Microsoft

Founded in 1975 by Bill Gates and Paul Allen, Microsoft has grown to become the industry leader and standard of a successful multinational computer software and technology company. Gates and Allen began their research and mission when they learned how to develop the utilization of the programming language interpreter BASIC for the Altair 8800. After the success from the interpreter, Allen and Gates then co-founded Microsoft. In 1981, Microsoft partnered with IBM to form Microsoft’s operating system with IBM Personal Computers. Shortly after the release of the operating system, Microsoft creates Microsoft Windows graphical user interface. In 1986, Microsoft announces its stock will go public at $21.00 per share. This offering would go down as one of the most successful investments of the decade. Success would continue to soar finally reaching the creation of Windows 95, one of the best-selling software products in history. This success would inspire the momentum to place PC’s in every household around the world. In 1995, Microsoft began researching and adding internet capabilities into their products, leading to the 1997 release of Microsft’s Internet Explorer. Through the beginning of the 2000’s, technology began to explode requiring Microsoft to reach new technological frontiers that would provide customers with next generation products. This would inspire the creation of Office XP, Windows XP, and Xbox.
 
A. Mission Statement

We believe in what people make possible. Our mission is to empower every person and every organization on the planet to achieve more (Microsoft).

Our mission is a broad definition of our company’s objectives and goals. The statement is broad and vague, however does capture the essence of Microsoft. The statement is missing key information regarding our daily business practices and what our company is specifically working towards.

Vision Statement

To help individuals and businesses realize their full potential (Microsoft).

Core Values

We install several core values into our company’s foundation which insures that Microsoft is headed in a direction that is inspired by key ideals:

Innovation

Scientists and engineers working together to help solve global challenges

Diversity and Inclusion

We maximize every person’s contribution – from our employees to our customers – so that the way we innovate naturally includes diverse thought.

Corporate Social Responsibility

We work to be a responsible partner to those who place their trust in us, conducting business in a way that in inclusive, transparent, and respectful of human rights.

Philanthropies

We empower people by investing technology, money, employee talent, and the company’s voice in programs that promote digital inclusion.

Environment

We lead the way in sustainability through the use of our technologies to minimize the impact of our operations and products.

Trustworthy Computing

We aim to deliver secure, private and reliable computing experiences based on sound business practices. (About-Values, Microsoft)

Organizational Objectives

B. SWOT

Analysis of internal organizational environment

Corporate Governance

At Microsoft, we believe that good corporate governance encourages accountability and transparency, and promotes good decision-making to support our business over decades. Our corporate governance establishes and preserves management accountability to company owners by appropriately distributing rights and responsibilities among board members, managers, and shareholders. Corporate governance provides a structure for the management and the board to set objectives and monitor performance, strengthens and safeguards our culture of business integrity ad responsible business practices, and finally encourages the efficient use of resources to require accountability for the stewardship of those resources. The mission of our corporate governance framework is to provide a smooth alignment between directors, shareholders, and management while meeting the requirements of NASDAQ Stock market and applicable law.

Our framework is as follows:

– Board composition, director selection and director compensation

– Board refreshment and succession planning

– Independent Board leadership

– Board meetings and involvement of senior management

– CEO performance evaluation

– CEO and senior executive development and succession planning

– Board committees

– Board and committee evaluations

– Shareholder engagement

– Risk oversight

(Governance Framework, Microsoft)

Audit Committee

The Audit Committee assists the Board of Directors in fulfilling its responsibility for oversight of the quality and integrity of the accounting, auditing, and reporting practices of the Company, and such other duties as directed by the Board. The Committee’s purpose is to oversee the accounting and financial reporting processes of the Company, the audits of the Company’s financial statements, the qualifications of the public accounting firm engaged as the Company’s independent auditor to prepare or issue an audit report on the financial statements of the Company and internal control over financial reporting, and the performance of the Company’s internal audit function and independent auditor. The Committee reviews and assesses the qualitative aspects of the Company’s financial reporting to shareholders, the Company’s financial risk assessment and management, and the Company’s ethics and compliance programs. The Committee is directly responsible for the appointment (subject to shareholder ratification), compensation, retention, and oversight of the independent auditor. The Committee also reviews and assesses the Company’s processes to manage and control risk, except for risks assigned to other committees of the Board or retained by the Board (Audit Committee Charter, Microsoft).

Compensation Committee

The Compensation Committee’s role is to discharge the Board’s responsibilities relating to compensation of the Company’s executive officers, the adoption of policies that govern the Company’s compensation and benefit programs, oversight of development and succession plans for the corporate Senior Leadership Team (the Chief Executive Officer, Chief Operating Officer, President, and Executive Vice Presidents), and to fulfill the responsibilities in this Charter (Compensation Committee Charter, Microsoft).

