Microsoft Corporation - Report Example

MICROSOFT CORPORATION Submitted Submitted by: Ms. Kanhnika 12/07/2009 MICROSOFT CORPORATION The word Microsoft is one of the most popular phrases of the contemporary era, which is not new and eccentric to the ears of even the young students studying in their O levels at school; on the other hand, men, women, children and the aged belonging to divergent professions and living in various regions of the earth are quite familiar with this term. The reason is not mere its being as one of the top-most organizations of the world. Rather, the reason behind its unflinching and unabated recognition among the individuals belonging to different nations, communities, regions, occupations and age groups is this that it has become an essential component of everyday domestic, professional and institutional activities. The entire achievement is not mere the outcome of one single day. Rather, an extensive and unremitting struggle could be found behind the stupendous accomplishments the Microsoft Corporation has made within the last few years only. Brief Introduction: Established in 1975, by Bill Gates and Paul Allen in Redmond, Washington, Microsoft Corporation is the leader of the entire global IT industry of contemporary era. Its marvelous achievements in the filed of information technology and communications look like a dream in real sense. It is by dint of the dynamic leadership of the founder chairman Mr. Bill Gates that the company achieved tremendous goals by inventing astonishing communication products for the computer and internet users. The entire series of achievements are the outcome of his God-gifted talents, indefatigable hard work, sky-scraping aims, profound thoughtfulness and persistent dedication to his cause that Microsoft is thought to be synonymous with computer technology. The corporation strongly believes in presenting innovative products, unique ideas and terrific IT devices to the millions of its customers, so that they could enjoy the fastest and most effective ways of communications and learning at their desktop. It is why it revises its own versions of hardware and software IT products and accessories within shortest time span so that the consumers could have an easy access to the most recent developments being made in the world of IT. Windows operating system, internet explorer, antivirus software, windows media player and windows operating system are the flagship products of the corporation, where the company looks always engaged in improving all these products up to the entire satisfaction of the wide range of its customers. Microsoft Stated Strategic Goals: The modern era has increased competition level with global perspective, and all international organizations seek to enter into partnership in order to obtain positive results by launching their products far from their native land. It is therefore Microsoft is also working in collaboration with local Chinese, Australian, African, Middle East and British companies for the projection of all the partners while exercising its services in these countries respectively. Since the mission of Microsoft Corporation is to bring revolution in the fields of IT and communications, it always lays stress upon revising and improving its already existing software and introducing new and novel products for its consumers. Since Microsoft aims to remain a leader in such an age of perfect competitive environment under globalization, it requires day and night hard work, team of highly qualified professionals and commitment to their aim and mission that helps in winning highest position in world ranking. It is therefore the corporation consumes imperative energies to devise its plans and determine its strategic goals. Strategic goals are always achieved on the basis of physical, financial, human and intangible resources of an organization; Microsoft Corporation carries rich physical, human and financial resources in the form of reputed collaborator organizations, proficient employees and wide range of offices and products respectively. Since every organization undergoes fluctuation, Microsoft also experiences the same, as it experiences fall in revenue during the third quarter of this year in comparison to the profit volume it earned in 2008 during the same period. On Oct 23, the corporation has announced its revenue of $12.92 billion for the first quarter ended Sept. 30, 2009, which indicate 14% decline from the same period of the prior year. Operating income, net income and diluted earnings per share for the quarter were $4.48 billion, $3.57 billion and $0.40 per share, which represented declines of 25%, 18% and 17%, respectively, when compared with the prior year period. (www.microsoft.com) Microsoft Stated Earnings: The annual and quarterly reports published and announced by Microsoft Corporation display detailed assessment of the business volume and gross profit earned by the corporation during different phases. According to the yearly reports, displayed by the corporation, the year 2008 was most profit generating one during the last five years, followed by 2009 and 2007, which can be seen in Figure 1 as following: Figure 1 Microsoft Annual Revenue from 2005 to 2009 . The above figure reveals the very fact that the corporation made continuous growth in its business from 2005 onward, though there could be seen slight decline in 2009, which reflects the turn down in respect of revenue generation. Hence, the corporation could not sustain the pace of its growth in 2009, and lost the chain of financial development this year. Figure 2 Microsoft Net Annual Income 2005-2009 Figure 2 shows that the corporation observed highest net income in 2008, which could not be sustained during the next year 2009. Consequently, net income fell down equal to that of the previous years i.e. 2007, 2006 and 