Dr.

Milenka Plavec Management

Bill Gates co-founded Microsoft in 1975 and built it into the most profitable technology
company in the world. But as the company grew larger, the functional structure became
ineffective. Employees began complaining about the growing bureaucracy and the snail´s pace
for decision making. A functional structure was too slow and inflexible for a large organization
operating in the fast-moving technology industry.

To speed things up and better respond to environmental changes, top executives created
seven business units based on Microsoft´s major products:
 Windows Group
 Server Software Group
 Mobile Software Group
 Office Software Group
 Video Games and Xbox Group
 Business Software Group
 MSN-Internet Group.

Each division is run by a general manager and contains most of the functions of a stand-alone
company, including product development, sales, marketing and finance.

What really makes the new structure revolutionary for Microsoft is that the heads of the seven
divisions are given the freedom and authority to run the businesses and spend their budgets
as they see fit to meet goals. The general managers and chief financial officers for each
division set their own budgets and manage their own profit and loss statements. Previously,
the two top executives, Bill Gates and Steven Ballmer, were involved in practically every
decision, large or small. Managers of the divisions are charged up by new authority and
responsibility. One manager said he feels “like I am running my own little company”.

Questions:

1. Plot an organizational chart of Microsoft after the change.

2. Microsoft´s new organizational structure is called _______________________________.

3. Discuss disadvantages of the old structure, named ______________________________.

4. Discuss advantages of the new structure for Microsoft.

5. Discuss disadvantages of the new structure for Microsoft.

Dr. Milenka Plavec Management

Our Commitment to Our Customers

Microsoft's Business

Updated: October 05, 2011

At Microsoft, we're motivated and inspired every day by how our customers use our software to find creative solutions to business
problems, develop breakthrough ideas, and stay connected to what's most important to them.

We run our business in much the same way, and believe our five business divisions offer the greatest potential to serve our
customers. They are:

 Online Services Division: Microsoft’s search, portal, advertising and personal communications services, including online
information offerings such as Bing and the MSN portals and channels.

 Server and Tools Business: Microsoft infrastructure software, developer tools and cloud platform, including products
such as Windows Server, SQL Server, Visual Studio, System Center and the Windows Azure Platform.

 Microsoft Business Solutions: A portfolio of Microsoft Dynamics products and services, as well as Microsoft Health
Solutions.

 Microsoft Office Division: Productivity products and services, including Office, Exchange, SharePoint, Lync, Project,
Visio, and Microsoft’s speech technology investments.

 Interactive Entertainment Business: Key entertainment experiences that span gaming, music and video across multiple
screens, including Xbox 360, Xbox LIVE, the controller-free Kinect for Xbox 360, Zune Music and Video, and
Mediaroom, as well as PC and mobile interactive entertainment.

 Windows Phone Division: Microsoft software and services for Windows Phones worldwide.

 Windows & Windows Live Division: All Windows businesses, including Windows, Windows Live and Internet
Explorer.

We are committed long term to the mission of helping our customers realize their full potential. Just as we constantly update and
improve our products, we want to continually evolve our company to be in the best position to accelerate new technologies as they
emerge and to better serve our customers.

Source: http://www.microsoft.com/about/companyinformation/ourbusinesses/en/us/business.aspx

(Accessed 12.10.2011)