CASE STUDY – PLANNING AT MICROSOFT

In developing plans in a company like Microsoft, management is actually developing

recommendations for future actions. As such, plans should be action oriented; they should state
precisely what management is going to do to achieve its goals.
In developing plans, managers such as those at Microsoft should consider how often the plans
will be used and the length of time they will cover. Will a plan be implemented only once or
used on a long-term basis to handle an ongoing issue, such as maintaining a product line? A plan
similar to Microsoft’s plan to serve a different market might not be used by other companies and
would be designed to cover a specific amount of time.
In addition, managers should consider what part of the organization the plans they develop will
be aimed at and on what level the plans will focus. For instance, a plan to cut costs may
encompass all of Microsoft’s internal operations, whereas a plan to improve product quality may
affect only one part of the company, such as its product development function. Similarly, a plan
to cut costs may be aimed at top-level management, whereas a product-quality plan may be
aimed toward lower-level management and programmers themselves. Managers such as those at
Microsoft must realize that management systems are interdependent, which means that any plans
they implement will affect the systems as a whole.
Managers would normally use both standing and single-use plans in a company. Standing plans
include policies, procedures, and rules and should be developed for situations that occur
repeatedly. For example, once policy Microsoft management could develop might focus on the
level of product quality they want to emphasize with employees.
Single-use plans include programmes and budgets and should be developed to help manage less
repetitive situations. In developing such plans, managers should thoroughly understand the
reasons that plans fail and take steps to avoid those pitfalls.

Human resource planning involves obtaining or developing the personnel an organization needs
to reach its objectives. In this area, for example, Microsoft management might discuss the types
of engineers needed to improve existing products or design new products that meet specified
requirements. Discussion would inevitably focus on issues such as how many employees, if any,
Microsoft will need as economic conditions vary; in what areas they will be needed; when these
employees would be needed; how they will be obtained; and how they will be appropriately
trained.
One of the planning tools available to Microsoft management is forecasting, which involves
predicting future environmental events that could influence the operation of the company.
Although various specific types of forecasting-such as economic, technological and social trends
forecasting – are available to them, Microsoft management would probably use sales forecasting
as its key, because it will predict how high or low sales will be during the time period they are
considering.
To forecast sales, Microsoft management could also ask its retailers (sales force) for opinions on
predicted sales. Although the opinions of such individuals many not be completely reliable,
these people are closest to the market and must ultimately make the sales. Microsoft might also
follow the jury of executive opinions of future sales. This method would be quick and easy to
use and, assuming that Microsoft executives have a good feel for product demand, might be as
valid as any other method the company might use.
Finally, Microsoft management could use the regression analysis method by analyzing the
relationship between sales and time. Although this method takes into account the cyclical
patterns and past history of sales, it also assumes the continuation of these patterns in future
without considering outside influences such as economic downturns, which could cause the
patterns to change.
Because each sales forecasting method has advantages and disadvantages, managers at Microsoft
should carefully analyze them before deciding which method or combination of methods should
be used. Scheduling is another planning tool available to Microsoft management. It involves the
detailed listing of activities that must be accomplished to reach an objective. For example, if
Microsoft’s goal is to have all of its employees working proficiently on updated equipment
within two years, management needs to schedule activities such as installing the equipment,
training the employees, and establishing new output standards.
QUESTIONS

a. Clearly Microsoft takes planning seriously. One of the guiding principles used is
planning is the SMART principles. Provide evidence that Microsoft employs this
principle in planning. (5 marks)

b. Citing five examples from the case study, explain four benefits of planning to an
organization. (5 marks)

c. Explain five primary reasons why plains may fail. In your opinion, which of the reasons
is the most important and why? (6 marks)

d. Explain the use of the following as used in the case study:

i. Standing and single use plans

ii. Procedures and policies
iii. Forecasting and scheduling
(6 marks)
e. Citing an example from the passage, describe a situation that may necessitate Microsoft
to recruit externally. Explain four advantages of recruiting externally.
(10 marks)
Using a diagram, explain the control process that is probably used at Microsoft.