure, LinkedIn, Bing, Xbox live, TechNet, GitHub, OneDrive, MSDN, Office 365, Pay, Windows update, Xbox game pass etcetera.
The organisation has hired 131000 numbers of employees in their organisation so that they can generate sufficient productivity. In the year 2018, the organisation has made revenue of US$110.4 billion. The change in revenue per cent is 22.7%. Presently, the net income of the company is US$39.2 billion. The profitability that has been achieved by the organisation is $16.571 billion (Fortune, 2019). The asset of the organisation in the year of 2018 is $258.8 billion (Fortune, 2019). The operating income of the company is US$43.0 billion. Microsoft is run by the board of directors that are made up by the outsiders of the organisation because the organisation is one of the public traded organisations. In April 2019, the valuation of the organisation has become $1 trillion that has made the technology giant in securing the third position among the USA based organisation after Amazon and Apple (Fortune, 2019). The CEO of the organisation is Satya Nadella, who has helped Microsoft in focusing on their fast-growing cloud computing services rather than their operating system (Fortune, 2019). Due to this strategy of the organisation, Microsoft has achieved sufficient profitability in their organisation. In fiscal 2018, Microsoft has secured 14% growth in its revenue than the previous year. Earnings per share of the organisation in the 2018 fiscal year are $2.13.
Identification of the critical strategic issues of the organisation:
The vision of Microsoft is helping businesses and people in realising their full potential in all over the world. The vision statement of the organisation mainly shows how organisation present their computing products as well as businesses as tools that companies and people can use to achieve development.
The main strategies of Microsoft are:
Increasing focus on cloud computing, AI along with the subscription services
Promoting tech-intensity in the organisation
Focusing on the virtual and augmented reality
Providing focuses on acquisition and mergers.
For analysing the strategic issue, tripod strategy can be used. In the tripod strategy, the first part is the industry based view (Su et al. 2016). The industry-based view is associated with examining the industry environment. This view is associated to focus on the market’s external circumstances. Microsoft is facing an increasing level of competition from different cloud providers such as Google and Amazon, along with various software providers such as Salesforce, SAP, and Oracle, along with IBM. For achieving a sustainable competitive advantage in this market condition, a winning strategy of communication is necessary (HuffPost, 2019). It has been observed that over the past few years, Microsoft has made several mistakes in developing and maintaining communication with customers (HuffPost, 2019). As an example of their ineffective strategy, it can be said that the organisation has waited almost four years after the launch of the iPhone for launching their own modern Smartphone operating system (HuffPost, 2019). Moreover, the organisation has also taken two years for launching its first tablets after the iPad.
For making their product popular among the customers, Microsoft did not take any effective approach to identify the market trends, competition level and the need of the customers. They have just followed the premium model approach in their different products such as phones, laptop, Xbox and tablets (Computer weekly, 2019). They have included Xbox game console in their different products that is costlier than the Play station 4 (Computer weekly, 2019). Moreover, they have included different premium software such as Hulu, Netflix and other apps to use which the customers need to pay $60 in every year basis. Therefore, overpricing of different key product such as windows phone, offie, Xbox one and surface can create difficulties for the organisation in attracting customers towards the organisation.
For remaining relevant in the highly competitive consumer market, identification of the authentic way in conveying notion for a particular product is highly essential so that it can attract users in using the product (Computer weekly, 2019). However, Microsoft has failed in attempting to make their product necessary or useful in this present technological wave (Computer weekly, 2019). This is because the organisation does not have an effective strategy in developing communication with the users so that they can convince their customers in using the product.
The resource-based view looks on the internal resources of an organisation; this view mainly focuses on how internal resources can be used in gaining competitive advantage (Xu and Ma, 2019). The CEO has provided a focus on the "mobile-first, cloud-first” strategy (HuffPost, 2019). Despite giving an active focus on the strategy, Microsoft has gained a failure on their windows phone section. Nadella has a good focus in looking into the strength of the business of Microsoft (HuffPost, 2019). Among different products of Microsoft, Microsoft office has an adequate level of productivity that offers good profitability to the company.
