Organizational behaviour: concepts and applications

Organisational Behaviour

Organizational Behavior at the Microsoft Corporation

Today's organizations are characterized by a wide array of features, probably the most notable one being the increasing force and intensity of competition. Due to globalization and market liberalization, the number of economic entities activating within one market has exponentially increased. In order to efficiently face the competition, managers develop and implement numerous strategic courses of action. In this new and challenging context, more and more focus is being placed on organizational behavior. The concept is generically defined as "the study and application of knowledge about how people, individuals, and groups act in organizations. It does this by taking a system approach. That is, it interprets people-organization relationships in terms of the whole person, whole group, whole organization, and whole social system. Its purpose is to build better relationships by achieving human objectives, organizational objectives, and social objectives" (The Skagit Watershed Council, 2008).

The aim of this paper is to apply the concept of organizational behavior and its adjacent features to a real life organization -- the Microsoft Corporation. In doing this, it is first necessary to present some basic characteristics of the firm and the industry in which it activates. The organizational structure, goals and contingencies will then be assessed, followed by an analysis of their fit within the organizational context. Finally, the paper will come to an end with a section on concluding remarks and recommendations.

2. Microsoft Corporation and the Industry

Founded in 1975 and headquartered in Redmond, Washington, the Microsoft Corporation is the supreme leader of the IT industry. Among its most notable products, one can point out the operating program Microsoft Windows, the pack Microsoft Windows or various computer games. The company's launch occurred in an interesting way. Passionate by computers, which were at that time too large and expensive to be bought by schools, William Henry Gates III, Paul Allen and other of their colleagues were contracted by a computer company to find and fix bugs in their computer systems. Throughout this period, they had gathered sufficient knowledge to set the basis for what would become the leader of the IT industry. Few years later, as the computers were expanding into homes, Gates dropped out of Harvard law school and together with Allen, formed Microsoft. "The company went through some rough first years, but eventually were able to license MS-DOS to IBM. The IBM PC took the public by storm, and its success signaled the success of Microsoft. Microsoft continued writing software, for businesses as well as the consumer market. In 1986, the company went public, and Gates became a 31-year-old billionaire. The next year, the first version of Windows was introduced, and by 1993 a million copies per month were being sold" (PIE Software, 2001).

Despite the internationalized financial crisis, Microsoft was continually able to sustain increasing revenues and this is revealed by the financial highlights in their 2008 annual report:

revenues increased from $51.12 billion in 2007 to more that $60 billion in 2008

operating income increased from $18.52 billion to $22.49 billion net income increased from $14.06 billion to $17.68 billion increases were also registered in terms of assets, shareholder equity and so on Microsoft's main competitors are Google, IBM and Oracle and the industry in which they operate is extremely dynamic and challenging and consumer demand is pegged to the state of the economy. Organizational success is directly linked to their ability to reveal technical expertise as well as develop adequate marketing campaigns. Small size entities survive by addressing niche markets or creating customized products for their clients. These small size entities often form alliances with the larger organizations in order to promote their products. For the next period, the estimations see fluctuating movements, but the compound rate through 2013 is an increase of 6% -- 1% decrease in 2008, 5% decrease in 2009, 5% decrease in 2010, 6% increase in 2011, 11% increase in 2012 and 8% increase in 2013 (Hoovers, 2009).

3. Organizational Structure

Historically, Microsoft has been organized as a vertically integrated organization, in which most decisions would be made at executive management level and executed top-down. In more recent years however, internal changes have occurred with the aim of achieving better support in reaching organizational goals. The largest amount of changes was introduced in 2001 and it revolved primarily around the following:

the Vice President would have to report to the President and the Chief Operating Officer and would also become the head of the MSN and Personal Service Business Group

Group VP Bob Muglia will become the head of an expanded .NET Services Group, renamed Personal Service Group; this new unified services infrastructure group will ensure interoperability across web sites and services

Group Vice President Jeff Raikes will continue to lead the Productivity and Business Services Group

Group Vice President Jim Allchins will continue to head the Platform Products Group but will place an increased emphasis on improving the Microsoft experience (Microsoft Corporation Website, 2009).

Today's organizational structure at Microsoft is based on the Windows Server System Reference Architecture. Under this type of organizational structure, the Microsoft Corporation is constructed on the following formations:

The Centralized Data Center, or the CDC? -- this formation supports the offering of enterprise level services of the Microsoft employees and is also useful when organization-wide strategies are being implemented

Department?

-- deals with the infrastructure needs of the business units; more independent departments exist with the intent of organizational separation of tasks, responsibilities, costs, goals and other management purposes

Branch Office -- a Microsoft facility located outside the headquarter and which may offer local services; if they do not offer local services, they are called satellite branch offices (SBO)

Extranet? -- an environment which gives business partners and Microsoft employees quick access to vital information in support of communication and collaboration

Internet Data Center -- a piece of organizational infrastructure which allows entities to connect with the customers

"These scenarios are a mixture of physical and logical entities differentiated by geography, isolation or interdependence, and business needs in the context of typical organizational structures. The following figure depicts an organizational structure that is separated into corporate and regional facilities and a branch network based on the provision of services and their consumption. The Centralized Data Center provides services for employees within corporate and regional facilities, which are logically separated into departments; it also provides extranet or Internet-based services. A typical branch network is usually extensive, uses services of the organization, and focuses on being a customer touch-point" (Cummings, 2005).