2005. Figure 3 Microsoft Total Assets 2005-2009 Figure 3 indicates towards the Total Assets of Microsoft Corporation, according to which during the current year 2009, the Microsoft touched highest point ever in respect of its total assets. The corporation underwent extreme decline in 2007, but recovered it the very next year onward. Looking into the strategic plans and financial reports of the Microsoft Corporation, the readers come to know about the business focus of the corporation for the future days. Since the corporation underwent fall in respect of profit volume, the subsequent suggestions could help out to escape business shrinking in future. These suggestions are as following: Preservation of Intellectual Property Rights: Main financial and operational activities of the Microsoft Corporation are focused upon devising registered and licensed software versions that are major source of profit generation because of their uniqueness and innovation. No other company introduces software versions in bulk on the one hand, and revises its own version on the other. Though Microsoft is well aware of its distinction in the field of IT and it certainly gets it cashed through wide range of its customers, yet violation of the copyrights of its product have become a normal issue. Its windows and other software products are cheated and misused, and are sold out at cheaper price. It not only challenges its reputation, bur also drastically cost its profit volume. The corporation must strive to get its intellectual property rights observed strictly, so that no one could enjoy the fruit and reward of the mental and physical efforts applied by the staff members of Microsoft Corporation. It may be implemented by using more effective security codes by the organization. Removal of Complications from Revised Versions: Whenever a new version of the already existing software of Microsoft Corporation arrives in the market, the users rush to obtain and utilize the device as early as possible. But sometimes, their enthusiasm ends in smoke because of the complications the new version contains in it, as it is a bit difficult to use for a large majority of learners and users alike. The corporation should introduce CDs etc to learn the usage of new version, so that the company can obtain immediate results after the launching of new products in the market, which has cost a lot of time, energies and money to the Microsoft Corporation. Delay in sales may delay the profit generating of the company. Improvement of Communication Devices: Another important step that can enhance its gross profit and total revenue is the improvement of its communication devices like mobile phone sets and hardware products etc. Despite the very fact that Microsoft has monopoly over computer technology and internet software industry in the world, yet there are strong and powerful organizations, including Garmin, TomTom and others, which are its challenging rivals in the production of communication, navigation and other relevant devices. Price Segmentation: Microsoft Corporation should decrease the prices of its various products for the Asian and African countries. It will be helpful in closing the door of security vulnerability, and violation of intellectual property rights, as well as could make the individuals of third world capable of purchasing IT products of the corporation. Outsourcing Phenomenon: Microsoft Corporation does not observe outsourcing phenomenon to such an extent which has become a trademark of the international brands of today. It must look into this aspect to generate more profit from Asian and African countries. It must include the talented individuals as part of its team, which could be helpful in the business growth on the one hand, and preservation of copyrights on the other. Moreover, rapid changes in its software CDs turn its old versions ineffective. Microsoft must sustain its old versions as old versions of print media including books and periodicals, rather making it void and useless. Further, Microsoft Corporation should work in such a way that its software versions could be updated easily through internet. Microsoft Corporation consists of highly educated and skilled personnel, and they are well-informed regarding the changing market scenario. It is therefore, they overcame the problem of profit shrinking within few months only. The above given recommendations can also prove valuable in escalating their profit volume for the future days to come. References: Warnerfelt, B. A resource-based view of the firm: Strategic Management Journal, volume 5, no. 2. UK. 1984 173 Microsoft Corporation Annual Report 2009 Financial Highlights (Quoted in http://www.microsoft.com/msft/reports/ar09/10k_fh_fin.html) Microsoft Reports First-Quarter Results: Windows and Xbox exceed expectations due to strong consumer demand; cost discipline drives earnings per share growth. (Retrieved from http://www.microsoft.com/msft/earnings/FY10/earn_rel_q1_10.mspx) Appendix A SELECTED FINANCIAL DATA FINANCIAL HIGHLIGHTS (In millions, except per share data) Fiscal Year Ended June 30, 2009(a 2008 2007 2006 2005 Revenue $58,437(a) $60,420 $51,122 $44,282 $39,788 Operating income $20,363(a) $22,271 $18,438 $16,380 $14,576 Net income $14,569(a) $17,681 $14,065 $12,599 $12,254 Diluted earnings per share $)),1.62(a) $)),1.87 $)),1.42 $)),1.20 $)),1.12 Cash dividends declared per share $((,0.52(a) $((,0.44 $((,0.40 $)),0.35 $)),3.40 Cash and cash equivalents and short-term investments $31,447(a) $23,662 $23,411 $34,161 $37,751 Total assets $77,888(a) $72,793 $63,171 $69,597 $70,815 Long-term obligations $11,296(a) $$6,621 $$8,320 $$7,051 $$5,823 Stockholders’ equity $39,558(a) $36,286 $31,097 $40,104 $48,115 (a) Includes $3.75 billion of debt securities issued in May 2009. Note 12 – Debt of the Notes to Financial Statements. Read More