Along with that, the cloud service platform of the company is the area that can help Microsoft in gaining critical success (HuffPost, 2019). Despite providing more focuses on the developed product segment of the organisation in increasing profitability from it, the present CEO of the organisation provided focuses on developing the new business model by focusing on the product segment that is still developing (HuffPost, 2019). This strategy of the organisation is the main reason behind the failure of the mobile brand of the organisation.
Microsoft is not the only organisation that has the capacity in reinventing the business processes along with the productivity, but they are one of the loudest organisations that can show that they have the ability in facilitating invention (HuffPost, 2019). Among different products of them, office 365 is one of the products that deliver associated services as well as productivity tools to the users and the employees, but it has radically changed the way in using Microsoft office (HuffPost, 2019). However, it has been observed that the organisation has not included any new features in their office products that can attract customers.
For achieving success in the organisation, Microsoft has conducted several merger and acquisition so that they can get benefits from the acquisition (Foley, 2019). Microsoft has followed the acquisition strategy for integrating them with Nokia and Github (Foley, 2019). Though, the organisation has a capacity in identifying the best organisation from which they can get the highest possible benefits, but they do not have sufficient capacity in determining the way with the help of which they can identify the best strategy to integrate their services with the new organisation (Foley, 2019). Moreover, they have an ineffective strategy in implementing effective control to control the new platform that can create difficulties for them in getting the best result from the merger and acquisition.
The main goal of Microsoft is making Azure the only solution for every business around the world. For this reason, they have developed the “tech intensity” buzzwords. Satya Nadella just wanted to make more devices connected with the help of their Azure cloud platform (Windows central, 2019). The tech intensity strategy of Microsoft wanted to involve a number of companies in embracing technology that can make them compatible with the help of the positioning strategy of Azure (Windows central, 2019). Nadella has adopted an effective strategy in building their digital capability so that they can offer Azure services (Windows central, 2019). Microsoft provides this service by offering different supplying tools such as dynamics 365, Azure, along with other various platforms. However, it is seen that the organisation do not have any strategy to communicate their customers (Windows central, 2019). This fact can create difficulties for the organisation in communicating this service to the customers so that the customers can use the services of Microsoft.
However, Microsoft has a practical focus towards incorporating the virtual reality and augmented reality in the organisation (Microsoft Research, 2019). The research team of Microsoft mainly includes Christian Holz, Mike Sinclair and others who are associated with exploring different ways to generate a wide range of haptic sensation which can be fit in the hand-held VR controllers (Microsoft Research, 2019). Various technologies that are used by the organisation to involve the augmented and virtual reality are a haptic wheel, Claw, canetroller and haptic links. From the facts, it can be said that Microsoft has an efficient and innovative worker (Microsoft Research, 2019). Moreover, it can also be noted that the organisation has a practical focus in incorporating the virtual and augmented reality.
The last view is the institution-based view that mainly focuses on the possibility of broad view along with the cultural differences (Maclennan and Oliva, 2016). This view is highly beneficial for supplementing the resource-based view along with the industry-based view. The institution-based strategic issues that are faced by Microsoft are developing a culture that can build the future of the organisation (Guppta, 2019). The former CEO Steve, always encouraged a culture that mainly focuses on the improvement of the existing business or makes it alive. Windows is the main reason behind the success of the company, and another invention of the organisation is always centred on windows (Guppta, 2019). Despite pumping into the money on the research and development in improving windows to catch more profitability, the company is more interest to invest money on the XBOX. The current CEO Satya Nedella has more focuses on their business profitability, and he has focuses on developing a future where Windows is just one of the business components (Guppta, 2019). Though Nadella correctly knows that this strategy will not help Microsoft in achieving a dominant position, but he is still determining to gain profitability that cab creates growth for the organisation in another direction (Guppta, 2019). This fact creates a dramatic shift in the culture from their opening ecosystem.
