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Microsoft Corporation

Introduction.

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Analysis of Historical Development and Current State of Microsoft Corporation

Firstly, the success of the company in many cases is dependent on its leader. Therefore, in order to realize why Microsoft Corporation occupies the leading position in the world, it is necessary to analyze the steps that the leader has taken in the course of historical development of the company. Talking about Microsoft Corporation, the company’s leader is Bill Gates who is the greatest entrepreneur of the 21st century. The first step he has taken is determination. In 1975, Bill left Harvard and together with his friend Paul Allen founded Microsoft. They were not afraid of future difficulties because their goal was clearly defined, namely to develop software for the newly emerged PC market (Clark & Salisbury, 2006, p. 920). The second step is the opportunity to catch the chance. With the introduction of the first PCs by IBM in 1980, Microsoft did everything possible to develop an operating system for them. The invention of DOS helped Microsoft not only to achieve this objective but also to become the most popular standard for PCs in the world (Riper, 2011, p. 308). The third stage is fighting with competitors. In 1983, to be in the same league with Apple Macintosh, which sported a graphical user interface, Microsoft created Internet Explorer and version 1.0 of Windows operating system. The last stage is constant improvement. To adjust to the changing needs of the society, Microsoft provided users with new updated versions of Windows operating system. For example, Windows 95, introduced in 1995, was a radical departure from the previous as its principal innovation was 32-bit memory addressing with protected memory and independence from MS-DOS (Ritchie, 2003, p. 279).

Nowadays the majority of people define Microsoft Corporation as the leading company in the field of software. Almost every person has in his or her PC such Microsoft applications as Internet Explorer, Media Player, and MS-Office Suite consisting of Word, Excel, Power Point, Outlook, and Access. Almost all Microsoft products are complementary to a member of the Windows family of operating systems for personal computers and servers (Economides, 2003, p. 3).

Secondly, one can reveal the present position of Microsoft Corporation on the worldwide market with the help of analyzing concrete case studies. The first case study shows that Microsoft helps business companies to be successful. According to it, Raritan Bay Federal Credit Union upgraded its Windows XP PCs to mobile PCs running the Windows 8 operating system so that it can offer modern financial services (Microsoft Case Studies, 2013). With the help of the use of Windows 8-based mobile computers, RBFCU can serve customers more promptly, calculate and post interest rates faster, and enables employees to work in different conditions (Microsoft Case Studies, 2013). The second case study proves that Microsoft is helpful for people with special needs. At the Abu Dhabi Center for Autism, Microsoft through its assistive technology device the DynaVox Maestro, built on the Windows 7, helps students to communicate, interact with teachers and school peers, develop language skills, and successfully function in the society (Microsoft Case Studies, 2011).

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Finally, it is difficult to imagine what Microsoft will prepare for its users in the nearest future. Nowadays people have the possibility to use Windows on their mobile phones. Thus, it is possible that in a few years, Microsoft managers will provide users with penetration of Microsoft in almost every sphere of their life. For example, cars will be equipped with special small computers, based on Windows, and toys for kids will be running with the help of Microsoft applications. Thus, one might formulate the motto of changes in such a way Microsoft is everywhere.

Microsoft Corporation is a leading software manufacturer in the modern world. One can analyze the history of its development from the point of view of steps that the company’s leader Bill Gates has taken on the way to its success. They are as follows: determination to open the new company, the opportunity to seize the chance proposed by IBM, fighting with competitors, and constant improvement. With the help of regarded case studies with Raritan Bay Federal Credit Union and the Abu Dhabi Center for Autism, one can indicate such benefits of Microsoft as strong leadership and a wide range of productions, adjusted to the changing needs of the modern world. However, the biggest disadvantage of Microsoft is illegal and unethical monopolization of power. It does not give the opportunity to reveal the potential of other smaller companies. It is difficult to predict the future of Microsoft Corporation. Nevertheless, it is feasible that Microsoft will penetrate into different spheres of life of its users from cars to toys in order to make the life of people easier and extend its influence.

Bove, T. (2005). Just say no to Microsoft: How to ditch Microsoft and why it’s not as hard as you think. San Francisco, CA: No Starch Press.
Chen, B. (2011). Always on: How the iPhone unlocked the anything – anytime – anywhere future and locked us in. Cambridge, MA: Da Capo Press.
Clark, C. E., & Salisbury J. N. (2006). The enduring vision: A history of the American people. Boston, MA: Cengage Learning.
Economides, N. (2003). The Microsoft antitrust case: A case study for MBA students. New York, NY: Stern School of Business.
Microsoft Case Studies. (2011, April 11). Abu Dhabi center for autism. Retrieved from click here
Microsoft Case Studies. (2013, December 11). Raritan bay federal credit union.
Riper, A. (2011). A Biographical Encyclopedia of Scientists and Inventors in American Film and TV since 1930. New York, NY: Scarecrow Press.
Ritchie, C. (2003). Operating systems incorporating UNIX and Windows. London, UK: Cengage Learning.

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Microsoft Corporation Essay

Microsoft Corporation: A Research Project

Since its inception in 1975 by co founders Bill Gates and Paul Allen, Microsoft Corporation have steadily and rapidly become one of the world’s most successful companies, with brands amongst the most global. It now commands a position among the top worldwide corporations, ranking number three in the FT Global 500while enjoying revenues in excess of $36bn.

This essay seeks to provide an overview and history of the company, while undertaking a succinct analysis of its business successes. The reasons for this success of the company shall be explored, and the prospects for continued future prosperity will also be assessed.

Introduction and History

Microsoft, a public US company trading shares on the NASDAQ stock exchange in New York, is active globally, with offices in over seventy countries. For an overview on Microsoft figures, see Appendix A. Originally set up to make operating systems for the Altair 8800 system, the company has since produced industry benchmarks in the market, first with MS-DOS in the 1980s, and with Windows in the 1990s.

By dominating this market with a near total monopoly on the world’s home and business PCs, it was in a position to develop software applications to complement and support its product range. The most successful examples of these include Microsoft Office, a clutch of desktop publishing applications, and more recently the online integrated programmes and services of MSN.

Microsoft and their Markets

According to their website, Microsoft loosely define their three core markets as:

Entertainment
Platform Products & Services

The development and subsequent strength of the brand has revolved around specialised marketing to each of its target audiences. Fill (2002) identifies the company’s overall marketing strategy as taking a radical new approach to the needs of the market and break away from the way in which brands in the sector are normally perceived. Although Microsoft’s core markets now appear to be in maturity, it initially sought to build presence in these markets via distinct product positioning which set it apart from its competitors. The strategy is evidently a success, as applications such as Office and Internet Explorer rapidly became benchmarks.

Microsoft’s website offers a good indication of how the company very clearly segments its markets. Business, for instance, is split into areas covering all aspects of industry (education, finance, retail etc.) while home markets concentrate on education, entertainment and utility segments.

Within its business market, Microsoft offers integrated applications tailored to specific industries. It aims to cover all business technology needs over two distinct areas: business solutions such as supply chain management and customer relationship management, Windows Server System, covering network and hardware management.

On a more micro level, the company aim to tailor its services to customers via its Certified Partners scheme. Using a worldwide network of regional business units and individual professionals, it can be sure that its customers are receiving service from people who know the industry or are more familiar with local business issues. Functions performed in this regard include what its website refers to as add-in products to build on standard functionality to meet industry-specific and company-specific needs. Such personalised service is something often found lacking in large multinational organisations that often use a one size fits all approach to whole territories. The company’s contact with its customers extends as far as individual training and certification on how to use its software.

Using this multi-functional approach to business solutions, the company is able to frequently interact with its business markets, helping consumers to believe the company is marketing directly to their individual needs. East (1997) highlights the importance of retention in durable markets (i.e. one off or long lasting purchases). He argues that the cost of losing customers in such markets are high as setting-up costs often include higher overheads associated with the purchase. Microsoft appears to have been very successful in retaining its customers, due in part to convenience or the overall high cost of switching. It can be assumed that the interaction the company appears to have with customers creates a reinforcement effect, which will increase a customer’s propensity to remain loyal to the company in future purchases, defined by East (1997) as learned reinforcement.

