Internal Environment Analysis of Microsoft Corporation
The Microsoft Corporation is a global entity with branches in every nation. The firm has economies of scale which enable it perform well on the world market. The company based its headquarters in the USA, and it has competent managerial administration. The current Chief Executive Officer is Mr. Satya Nadella (Microsoft, 2017). The corporation has enormous revenue averaging of $ 73.72 billion as in (2012), and its profitability is averaged at $ 16.97 billion as in (2012). The company has the largest number of the workforce as compared to its competitors international. There are about 94,000 as in (2012) employees of all expertise professionals.
There a large number of the competitors that the corporation faces in the market. Key among them being; Apple Inc., Google Inc., Ltd., Samsung, International Machines Business conglomerate and other firms provide similar products (Lombardo, 2017). They offer a divert products on the market of computer hard and software, and all other types of electronics. The firm is the key element in the stock market based on its worldwide operation as well the enormous financial capital base
The financial analysis of Microsoft Corporation for the past financial years has had a fluctuation from one year to other for the revenue, net profit, sales, as well stocks. For the financial years; 2013, 2012, 2011, 2010, 2009, 2008 and 2007 the revenue, net profit, sales have been fluctuating as seen in the table below.
The Table below shows the financial analysis of Microsoft Corporation for the past years
EXPORT YEARS
2007-06
2008-06
2009-06
2010-06
2011-06
2012-06
2013-06
2014-06
2015-06
2016-06
TTM
Revenue USD Mil
51,122
60,420
58,437
62,484
69,943
73,723
77,849
86,833
93,580
85,320
85,688
Gross Margin %
79.1
80.8
79.2
80.2
77.7
76.2
73.8
68.8
64.7
61.6
61.0
Operating Income USD Mil
18,438
22,271
20,363
24,098
27,161
21,763
26,764
27,759
18,161
20,182
19,765
Operating Margin %
36.1
36.9
34.8
38.6
38.8
29.5
34.4
32.0
19.4
23.7
23.1
Net Income USD Mil
14,065
17,681
14,569
18,760
23,150
16,978
21,863
22,074
12,193
16,798
16,768
Earnings Per Share USD
1.42
1.87
1.62
2.10
2.69
2.00
2.58
2.63
1.48
2.10
2.13
Dividends USD
0.39
0.43
0.50
0.52
0.61
0.76
0.89
1.07
1.21
1.39
1.47
Payout Ratio % *
27.3
22.9
30.8
24.8
22.6
26.4
44.3
38.2
49.0
101.5
69.0
Shares Mil
9,886
9,470
8,996
8,927
8,593
8,506
8,470
8,399
8,254
8,013
7,906
Book Value Per Share * USD
3.73
3.97
4.44
5.33
6.82
8.19
9.21
10.61
11.23
9.58
8.90
Operating Cash Flow USD Mil
17,796
21,612
19,037
24,073
26,994
31,626
28,833
32,231
29,080
33,325
36,673
Cap Spending USD Mil
-2,264
-3,182
-3,119
-1,977
-2,355
-2,305
-4,257
-5,485
-5,944
-8,343
-9,114
Free Cash Flow USD Mil
15,532
18,430
15,918
22,096
24,639
29,321
24,576
26,746
23,136
24,982
27,559
Free Cash Flow Per Share * USD
1.44
1.95
1.77
2.48
2.87
3.24
3.24
2.69
3.16
2.93
—
Working Capital USD Mil
16,414
13,356
22,246
29,529
46,144
52,396
64,049
68,621
74,854
80,303
—
Efficiency Ratios
Margins % of Sales
2007-06
2008-06
2009-06
2010-06
2011-06
2012-06
2013-06
2014-06
2015-06
2016-06
TTM
Revenue
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
COGS
20.92
19.20
20.80
19.84
22.27
23.78
26.19
31.18
35.30
38.42
39.03
Gross Margin
79.08
80.80
79.20
80.16
77.73
76.22
73.81
68.82
64.70
61.58
60.97
SG&A
29.09
30.43
28.94
27.65
25.97
24.99
26.06
23.59
21.72
22.57
22.26
R&D
13.93
13.51
15.42
13.95
12.93
13.31
13.37
13.11
12.87
14.05
14.35
Other
—
—
—
—
—
8.40
—
0.15
10.70
1.30
1.30
Operating Margin
36.07
36.86
34.85
38.57
38.83
29.52
34.38
31.97
19.41
23.65
23.07
Net Into Inc & Other
3.25
2.55
-0.93
1.46
1.30
0.68
0.37
0.07
0.37
-0.51
0.36
EBT Margin
39.32
39.41
33.92
40.03
40.13
30.20
34.75
32.04
19.78
23.15
23.42
Profitability
2007-06
2008-06
2009-06
2010-06
2011-06
2012-06
2013-06
2014-06
2015-06
2016-06
TTM
Tax Rate %
30.03
25.75
