Microsoft Clipart

Current Event Microsoft has announced that it is discontinuing ClipArt, a once-popular program that allowed people to access a set of basic images that were part of the creative commons, that they could access (Goldman, 2014). Microsoft's decision highlights some of the choices that managers must make as part of their jobs. A basic managerial function is the allocation of resources. Managers are agents of the shareholders, which means that they are charged with handling the company's resources and working with them in a manner that will increase shareholder wealth.

In theory, the alignment between managers and shareholders should be evident, but at times it is necessary for the structure of the organization and compensation to reflect a better alignment (Nyberg, Fulmer, Gerhart & Carpenter, 2010). One of the considerations that comes into play in a situation like this is the product life cycle. ClipArt was introduced in 1993 as part of Word 6.0 (Goldman, 2014) and today hosts 100,000 images, stored online.

The product is therefore mature, and at this point competes with basic online searches when people are looking for images for their papers and presentations. When it was introduced, ClipArt offered value to the consumer and had competitive advantage. With high-speed Internet, and the fact that ClipArt is no longer bundled with the word processing software, it has lost those advantages.

Thus, ClipArt is at present not a big money-maker for Microsoft, but is rather a service that the company was providing basically on a legacy basis, something that people expect to exist, but which did not add genuine value to the company's bottom line. Microsoft's management was still dedicating resources to Clip Art, but it was apparent that it was not generating enough to justify its existence. Even though the service remained at least somewhat popular, it is worth considering the role of the manager.

The manager should not deploy resources to a service that costs the company money, and does not generate anything in return. While at one point it could be argued that ClipArt was a value-added component of Word, that is no longer the case, so there is no reasonable argument that ClipArt is a selling feature of any Microsoft product. ClipArt was never economically viable as a standalone product, because its images were in the public domain, licensed via creative commons.

Managers must be able to recognize the external environment, especially when changes in that environment have an effect on the business. In this instance, technological advances diminished the value of ClipArt to the consumer. Where in the 1990s its use was ubiquitous, today other services are more competitive alternatives. As such, the shift in the technological environment, combined with the fact that ClipArt was not profitable for Microsoft, led the company to this decision. Curious is that the company kept ClipArt around for so long.

It had some popularity as a legacy service, but realistically it had been a long time since ClipArt added value for Microsoft shareholders. Perhaps its costs were low and the company -- with tens of billions of dollars.