Using a combination of strategic partnerships with PC manufacturers, as identified in their 2004 annual report, proactive marketing and the strategies discussed below, Microsoft has managed to build and maintain a near complete monopoly in its core markets.

Understanding and marketing to the target audience

According to their website, Microsoft Corporation would define their business position as the worldwide leader in software, services and solutions that help people and businesses realize their full potential. The company’s success in adapting to changing market conditions and demands represents perhaps one of the key reasons for their continued success. In addition, it is their ability to exploit its strengths which help it to maintain its position, a point which will be explored in greater detail later in this essay. The company, with vast amounts of funds available to formulate the kinds of integrated global marketing campaigns historically observed (over $8.3bn spent globally on marketing activity in 2004), has nevertheless attempted to understand its market from a corporate level in many ways.

Commitment to Online Development

By placing the evolution of its applications into Web-based services for enterprises and consumers (Hoover 2005) at the forefront of its product development strategy, Microsoft is demonstrating its perception that the Internet is and will continue to be important to its consumers. In addition, it has attempted to integrate its Hotmail email programme into a more far reaching MSN passport system, and relied on online functionality for the success of its games consoles. Davenport (1997) acknowledged that the company identified as far back as 1997 that they needed to embrace the Internet and incorporate it into virtually all products and services. Whether or not such a strategy will continue to prove successful remains to be seen, but success should be assisted by Microsoft’s original online vision and the experience it has gained since then.

Microsoft’s Corporate Strategy: Organic Growth & Acquisitions

During its lifetime, Microsoft has pursued an aggressive policy of take-overs and acquisitions. Via this strategy, Microsoft has shown that it is ready to adapt quickly to market conditions in order to appeal to its consumers. The company has carried out over 50 acquisitions in the last ten years. One of numerous examples of this includes the 1999 purchase of Hotmail, the world’s most popular free email service, and reflected Microsoft’s sound belief in the strategic need to deliver high quality free email services to its customers in the face of strong competition from other free email providers (Yahoo!, Lycos etc.). In addition, Microsoft has shown that it is prepared to purchase companies who could improve their overall product quality. Prior to the launch of its Xbox games console, the company embarked on a strategy to secure exclusive rights to top rated games, including the purchase of developer Bungie, creator of the popular game Halo.

The approach has allowed the company to acquire competencies it may have lacked if it had followed a strategy of internal development, and allowed it to bring high quality products to market within a relatively short timeframe.

Concurrently, Microsoft has strongly pursued a policy of internal development, placing a high level of emphasis on research and development. The company state in their 2004 annual report that the concept of integrated innovation was key to their strategy, which aims to deliver even greater value to customers. Hence, Microsoft has invested a great deal in product and service development (over $7bn in 2004). The company’s willingness (something which may or not have been enforced upon them for legal reasons) to allow third party companies to complement their products demonstrates an evolution in strategy. Such a strategy would seem to be complimentary to their competence of moulding other company’s products to fit their own product output as observed in the high number of acquisitions that have taken place. Hence, this type of integrated innovation would appear to see Microsoft playing to their strengths when delivering products to their markets.

A Workforce that Understands Technology Markets

According to Davenport (1997), Microsoft has built up a reputation for employing highly skilled individuals who understand the business and the industry. It is argued that, in doing so, the company’s operations are able to better adapt to the industry and the observed changes in markets. The company’s marketing activity, for example, must be able to communicate how the company is striving to meet the changing needs of the consumer. Highly skilled workers, therefore, will help the company to develop and implement strategies successfully as needed.

Such a reliance on highly knowledgeable staff in which product development occurs in parallel to understanding what the customer requires may be one of the main factors in maintaining its position. With a marketing department that understands the technology market and anticipates its changes, the company is able to retain its image as technology and product innovators.

The above has summarised many of the ways in which Microsoft has sought to appeal to its various target audiences. Observing the company’s competitive position may also help to identify the decisive factors effecting future continued success.

SWOT: An Analysis of Microsoft

For a full outline of identified strengths, weaknesses, opportunities and threats to the company, see Appendix B. Some of the key issues facing Microsoft as it aims to maintain past successes include the following.

In the past, Microsoft has been extremely successful in developing new products by promoting, or bundling, them with existing brands. The Windows operating system is perhaps the best example of this, where applications such as Internet Explorer and Media Player have become industry benchmarks due to their out of the box availability. By exploiting the monopoly power it has on PC operating software, it is in a position to influence the success of strategic areas of future performance. In an industry where the battleground for future dominance in the technology industry is likely to be aggressively fought, as companies increasingly move towards wholly integrated media devices, the strategic advantage of such a means cannot be overstated.

Legal Lawsuits

Due to an observed monopoly Microsoft enjoys in the home PC market, it could be considered inevitable that competitors will seek to undermine or diminish this power though legal means. It is, however, stated in Microsoft’s 2004 annual report that major progress has been made to stem legal action and improve relations with governments. Nevertheless, the threat of lawsuits remains one of the greatest threats to Microsoft’s current monopoly of its market position.

Current examples:

Recent payment to RealNetworks, Inc. ($361 million)
Recent Novell settlement

Emerging Online Brands

The emergence of online global brands has led to strong competition, particularly within the media market, a developing Microsoft market according to Hoover (2005). Google and others are increasingly bringing a greater range of products to the market, many of which directly compete with Microsoft’s own product portfolios.

What perhaps differentiates Microsoft from many of its more traditional competitors such as IBM is its globalised nature. Anholt (2000), as cited by Fill (2002) suggests that by using technology in place of more traditional physical distribution channels Microsoft was able to negate the inefficiencies associated with the latter. Upcoming online brands, on the other hand, do not suffer the same traditional barriers, and may in time create better conditions to compete effectively with Microsoft.

Conclusions

As the technology market evolves, it could be speculated that the successful companies within the industry will be the ones that are able to best suit the changing needs of consumers. If the upcoming trend towards technological integration of media products predicted by Microsoft and others does occur, the company is seemingly well placed to do this.

The many analysed strengths of Microsoft detailed in this essay appear to be particularly pertinent to the evolution of the market’s needs. The company appears to have sensibly accepted the role of integrating competing products within its own products, which may in future assist it in maintaining its position from a legal perspective. Adaptability in the market place, as it has been in the past, may prove to be decisive as competition from Google and other online brands strengthens.

Microsoft Overview

Company Name: Microsoft Corporation
Current CEO: Steven A. Ballmer
Company Headquarters: 1 Microsoft Way
Redmond, Washington State, USA
Shares listed on: Nasdaq (USA)
Current Share price $28.07
(as at 18/11/05)
Year high $28.00
Year low $23.82
2004 Sales Revenue $36.835bn
(Year ended June 30, 2004)
2004 Net Income $8.168bn

SWOT Analysis

Bibliography.

East, R. (1997), Consumer Behaviour: Advances and Applications in Marketing FT Prentice Hall, UK
Fill, C. (2002), Marketing Communications: Contexts, Strategies and Applications (3rd Ed.), FT Prentice Hall, UK
Davenport, T.H. (1997) Knowledge Management at Microsoft,
Web: 2005 Sales, source Hoover’s Microsoft Company Report 2005

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Microsoft Corporation: PEST and SWOT Analysis

Today, Microsoft Corporation is a world leader in software production, provision of services, and Internet technologies for personal computers and servers. Over the years, the company has experienced ups and downs but was able to overcome the crisis and keep the bar of the leader in the development of various software technologies and products. This work is devoted to the analysis of the problems faced by the company and the decisions taken by the company’s management.

Microsoft has many successes on its account, which resulted from the evolution of the company’s marketing and production over the years. In addition to its operating systems, the company has a stranglehold on the office suite market. Large and small enterprises use this software because it gave them tools that made it easier to process texts and create spreadsheets, presentations, and documents. The primary success of Microsoft is undoubtedly Windows NT, a family of operating systems that Microsoft has been using since the early 90s. In addition, it is possible to recall Windows 95, Windows XP, Windows 7, mobile operating, and search systems, which significantly expanded and strengthened the company’s influence on the global market.