VRIO framework is one of the strategic analysis tools that have been designed in helping an organisation in uncovering as well as protecting capabilities and resources that can be helpful for an organisation in securing long-term competitive advantage (Chatzoglou et al. 2018). VRIO is the acronym for the value, rarity, organisation and imitation. The VRIO analysis of Microsoft is shown below:
Figure 2: VRIO analysis
(Source: Knott, 2015)
|Valuable||Rare||Costly to imitate||Organised||Competitive advantage|
|Employees||YES||YES||YES||YES||Sustainable competitive advantage|
|Capabilities to communicate||YES||NO||NO||YES||Temporary competitive advantage|
|Culture||NO||NO||NO||NO||No competitive advantage|
|Innovation||YES||NO||NO||YES||Temporary competitive advantage|
|Financial condition||YES||YES||YES||YES||Sustainable competitive advantage|
|Capabilities to identify the market need||NO||NO||NO||YES||Temporary competitive advantage|
Employees of the organisation are valuable because it helps them in securing more innovation that is helpful for the company in achieving competitive advantage. The employees of the organisation are rare because it helps them in obtaining benefits. It is difficult to imitate the employees because different people have a diverse talent which is not possible to imitate. It is organised because it is helpful for the company in getting more value.
Capabilities to communicate:
The organisation has an active focus in developing communication with the customers and users so that they can get knowledge about the product of the organisation. However, they follow a straightforward strategy to maintain communication with users. For this reason, it is not rare or easily imitated. However, this element is organised because it creates value for the organisation.
The organisation do not have an active focus on culture so that it cannot create sufficient value for the organisation. For this same reason, the culture of the company is not organised.
The organisation do not have an active focus towards maintaining their previous culture to improve the existing products and providing emphasis on the developing segments so that it is not rare. This is because there are numerous organisations that provided their focuses on the developing business unit to achieve profitability, but there are very few organisation that sticks into their core products.
The organisation has a useful capability to invent a product so that it is valuable. As innovation creates a valid value for the organisation, so it is organised. However, the invention capability of the company is not rare because any company can facilitate a similar invention. For this reason, it is not costly to imitate.
The financial condition of the company is precious in maintaining sustainability so that it is highly valuable for the organisation and organised. The financial condition of the company is rare because any organisation cannot imitate it so quickly.
Capabilities to identify the market need:
Microsoft has an issue in determining the market need so that it is not a sufficient capability of the organisation. Moreover, the organisation is not organised because it is not valuable. Microsoft cannot identify the market needs so that they set overprice for their products that distract customers in buying their products.
Identification of the critical ethical issues of the organisation:
According to Harrison, Felps and Jones (2019), ethical issues are rising in an organisation that selects wrong alternatives among a set of other options. Presently, Microsoft is facing an ethical dilemma after they have signed a 480 million dollar deal with the US army. This fact has made their engineer very upset because they have encountered that the Hololense segmented reality technique of the company will be used to kill people. One of the main strategies of the organisation is providing more focuses on virtual and augmented reality technology (Umatiya and Umatiya, 2019). As part of this strategy, the organisation has signed a deal with the US government that has made the employees of the company dissatisfied because they think that it is not one of the ethical decisions made by Microsoft.
For analysing the ethical dilemma, appropriate theoretical frameworks will be used. In that case, the moral dilemma is the utilisation of the technology for military use (Umatiya and Umatiya, 2019). It is not ethical in using technology for military use because it can create a more devastating result. On the other hand, the utilisation of technology is highly essential for the US army because it offers them more safety.
For analysing the ethical dilemma, implementing stakeholder theory is essential. Stakeholder theory is associated to emphasise the interconnection among the organisation and different people who have stakes on the organisation such as customers, employees, investors, suppliers, government and community (Harrison et al. 2019). The stakeholder theory demonstrated the fact that the primary purpose of a business is to create values for not only the shareholders but for the stakeholders (Andriof and Waddock, 2017). From the ethical issues faced by Microsoft, it can be said that for creating more value of the organisation, Microsoft must consider the opinion of the employees along with the profitability of the shareholders. However, Microsoft did not inform their employees during making a deal with the US army (Umatiya and Umatiya, 2019). For reducing the resistance from the staff, it would be useful for Microsoft in describing the necessity of the project for the country.
Moreover, they should describe the ethics behind making a deal with the USA army, but Microsoft did not inform their employees during making the deal (Umatiya and Umatiya, 2019). The main objective of this project is developing, testing as well as manufacturing an excellent platform for the soldiers so that they can fight and train for increasing mobility, lethality and situational awareness’s (Umatiya and Umatiya, 2019). This technology is needed for US soldiers in increasing safety as well as security. Microsoft did not inform importances of this project; therefore, the employees have taken the deal in the wrong way.
