Microsoft Corporation’s Operations Management, 10 Decisions, Productivity

Microsoft Corporation’s operations management (OM) in the 10 strategic decision areas

addresses the productivity needs of the computer hardware and software business. The
10 decisions reflect the major business functional areas that require coordination to
achieve optimal business performance. In the case of Microsoft, the 10 strategic
decisions are intertwined with the ability to expand the business. This condition is linked
to the global nature of the company’s supply chain and distribution network. As one of
the biggest firms in the industry, Microsoft must continually develop relevant operations
management approaches to address the 10 strategic decisions for maximizing
performance and productivity.

The 10 strategic decision areas of operations management (OM) are effectively covered
in Microsoft’s approaches. Business productivity depends on the effectiveness of
operations managers in developing solutions corresponding to these 10 decisions to
support Microsoft’s computer hardware and software operations.

Microsoft’s Operations Management, 10 Decision Areas

1. Design of Goods and Services. This decision area of operations management

deals with the strategies and tactics needed to develop profitable products. Microsoft
Corporation initially focused on software design. However, through continuing
expansion of the product mix and diversification of the business, the company’s
operations managers now make broader strategic decisions. For example, their
operational productivity decision-making processes now include computer hardware
and software products, along with Microsoft’s cloud computing services. This condition
increases the significance of operations management in designing goods and services
for the company. The increasing variety of products also reflects Microsoft’s generic
strategy and intensive growth strategies.

2. Quality Management. Operations managers are concerned with satisfying

customers’ expectations about product quality in this strategic decision area. Microsoft’s
approaches to operations management address these operational objectives through
continuous improvement and innovation. For example, the company uses feedback
systems to collect usage information from customers, and integrates such information in
the next iteration of computer software products. Also, Microsoft heavily invests in
research and development to achieve rapid innovation that keeps the business
competitive against other technology firms. These approaches optimize productivity and
organizational resilience, given market dynamics. Emphasis on quality supports the
aims for helping and empowering customers, as included in Microsoft’s mission
statement and vision statement.

3. Process and Capacity Design. In this strategic decision area, companies focus on
resources and standards applicable to production processes. In Microsoft’s case,
operations management relies on extensive automation to optimize capacity and
processes. For example, in computer hardware production, the company automates
production capacity allocation to minimize productivity bottlenecks. On the other hand,
for software production, Microsoft’s operations managers streamline process design to
reduce errors and increase operational efficiency in correcting software development
issues.

4. Location Strategy. Proximity and access to resources, markets and supply chains
are considered in this strategic decision area of operations management. In software
development and distribution, Microsoft Corporation focuses mainly on human resource
productivity within its corporate facilities. The company’s computer software products
are easily distributed to target markets through the Internet. However, for hardware
products like the Xbox, Microsoft must ensure nearness and accessibility to target
markets around the world. For example, the company maintains business partners,
such as authorized sellers. In addition, the firm adds more distribution channels by
increasing the number of its Microsoft Store locations worldwide. Thus, Microsoft’s
operations management approach in this strategic decision area involves a combination
of virtual and physical locations to reach markets and maximize resource accessibility.
These operational strategies are also reflected in the place element of Microsoft’s
marketing mix.

5. Layout Design and Strategy. Operations management optimizes resources in this

strategic decision area for the purpose of achieving efficient movement of human
resources, information, and materials. Microsoft’s layout design integrates advanced
computing technologies to facilitate such efficiency. For example, efficient movement of
information is achieved through network technology, such as online computers in the
workplace. On the other hand, efficient movement of materials is supported through
Microsoft’s automation of production processes. Business partners are also provided
with technological solutions to achieve operational efficiency and high productivity.
Microsoft’s operations management also uses innovative layouts for ease of employee
movement throughout its facilities.
6. Job Design and Human Resources. This decision area of operations management
considers the recruitment, retention and development of human resources. Microsoft’s
approach to job design emphasizes innovative thinking and a growth mind-set. These
characteristics support the firm’s technology innovation and product development goals.
The approach also aligns with Microsoft’s organizational culture. On the other hand, to
develop its human resources, the company uses training programs. For example,
leadership development programs are used to identify and support leaders within
Microsoft’s organization. Through these approaches, Microsoft ensures productivity and
operational efficiency in its expanding computer hardware and software business.

7. Supply Chain Management. Operations managers address this strategic decision

area by maintaining streamlined integration of the supply chain with other business
activities. Microsoft Corporation’s global supply chain is monitored through computer
networks. For example, personnel regularly input current supply status, which is
transmitted to regional and corporate offices for monitoring. The resulting data is
automatically analyzed to determine necessary changes in Microsoft’s supply chain. In
addition, strategic decisions are based on real-time data representing the supply chain,
distribution network, and other areas of the business. Microsoft’s operations
management approach to this strategic decision area maximizes operational efficiency
of the supply chain. The approach also optimizes the productivity of supply chain
personnel. The resulting optimization addresses some of the opportunities and threats
identified in the PESTEL/PESTLE Analysis of Microsoft Corporation.

8. Inventory Management. In this strategic decision area of operations management,

inventory costs and holding are set to satisfy organizational needs, customer
expectations, and supply chain capacity. Microsoft applies automation for managing its
inventory for materials used in maintaining its online systems. For example, the
company uses automated systems to determine when to update and upgrade its cloud
computing services. The upgrades involve new materials like server components in
Microsoft’s facilities. The same operations management approach is used for inventory
management in computer hardware manufacturing, although Microsoft outsources
production processes. The company’s operations managers apply perpetual methods,
periodic methods, and serialized inventory management to maximize operational
productivity in this decision area.

9. Scheduling. Intermediate and short-term scheduling to address resources and

market demand is covered in this strategic decision area of operations management. In
this regard, Microsoft’s objective is to use market conditions to determine the most
suitable schedules. The company achieves high productivity in this decision area
through decisions based on continuous market analysis. The operational significance of
market analyses is their support for relevant decisions that accurately address current
concerns in Microsoft’s business. For example, operations managers change
intermediate schedules to suit current changes in demand for Microsoft’s Xbox units.
10. Maintenance. Operations management maintains adequate resources and
processes in this strategic decision area. Microsoft Corporation needs to maintain its
software development processes, as well as production capacity to maximize revenues.
In software development, the company focuses on the sufficiency of personnel, such as
programmers, to maintain rapid innovation through software design and iteration. On
the other hand, in terms of production capacity, Microsoft’s operations management
approach maintains high productivity through inter-organizational support. For example,
to support outsourced production, the company provides current data to manufacturers.
Such current data indicates intermediate changes in production to ensure operational
adequacy of Microsoft’s supply chain.

Microsoft Corporation’s Productivity Criteria

Microsoft’s productivity is based on personnel activity, manufacturing processes,

software development processes, and equipment maintenance, among others.
Operations managers consider these factors in evaluating productivity levels. The
following are some measures or criteria Microsoft uses to assess and monitor
productivity:

 Units per day (Hardware manufacturing productivity)

 Servers updated per day (Equipment maintenance team productivity)
 Units sold per day (Productivity of Microsoft Stores)