However, Microsoft also had setbacks that negatively affected the company’s reputation. For example, Windows ME is an operating system that was released in a hurry and, as a result, lasted only a little more than a year. It was constantly faced with incompatibilities, bugs, slow and unstable work. Microsoft Vista was heavily criticized for many errors and problems, which is why the company’s management even organized a particular Windows Mojave advertising campaign. Marketing failed to implement its plans, especially after users discovered that the operating system was stuffed with DRM restrictions and consumed excessive RAM and processor resources.

In 2011, the company decided to enter the growing mobile industry and took the dominant position of Google thanks to the Bing search system. The Internet is playing an increasingly important role in human activity, as it provides quick access to a massive amount of information. It means that users need high-quality search engines, including Bing, which has many useful features and updates to compete with Google and Google Chrome. Thus, given the constant innovations and changes, Microsoft search systems will remain in demand for a long time.

Nevertheless, the same cannot be said about Microsoft’s mobile products, the production of which ended four years ago due to several factors. For example, in the last years of the life of Windows Phone, Microsoft, for some reason, began to target the commercial sector, although it was necessary to focus on the mass consumer. In addition, Windows Phone had a minimal app store. Developers were reluctant to optimize their applications for the new platform because Windows Phone used a different API, which took a lot of time and money. Thus, the field of mobile devices could become an extremely profitable and promising direction for Microsoft, but Windows Phone came out too late. If Microsoft had introduced a new operating system earlier, instead of using Windows Mobile until the last moment, the story could have turned out entirely differently.

Microsoft needs to listen to users’ words and no longer try to establish a monopoly on a particular product sector so that the company’s actions do not cause disputes and disagreements. In addition, a transparent and honest marketing policy is needed, which will convince customers of the high quality of Microsoft products. It will also serve as an essential component of the company’s reputation. Of course, Microsoft has been on the market for many years and has a stable and reliable reputation. Still, the situation on the market may change, new competitors may appear, which will have to be reckoned with and coexisted.

PEST Analysis

Microsoft has faced several political challenges over the past couple of years. In particular, some trust issues have arisen, which are severe and require solutions, unlike many other problems. Countries, primarily China, face the problem of methods of distribution and sale of Microsoft software. Relations between the United States and China are, for the most part, friendly and mutually beneficial (Warner, 2019). The United States relies heavily on China, which means that any problems and interference can cause unrest even for Microsoft. However, the issues are connected with China and the European Union, which in 2013 fined the company $ 730 million for violating trust rules. Recently, the EU changed its privacy rules, which may be the reason for continuing legal proceedings against large American companies.

Any active business’s profitability and income directly depend on the political environment, so Microsoft needs to monitor laws in other countries carefully. Over the past two years, the company’s management has spent more than ten million dollars on organizing a favorable political environment, so Microsoft is in an advantageous position (Warner, 2019). Microsoft operates in many countries, so the nation’s attitude to the company’s activities directly affects its success.

The corporation is still recovering from the changes that occurred more than a decade ago. In 2007, when the financial crisis broke out, Microsoft was forced to lay off more than 5,000 employees. Any changes in the economy can lead to devastating consequences for companies, even as big as Microsoft. The current state of the economy also impacts Microsoft’s situation, as profits fluctuate due to changes in tax rates and labor legislation. In addition, unfriendly relations between international companies can increase inflammation or hinder the import and export of materials.

In 2015, the strengthening of the dollar led to a reduction in revenues and expenses from Microsoft’s international operations. If one country is experiencing difficulties, their purchasing habits will shift only to essential goods. However, if a country’s economy is booming, they are likely to buy more products, even if they are not expediently needed (Jiang et al., 2021). Microsoft needs to act accordingly to ensure that such changes will not significantly impact the company as a whole.

In addition to economic factors, social factors have a significant impact on the company’s income and profit. The lack of tracking of cultural changes can have a negative effect on business (Lopez Giron & Vialle, 2017). The management of large companies makes a lot of efforts to learn about new trends, to study the customs and cultural traditions of the countries where their business operates. Unfortunately, Microsoft doesn’t pay much attention to changing its positioning to benefit cultures.

There is a significant increase in mobile devices, which should be fast, optimized for screen size, and easy to use. Microsoft has not easily adapted to smartphones, as most Microsoft products are designed for computers. Microsoft needs to make some adjustments in its attitude towards mobile device users if the company wants to succeed in this field. For example, it makes sense to include smartphones as the central part of their marketing strategies; otherwise, other companies will take the initiative.

Microsoft is a technology company that develops and distributes digital software. The corporation is affected by any changes in the technology industry: the old technology is discarded as soon as a new one is developed. The two main competitors, Apple and Google, pose a constant threat to Microsoft, as they adapt more easily and quickly to continuous changes. If Microsoft does not take any action, it will most likely lead to a devastating loss of profits (Warner, 2019). Fortunately, Microsoft invests a lot in innovation, research of new technologies. For example, the company has achieved profit growth after the introduction of cloud services. Nevertheless, the corporation is not entirely familiar with mobile technologies, which are gradually becoming a priority.

SWOT Analysis

A leading position in the global software technology market, especially in the field of cloud computing. Microsoft is the world’s largest operating system developer and a top cloud player. In the third fiscal quarter of 2020, the number of daily users of the Microsoft Teams remote work solution increased by 70% – from 44 million to 75 million within six weeks; and increased by 110% in the four months prior.
Microsoft ranks second in the world by market value, being the world’s largest company with a dominant market share. It also holds the largest market share with 3% growth among the five largest cloud service providers.
Microsoft has a comprehensive market coverage, operating in more than 190 countries around the world.
The corporation demonstrates constant and steady growth in the cloud business based on profit results.
The company’s management resorts to effective and robust marketing strategies that impact people around the world.
Microsoft focuses entirely on the PC market, which is often subject to falls due to rising supplier prices and currency fluctuations. This factor puts the company in a vulnerable and periodically dangerous position.
Currently, there is a constant increase in cybercrime, which negatively affects the company’s activities. Hackers launch attacks on the cybersecurity of Windows operating systems.
Microsoft has failed to increase sales of its hardware products, such as computers and Surface pro phones. The corporation lags in innovation and advanced technology, while Apple and Google are quickly making their way.

One of the organizational problems of Microsoft is the mobile direction of activity, which is difficult for the company. This problem is evident against the background that companies are beginning to allow their employees to use Android and iOS devices instead of the traditional Windows and BlackBerry devices for the corporate segment. The attention of consumers is entirely attracted by new devices – smartphones and tablets in which Microsoft has not yet reached a confident position.

Potential marketing solutions to this problem are the following: the development of a recognizable Microsoft flagship phone, like Nexus or iPhone; the expansion of the Windows Phone app store; the corporation’s transition to the Android system. Presumably, the field of mobile technologies has already been conquered by other companies, and Microsoft is unlikely to regain a significant mobile device sales sector, even despite the high quality of its products. The best strategy seems to be the transition to the Android mobile system. Even a Windows Phone-based phone with a 50-megapixel camera will not convince connoisseurs of portable electronics to reconsider their preferences in favor of a mobile platform that is not currently in high demand.

Jiang, Z., Sun, J., & Wei, K. (2021). The Application of PEST Analysis and POCD Framework to Skydio’s Venture Capital Investment. In 2021 International Conference on Financial Management and Economic Transition (FMET 2021) (pp. 202-208). Atlantis Press.

Lopez Giron, A. J., & Vialle, P. (2017). A preliminary analysis of mergers and acquisitions by Microsoft from 1992 to 2016: a resource and competence perspective.

Warner, J. P. (2019). Microsoft: A Strategic Audit.

