STRATEGIC MANAGEMENT
PRACTICAL CASE STUDY
Table of Contents
1.1 General introduction to Microsoft
1.2 General introduction to Amazon
2.0 Statement showing the collection of information
3.2 Comparing Strategic position of Microsoft & Amazon
3.5 Critical discussion on the findings and questions
1.0 Introduction
The present report would be prepared on the basis of the strategic stance of the two eminent organisations Microsoft and Amazon, and would further look into the information regarding the strategic position, leadership, change, and economic success regarding those. The report would also formulate two different questions to examine why the change, economic success, and the leadership within the organisation are related.
1.1 General introduction to Microsoft
Microsoft has been the leading organisation throughout the world, offering computer operating systems, and it is headquartered in Redmond and Washington in the USA. The organisation had started from Albuquerque, USA, in April 1975 in the ownership of Bill Gates and Paul Allen. The revenue of the organisation in 1975 was mere $16000, and it got a breakthrough in 1980 when the deal regarding the supply of DOS for PCs prepared by IBM. With the sale of an IBM PC, the amount of royalty was sent to Microsoft. It took a further leap in 1990 when Windows 3.0 was released, and 60 million copies were sold. Until 1990, Microsoft was predominantly a supplier of manufacturers producing hardware. However, the organisation began to be popular in sales and marketing as the demand for the PCs increased. They released a different operating system like Vista and MS Office 2009, which became a great success. Presently, under the supervision of their leader Satya Nadella, the organisation operates in OS, Office solutions, and others. (Cowling, 2020)
1.2 General introduction to Amazon
Amazon has been the largest e-commerce organisation in the world, which started its operation on July 5, 1994, in Bellevue, Washington. The organisation has operated in different products such as electronics, apparel, video games, foods, and many others. The ownership of the organisation has been to Jeff Bedoz, and the organisation flourished over time to become the largest online retailer. They first started to operate by selling books to users. By December 1996, the organisation had 180000 customers, and by 1997, they had 1000000 customers (McFadden, Bergan and Yilmaz, 2020). The revenue increased to $148 million in 1997 from $15.7 in 1996. The popularity of the organisation can be anticipated when the organisation got 1% of the search in and outs in 2012 through the website. Among the operations besides e-commerce, there have been “web-based services,” such as data storage and cloud computing, reading services such as Kindle.
2.0 Statement showing the collection of information
The sources of the information regarding the two organisations are collected from the official websites of the organisations, and the history and background data were collected from the websites of Contents DSP and others. The research in the present report would be based on the case studies regarding the change, leadership, and economic benefits from the strategic positions. The report would also follow the detailed case study of leadership and success regarding the two organisations available from the ideas.bkconnection.com and inc.com.
3.0 Discussion & analysis
3.1 Questions
The questions which would help to shape the study regarding the strategic position of these two organisations can be formulated as follows:
- What are the strategic positions of Microsoft and Amazon?
- What are the areas of change, leadership, and economic success points in Microsoft & Amazon?
3.2 Comparing Strategic position of Microsoft & Amazon
The strategic position of Microsoft
Analysing the strategic position of Microsoft through the Ansoff matrix:
Fig 1: Ansoff Matrix
(Source: Loredana, 2017)
Market penetration: It refers to distributing or selling existing items to existing markets. The market penetration strategy is utilized by Microsoft to sell its items like Windows devices and software, and other services in its 116 stores across the world, and also through authorised distributors and online channels. The multinational technology organization utilizes the “Microsoft loyalty program” to trace its strategy of market penetration.
Product development: It is a growth strategy and involves producing new items to sell to the company’s existing markets. The MNC engages in the strategy of product development very systematically. Microsoft’s R&D expenses amounted to almost 19.3 billion US dollars in 2020. The below three points are the representation of engineering groups by which the tech-giant develops and generates most of its services and products:
- “Enterprise and cloud engineering group”: It mainly focuses on the company’s cloud infrastructure, database, server, management, “enterprise resource planning,” CRM, development tools along with some other services for Microsoft.
- “Services and applications engineering group“: It focuses onboard services and application’s main technologies in communication, productivity, search, education along with some other information categories.
- “Devices and Windows engineering group“: It focuses on the company’s Windows platform of all types of devices, hardware development, and connected online marketplace.
Market development: This strategy is connected with searching for new marketplaces for existing items. Microsoft targets a market whenever this company notices any potential position for its services and products. For instance, Microsoft’s HoloLens was developed to initially distribute in ten countries like UK, USA, Australia, Canada, Germany. After noticing demand in the market, Microsoft distributed HoloLens to additional 29 countries like Turkey, Poland, and Croatia (windowscentral, 2020).