Since Microsoft aims to remain a leader in such an age of perfect competitive environment under globalization, it requires day and night hard work, team of highly qualified professionals and commitment to their aim and mission that helps in winning highest position in world ranking. It is therefore the corporation consumes imperative energies to devise its plans and determine its strategic goals. Strategic goals are always achieved on the basis of physical, financial, human and intangible resources of an organization; Microsoft Corporation carries rich physical, human and financial resources in the form of reputed collaborator organizations, proficient employees and wide range of offices and products respectively.

Since every organization undergoes fluctuation, Microsoft also experiences the same, as it experiences fall in revenue during the third quarter of this year in comparison to the profit volume it earned in 2008 during the same period. On Oct 23, the corporation has announced its revenue of $12.92 billion for the first quarter ended Sept. 30, 2009, which indicate 14% decline from the same period of the prior year. Operating income, net income and diluted earnings per share for the quarter were $4.

48 billion, $3.57 billion and $0.40 per share, which represented declines of 25%, 18% and 17%, respectively, when compared with the prior year period. (www.microsoft.com) Microsoft Stated Earnings: The annual and quarterly reports published and announced by Microsoft Corporation display detailed assessment of the business volume and gross profit earned by the corporation during different phases. According to the yearly reports, displayed by the corporation, the year 2008 was most profit generating one during the last five years, followed by 2009 and 2007, which can be seen in Figure 1 as following: Figure 1 Microsoft Annual Revenue from 2005 to 2009 .

The above figure reveals the very fact that the corporation made continuous growth in its business from 2005 onward, though there could be seen slight decline in 2009, which reflects the turn down in respect of revenue generation. Hence, the corporation could not sustain the pace of its growth in 2009, and lost the chain of financial development this year. Figure 2 Microsoft Net Annual Income 2005-2009 Figure 2 shows that the corporation observed highest net income in 2008, which could not be sustained during the next year 2009.

Consequently, net income fell down equal to that of the previous years i.e. 2007, 2006 and 2005. Figure 3 Microsoft Total Assets 2005-2009 Figure 3 indicates towards the Total Assets of Microsoft Corporation, according to which during the current year 2009, the Microsoft touched highest point ever in respect of its total assets. The corporation underwent extreme decline in 2007, but recovered it the very next year onward. Looking into the strategic plans and financial reports of the Microsoft Corporation, the readers come to know about the business focus of the corporation for the future days.

Since the corporation underwent fall in respect of profit volume, the subsequent suggestions could help out to escape business shrinking in future. These suggestions are as following: Preservation of Intellectual Property Rights: Main financial and operational activities of the Microsoft Corporation are focused upon devising registered and licensed software versions that are major source of profit generation because of their uniqueness and innovation. No other company introduces software versions in bulk on the one hand, and revises its own version on the other.

Though Microsoft is well aware of its distinction in the field of IT and it certainly gets it cashed through wide range of its customers, yet violation of the copyrights of its product have become a normal issue. Its windows and other software products are cheated and misused, and are sold out at cheaper price. It not only challenges its reputation, bur also drastically cost its profit volume.

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