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Microsoft Corporation

Firstly, in order to understand why Microsoft Corporation is on the top of the business world, it is necessary to analyze the way of its historical development. It is almost impossible to do without analysis of the life path of its creator, Bill Gates. At the age of 13, Bill became programming computers. At Harvard, he continued his hobby. Together with his friend Steve Ballmer, he wrote a version of programming BASIC. In 1975, Bill left Harvard and together with his friend, Paul Allen, formed Microsoft. Their goal was to develop software for the newly emerged PC market (Gates, 1998, pp. 25-26). Originally, the company was situated in Albuquerque, New Mexico. Nevertheless, when IBM introduced the first PCs in 1980, Microsoft was given a chance to develop an operating system for the computer hardware, and moved to Seattle to perform this task. Gates and Allen made some changes in the operating system, called the Quick and Dirty Operating System. They gave the new name for it – DOS. After making improvements, DOS was licensed to IBM. From that time, Microsoft software became the standard for PCs around the world. However, to deal with competitors, Microsoft Corporation could not stop at this stage of development. That is why, in 1983, Microsoft created Windows operating system, which provided users with such benefits (graphical interface) that were proposed also by the Apple system. This innovation gained success in the society and allowed Microsoft to retain leading position on the PC market. Subsequently, in 1986, the company launched IPO, which provided Microsoft with the necessary money to develop new products, and buy out smaller competitors. In addition, Microsoft Corporation gave away Internet Explorer adjusting to the growing need of the Web. In 1990, Bill Gates introduced Windows 3.0 and provided further competition for Apple software. By the 1990s, the company held a monopoly in the field of operating systems of PCs, as almost 80% of the world’s PCs used its software (Geisst, 2009, p. 179).

Nowadays, Microsoft Corporation can be defined as the leading company in the field of software. It is known worldwide for such applications as MS-Office Suite consisting of Word (word processor), Excel (spreadsheet), Power Point (presentations), Outlook (e-mail and news), and Access (database). Nevertheless, it is not only famous because of its software, but also because of hardware as it offers keyboards, mice, and Xbox gaming console. In addition, in 2013, Microsoft started to expand its power in the sphere of mobile technologies. It acquired the handset division of Nokia (Economides, 2003, p. 3).

Secondly, the benefits of Microsoft Corporation cannot be clearly noticed without regarding concrete case studies. The first one is concentrated on the company SunSmart Energy, which is situated in the U.K. It is “a startup company that designs, sells, and installs solar photovoltaic (PV) systems, which convert solar energy into electricity” (Microsoft, 2012). To attract customers and occupy the leading position on the market, the manager of it, Matt Thorington, has chosen the strategy of close contact with customers. Microsoft has helped SunSmart Energy to bring this idea into life. It provides it with Microsoft Dynamics CRM Online, the customer and sales management tools, which can be accessed over the Internet. With this program, SunSmart Energy gains such benefits as cost-effective purchasing model, based on a per month and per user basis, increased profitability through tight control of costs, and direct communication and connection with the customers (Microsoft, 2012). Nevertheless, Microsoft is vital not only for the business environment, but also for social one. The second case study reveals the importance of Microsoft for people with special needs. Ignacia Picas is a student at Colegio San Benito, a primary level school in Santiago. She is blind. However, it does not prevent her from successful studying. Windows accessibility programs, integrated in Microsoft Office application and compatible screen reading software play a very great role in it. They give her the opportunity to perform a full range of different activities in the class and be in the same league with other students (Microsoft, 2012). Despite of all benefits that are clearly defined in these case studies, there are some of them, which point out weak sides of Microsoft Corporation. For example, the Antitrust Division of the Justice Department accused Microsoft of violations of the Sherman Antitrust Act in 1998 (Geisst, 2009, p. 180). The initial trial judge admitted the guilt of Microsoft for monopolization, and ordered the company to break into two parts (Geisst, 2009, p. 180).

According to the historical path of its development and concrete examples of case studies, main benefits of Microsoft Corporation can be defined. The biggest one of them is the adjustment to the needs of the time. It means that managers of Microsoft work constantly on the improvement of software and hardware as well as introduction of new models as it gives the opportunity to follow modern tendencies of life. Another benefit is the diversity of products, which appeal to the needs of big companies and every citizen in particular. It becomes clear from both case studies. In the first example, Microsoft Corporation provides the company with the program that allows its constant connection with customers and tight control of the costs. In the second one, it allows people with special needs to feel comfortable in the society. The third advantage is strong leadership. Bill Gates has not only created a strong initial base for the company, but also adjusted it to the needs of the turbulent times. For example, to overcome the competitor, Apple Corporation, Bill Gates has introduced Internet Explorer, Microsoft Windows, and Windows 3.0. Nevertheless, the drawbacks of Microsoft Corporation should not be underestimated. The biggest of them that it is almost complete monopolist in the sphere of computer software. Therefore, it does not give customers opportunity for choice. In addition, the cost of the production is under the tight control of Microsoft Corporation. Consequently, it means that the government does not have many possibilities to regulate it.

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Finally, it becomes clear that the advantages of Microsoft Corporation overcome the disadvantages. According to it, the future of Corporation will be based on them. As the tendency of the near future is predicted to be formulated in such a way – to get more benefits from the combination of ordinary things, the Microsoft will follow this modern tendency. That is why the motto of the future is “to make a pizza to feed a billion of people” (Chen, 2011, p. 81). The goal of the Microsoft is to use its software on every type of computing gadget that exists. Even in 1994, Microsoft started to explore the option of collaborating with cable television companies like Time Warner and TCI in the development of software standards for the delivery of television – based information services (Hamel & Prahalad, 1996). That is why this system of relations will be improved and expanded. It will definitely provide many companies with many benefits. For instance, they will have the opportunity to receive effectiveness from the combination of different resources. From my point of view, it is a good idea to make the clocks with Microsoft Windows software and instant connection to the Internet. Employees will have the opportunity to be controlled on the workplaces and send their offers and requests to the managers immediately.

To sum up, Microsoft Corporation is a large diversified computer software manufacturer with one of the highest evaluations in the world. It has come a long way of development and improvement from the small company, situated in Albuquerque, New Mexico to one of the largest corporations in the world. According to the regarded case studies with SunSmart Energy Company and blind college student, Ignacia Picas, such benefits of Microsoft as the adjustment to the needs of the time, diversity of products, and strong leadership can be defined. Nevertheless, the case about the violations of the Sherman Antitrust Act by Microsoft shows that the biggest disadvantage of this company is monopolization of power. As advantages of the company overcome the drawbacks, the future of it will be based on them. Accordingly, it is possible to predict that Microsoft will expand its power on all possible gadgets, following the modern needs of time.

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Apple vs. microsoft: a compare and contrast analysis.

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1. Apple vs. Microsoft: A Compare and Contrast Analysis

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6. Microsoft Window’s Advantages Over Its Competitors

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8. The Brief Overview of the Strategy and Establishment of Microsoft Corporation

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Business , Pages: 5

Microsoft Corporation

Introduction

Microsoft Corporation is an American global technology company headquartered in Washington. The company was founded by Paul Allen and Bill Gates in 1975 to sell and develop Altair 8800’s BASIC interpreters. The company began dominating the personal computer operating system sector in the mid-1980s after establishing MS-DOS. The company then gained popularity by establishing Windows, which is currently the largest software developer in the world based on revenue. The company also produces various enterprise and consumer software for laptops, desktops, tabs, servers, and gadgets, including cloud computing, mixed reality, and internet search. Although Microsoft Corporation has been successful over the years, various issues impact its growth. The issues include ethical, accounting, financial, economic, and statistics issues. This report provides a detailed analysis of these issues and recommendations for dealing with the issues for organizational success.

