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    276 5772 388199

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    Bilal Siddiqui
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    276_5772_388199

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    of 9
    yr (CASE 19 © MICROSOFT CORPORATION, 2013 yicrosott Corporation, 2013 apmaniosofecom, MSFT sass in Redond, Washington, Microsoft isthe works anges software compa sgt ers nS a hal ye 21 ened on re 90.2012 be develops a variety of software and hardware products and services for customers: ripe wor iclacing ts Windows Office, Windows 8 operating system for personal sro) hes). Windows Phone 7 operating systems for mete phones, Windows Server Sem gems, Wun Ara. Mon SOL Vea Sui Silverlight, and the srg ming and eneinen col Man males sah eet. Len wi A aca a Tosh pel Mrs sofa an eve The em als emt services, clouased services and aingcertifations aswel as online Bing, MSN, adCenter, and Allas, Microsoft as stagic alliances with trdtuced a fen poets such a ea and Domirion Enterprises. The compary owns Skype and ect Np Phone anda Windows tablet computer named “Surface To hid quae of sal 2013 rests epee Api 2913 were oustanding with ss tes Divisio’ ovens op $ erent o 6.12 bilan it Servet and Tool nuts i Bs tion up 11 percent its Windows” vision evenes of $5.07 ilion up ° Pere oie Series segment venues up 18 percent to $32 milion, an its Eetsient and Fines segment revenues up 56 percent to $253 billion, We august 2013, CEO Ballmer announced he would resign from Misrosat wAh 2 ma so the Firm is scurrying to determine who will ea good rplacoment.The month Fear cot revamped i organizational structure, dsl it ih busines Hes 9 Fare enrof four new segments to focus on engineering and encourage collaboration crows enema. Basealy the company is now siractured 2s a division-by function (Pe Of ae ake divisions are expected to focus on operating systems. apps. cloud \echer, sarin devices. The move largely reversed the srtegy and trctre pu in lacs by CSD dann ass Microsoft's stock price jomped in response the Ballmer anaouncing that he ‘ul resign soon. Copyright by Fred David Books LLC. (Writer by Forest David) History Feded by Bll Gates an Paul Allen n 1975, Micronlt was extabished to develop and so BASIC ingrpeters forthe Altair 8800. The cormpany roe to dome the PC operating 586m Hae e ee oeds with their MS-DOS softaare, followed by the Microsoft Windows oem spe obich ea graphical extesion of MS-DOS. Micros went bl tS Tn ccatny re tlionaires and 12,000 milionsres ftom Microsoft rployecy, 1p 19% Fi aes annrrar efice suite. Microsoft Offic that bundled MS Word and MS Biel together, Me acquired Stype Techmoosis for $86 illon in 2011 in it lees ver eqn otostng i ete of Window Phone 7 Mltoxof underwent gradual rebrand. ingot is edoc toe aeghout 2011 and 2012.1 logos, products services. and websites meped a and concep of de Me design language, Mirosot in caly 2012 impd Windows an orig syste ine Toner both PCs and tblet computes Mens So cle tbl oper he Mico STs A he onpary cate to deri aay ror operating ster gd $12 bloat by he nr oan ura then launched its Windows Phone & To cope with the potential laze in demand for pit sri Misr “surely opening is on Mov Ses ats th USA. Bilan Nida Gate) ‘one ofthe richest couples on Selman one te mos giving eles it ems F Pia endeavors though the i an Melinda Gates Foundation. 353 ssa STRATEGIC MANAGEMENT CASES, Internal Issues Vision and Mission A statment at he crprate website says: "At Micros ou SiON An ah people and businesses throughout the world realize their fall potential hp Ome suete Ferre: Noten Exhibit 1 tha Micrsott ses a divison-y-preuct orcarizaiong with Steve Ballmer being chief executive officer (CEO) and Kevin Turner being chs some observers Its uneser from the sractre where Microsf Phone sind Mico tae Microsoft Stores reports, Such items would ideally be clear in executive ot les, Pethaps srt ‘The Surface Tablet Sales of Micro's Surface tablet are not eck: analysts expect the company 9 sl teats 500,000 and 0,000 Surface tables in heir second quarter of fiscal 2013, ch loner the company’s original estinave of 110 2 million, teuoducing a tablet Isa gond ear ae easons: (1) Microsoft has the cash fo invest heavily in research and