Diversification: It involves producing new services to distribute to some new market areas. Microsoft utilizes this strategy very occasionally. For instance, in 2006, Microsoft entered the cloud computing market to compete with “Amazon Web services” launched in the same year. By 2018, Microsoft bit Amazon in twelve-month cloud revenues and became a leader in the global market in terms of cloud computing (Evans, 2020). At that year, Microsoft’s revenue from this sector was 26.7 B us dollars, where Amazon only collected 23.4 b US dollars (statista, 2020).
Unlike the brand Microsoft, Amazon has been in the marketing section, and therefore, the positioning of the brand has been different, which can be described as follows:
Market penetration: the market penetration strategy of the organisation Amazon has been different. The marketing strategy has been aggressive. The main functions which play a large role in the strategic positioning of the brand have been the review section of the customers and the recommendation feature, which helped them largely to increase brand awareness. Unlike the approach of selling in-store by Microsoft, Amazon has based on selling through online platforms and delivery to the customers (Solanki, 2019).
Product development: unlike the brand Microsoft, Amazon has based on the development of the brand, not on products. As Microsoft has been directly related to the process of product development, such as MS Office, Windows OS, they have updated themselves regularly. On the other hand, Bedoz developed Amazon for selling only books, which later on included different categories like electronics, apparel, and others. The product they have developed recently has been cloud storage (Adams, Meyers, and Sekaja, 2019).
Market development: the market development strategy of the brand is the same as Microsoft: searching a new market for the existing products. The brand currently has 13 different websites in different countries and has been expanding regularly (Solanki, 2019). Besides, the prime services like free same-day and free one day services are available in more than 8000 cities, and the prime service is available too in 100 cities.
Diversification: The diversifications of the products include the offering of different products in different markets. Therefore, it can be a risky strategy to diversify the customer-oriented products which may not be accepted by them. On the diversification strategy, unlike Microsoft, the brand has developed the products in 4-5 different categories like Home Accessories, Electronics, Apparels, and others.
If the comparison of strategic positioning is compared between these two brands, it can be seen that Microsoft has standardized in the product category with Operating Systems and MS Office products while Amazon has no product development strategy, and they are related to eCommerce (Adams, Meyers and Sekaja, 2019). Amazon has been related to the selling of diverse goods of different categories while Microsoft has been selling some products which are universal, and the strategic position has been more solid. For example, the Cloud-based data storage strategy in Microsoft has surpassed Amazon in recent times.
3.3 Identification of the critical areas of change, leadership, and economic success points in Microsoft
Critical areas of change: The areas which have been related to the change, according to the case study, the slowing down of stock prices and the lack of modern technologies such as mobile technologies. In earlier times, the organisation has faced the issue of slowing down the market demands due to the over-reliance on the traditional PC solutions (IBARRA and Rattan, 2018). Apple and Google enjoyed the surfing profits while cutting into the mobile technologies, and Microsoft lagged behind. Therefore, the change in the existing technology was needed to develop and further increase the business. Although the development of this surfing facility by the organization Google and Apple has not affected the money earning of Microsoft, it had the chance to lose relevance to some extent. (Fox, 2020)
Leadership: it was the visionary and positive leadership of Satya Nadella, which has transformed the operations process of the organisation and transformed the organisation towards profitability. The positive leadership style within the organization can be described as the ” positive leadership is just one style that can influence a thriving workplace culture” where the people are encouraged to trust others, create a motivating situation, and to participate freely in the working process. The talents and the wishes of the people flourished when they were acquaintances with the leadership style of Satya Nadella. From the side of technology, from his selection of CEO in 2014, Nadella announced the intention to prioritize cloud and mobile technologies (IBARRA and Rattan, 2018). According to Microsoft chairman John Thompson, “He made a pronouncement on day one—the world is about cloud-first, mobile-first.” Besides, he turned the culture of working with the shift towards empathy, positivity, individual empowerment, and growth. Nadella, have a progressive mindset with the influence of personal development through the use of positive leadership. (Fox, 2020)
Economic Success points: if the economic success points of the organisation are seen, it can be seen that the organization’s profitability has started to increase from the leadership of Satya Nadella. The financial performance of quarter 4 2014 showed that the organization earned a revenue of $23.38 billion and a net income of $4.6 billion, which can be compared to the results of the same quarter earlier year with $19.9 billion and $4.97 billion. The growth in the revenue has been constant in 2018-20 at $110.36, $125.84, and $143.02. The most has been the contribution of the visionary and positive leadership from Satya Nadella, and the organisation has developed very well. (Fox, 2020)
Figure 2: Economic success statistics of Microsoft
(Source: statista.com)
3.4 Identification of the critical areas of change, leadership, and economic success points in Amazon
The key economic success point of “Amazon” has been its ability to use innovative business models towards appropriate organizational change. While the executives relied upon third-party selling business, with over 50% rise in the sale of products as well as featured support to sellers (Kruse, 2020). Apart from this strategy, the CEO of the organisation Jeff Bezos has opted to go through with his online division. This has resulted in the company controlling its logistics in a well-defined manner and completing over 5 billion packages to customers through prime memberships (Tabaka, 2020). Their leader provided a flexible environment for the workers in swiftly engaging with creative endeavors by putting the customers in the first consideration. The operational standards of the organisation are corrected through regular updations for sorting small-time problems. This was mainly seen through the international markets, which accounted for weak returns for the organisation. For instance, a lighter than expected growth of 15% was experienced by the organization on a constant currency basis prior to 21% in the previous quarters (TheStreet, 2020). This occurred mainly due to wrong decisions made by the company in acquiring Souq.com. While holidays in India also slowed down the growth.