Brief history and ethical issues of my corporation

Microsoft Corporation has maintained a reputation for offering high-quality products since the 1980s. However, the company has been facing stiff competition over the past five years because of Android. To overcome the stiff competition, the company pushes its employees to increase productivity and looks for ways to increase profits, which leads to various ethical issues. Microsoft began experiencing ethical issues in 1989. The main ethical issue is overworking employees. According to the Seattle Times (2015), Microsoft Corporation is viewed as a Velvet Sweatshop characterized by employee access to everything they need and a convenient workplace in return for long working hours. The company has also faced criticism for creating a toxic work environment for its employees. For instance, a report by Bort (2012) indicated that the company had abusive managers who were only concerned about the company’s profitability. Unfortunately, nothing much has been done to change the work environment at the company despite employee complaints. A recent study conducted by the company in 2022 indicated that almost 50% of the employees at Microsoft and 53% of the managers are burned out (Smith, 2022). Another ethical issue is tax evasion. Microsoft Corporation was in the spotlight in 2020 after one of its subsidiaries declared £220 billion in profits but failed to pay corporation tax for 2020. Another ethical issue is accounting fraud. For instance, in 2020, the company diverted approximately $39 billion of its profits to Puerto Rico so that it would seem unprofitable (Kiel, 2020). The company has also been criticized for its surveillance program, which denies people their privacy.

Analysis of Accounting Issues

Microsoft Corporation’s accounting issues include accounting violations. The Securities and Exchange Commission filed a complaint against Microsoft Corporation for accounting violations after discovering that the company was committing various accounting violations and violating federal securities laws. The company had seven reserve accounts with balances of a minimum of $200 million and a maximum of $900 million that it was required to reconcile every quarter (Sullivan, 2002). The discrepancies in its accounting records led to understatements and overstatements of its income in the 1998 and 1995 quarters (U.S Securities and Exchange Commission, 2002). The Securities Exchange Commission also found that the company failed to properly document its accounting records and maintain proper internal controls in accordance with federal securities laws. The commission also found that the company did not have safeguards ensuring that adjustments to its reserve accounts and the accounts’ balances were accurately or appropriately reported.

Analysis of Finance Issues

A company’s financial success is important in maintaining its growth and sustainability. Although Microsoft Corporation has maintained a record of financial success, there are various financial issues that may affect its sustainability. One of the issues is fluctuations in its net income. According to Trueman (2022), Microsoft’s 2022 fourth quarter indicated that the company’s revenue was $52 billion, and the expected revenue increase would be 12% annually. However, the relative income had only increased by 2%. The fluctuations in net income may make it hard for the company to forecast its financial growth and make financial-related plans. The second financial issue is unfavorable foreign exchange. The unfavorable foreign exchange rates negatively impact the company’s revenue and dilute earnings per share. Unfavorable foreign exchange rates may also impact production by creating production shutdowns in regions where the foreign exchange rates increase production costs. Another financial issue is high operating expenses. For instance, the company was forced to reduce its operations in China because of high operating costs from asset impairment, bad debt expense, and severance (Bishop, 2022). The company’s personal computing market has also been impacted by manufacturing shutdowns linked to reduced revenue. The company’s revenue from the gaming segment also decreased, leading to an overall reduction in revenue.

Analysis of Economic Issues

Economic issues play a significant role in a company’s financial performance. One of the economic issues that Microsoft Corporation faces is the unfavorable foreign exchange movement. The company experienced a $0.04 diluted earnings per share and $595 million in revenue within the first quarter of 2022 because the unfavourable exchange rate led to poor financial performance (Newman, 2023). The unfavorable foreign exchange rate has also forced the company to shut down production in China, leading to the deterioration of the personal computer market and negatively impacting revenue. The second economic issue is high operating costs. The company has been forced to make several adjustments to reduce operating costs, such as reducing advertising spend, which negatively impacted the revenue generated from LinkedIn and Search and news advertising (Newman, 2023). Another economic issue impacting the company is economic instability in major markets such as Ukraine. For instance, the company experienced high operating costs in Russia during the war in Ukraine because of changes in the cost of production and asset impairments. The company also had to adjust its operations during the COVID-19 pandemic to reduce operating costs due to economic instability. For instance, some employees were laid off to reduce the costs of paying salaries.

Analysis of Statistics Issues

The main statistical issue that Microsoft Corporation faces is inaccurate forecasts. The company makes inaccurate forecasts by failing to consider all factors that could impact its financial performance and operations. For example, the company had to lower its revenue and profit in the fourth quarter of 2022 because of the pressure from a stronger greenback. The fluctuations in the United States dollar also contribute to inaccurate forecasts. For instance, without a stronger dollar, Microsoft Corporation’s 12% revenue growth per year would have been 4% higher, but it was reduced in the fourth quarter of 2022 by $1 billion (Reuters, 2022). Another factor that contributes to the inaccurate forecasts is foreign exchange rates. Foreign exchange reduced Microsoft Corporation’s revenue by almost $600 million because of the over $300 million reduction in the revenue from the PC market and over $100 million reduction in revenue from advertising (Reuters, 2022). The other factor leading to inaccurate forecasts is the changes in consumer behavior. For instance, the revenue in the gaming sector decreased because of reduced consumer demand which was attributed to the decrease in Xbox hardware, services, and content.

Conclusions with Recommendations

Microsoft Corporation is among the companies that have established dominance in the technological sector. However, the company’s future will be dictated by its ability to handle the ethical, accounting, financial, economic, and statistics issues it faces. The main ethical issues that must be addressed are overworking employees, tax evasion, and accounting fraud. I would recommend involving employees in developing work schedules to prevent overworking and soliciting employee feedback about the work environment to create a conducive work environment. The company should also consider conducting regular audits, which should be done by an external auditor to prevent tax evasion and accounting fraud issues. The main accounting issues that the company needs to address are accounting violations such as lack of safeguards and false financial reporting. Moreover, I would recommend training employees on acceptable accounting practices and following the recommendations given by the Securities and Exchange Commission to prevent accounting violations. I would also recommend setting strict accounting regulations in the company and holding those responsible for accounting violations accountable. Although Microsoft Corporation may have limited control over financial issues such as fluctuations in net income, unfavorable foreign exchange, and high operating expenses, the company can create mitigations to ensure that the issues do not negatively impact its performance. For instance, it can diversify income sources to prevent large net income fluctuations and invest locally to reduce the impact of foreign exchange. The company can also automate and source products locally to reduce operating expenses. Microsoft Corporation should also be prepared to deal with economic issues, including unfavorable exchange movements and economic instability. I would recommend using strategic alliances and partnerships to deal with unfavorable foreign exchange movements and creating mitigation measures to deal with economic instability, which is one of the economic issues facing the company. Microsoft Corporation can deal with its main statistical issue of inaccurate forecasts by considering all factors that could impact its financial performance before making forecasts.

This paper presented a brief history of Microsoft Corporation, including when it was established, its founders and its main products, and the ethical, accounting, financial, economic, and statistics issues facing the company. The ethical issues discussed include overworking employees and tax evasion. The accounting issues discussed include accounting violations. The financial issues discussed include fluctuations in net income, unfavorable foreign exchange, and high operating expenses. The economic issues discussed include unfavorable foreign exchange, high operating costs, and economic instability. The statistics issues discussed include inaccurate forecasts. The paper then recommends how the issues can be addressed.

Reference List

Bishop, T. (2022, July 27). Microsoft earnings come up short, hit by Global Economic Trends and cutbacks . GeekWire. https://www.geekwire.com/2022/microsoft-comes-up-short-in-earnings-report-impacted-by-global-economy-and-cutbacks/

Bort, J. (2012). Microsoft is filled with abusive managers and overworked employees, says the tell-all book . Business Insider. https://www.businessinsider.com/microsoft-is-filled-with-abusive-managers-and-overworked-employees-says-tell-all-book-2012-5?r=US&IR=T

Kiel, P. (2020, January 22). The IRS decided to get tough against Microsoft. Microsoft got tougher. ProPublica. https://www.propublica.org/article/the-irs-decided-to-get-tough-against-microsoft-microsoft-got-tougher

Newman, D. (2023, June 27). Microsoft revenue hits $51.9B for Q4 2022, $198b for FY2022 . The Futurum Group. https://futurumgroup.com/insights/microsoft-revenue-hits-51-9b-for-q4-2022-198b-for-fy2022/

Reuters. (2022, July 26). Microsoft earnings hurt by slowing PC sales, stronger dollar: Business . Devdiscourse. https://www.devdiscourse.com/article/business/2123471-microsoft-earnings-hurt-by-slowing-pc-sales-stronger-dollar