development (RAID, hae ‘ow fable (2) the tabtet market has been booming: and (3) the PC markt sctiing. bur ‘robem pethaps is that Microso!t priced the Surface too high at S499 and up, rouzhiy the sane price asthe competing Apple iPad. Microsoft likely should compete on price, act Inver, oh Uup against Apple products, Microsoft could undercut Apple’s price. and ven i it loses men ‘on Surface, the initial loss could be wort it fit revitalizes sles of other company prada the success of Windows 8 largely hinges on widespread adoption of the Surface able, The whic EXHIBIT 1 Organizational Chart ! - ty (Fata) | comma oe in |a.tevm turer] | tints | | crigntnie | | Smite Gata [efopeaicn] | ‘Cacteone | | Seraac: || EO, ‘Sawe ‘ober one accra. | | “crea ‘tm ~ aS a i Den nate a teoytam | | ruroriere | | Antes ten, ait, mromaret.) ( suranican } (PRT Priorat || "Prscon renew rene tote resi a re | [aime] |atenaacis| |omacsenn| | cena | | Stred Bsns | | seer | | conta | | 2 u “Source: Bases on company documests |S — 28 thou pers consider MeDnalssncessi J toneyy sfoeaE cea x Mosoenpeasive Pret (Fr example, the Doar Me =n 1 Dollar Menu) and by promoting low: grade i sone rey le business sege SOME hs fhe pruble buses sumer ned in Exit 2. Now poses ‘vis se gly a he cosy final Pen sh sg. el ‘Rae, Tesiba, and others pre-snsaling Witdows on thir machines for ewsemer. Th ExwIBIT 2 Microsoft's Revenues by Segment (9 milions) 7012 mH 2010 ae ‘iow Divo Rocms sis 00 19991 Oring acon nao an va395 Ser and Tos — 1s 6680 13409 Open om 78) 60 281 One Series Bocmes a aon Pa Opens nce am ass 08) Mow Bases Reve aa nosis vp2s6 eon i 1330 Ho fer Fateainneat and Dev tome ase sais 607 a 27 sv rang eve = asm ane Sone: 5 led om 2012 Annual Report. 23-28 AGEMENT CASES sad from an inrease 1 oD Prod Suppor ang still increased 17 percent rrcon designs products tha ad cUStmers in simpy sr enlne, Produc include Bing and MSN, wtcy, fenerat sales through adverising. In Fisal year 2012. avers revertes grew 13 percent ig aan ve $2 billion Online advertising revenues grew! 1 PRET oe Tal yar ae erat cenerer operating leies vated SE bitin resuing [ort 6 ten i.gona 1 2012, resulting from the 2007 acquisition fourth quarter of fiscal ye oa Mrtone sles growth and prottability ae signiianty Tower fr Services grew 18 percent over the consulting services. Overall operating ‘The company’s Online Services ing tasks and making more informed dec wa ipainvent Fe Sr uitve Expect Suantve tan amiipsed Cate a of Busines Diton produced 32 peel ot ve cama Mic gnc ayo 2012, The ee eee pet of nein ene peal ea an azn bel ra Offi System rake ie an duct it Milian co tis eget sinew wae ering Web-based PI tht wer prof ccompanywide from software tuctivity. Microsofts most netoble pre 90 percent of this division's reventes. tenuous because Google and ether competitors af much the same as Microsoft Office products work ee sam an's Eneraizaneet and Devices Division generate 3 percent of ttl revanaes so Geet soa 202, ed by the Xbox 360 entrainment plaform. The division cules Noy Se ahd Windows Phone. Skye i ee popular vidco chat platform a C-by pene Sere. “Sales orn Skype and Windows Phone increased 6.5 percent im fiscal yest 2012 bu see areca’ $113 milion xen though Xbox LIVE revenue increased. Skype repored ae ne $860 malin, net losses of S7 milo, and longterm debt of $686 milion in 214 Hare onaysist say Micrsot paid tov mach for Skype, Overall, Microsoft hs ahs TeeeE ting pt yudgment in aquisios, a ated ty the company’s rl beng 108 tpan S13 lion. Skype docs overlap considerable with Windows Live Messenger in Bat Tak ones fee chats voice cha, and video chat. Windows Messenger though has arumd ee roan othe wees a8 Skype, but Skype offers a more refined platform for video chats, The ene LLvarerence between Microsofts existing products and Skype is that abou 8 lon tps Mer ipin for the service tough tlzphore connectivity, making it cary for many coy rae ye aloe wo buy phone numbers in foreign makes afordably. With the purche fre of $85 billion, Micros sin essence paying around $1,000 foreach cutomet wht Pe wound $30 each, assuming most of Skype's income is from call charges, leaving must ote ma ap on possible advertisements oF some sYpergy wit existing Microsoft prods Compounding problems for Skype. itis estimated a large percentage of thes cesiomer oe Fenmmerging markets and do not have much money to spead. However for Microsot, re's Iie Gowgle and Facebook from obiaining Skype aso played a role in the purchase, Teuhbi 3 reveals that approximately 52 percent of Microsoft's 2012 revenues ae dene from the USA. Note that international revenves have inereased as a percent of toa eveNIES act of the three years provide. Finance Fitermntt’s Fiscal year ends on June 30 of each year, As indicated in the financial stemets ly ingen! 