Microsoft’s Value Chain and VRIO Analysis

Microsoft’s Value Chain and VRIO Analysis
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Microsoft’s Value Chain and VRIO Analysis Microsoft Corporation is a major technology company based in the United States of America. The company has its head offices in Redmond, Washington D.C, and operates in more than two hundred countries worldwide. Microsoft Corporation has experienced a high rate of growth in the last few years, which can be related to the strong competitive position of the company (Sehgal et al.,2020). This research paper aims at analyzing Microsoft's Value Chain and VRIO analysis. The paper has researched the two topics and organized them into subsections to achieve those above. To achieve this, all the data relating to the company's Value Chain and VRIO was researched from both primary and secondary sources such as journals, newspapers, websites, periodicals, books, and company and internet employees. The inclusion-exclusion criterion was used to filter out the relevant material to conduct the research.  Value Chain Value chain refers to the business processes and activities involved in creating a product or service. This concept conceived by Professor Michael Porter encompasses several stages of the lifecycle of a product or service, which includes research and development, marketing, sales, among others (Kaplan & Norton, 2008). Porter defined that all the processes and activities that makeup up a value chain of a company can be split into primary and secondary activities. Secondary activities of Microsoft value chain analysis: i.General Administration: A healthier and more ecologically friendly strategy is used to ensure Microsoft's corporate operations. Microsoft uses this method to modify and arrange its goods to make the packing lighter and the product transportation easier. ii.Human Resource Management: Selective recruiting is one of Microsoft's management initiatives. This method is used to find and hire skilled employees for the company. iii.Technological Development. Microsoft invests a significant portion of its retained earnings on research & development. Microsoft's research and development investment grew year after year, reaching $1.9 billion in the most recent quarter and accounting for 3.3 per cent of the company's total net sales (Sehgal et al.,2020). This demonstrates Microsoft's dedication to continually pushing creative concepts to maintain a competitive lead over its rivals. Microsoft's Primary Activities of Chain Value Analysis: i.Inbound Logistics: Microsoft now works with hundreds of suppliers across the world. Microsoft's supply chain management is well-synchronized and structured. Microsoft's procurement agreements expressly cover its needs for 150 days. ii.Operations: Microsoft employs almost 131,000 full-time employees and an additional 4,400 temporary and contract workers to support the company's operations. iii.Outbound Logistics: Microsoft's direct lines of distribution account for over 28% of its net sales. Microsoft places significant reliance on its indirect distribution channels (Sehgal et al.,2020). Due to inventory management cost concerns, Microsoft is attempting to lower the number of inventories. iv.Marketing and Sales: Microsoft offers its goods through four different distribution channels. The majority of the funding is allocated to creating and executing an integrated marketing communication strategy. Advertising, public relations, events, and personal selling are part of this marketing mix. VRIO Analysis             The VRIO study examines and evaluates a company's resources, competitiveness, and strategic benefits. The VRIO analysis enables a company to identify the long-term competitive advantage by researching its internal skills and resources (Barney & Wright, 2018). The prior business strategy emphasized the unique resources that gave it an edge over competitors. 1)                  Valuable Competencies that are valuable help Microsoft maximize opportunities and mitigate threats both inside and outside. These talents help a firm thrive and flourish—brand image matters in terms of social responsibility. i.Brands and social responsibility Microsoft regularly takes part in corporate social responsibility activities. The stakeholders are periodically briefed on the company's social responsibility activities through official reports like annual reports.

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