Seattle Times. (2015, August 18). Archive: “Inside Microsoft – a ‘velvet sweatshop’ or a high-tech heaven?” The Seattle Times. https://www.seattletimes.com/business/archive-inside-microsoft-a-velvet-sweatshop-or-a-high-tech-heaven/

Smith, M. (2022, October 6). 50% of workers are burned out, and “productivity paranoia” could be making it worse: “People are just worn down.” CNBC. https://www.cnbc.com/2022/10/06/microsoft-50-percent-of-people-are-burned-out-at-work.html

Sullivan, B. (2002, June 3). Microsoft agrees to stop accounting violations . Computerworld. https://www.computerworld.com/article/2575805/microsoft-agrees-to-stop-accounting-violations.html

Trueman, C. (2022, July 27). Microsoft Weathers the financial storm with 12% revenue growth . Computerworld. https://www.computerworld.com/article/3668153/microsoft-weathers-the-financial-storm-with-12-revenue-growth.html

U.S Securities and Exchange Commission. (2002). SEC Brings Settled Accounting Charges Against Microsoft Corporation . U.S Securities and Exchange Commission. https://www.sec.gov/news/press/2002-

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The Microsoft Corporation

Updated 15 May 2023

Subject HR Management , Management

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Category Business , Information Science and Technology

Topic Human Resources , Microsoft Corporation , Project Management

The art of utilizing all available human resources to increase productivity inside an organization is referred to as organizational management. In this approach, the managerial structure suggests structural effectiveness both within the company and in the market. Most businesses have serious worries about various aspects of industry culture. It might be challenging to determine the organizational strategy and the contextual features of market needs when market culture is so diverse.

Microsoft Corporation

A multinational corporation that works in the computer and technology sectors is called Microsoft Corporation. Based in Redmond, Washington, the company offers computer software, other computer gadgets as well as consumer electronics and technology services in the industry. It has one of the most effective organizational structures that propel their businesses into the global phase.

Product Division Approach

Practically, the corporation operates under the product division type of organizational management structures. It has three basic levels of division that help in their service delivery in the industry. Similarly, Kwasi asserts that culture is a key player in the management of any organization (39). Thus, the structural organization applied by this corporation displays the integration of the theoretical knowledge as documented in the article. To sustain the economic performance, one has to research on the market cultures and trends.

Product Types and Market Demand

First, they have divided their products types in the market. Computer software involves components that have different aspects of operation. Thus, to determine the characteristics of the market demand and the operation system, the company uses its output component as the major determinant in organizing and putting their personnel in groups for efficiency and timeliness in the market. The application of the Intelligent Cloud, for instance, promotes effective product division as well as structural organization of the products in the market. Hence, several factors play role in the division of the products within the industry. The other modes of classification basis include the use of business productivity and process. Moreover, the corporation has applied personal computation and corporate approach as approaches to product division in the industry. Notably, product division plays the most important role in the organizational structure of the company. It helps the company to sustain their relevance in the industry as well as their relationships with the diversity of cultures in various states and nations in the world.

Establishing Corporate Groups Globally

The other aspect of organization structure includes establishing corporate groups globally. Practically, the corporation has various corporate groups of computer characteristic managers within the global system. These enhance their approach to corporate grouping of the human resources within the operational lines. The groups range from the office of the chief executive officer to the legal aspects of operations. The other groups involve marketers, researchers, marketing, commercial group, windows and other devices group, strategic and the enterprise groups among other common corporate groups within the company (Rothaermel 13). This approach enables the corporation to launch various products in the market every period of financial return evaluation. Moreover, the structural approach enables the corporation to understand the cultural components of the technology industry as well as organize their human resources in the industry. This way, several aspects of the organization's approach portray inclusiveness in the decision-making processes.

Segmenting Operations Geographically

In addition, segmenting operations geographically plays another important role among the characteristics of the corporate management structures. Geographically, the corporation has its establishments within the United States of America and internationally. This implies that their products have a wider base of consumer pool in the market. Thus, several branches exist within several countries globally (Richard 24).

The efficiency of the structure

The major advantage of this structural organization is that it focuses on developing their products in the market. As compared to the application aspects of management, continued products development enhances better performances within any segment of an industry. Microsoft applies the skill to develop newer products of their old versions to sustain their relevance and productivity in the ever-changing technology industry. Consequently, the organization is very competitive and stocks up to date products in the industry. Thus, it is very clear that the structural organization of the corporation is very effective and works out very well for the company. Over the years, there have been numerous changes in the organizational structures of the corporation to accommodate the trends in technological changes in the industry. Such a culture is very important in the growth of any industry.

Changes recommendable

As noted in the structure of management, Microsoft Corporation does not recognize the differences within the various sets of market localities in the industry. Numerous regional market differences exist in the industry that demands keen attention in the operations. The corporation should therefore integrate the regional differences in their structural organization in the market to accommodate the cultural differences in taste for the computer software and hardware. Technology as whole plays the central role in modernization of the world's industrialization focus. Therefore, the organizational structure should consider the emerging trends in the use of technology such as those embedded in the Smartphone era. Concisely, the corporation has effective organization structures. However, they need to integrate the recommended strategies in order to, further, enhance their competence and performance in the industry.

Rothaermel, Frank T. Strategic management. New York, NY: McGraw-Hill, 2015.

Dartey-Baah, Kwasi. "The Cultural Approach to the Management of the International Human Resource: An Analysis of Hofstede's Cultural Dimensions." International Journal of Business Administration 4.2 (2013): 39.

Lewis, Richard. When teams collide: Managing the international team successfully. Nicholas Brealey Publishing, 2012.

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Apple Inc. designs manufacture and markets mobile communication and media devices, personal computers, small and mid-sized businesses, and portable digital music players to consumers and education, enterprise, and government customers worldwide. The company also sells related software, networking solutions, services, accessories, and third-party digital content and applications. It offers iPhone, a line of smartphones; iPad, a range of multi-purpose tablets; and Mac, a variety of desktop and portable personal computers. The industry also provides iLife, a consumer-oriented digital lifestyle software application suite; iWork, an integrated productivity suite that helps users create, present, and publish documents, presentations, and spreadsheets; and other application software, such as Final Cut Pro, Logic Pro X, and FileMaker Pro. (Market Watch)

The company also offers Apple TV that connects to consumers TV and enables users to access digital content directly for streaming high definition video, playing music and games, and viewing photos; Apple Watch, a personal device; Also iPod, a line of portable digital music and media players. Further, Apple Inc. sells Apple-branded iOS-compatible accessories, and third-party Mac-compatible such as storage devices, headphones, displays, Beats products, and other connectivity and computing products and supplies. It also offers iCloud, a cloud service; AppleCare that provides support options for its customers; and Apple Pay, a mobile payment service. The industry sells and delivers digital content and applications through the iTunes Store, App Store, TV App Store, Mac App Store, iBooks Store, and Apple Music. It also makes sales of its products through its retail and online stores, as well as through third-party cellular network carriers, retailers, wholesalers, and value-added resellers. Apple Inc. Founded in 1977 and its headquarters in Cupertino, California.

The horizontal analysis of the Microsoft Income statement reflects a decrease in the revenue over time where we have a net reduction of 3,630,000 which shows a decline in sales. One can pose the question why is this happening? There seems to be a drop in sales promotions; the managers should take up re-engineering processes that could help improve sales for example Benchmarking. The reduction in sales has consequently brought about a decrease in profitability where we see a negative shift in the horizontal analysis of Gross profit of the past three years with a net change of 4,853,000.

The Microsoft company has been keen enough to invest more in research development over the three. Why? in consideration to It being a big player in Technology which is a very competitive field where new products are being developed rapidly with each new product better than the previous version with better upgrades integrated and user-friendly for most products. It is correct to say that this is a good move in ensuring the continuity of the firm and safeguarding clientele satisfaction by creating reliable and better outcomes. Research development has increased 991,000.

In the horizontal analysis of Microsoft Corporation, we see a trend in the operating income or loss docket where we have figures as at 6/30/2015,6/30/2016,6/30/2017 being

18,161,000, 20,182,000, 22,326,000 respectively. One can pose the question, what are the effects of this shift or this change? We see that the increase in operating income over the years has greatly influenced the Total Other Income/Expenses Net which increases and Earnings Before Interest and Taxes.