26.50
25.00
17.53
23.75
19.18
20.65
34.12
14.95
16.46
Net Margin %
27.51
29.26
24.93
30.02
33.10
23.03
28.08
25.42
13.03
19.69
19.57
Asset Turnover (Average)
0.77
0.89
0.78
0.76
0.71
0.64
0.59
0.55
0.54
0.46
0.42
Return on Assets %
21.19
26.01
19.34
22.88
23.77
14.77
16.58
14.02
7.00
9.08
8.29
Financial Leverage (Average)
2.03
2.01
1.97
1.86
1.90
1.83
1.80
1.92
2.20
2.69
3.26
Return on Equity %
39.51
52.48
38.42
43.76
44.84
27.51
30.09
26.17
14.36
22.09
23.03
Return on Invested Capital %
36.92
50.52
33.36
37.45
37.40
22.62
25.07
21.11
10.71
14.18
12.52
Interest Coverage
—
—
—
166.65
96.16
59.60
64.06
47.60
24.70
16.89
13.22
(Morningstar Corp ,n.d)
The company has a culture which upholds the dignity and respect on which values and mission of the firm are based on. There are a number of them namely: Accountability, Responsiveness to clients Growth Mindset, Quality and Innovation, Diversity and Inclusion. Under accountability, the company requires every associate of the corporation to make good use of resources available and be able to account for any possible loss.
Also, the corporation must be responsiveness to clients Growth Mindset as a major backbone and fundamental of the firm since clients are the primary resource of the enterprise. Another value is Quality and Innovation (Lambardo, 2017). The company insists on the quality and innovation as changes of technology undergo various crucial stages of the innovation. Finally, the value and culture lie in diversity and inclusion since there is stiff competition on the market segmentation and diversity as well as inclusion shall enable Microsoft Corporation to compete favorably in the global market.
Microsoft values are ingrained in its organizational culture and are reflected in the business practices that are ethical and compliance to legal requirements. The employees of the organization are expected to show these values by maintaining ethical standards and conduct the business of the company with high integrity and in compliance with the established policies. Retaliation is not tolerated against employee who prepares a report in good faith and who corporate with the audit process or even declines to take part in activities that are in violation to relevant policies, regulations and laws (Nadella, 2014). This shows that such an employee is observing the laid down standards of ethical standards. The organizational members are expected to think through the values and utilize the available resources to help in improving the ethical, values and culture of the firm. As such, respect for culture and customs diversity is held highly and differences in business practices encountered in the global market place acknowledged (Nadella, 2014).
In conclusion, the firm celebrates its core values, mission and vision through market diversification. However, the Microsoft’s organizational customs supports industrial goals for enduring global achievement. Such accomplishment is based on innovation and openness to client’s’ concerns. The shared cultural celebration illustrate how Microsoft has to maintain its sell position, as it satisfies needs in both computer software as well as hardware market.
References
Microsoft (2017). We believe in what people make possible Retrieved from: https://www.microsoft.com/en-us/about/
Nadella, S., (2014). Standards of Business Conduct. Integrity in everything we do. Retrieved from: http://download.microsoft.com/download/7/2/C/72CADD4F-C6B3-403B-9415-7D7237D09ECD/Microsoft%20Standards%20of%20Business%20Conduct%20(EN-US).pdf
Lambardo J.,(2017).Microsoft Corporation’s Organizational Culture & Its Characteristics (An Analysis). Retrieved from: http://panmore.com/microsoft-corporation-organizational-culture-characteristics-analysis
Morningstar Corp (n.d). Microsoft financials: retrieved from: http://financials.morningstar.com/ratios/r.html?t=MSFT
