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Leadership and Organizational Behavior

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Leadership and Organizational Behavior


Microsoft describes itself as the worldwide leader in developing software products and services. Since its founding more than 30 years ago, the company has reorganized and changed its business structure to stay competitive against other major companies such as Google and Yahoo! As of 2009, the most recent year for which the company provided figures, Microsoft employed more than 92,000 people in more than 25 countries and had net revenue of more than $58.4 billion, with net income of more than $14.5 million.

1. History

Bill Gates and Paul Allen founded Microsoft in 1975 to create operating systems and other software-related products for personal computers. First incorporated as a private company in New Mexico, Gates and Allen moved the company to Washington State in 1979 and incorporated on June 25, 1981. Microsoft moved to its current headquarters in Redmond, Wash., in 1986. The company has reorganized at least twice to try and become more efficient. An Associated Press article described how Microsoft reorganized into three large business divisions in 2005, giving its executives more power. By 2009 the company had made another shift in its organization, splitting into five product groups.


Microsoft is a public corporation. Shareholders elect the board of directors, who in turn hire the top executives including the president, vice presidents, secretary, and treasurer. The company must follow Washington State's laws regarding a corporation and must also abide by Securities and Exchange Commission regulations for financial reporting. As of July 2010, Steve Ballmer held the title of CEO, while co-founder Bill Gates was the chairman.


As of 2010, the company has a divisional organization as described by Richard L. Daft in his book, "Management." Each division, or product group, focuses on a specific line of goods and services. Each group has its own research and development, sales and customer service staff. Daft says although this type of organization is more expensive, it allows the groups to better serve their customers. Each product group has one executive in charge who reports directly to the company's president.


Microsoft's five product groups are Windows & Live Windows Group, which handles the PC operating software and Windows consumer products; Server Software, in charge of internet server software; Online Services, responsible for online advertising and Bing search engine; Microsoft Business, develops business related software and servers; Entertainment and Devices, assigned to handle the Xbox, Zune and software for the automotive industry.

Benefits of Structure

In his book "Management," Daft describes how companies benefit from using a divisional, or group, organization. He says the entire group is often in one location, allowing more interaction and better communication between all the employees developing or supporting one line of products. Daft adds that having a smaller business unit means each division can develop new products and get them to market faster, making it easier to compete against rivals.

2. Business and Organization Structures

3. Microsoft CRM uses a very simple, but powerful, organizational structure for the construction of arbitrarily complex business hierarchies. Each installation can have multiple organizations. However, every action performed by a user is confined to the user's own organization. Organizations are lightweight entities which provide a common location from which to locate other business units. Business units are not strictly hierarchical in nature; however, they may be parented only by a single business unit.

4. Note the Microsoft CRM application does not support multiple organizations.

5. There are three primary entities within the organizational structure, not including the organization itself. These are users, teams, and business units. Users represent real people who are members of an Active Directory domain; these are the people who use the Microsoft CRM application. Teams are arbitrary groups of users created and defined by a user in an organization. Business units are the structural units of an organization, as defined by a user in the organization; they are the primary container entity within the organizational hierarchy. It's the business unit structure that determines and defines the concepts of Basic, Local, Deep, and Global access, which will be covered in the sections Microsoft CRM Security and Access Levels. The following diagram is an example of a Microsoft CRM business unit structure for an organization.


7. The organization contains six business units in a simple hierarchy. The business units directly below the organization are unrelated in any apparent structural way except for the fact that they all belong to the same organizational structure.

8. The two business units labeled Department A1 and Department A2 are child business units of Business A. These two business units have a special relationship with regard to users parented to Business A - they serve up business objects to users within Business A who have "Deep" access. Note that it's not possible to construct matrix organizations within the Microsoft CRM organizational structure.

9. Within this structure, users can be created from the users who are members of the Active Directory domains. Users within Microsoft CRM must be 'parented' to a business unit and cannot be parented to the organization object itself. In the previous diagram, this means that users can be located at any node except the top-level node labeled Organization.

Over the last 15 years Microsoft has gone from 2 friends in a dorm room to the most highly capitalized company in the United States. This has occurred not because of luck, money, acquisitions, or personal connections. It has occurred solely because Bill Gates has built a company with his own unique management style. Microsoft's management style is its core strength. There are other companies that produce better software, market better, and make fewer mistakes. But no other company manages their business as well. And Microsoft's management strength is why it will continue to dominate.

Microsoft has brought about a change in the business community greater than the change due to global competition that has occurred over the last 20 years. This new change is more severe. It requires a change in the



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