Control Mechanisms: Microsoft Paper

1554 words - 7 pages

For many years Microsoft has played an important role in the computer industry. Microsoft has evolved into a great technological corporation that is used by millions of people with different ethnicities and backgrounds all over the world. Microsoft has unified many people from many different cultures on how to communicate with one another. There are four different types of control mechanisms to assist with the growing dynamics of Microsoft. They are budgetary, financial, market, and clan controls. Controls direct the activities of different individuals to assist with achieving the goals of Microsoft. After examining the different types of mechanisms and how they affects Microsoft in both a positive and negative way, even though some results are similar, they are each very different. Each control mechanism has a different impact of the four functions of management. Analyzing and reviewing how each one impacts Microsoft will help to determine and explain the purpose of each control mechanism.Microsoft, like any major corporation, uses managing control mechanisms in order to succeed in all aspects of its industry. They have focus on four mechanisms, the first of which is budgetary control. This "is the process of finding out what" is "being done and comparing the results with the corresponding budget data to verify accomplishments or remedy differences" (Bateman and Snell, 2007). This way Microsoft will know what to expect in sales, what is being accomplished, and make corrective actions if needed. The second mechanism is financial control. Microsoft uses a balance sheet to keep control of their assets, liabilities and stockholders' equity, and also uses a profit and loss statement in order to analyze and keep control of the income and expenses of Microsoft operations. This is to ensure that their revenues are larger than their expenses at all times. Another control Microsoft uses is market control, this is in order to regulate independent business and maintain low competitive prices with other businesses. This control works best if having an actual physical existence and market can be established among parties. The fourth control mechanism Microsoft uses is clan control. This is to empower Microsoft employees to meet certain performance standards. That way they involve the employees on doing what is best whether the manager is there or not. This control also helps Microsoft generate more innovative ideas since there are more heads thinking of new things to improve and create. It also helps in letting the employee feel they are part of the company's success. With these control mechanism Microsoft has managed their way to success by controlling their budget, assets, market and performance.Comparing actual results with projected or budgeted results, gives Microsoft feedback of how well the company is performing. Analyzing both positive and negative variances between actual and budget enables Microsoft to focus more heavily on areas that need improvement and learn from the favorable results to apply practices elsewhere. Enacting budgetary controls helps Microsoft to think about the future and set out detailed plans to provide its consumers with quality products at an affordable price. Financial controls illustrate the fiscal position of Microsoft through profit and loss reports and the balance sheet. Through compounding income and expense data, the company can see its financial results at a glance. This tool is effective in displaying actual results to managers who can make corrective actions in areas that require response. Market controls are an effective means of regulating the sale price of Microsoft's products. The company is the forerunner in the software industry and is responsible to determine a cost for its product compared to the value the public places on the product. A consumer will only pay what they are willing to shell out on a particular item which challenges Microsoft to perform at its highest potential and productively. Activities become more regulated and customary for Microsoft. The processes become leaner and the business results are more profitable. Microsoft's employees are responsible for meeting specific business standards. The clan controls are useful in the development of the best practice ideas and the delivery of consistent and quality products. Internal systems of values and controls help the workers of Microsoft enhance its business performance and converge on the goals of the company. "Some companies, such as Microsoft, are using stock based incentives for both empowering the employees and giving them a greater sense of achievement. Many other organizations are increasingly sharing the corporate information - including financials - with even the line workers so that they can better relate to the company's challenges" (Yogesh, 1997, para. 8). Microsoft engages its employees by giving them a sense of pride in the work they do.Microsoft, like any other corporation, utilizes the four functions of management in order to succeed and rise above it competitors. These functions include: planning, organizing, leading and controlling. Budgetary Controls consist of a wide variety of different planning processes, the entire concept is to plan for and estimate expected sales and income for set future dates, this can be done weekly, monthly, quarterly or annually. This is implemented by creating and compiling information into several different budgets such as: sales, production, cost, cash, capital and master budgets. It is crucial that Microsoft managers and executives plan accordingly for these expected finances in order for them to ensure that they consistently generate a profit each month.Financial controls consist of a tremendous amount of organizing and coordinating of financial budgets and assembling statements such as: balance sheets, profit and loss statements and financial ratios. Each of these statements requires consistent monitoring, so that the controlling function is taken into careful consideration as well. Controlling is the process of learning from information and making changes where ever necessary. Successful organizations, such as Microsoft or even the smallest of companies must pay close attention to detail in this area, so that they keep a competitive edge in today's market.Market Control is another form of gathering information in order to negotiate the price and value of a product or service. These transactions are organized and adjusted by the effects of the supply and demand and the productivity and performance of the organization.Clan Control requires that managers stimulate their employees to be high performers and enforce that each subordinate takes responsibility for each of their own actions. This is done, not so that they please their supervisor, but rather that they satisfy their customers by implementing personal values, ethics and good judgment when ever on the job. Clan control enforces proper motivation instead of strict guidelines and rules for everyone to follow, but the only way this can be successful is for leaders to inspire and invest time in each of their employees.Control systems regulate the allocation and utilization of resources (Bateman and Snell, 2007), and can be the cause of positive results as well as negative results. For instance, prior to Steve Ballmer's takeover at Microsoft, innovational employees were leaving their positions due to the bureaucratic control structures that were in place. One of the company's midlevel managers was frustrated with the "snail's pace" decision making required to inculcate a new feature into Microsoft's "freebie Internet E-mail service, which would quickly take its 40 million users to Microsoft's MSN sites. It would have taken about 30 minutes to write the code, he says. With 30,000 employees, 183 different products, and at least five layers of management, staffers had begun complaining about the red tape" (Moeller, Hamm, and Mullaney, 1999). However, Steve Ballmer, new CEO for Microsoft since 2000, is aware of "the risk that copious attention to management processes…could stifle innovation" (Anonymous, 2003). Ballmer has cut that red tape by empowering "a second tier of executives to run their work with less supervision" (Anonymous, 2003).ReferencesAnonymous. (2003). New CEO Aims to Make Microsoft a Better Corporate Citizen. Human Resource Management International Digest, 11(1), 26-30. Retrieved May 25, 2008, from ABI/INFORM Global database. (Document ID: 331834961).Bateman, Thomas S., & Snell, Scott A. (2007). Management: Leading and Collaborating in a Competitive World. (7th ed.). The McGraw-Hill Companies, Inc.Malhotra, Dr. Yogesh. (1997). Brint Institute. Virtual Corporations, Human Issues & Information Technology. Retrieved May 23, 2008, from (2008). Microsoft Corporation. Retrieved May 24, 2008, from, Michael, Hamm, Steve and Mullaney, Timothy J. (1999, May). Remaking Microsoft: Why America's Most Successful Company Needed an Overhaul. Business Week, (3629), 106. Retrieved May 25, 2008, from ABI/INFORM Global database. (Document ID: 41811037).


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