Governance and Nominating Committee

The Governance and Nominating Committee’s role is to determine the slate of director nominees for election to the Company’s Board of Directors, to identify and recommend candidates to fill vacancies between annual shareholders meetings, and to review, evaluate, and recommend changes to the Company’s corporate governance framework (Governance and Nominating Charter, Microsoft).

Regulatory and Public Policy Committee

The Regulatory and Public Policy Committee assists the Board of Directors in overseeing the Company’s policies and programs and related risks that concern certain legal, regulatory and compliance matters, and public policy and corporate social responsibility including public issues of significance to the Company and its stakeholders that may affect the Company’s operations, performance, or reputation. (Regulatory and Public Policy Committee Charter, Microsoft). Financial Position and Capacity

Organizational Structure (Refer to Appendix)

Our organizational structure is critical to the smooth internal operations of our company. In order to have clear communication, we must have a strong and clear structure of our business. Recently, our company decided to restructure our organizational structure. This restructuring was motivated by a recent slump our company faced in the past years. Satya Nadella The restructuring of our structure was mainly to “align our strategic direction as a productivity and platform company(Dudovskiy).” This new design is a divisional structure. These divisions are divided into engineering grouping, and business functions. These divisions are directly under the direction of our CEO, Satya Nadella.

Organizational Culture

Our organizational culture is inspired by our mission statement to empower every person and organization. This begins with inspiring and empower our own employees and encourage them to reach their full potential. Here at Microsoft, we know and value the importance of discovering the meaning of our work and providing a comfortable environment that motivates employees to make an impact on our world today. In a fast-paced, intense, and productivity focused industry, our CEO, Satya Nadella has shifted our organizational culture to place focus not only on our productivity but on the importance of our employees. Microsoft’s organizational culture embodies diversity and inclusion,

Human Resources

“At Microsoft, we strive to create a respectful, rewarding, diverse, and inclusive work environment that enables our employees to create products and services that help others to achieve more” (Microsoft, Empowering Our Employees).

This statement is the foundation of our Human Resources department at Microsoft. Under the direction of our Executive Vice President of Human Resources, Kathleen Hogan, the HR department provides a work environment that is socially accepting, diverse, equal opportunity employment, and a strong dedication to our employees.

We believe that the empowerment of our employees is the key to success in all aspects of our business practices. We are committed to providing our employees with the proper tools, resources, and benefits that will encourage them in their workplace. This means providing a benefits packages that is competitive and beneficial. We offer our employees one of the most advanced benefits package in the country. Competitive pay, bonuses, healthcare, and wellness care are all covered for our employees.

Our healthcare benefits are one of the strongest in the nation. We cover a long list of health benefits including:

– Medical and Hospitalization

– Vision Care

– Dental Care

– Physician House Calls

– 24-Hour Health Line

– Free On-Campus Health Screenings and Flu Shots

– Life, Disability, and Accidental Death Insurance

We not only offer our female employees two weeks leave in advance of their due date

and eight weeks of maternity leave, but we also offer our Parental Leave of fully paid twelve weeks.

Operations/Production

As a major global company, we have operations and production facilities across the world. These centers fulfill a list of duties including customer contract and order processing, credit and collections, information processing, and vendor management and logistics. These facilities are placed in Ireland, Singapore, North Dakota, Fort Lauderdale, Puerto Rico, Washington, and Nevada. Along with our operation centers, we also hold data centers located in the Americas, Europe, and Asia regions.

Manufacturing activities for Xbox, retail software, Surface devices, and Microsoft PC are contracted through third parties due to limitations of product sourcing. “The integrated central processing unit/graphics processing unit is purchased from IBM, and the supporting embedded dynamic random access memory chips are purchased from Taiwan Semiconductor Manufacturing Company. Sole source suppliers also will produce key components of our Surface devices. We generally have the ability to use other manufacturers if the current vendor becomes unavailable or unable to meet our requirements. We generally have multiple sources for raw materials, supplies, and components, and are often able to acquire component parts and materials on a volume discount basis” (Microsoft, Operations).

Marketing Mix

Product

Though our beginnings are in software development, our company has categorized our current products into five category segmentations: Devices, Software, Apps, Games, and Entertainment. These products include personal computers, Xbox, phones, and tablets. Software products are also included under the software development category. Third party items such as apps and other free software products are placed in the Apps Category. We provide a wide variety of products for our consumers that span over a variety of markets.

Place

Our products are offered all over the world. Consumers are able to obtain our products through three different distribution centers: Microsoft.com, authorized sellers, and Microsoft Stores. Our online marketplace is a major contributor to our company’s success and revenue. Authorized sellers include firms that are able to provide a direct style to sales and marketing. These sellers are commonly located in commercial areas internationally.

Price

At Microsoft, we recognize that we must create the most effective and beneficial strategy for not only our company but our customers. Therefore, we utilize three separate pricing strategies: Market-oriented pricing, Freemium Pricing, and Buy Only What You Use pricing strategy. These strategies help us focus on basic market factors including our competitors’ strategies. We also implement the “Buy What You Use” strategy for our cloud services. This strategy is based off of how much the customer uses rather than the basic price per device. These strategies have enabled us to become a force and dominant shareholder in the market.