Source: Cummings

4. Organizational Goals

The Microsoft Corporation takes a plain and simple approach to the development of its mission statement and the website simply mentions that "at Microsoft, our mission and values are to help people and businesses throughout the world realize their full potential." In attaining this desiderate, the organization will guide its actions through the implementation of values such as integrity and honesty as norms and goals for correct business behavior. "As a company, and as individuals, we value integrity, honesty, openness, personal excellence, constructive self-criticism, continual self-improvement, and mutual respect. We are committed to our customers and partners and have a passion for technology. We take on big challenges, and pride ourselves on seeing them through. We hold ourselves accountable to our customers, shareholders, partners, and employees by honoring our commitments, providing results, and striving for the highest quality" (The Microsoft Corporation Website, 2009).

It can nonetheless be assumed that the larger corporate goals can only be achieved through the gradual accomplishment of various smaller goals. These smaller goals occurred at various points in time and a retrospective look at organizational efforts will reveal some of the most relevant smaller goals, materialized in the following:

The company has historically focused on increasing the customer base and the target market to which they applied

Microsoft has continually striven to increase its sales revenues in order to generate more profits, more investment opportunities as well as create shareholder value

Microsoft has striven to become and then to maintain its position as leader of the IT industry

The corporation has focused on employing the best developers that will bring in new and fresh ideas which will further increase product quality and customer satisfaction

Despite the long hours put in, the company has striven to create an environment in which the staff members feel valued and respected

5. Organizational Contingencies

Generically, contingency is understood as a situation that could occur in the future. Contingency planning revolves around the development of strategies to be implemented in case the even considered materializes. Within the business community, "the contingencies play the key causal role in the functional argument. They are conceptualized and measured through regularities that they are, theoretically, seen to produce -- we know the contingencies through their regular, predictable effects" (Clegg, Kornberg and Pitsis, 2005).

The politics regarding contingency planning are highly strict and the information is next to never disclosed to the public. In this order of ideas, it is rather difficult to conduct an analysis of Microsoft's contingency planning. Yet, from their operations it can be observed that the need for contingency is generally reduced as the company has the ability to succeed at mostly any endeavor. Nonetheless, in this time of a competition fiercer than ever and growing consumer demands, some of Microsoft's products have failed to generate the expected outcome. The most commonly used example in this sense was the operating system Windows '98, which replaced the more efficient and user friendly Windows '95. Contingency planning in this scenario was limited, but the user comments were collected and attention was paid in the development of the next operating system, the Windows 2000, known under the name of Windows XP.

Another angle from which Microsoft's contingencies can be assessed is that of the hardware products manufactured by the organization. Unlike the software, the material products have enjoyed limited success and the company considered ways to address lack of consumer excitement. One of the contingency approaches was that of increasing the popularity of the products through alliance with other successful brands, such as Wal-Mart or MTV (Roughly Drafted Magazine, 2006).

6. Structure, Goals and Contingencies

In 2001, as the IT industry was moving towards the offering of more and better software services that would increase customer satisfaction, Microsoft has made it a goal to participate in processes or organizational restructuring. "Microsoft announced some internal organizational changes aimed at advancing the company's ongoing movement toward software services, in addition to the company's traditional packaged software products" (Microsoft Corporation Website, 2009). This basically means that the relationship between organizational structure and organizational goals is a strong one and that the company officials are striving hard to ensure that the structure of their business is supportive of the established goals.

A new piece of evidence which proves the fact that the company's organizational structure is in sink with its goals is given by the implementation of the Windows Server System Reference Architecture, which was created with the specified aim of appealing to more customers. In order to even better support the company in reaching its established goals, the WSSRA has been further broken down into more formations. This step was taken due to the complexity of the organizational goals and the need for differentiated approaches. In this order of ideas, the three new formations in the WSSRA structure refer to services for employees, services for business partners and services for customers (Cummings). All these play the role of increasing the satisfaction of the respective stakeholder categories and bringing the company one step closer to its objectives.

Despite the relatively poor analysis of Microsoft's contingencies due to lack of sufficient information, a conclusion can be drawn on the existence of an undisputable relationship between the contingencies and the other components of the organizational behavior. The structure and the Microsoft contingencies reveal a basic and simple relationship in the meaning that operations are organized in such a manner that is best supported by the organizational structure. In this order of ideas, contingencies are broken down into smaller projects which are divided between various organizational departments and go through processes of development, testing, implementation and control. In terms of goals, the relationship is more obvious and refers to the simple fact that the contingency plan is developed to ensure that any arising events do not impede the achievement of the pre-established goals. In this order of ideas, the Microsoft contingencies represent in fact another means of ensuring that organizational objectives are met regardless of the micro and/or macroeconomic scenario.

7. Conclusions and Recommendations

In this time of intense competition, economic agents strive harder and harder to develop and implement those strategies which will ensure their survival and success within the market. An example of an organization which has succeeded in this endeavor is IT leader Microsoft Corporation. Among the most notable strategies implemented were those based on organizational behavior. The aim of this paper was to reveal the application of OB within the context of the IT giant, with focus on organizational structure, goals and contingencies.

In terms of organizational structure, this has historically been a vertically integrated one, but it has suffered changes along the years. The large majority of the changes occurred in 2001 and had the primary aim of supporting the company achieve its service desiderate. Today, the Microsoft organizational structure is based on the Windows Server System Reference Architecture, which breaks the organization into various formations, all with clearly established functions.