We move on to the vertical analysis of the Microsoft Corporation Income statement were I took sale/revenue as my base of 100 percent and analyzed the contents of the Income statement as at 6/30/2017. We have the Cost of Revenue at 38.1% and the Gross profit at 61.9% the relation between the two is that the increase in one entity affects the other which increases by default.

Their vertical changes in most entities represented in the Income statement were we have. A vertical shift of 14.49 in Research Development, Selling General and Administrative by 22.25 total operating expenses go down by 24.82. The primary purpose of vertical analysis of the Income statement is to generate a report representing each line in the financial statement as a percentage of the Income statement’s primary focus which in our case is revenue or sales.

When we look at the horizontal analysis of the balance sheet, we see that there are changes over the years where we have negative and positive change. In the instance of current assets, cash and cash equivalents, Microsoft experiences, a definite shift in 2,068,000 this is to show growth in the current assets over the years in our portfolio our focus is principally past three years. The balance sheet also reflects a definite shift in short-term investments where we see Microsoft having a 34,387,000 net change over the period from a base period of 6/30/2015 up to 6/30/2017

A negative spike witnessed in the horizontal analysis of the balance sheet where we have an instance of inventory where there is a parallel shift of 721,000 decreases this report helps us understand better the trends over the years since 6/30/2015 till 6/30/2017 which are the past three years of the economic study of Microsoft Corporation. Total Stockholder Equity also decreases significantly over the last three financial years were we have a significant drop of 7,689, 000.the company should consider appropriate strategies that promote stockholder’s equity in the firm

In the vertical analysis of the Microsoft Corporation balance sheet.We use total assets as the Focus of our study as 100%, and then carry out a vertical analysis of all entities in the balance sheet. We have the instance of total current assets at 66.30 hence showing a vertical shift of the same and therefore reflecting growth in Microsoft Corporation current holdings concerning overall assets. Each line of the balance sheet represented on the spreadsheet as a percentage of the focus of our report which is total assets=100 %, e.g., Accounts Payable 14,024,000 divided by total assets 241,086,000 gives us a result of 5.81 %.

Ratio analysis using ratios from Du Pont formula represented as;

ROE (DuPont formula) = Net profit margin * Asset Turnover *Financial average = (Net profit / Revenue) * (Revenue / Total assets) * (Total assets / Equity). In the excel spreadsheet, I have shown the comparison of present industry ratio analysis between Microsoft Corporation and Apple Inc. which where my select companies in which I compared and contrasted on the given ratios. (Ready ratios)

Asset turnover ratio for the year ended 6/30/2017. Asset turnover ratio is the financial ratio that measures the efficiency of the company’s use of assets to promote sales, where we have Microsoft having a current ratio of 0.41 and Apple having a present ratio of 0.7. Apple has a better asset turnover ratio

The debt-to-equity ratio for the year ended 6/30/2017. This solvency ratio indicates the relative proportion of the entity's equity and debt used to finance an entity's assets. Debt-to-equity ratio = Liabilities / Equity. From the spreadsheet we have Microsoft having a current ratio of 2.33 while its competitor Apple Inc. is having a present ratio of 1.5. Microsoft has a better debt-to-equity ratio compared to Apple Inc.(Nasdaq)

Net profit margin as at 6/30/2017. The ratio is a profitability calculated as net profits divided by revenue. Net profit margin = Profit (after tax) / Revenue(sales). Microsoft has a ratio of 0.61 while Apple Inc. has) 0.93. Apple reflects a higher net profit margin compared to Apple Inc.

Return on equity (ROE) as at 6/30/2017. ROE is the amount of total net income returned as a percentage of shareholders equity. ROE = Net profit after tax / Average shareholder's equity. Microsoft has a ratio of 0.29 while Apple possesses a rate of 0.14. Microsoft Corporation attains a higher ROE compared to Apple Inc.

Return on Assets(ROA) for the year ended 6/30/2017. Shows the percentage of profit an industry or company earns to its overall resources or total assets. ROA = Net Income after tax / Average Total assets or Total assets. Microsoft has a current ratio of 0.09 while Apple has a ROA of 0.21. Apple returns more on Assets in contrast to Microsoft Corporation. (Chron)

In conclusion, we can see in our Ratio analysis, Microsoft and Apple do not have significant differences in their financial results although their management is different and hence differences in profitability and revenue generation. The two companies which are in the same industry that of Technology are big-time contributors to the global economy. It seems like they could borrow from each other where Microsoft can use Apple tactics to improve on sales, and proper asset utility and Apple can implement Microsoft’s strategies of ensuring higher returns on equity.

Microsoft’s management needs to benchmark which is an excellent strategy in business process re-engineering. Management also needs to promote sales and utilize assets more to achieve better returns on Assets. Management needs to consider a restructuring of the organization in some sectors that seem to be lacking, e.g., sales.

Du Pont Formula - Financial Analysis Software. (n.d.). Retrieved from https://www.readyratios.com/reference/profitability/dupont_formula.html

Microsoft Corporation Stock - Yahoo Finance. (n.d.). Retrieved from https://finance.yahoo.com/quote/MSFT/

Apple Inc. Stock - Yahoo Finance. (n.d.). Retrieved from https://finance.yahoo.com/quote/AAPL/

Microsoft Corporation Stock- Morning Star. (n.d.). Retrieved from

http://www.morningstar.com/stocks/XNAS/MSFT/quote.html

Microsoft Corporation ratio analysis- Nasdaq. (n,d). Retrieved from

https://www.stock-analysis-on.net/NASDAQ/Company/Microsoft-Corp/Ratios/Long-term-Debt-and-Solvency

Apple Inc. Stock – Market Watch. (n.d.). Retrieved from

https://www.marketwatch.com/investing/stock/aapl/profile

Comparing financial ratios to industry.- Chron. (n.d.). Retrieved from

http://smallbusiness.chron.com/compare-financial-ratios-industry-average-73351.html

Note: figures above are in thousands, e.g., 4,853,000.

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Microsoft Corporation’s Organizational Structure Term Paper

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Introduction

Organizational structure and design is important to every organization. This is because it defines the reporting structure and the job description and this way every employee becomes aware of their roles. Additionally, compensation for work done is necessary in order to motivate the employees since an organization cannot exist without them. However, compensation varies with the ranks whereby the executives receive higher remuneration packages than the employees.

This can be demotivating to the employees because they do majority of the work. A company’s management is also expected to represent the interest of its stockholders (creditors and shareholders). Therefore, if the management (agent) uses its position to pursue its personal interests to the disadvantage of the stockholders (principal) it leads to agency problem. The aim of this paper is to analyze Microsoft Corporation, the agency problems facing the company, its job design and compensation packages to its executives and the employees.

Microsoft Corporation is one of America’s most profitable companies. It was started in 1975 by Paul Allen and Bill Gates. It is the global leader in providing software, services and solutions which assist people and enterprises in achieving their goals. Microsoft’s headquarters are located in RedMond, Washington in the United States. According to Fortune 500 Microsoft is among America’s top 50 largest companies in profits, revenue and shareholders’ equity returns.

Currently, the company’s net earnings are at $23,150m and its revenues are $69,943m. Some Microsoft’s products are Microsoft Office, Xbox, Xbox 360 video gaming tools and Microsoft Windows. The company also runs Windows Operating Systems ( Microsoft Investor Relations , 2011). Its mission is to assist people and businesses in the entire globe in achieving their potential. Additionally, its values are honesty, integrity, mutual respect and personal excellence among others. In addition, Microsoft takes passion in technological innovation and it is concerned about the welfare of its stakeholders by striving for the best quality ( About Microsoft , 2012).

Microsoft has over 92,000 employees in over 25 countries. In order to manage its operations the company has divisional/group organizational structure whereby every division or product group specializes in particular products. Additionally, every division has research and development, customer relations, Microsoft business, entertainment and sales staff. Every division is represented by one executive who is responsible to the company’s president (Wills, 2010, p. 1). The diagram below is an example of Microsoft’s organizational chart.