Promotion

When developing our promotional strategies, we aim to include a variety of advertising, sales promotions, direct marketing, personal selling, and public relations. However, the majority of our company’s focus is on Advertising. Campaigns and commercials such as the “Women Made” Ad benefits not only our sales performance, but our corporate image.

Research and Development

Management Information Systems

IFE Matrix (Refer to Appendix)

Analysis of Eternal Environment

Political

Economic

There are several economic factors that

Social

Here at Microsoft, we understand the importance of the commitment to improving our world. We believe it is our responsibility to improve our world and share our progress. “We’re working to apply the power of technology to ensure corporate responsibility, safeguard human rights, and protect our planet (Microsoft).” This commitment influences our policies and business practices insuring a positive impact in our communities internationally. Through Microsoft Philanthropies, we are able to reach a variety of charities and nonprofits. “Every day we donate nearly two million dollars in products and services to nonprofits and we’ve pledged to donate one billion dollars in cloud services to nonprofits and academic researches over three years. We also work with and help develop many community empowerment organizations such as CityNext, the Microsoft Affordable Access Initiative, and Microsoft’s 4Afrika Initiative.

We focus on the fact that technology can have a positive social impact. Since 2016, we have worked to donate over than $1 Billion in cloud technology to researches. We plan to expand and triple this program in the next two years. We also ensure the future of our young people by providing easy access to digital skill training and computer science education. Our focus of this is to really hone in on those who have the least likely access to this education. Microsoft Philanthropies also has provided more than $30 million in technology and cash donations to emergency response organizations and refugee organizations. Microsoft is very aware that as a leading company in the market, it is our responsibility to give back.

Cultural

Demographic

Natural Environment

Here at Microsoft, we are determined to focus our resources on areas where our actions and investments can make the biggest impact. This includes the decisions we make and the effect these decisions have on our environment. We turn our focus on four main areas when evaluating our impact on the health of the planet. These areas include: Carbon, Energy, Water and Products.

Since 2012, our company has operated as a carbon neutral business. “By operating carbon neutral, Microsoft has changed the way it operates.” We have significantly decreased our energy and emissions by purchasing clean energy. This clean energy helps cover what we are unable to reduce and invest in other projects for the carbon we cannot replace. This change is funded by our internal carbon fee. This fee charges all of our business groups for their carbon footprint. We have established a list of Carbon principles, which help guide us through our Carbon Neutral Operations. These principles focus on our facilities, power, suppliers, and technology. Overall, our efforts to keep our planet clean have resulted in many benefits. We have reduced carbon emissions on our corporate campus to cut energy use by more than 15%. We have grown to become one of the leading green buyers of energy in the United States, and have purchased more than 14 billion kilowatt hours of green power. We are committed to encourage our suppliers to report and reduce their emissions. Finally, we have implanted the usage of the cloud and AI to further reduce our own emissions, and help our consumers also reduce their own carbon footprint.

This evolution to carbon free business has helped inspire us to remain clean through other elements. We are committed to using more clean energy o power our datacenters and operations each year. Our goal is to invent solutions that promote “greening of the grid” and accelerates the transition to a zero-carbon energy future for all. We are also developing solutions for managing the reduction of our water consumption. Our mission is to enable the creation of tools and services to help address the world’s water challenges, including scarcity, pollution and ocean health. Finally, we are a believer that every product we provide should be created with the environment in mind. We wish to improve the environmental credentials in our products. (Corporate Environmental Stability, Microsoft).

Technological

Industry

Porter’s Five Forces

Rivalry in Industry (Strong)

        The consumer electronics and technology industry is an intensely competitive industry. Though we are a major staple in the industry, we do face competition in our market. In business operating systems, we compete with software vendors including Adobe Systems, Apple, Cisco, Facebook, Google, IBM, Oracle, and SAP. When evaluating our competition in the Intelligent Cloud system, we include CA Technologies, Hewlett-Packard, IBM, and VMware. Entertainment competitors include Nintendo and Sony (Dudovskiy).

Threats of Substitutes (Low)

        Due to the wide variety of products that we offer, the threat of new substitutes is low. Our range of product is so diverse that we span over a variety of markets.  Currently there are few offerings that directly compete as a substitution for our software.

 Threats of New Entrants (Low)

        The threat of new entrants for Microsoft is low. Microsoft is a tremendous staple in the market including several other strong companies. There are large industry barriers that pose as a major threat to a new company entering the industry or market. However, the recent trend in digitalization in other consumer demands increases attractiveness in other industries encouraging new entrants (Dudovskiy).

CPM

International

EFE

C. Consumer Characteristics and Behavior

D. Strategic Direction

Source: ChinaStones - https://china-stones.info/essays/business/microsoft/





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