However, Microsoft is creating value for the government because they are doing the project for the US government. However, Microsoft has described the purpose of this deal with the suppliers to get the right quality products (Umatiya and Umatiya, 2019). However, the designers, as well as the engineers, became mad to describe the fact to the corporation that they did not know they are working on a military contract. This deal is helpful for the shareholders in increasing their return on investments because it helps the shareholders in securing more value. Therefore, according to the stakeholder theory, it can be said that Microsoft has become failed to maintain the theory.
Three theoretical considerations:
Utilitarian ethics promote those activities that are associated with maximising the well being as well as happiness for most of the people (Herschel and Miori, 2017). Utilitarianism is the version of the consequentialism that mainly stated consequences of any action based on the wrong and right standards. According to utilitarian ethics, a person’s action is right if the consequences of the action are excellent.
From the perspectives of utilitarian ethics, the deal with the US army is wholly justified. This is because; it can help Microsoft in helping their home country in offering better support. Every country requires some technological weapon that can save them from different threats and protects them (Umatiya and Umatiya, 2019). Moreover, the deal can help Microsoft in securing more revenue. From this perspective, this deal is justified. However, the employees of Microsoft think that the use of new technology in war can create a more devastating impact.
According to the view of Microsoft, the military is generally controlled by the different civilian authority that includes the congress, executive branch along with the courts. Therefore, no tech organisation can be active here in addressing the legal issues or the public policy that is created by different new technology.
According to Paquette, Sommerfeldt and Kent (2015), deontological ethics is one of the ethical theory that describes the fact that the rightness or wrongness of an action depends upon a series of rules. This ethics provides particular emphasis on the relationship among the morality of human action as well as duty. According to deontological ethics, the activity of Microsoft in developing a deal with the US army is not good. This is because; utilisation of technology can create more terrible impact and create more life losses. Though technology utilisation increases safety, it increases the number of life loss of the opponent (Umatiya and Umatiya, 2019). The increased effectiveness of the weapons can create a danger for both parties involved in a battlefield. Every people have their ethics; therefore, before engaging them in the military project, describing the primary purpose of the project is essential.
Ethics as a virtue:
Virtue ethics mainly emphasise the virtues of character, mind, along with the sense of honesty (Hart, 2019). According to the ethics virtue, it is not good for Microsoft in involving this type of project because it can create a bad impact on humanity. According to this ethics, the higher level of authority must describe the consequences of the project to the engineer or other employees who will be directly involved in the project.
From the above discussion, it can be concluded that strategic issues and ethical issues are prevalent for a multinational organisation. For achieving the best result, resolving these issues with efficiencies is necessary. For avoiding the strategic issue, an organisation must develop strategy by considering their previous organisational culture, their capability to achieve the strategy and the customer’s need so that it can help them in securing the best result. On the other hand, ethical issues can be generated in an organisation for several reasons. For resolving the ethical dilemma in an organisation, analysing the ethical perspectives from different perspectives is essential so that the actual rightness or wrongness of the moral issue can be identified.
The assumption of this assignment is Microsoft is facing strategic and ethical issues. Moreover, there are also assumptions that strategic and ethical issues are creating difficulties for operating the business.
Provides more emphasis on the core products:
Presently, Microsoft is providing more attention to their developing business unit that cannot offer them more popularity. Shifting focus from the core to developing product can reduce the brand image of the organisation. For this reason, providing discussions on the core product is highly essential.
Develop better communication with customers:
Microsoft has a lack of focus towards the maintenance of communication with customers that makes some customers aware of their services. For resolving this issue, Microsoft needs to communicate its target customers with the help of different media so that they can make their customer aware of their services.
Conduct better research before acquisition:
For resolving issues regarding ineffective merger and acquisition, it is necessary for conducting better research on the internal capability of the organisation that Microsoft wanted to acquire.
Involving employees in the process of decision making:
For facilitating better use of the stakeholder theory, it is highly essential in involving the employees in the process of decision making in every project. This strategy not only helps the employees in understanding the value and necessity of the project, but it also makes the employees feel their importance.
|Recommendation||1st month||2nd to 3rd month||4th month||5th month||6th month||7th month|
|Provides more emphasis on the core products|
|Develop better communication with customers|
|Conduct better research before the acquisition|
|Involving employees in the process of decision making|