However, with the organisation refining its technological skills through the means of web service, DashButton, AmazonFresh, Amazon PrimeAir, and Amazon Fire TV. The company has managed to capture other customers from overseas markets exclusively through their offers. This has mitigated the losses and enabled the company to regroup through their leadership and function suitably. Most importantly, the company’s eagerness to invent has been showcased in many different ways.
The main change management necessities which the leader and CEO Bedoz took seriously have been the Web services of Amazon. When they started to offer web services, the others did not take them seriously. Since then, the visionary leadership of the organisation has helped them to reach the vantage point where they have more capacities than the combined power of 14 suppliers. Besides, some revolutionary steps like including robots in the delivery process, faster delivery services, and others are initiated, which has increased the accountability and reliability within the customers. Since 2010, the organisation has earned more than $168 billion in US GDP, and job creation has also been the highest. (Economy, 2020)
The success of Amazon mainly comes from its innovative practices and technologies. For instance, “Amazon’s impressive voice command device, Echo” is an innovative idea and can be utilized to play music, check the weather, and to research any favorite sports team. This innovation was a big investment for Amazon. However, the organization gained a huge revenue by circulating this product. More than 22 million units of Echo were sold and distributed in 2017. Such a big profit and economic success motivated the company to invest more in its innovation. Diversification is another factor which is assisting the MNC to hold its market share and economic success.
3.5 Critical discussion on the findings and questions
From the questions, the evaluation of the strategic position, leadership, change, and economic success can be evaluated as below:
Firstly, the question was, “What are the strategic positions of Microsoft and Amazon?” to find out the strategic position of the organization, the analysis was done for both through the Ansoff matrix. From the comparison, it can be said that the strategic position of the organisation Microsoft has been stronger than that of Amazon because it has been able to create a brand position throughout the world among the PC users. On the other hand, Amazon has expanded very fast in the eCommerce industry within some years. The advantage of Microsoft has been an advanced cloud-based technology that surpassed the Web services of Amazon in recent years. Besides, Windows OS has been synonymous with the operating systems in PCs, where there are some competitors of Amazon in the eCommerce industry (Janicijevic, 2017). On the contrary, the strategy of market penetration within the organisation has been better at Amazon as they have reached the customers, unlike Microsoft, where the customers have to reach the store. Microsoft product development is limited to the OS and MS Office products (standardized) but has a greater impact than Amazon, which doesn’t develop products but includes various brands. It can be critically said that the strategic position of Microsoft is better than Amazon.
Secondly, the question was, “What are the areas of change, leadership, and economic success points in Microsoft & Amazon?” to find the answers, the case studies regarding the development of the leadership and the changes within the two have been analyzed. While Microsoft was losing the position in the share and stock market with the loss of relevance, Amazon was only concerned with the delivery of books in the early years. With the leadership of Satya Nadella in Microsoft, the main focus has been on the positive leadership and the well-being of the employees to explore the development opportunities (Janicijevic, 2017). He also stressed the web-based and mobile technologies which helped the organization to improve the profitability in the years after 2014 when Nadella took charge. On the contrary, Amazon expanded the services in 1997, which skyrocketed the revenue of the organisation under the visionary leadership of Jeff Bedoz (Burnes, Hughes and Buy, 2018). At last, it can critically evaluate that increasing economic impact and desiring changes are a lot dependent on the leadership.
4.0 Conclusion
From this report, it can be concluded that big organizations or businesses have to deal with multiple factors to hold their marketplace. Establishing a brand name in the world of competition and diversification is not an easy task, and it needs solid preparation, strategy, and investment to develop a product that can attract and hold consumers. This report has discussed the strategic stances of Microsoft and Amazon by introducing their background and current situation. Amazon and Microsoft both are global giants in their respective fields. Innovation plays a major role in both the organization’s success. However, the comparison between both the organization’s strategic positions has helped to understand that Microsoft utilizes standardized strategy in its product categories, and at the same time, Amazon holds no effective strategy when it comes to product development. Amazon’s main profit comes from its innovation and leadership strategies.
Reference list
Journals
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