Organizational Design of Microsoft - Essay Example

Microsoft - Organizational Design The design of organization for any company depends upon the key features like nature of the business, the extent ofspread of its operations and the number of employees. The design as such generally keep changing with times, as the company grows or depending upon the requirements of the business over the years. Overall strategy of the organization, HR policies, marketing principles, operational management etc. of the company would depend on the design of the organization. A smaller company can afford to have a hierarchical structure with command and control mechanism for the decision making process, but a listed company with wider span need to have a structure which depends on scientific study of the organization and its functioning. Ellis and Mayer (2001) state that, 'the extent to which an organisation aligns its strategy with the environment significantly influences the firm's ability to cope with threats and to take advantage of opportunities'. Microsoft is an international company with stakes in almost every nook and corner of the world. Therefore, the company requires having adequate representation in different regions depending upon the strategic nature of the operations and stakes involved. The process of organizing is essentially departmentalization of services and activities of the company. Department implies distinct area, division or branch of a company looking after the performance of specific jobs being looked after the appropriate levels of management. Another important aspect of organizational design is to put a limit to the number of workers or supervisors that a manager can look after effectively. The span of organization depends upon the size of the company and operating area. On the one hand a narrow span organization helps in close control of the activities and better interpersonal communication, it also results in taking away the freedom of the workers on the production floor, because in that case the supervisors are always found to be breathing down the neck. On the other hand a wide span organization functions effectively when a number of responsibilities are delegated to subordinates, who in turn try to pass on some freedom to the workers. But such an arrangement also runs the risk of losing control, if there is no control mechanism in place. Similarly, wider spans need to have a reliable mechanism for interdepartmental and interpersonal communication. The 'maintenance and after-sales services' too play an important role in today's market driven economy. Murthy et al. (2002) emphasize that effective maintenance management also requires a multidisciplinary approach where maintenance and customer care is viewed strategically from the overall business perspective. Therefore, while deciding about the design of the organization, companies are supposed to keep track of all such aspects. Microsoft Corporation (Microsoft) was founded in 1975 by Bill Gates and Paul Allen when they developed an interpreter for Basic programming language at Micro Instrumentation and Telemetry Systems. Subsequently the company started off its first international office in Japan as ASCII Microsoft in 1978 and thereafter moved to Washington in 1979. It operates mainly in five business segments namely; Client, Server & Tools, Online services business, Microsoft Business Division and Entertainment & Devices division. The Company coordinates its activities with the help of four key operation centres of the company are at; Dublin, Ireland which looks after the Licensing, Manufacturing, Operations and Logistics Humacao, Puerto Rico, USA which takes care of the manufacturing business of the company Reno, Nevada, USA works in close coordination with legal department of the government as it caters exclusively to the Licensing and operations divisions. In addition the company has its centre at Singapore which looks after the Operations and Logistics part It needs to be emphasized here that though Microsoft has operations in many countries around the world, but a cursory look at its financial statements indicate that company's revenues from the US contribute to more than 60 percent of the total revenues of the company while the rest of the world contributes just about 40 percent (Datamonitor, 2007). The company has subsidiaries in almost all regions and countries around the world. Keeping in mind the marketing potential of the billion strong populations in countries like India and China, the company has also shifted its focus towards the Asia Pacific region in a big way, particularly in recent years. With a strong workforce of more than 94,000, Microsoft has been able to record a growth figure of about 26 percent in the year ending on January 30, 2008 a net gain of 14 percent over the previous year1. The company recorded revenues of $60.42 Billion during the fiscal year ended June 2008, an increase of 18 percent over 2007. It is therefore quite evident that the company has worldwide stakes in varying measures. Therefore the company is required to have a wider span organization. Headquartered in Redmond, Washington, the central functioning of Microsoft Corporation is looked after by a board of governors headed by the Chairman Bill Gates, and its CEO, the legendary Steven A. Ballmer. This is the top decision making body of the company overseeing the affairs in all parts of the world. The board of governors comprises of; Bill Gates is the Chairman of the company since 1981. Having served the company as its CEO for a long time, Bill Gates stepped down from the post in 2000 thus paving the way for Steve Balmer. James, I. Cash, who has served as a Director of Microsoft since 2001. Mr. Cash is also serving on the board of couple of other reputed public companies besides being a Trustee for nonprofit organizations. Dina Dublon who is on the board of the company since 2005. Ms. Dublon has also been on the board of Directors of a couple of other reputed companies like Accenture, Ltd. and PepsiCo. Raymond V. Gilmartin is with Microsoft for more than seven years now. Having taught the intricacies of management at Harvard, Mr. Gilmartin has also served as the Chairman, President and Chief Executive Officer of Merck, a global research driven pharmaceutical company. Reed Hastings is a relatively new face for Microsoft as he is on the board since 2007 only. But he too is an experienced hand, having served as Chairman and CEO of Netflix and Pure Atria Software in the past. David F. Marquardt has been serving the company for a long time now. Having his association with the company since 1981, Mr. Marquardt has been a venture capitalist prior to his stint with Microsoft. He too serves on the board of couple of other companies. Charles H. Noski is a Director on the board of the company since 2003. He is also an experienced hand in the industry having worked for companies like AT&T, Hughes Electronics, Morgan Stanley etc. Dr. Helmut Panke too has been a Director of Microsoft since 2003, with past experience from BMW in different capacities. In the second tier of the decision making body, the company has divided the business in a number of departments and divisions, which are headed by people with matching abilities. Some of the departments are like; Developer and Platform Evangelism Group headed by Walid Abu-Hadba Entertainment and Devices Division headed by J Allard Sales and Operations looked after by Klaus Holse Anderson Legal and Corporate Affairs headed by Nancy Anderson Mobile Services headed by Brian Arbogast Emerging Markets looked after by Orlando Ayala Entertainment and Devices Division headed by Robert J Bach Communications Sector headed by Martha Bejar Entertainment and Devices eHome Divison taken care of by Joe Belfiore In parallel with this line of executive, we have the CEOs of the company looking after the business interests in different regions (each region comprising of many countries). For example; Simon Leung looks is the Corporate Vice President and the CEO Microsoft's Greater China Region. Yasuyuki Higuchi is the President and CEO of Microsoft Co. Ltd. Japan Umberto Paolucci is the Senior Chairman of Microsoft Europe, Middle East and Africa In fact with time, as the technology revolution leaves its imprint on a number of fields in our daily life, the changing needs of human being makes it obligatory on the part of the companies to segment the functional areas accordingly. Therefore Microsoft Corporation too has segmented a number of such needs for individuals as well as for the corporate houses in different departments, where the President or Vice President that division continues to update the governing board regularly. The third tier of the management comprises of country heads, who are supposed to report to the regional heads. Microsoft has offices in a number of countries around the world. Some such countries are; Argentina, Australia, Austria, Belgium, Brazil, Bulgaria, Canada, China, Columbia, Egypt, France, Germany, Italy, India, Korea etc. These regional heads have their own support staff in different capacities like Marketing, HR, R&D, production etc. References: 1. Datamonitor (2007). Microsoft Corporation - Company Profile. Datamonitor Europe, London 2. Ellis, N. and Mayer, R (2001). Inter-Organisational relationships and strategy development in an evolving industrial network: Mapping structure and process. Journal of marketing management, Vol.17. 3. Microsoft (2008). Your Potential: Our Passion. Available online at http://www.microsoft.com/en/us/default.aspx (December 7, 2008) 4. Murthy DNP, Atrens A, Eccleston JA (2002). Strategic maintenance management. Journal of Quality in Maintenance Eng. 2002; 8. Read More