Agency problem within the company, its causesand how it might be better controlled:

Agency problem is also known as principal-agent problem. It refers to conflict of interest that arises between a company’s management and its stockholders. It can occur if the management and the stockholders have differing ideas. The stockholders are the principals of the company. They include the creditors and the shareholders while the management is the agent. The principals own the company but they employ the management to run and manage the company on their behalf. Therefore, the agent is expected to represent their interests.

An example of agency problem is adverse selection. This conflict arises when the principal is not sure if the agent is capable of doing the work for which he is expected to do. Conflict of interest exists in almost every organization ( Agency Problem: Definition , 2011). More specifically, Microsoft Corporation has been accused of more than one agency problems. For example, the company was involved in an agency conflict with Sun Microsystems. Microsoft had negotiated with Sun in order to be allowed to use the company’s Java technology. Java’s success was mainly attributable to its flexible programs which could run on any operating system.

Therefore, Microsoft signed an agreement promising to develop and sell its own Java version but it would keep it portable. However, some days after signing the agreement Microsoft introduced a Java version which was incomparable with Sun’s. Microsoft’s Java version was only running on computers that used Windows operating system. Conflict arose between the two companies because Sun Microsystems (Principal) felt that Microsoft Corporation (agent) did not carry out the business they were expected to. Therefore, Microsoft’s management preferred to take care of its own interests to the disadvantage of Sun (Stephens, 2002).

This agency problem could have been caused by Microsoft’s strategy to dominate the software development market by copying the original non- Microsoft programs. Additionally, Microsoft is well known for deliberate use infringement and litigation of its competitor’s patent and ownership rights as an expansion strategy. This is because it has been involved in similar other cases which make it clear that litigation and betrayal have been the company’s way of beating competition. Unfortunately, it might be impossible to entirely eliminate agency problem. This is because the costs for doing so overshadowthe benefits.

However some control measures can be adopted. For example, Microsoft’s managers can be motivated through incentives so that they can act in accordance to the stockholders’ interests. Some incentives may include performance- based compensation and threats of either takeovers or firing. Additionally, a company can employ watchdog bodies or tough screening procedures. Law suits are also optional especially against Microsoft because they are legal. Additionally, through a strong court case it is possible for the affected stockholders to receive compensation for damages or loss of business incurred from infringement or litigation (Stephens, 2002).

Job dimensions of the company;if the current design is appropriate for the company; suggestions for improving the job design and if the organization is effective:

A job refers to specific tasks carried out as the routine of a person’s occupation at a certain price or compensation. Job can be part-time or full-time in nature. On the other hand job design or dimension is the way in which a group of tasks are organized. It also refers to the job specification, methodology and relationship between various jobs which are aimed at achieving an organization’s and an employee’s goals.Some of organizational goals of job design are efficiency, quality and productivity while the employee’s goals are contentment, motivation and personal growth (Griffin & McMahan, 1993, p. 2).

Microsoft’s job design is grouped by profession, geography and business division/ segments. The company uses job attributes approach, motivational approach and the perceptual-motor approach in its job design. The job attributes approach elaborates the required qualifications for a given job. The motivational approach requires that the job applicants possess certain skills and requirements while the perceptual-motor approach requires an employee to have technical skills in order to be able to interact with the company’s machinery (Griffin & McMahan, 1993, p. 4-9).

The current job design is not appropriate for the company. This is because it does not take in to account the human factor such as physical incapacity and gender balance. In order to improve this issue Microsoft should add more groupings in its job design. As a result gender discrimination can be reduced as well as discrimination against the physically challenged applicants. This type of integrated design has been very successful in NGOs and it is also possible that it can work for Microsoft.Therefore, the job design that the company is currently using is not effective because it concentrates mostly on organizational goals while the goals of the employee are merely represented. The table below is an example of a 3 by 7 job design matrix that Microsoft can incorporate.

Compensation package for executives and employees within Microsoft; if it is effective and any suggestions for improving the compensation package:

Compensation packages are essential in business organization. Landlords expect rent returns and entrepreneurs expect profit from their investments. Similarly, the labor force expectsa fair compensation package in form of salaries or wages from the business process. However, the executives have higher basic pay than the other employees. This is because they have more skills, experience and the title of their position also deserves high pay. Effective and fair compensation packages for both executives and the employees should be “internally equitable, externally competitive, affordable/cost effective, understandable, legal and appropriate for both the organization and the workforce” (Greene, 2010, p. 1).

Effective compensation package should also be based on merit (the employee’s role and how good their job is), personality (value that the employee adds to the organization) and results (Greene, 2010, p. 1). As from 2009 Microsoft’s executives have incentive plans which enable the Compensation Committee to put in place award programs for a given performance period. Therefore, the maximum compensation for an executive officer is a percentage of a pool of incentives for a specific performance period such as a fiscal year. The compensation package to one executive officer per fiscal year should be a maximum of $20m and it can be in form of stock awards or cash (Punk, 2008, p. 1).

This incentive is effective because it is merit based. However, on the other hand it is not cost effective. A $20m salary package per executive head means a lot of money outflow from the company.For example, in the fiscal year ended 2010, Microsoft’s CEO Steve Ballmer received $1.34m in compensation while Kevin Turner, a top executive received $10.45m (Eaton, 2010, p. 1). On the other hand Microsoft’s employees are compensated less than half of what the executives receive. For example, the annual salaries for managers range from $720,000 to $2.34m.

This shows that there is a very wide gap between the compensation packages for the executives and the employees. This is not effective considering that it is the employees who do most of the work as compared to the executives ( Microsoft Salaries , 2012). Therefore, in Microsoft merit and results may not apply in compensation criteria.As a result this can demotivate the employees leading to poor performance for the company. Additionally, some employees can resign in pursuit of better remuneration making the company to lose talented and skilled staff.

In order to improve the compensation package, the Compensation Committee should compensate all the employees according to merit, results, skills and experience. Therefore, the employees should also receive bonuses and incentives such as stock options for good performance. This can motivate them and improve performance. On the other hand, the executive incentives such as stock options should be reduced because they are currently too high and they are affecting the company’s performance. The table below shows the compensation packages for the various executives in Microsoft for the fiscal year 2008 to 2010.

The compensation packages for the various executives in Microsoft for the fiscal year 2008 to 2010

The table below shows compensation packages for some employees in Microsoft as at June 15, 2012.

Microsoft Corporation is an international company with high revenues and profits. It is also ranked among the top 50 largest companies in the Fortune 500. It specializes in software applications and services. Although it has a good reputation, it also faces various challenges. One of the major challenges is litigation or illegal use of its competitors’ ideas and products for its personal gain. This refers to agency problem which arises when a company misrepresents its stockholders’ interests.

Additionally, the company has an ineffective job design which can encourage gender discrimination and discrimination against physically challenged people. Microsoft’s compensation structure is discouraging in nature since there is a very wide gap between the executives and the employees. However, there are possible ways of solving these problems including law suits for agency problems, a 3 by 7 job design matrix, reduced stock option incentive for executives and increased remuneration for the employees. If these issues are solved as recommended, then Microsoft Corporation, its employees and its stockholders can achieve their desired goals.

About Microsoft . (2012). Web.

Agency Problem: Definition . (2011). Web.

Eaton, N. (2010). Microsoft executives’ pay and performance during FY2010 . Web.

Greene, R. (2010). Effectively Managing Base Pay: Strategies for success. Web.

Griffin, R., & McMahan, G. (1993). Job Design: A Contemporary Review and Future Prospects . Web.

Microsoft Investor Relations. (2011). Web.

Microsoft Salaries . (2012). Web.

Punk, W. (2008). Mini- Microsoft: Compensatory Arrangements of Certain (Microsoft) Officers . Web.

Stephens, S. (2002). An Agency Problem of United States Vs. Microsoft. International Business & Economics Research Journal , 1(4), 15- 28.

Wills, M. (2010). Microsoft’s Organization and Structure . Web.

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