382. provided in Exhibits 4 and 5, Microsoft's revenues have been growing annual Pied thing However note m Exhib 4 tha the company’s net income dropped 267 reee EXHIBIT 3 Microsoft's Revenues by Geographic Region (in millions) 201220112010 usa S384 SIKU S36173 Ouside USA $4.87 S51939— S2OALT ‘Tul 973723 _sonsas _ S284 Sorce: Based on 2012 AnnualReport, p80. 74 Microsofts Income Statements (in mi CASE 19 + MICROSOFT CORPORATION, 2013, lions) atl ee 2011 2010 ea 737230 «9430 eras eevee M0 985.0 62.8840 a Te W800 ssa nas cps ffl 56,1980 54,366.0 50.0890 coe reeatAdninsralve Expense. Toll TRIED tagay awe sean Deeommet sano sano ata ean Anontzaen oo 00 20 Pr ape ncn), NetOp on to (epee ere) 980 200 100 ver Opemting Exp, Toa 00 oD 00 open ate e102 es cane ape) 00 oo 00 Gannon Sale of Asis oo oo 00 toe io 210 Ho Tenet Tx nano moto (hone Ta Teal so2to mene Ar Tex 6sr80 231500 Monty iret 00 00 ty in Anes 00 co US.GAAP Ader oo 00 elmore Before Exedy eas los.) S00 ROO rad Exim tems 00 00 00 ttneame e730 aso U0 ‘rl Adie Net ncome 00 00 a bic Wigs Merge Sars $30 sam0 88130 sc FS Ending Pnoray Hes 20 27 2 sic EPS Including Extransinary ems Caring per share: GAR, generally accepted accounting proedures Soure: Based on compusy documents, ‘scl Year 2012 and that the company’s R&D expenditures have held at 13 percent of revenue fori las tree years, Mictoseit's sales nd marketing expenditures forthe last thtee years have ‘fepped from 21 w 2010 19 percent of revenues. _Notein Exhibit 5 that Microsofts goodwill increased another $900 million to $13.4 billion ‘8 fiscal year 2012. Goodwill represents the cumulative amount the company has historically Pi “above book value” for acquisitions, so such ahigh number is not goo EXHIBIT 5 Microsoft's Balance Sheets (in ions) 2011 fe 2022011 2010 Aa Chand Ston-Term Investments 63,0100 36.7880, Ted tecitice ee 157800 M9RTO 30140 Tra ventory List iso 7400 Prepaid Expenses 00 00 09 (ther Cane Asset, Tt suo 578.0 54340 ‘Wal Creat Assets sspsio T4918 SS6760 "Pet, Plat, and Equipment 82690 7.6300 (continued Mi ss |ANAGEMENT CASES EXHIBIT 5 Co! za — 300 SHO ag Good, Nt ee fe tang. Net se acy en Te ste ne eo ‘0 ee 18808 ter Assets To 09 __0o Total Assets 12,2710 108704.0 Liabiies and Shareholders Ey - Accounts Payable 41750 ae 40280 oo a0 ss crud Exons yao S80 2830 [Notes Payable and Short-Term Det 00 00 10000, Reece of Langtera Devas Lees 12318 a0 ved Other Curveat Liabilities, Tota! 234070 21.0020 7.8300, Tel Curr Listes sesso «RTO. «M8157 Teal Long-Tes Det foro SLO 48590 Defer Icom Tt 30 ASO x90 Minoriy ees! 09 a0 ie tee Lines Toa aon 98700 «RRO Fetal Lies sips S16O 399580 Redeemite Prefered Sock 00 a0 to prefered ck, Nowredsenabe, Net 09 a0 0 Conmoe Sick gsm A28SH0 ‘ona a nCapital 00 00 a ‘een Eamings (Acumated Df -sss0 81980-1770 Teo Stock Commen a0 ESOP Dstt Guarstee ao Unrated Gain La) 16580 nh uty Teal 2ns0 0830 1es.7040 ESOP, enpayee seek ownership plan Source: Based on ceenpsny documents. Competition ieing wo diversified, Miccsoft has diferent competitors in diffrent se ins Operating Sytem faces competition fom Apple and Gooe! ageg sans. Mit ae pine fie af comp TBM, sn Ore hol ter presale opeaing ems oe Se eis itt it case win Ami, Googe Salesforce com, whe Sasa SOL Ae inane np IBM, Oa ay at 3 seoh 0 fice package (Word, Encel, Access, and other products) faces Peas oe pen fa Abe, ple Cows Gg SA ary or eb nsed competion SP 2 word processing, spreadsheets, ard databeses. The company’s Entertainment an! DA) ccement, rode of ROO, ces intense competion fe heavyweights Nise Se Tee He aero sing ne 9 sane oe of he largest factors deterting the saeco ofa gaming console sgments. The compat» le who have their o*? from Hewlet Pech barat Nae = 6 AFinencal Comparison of Microsoft ro Rival ‘Companies CASE 19 + MICROSOFT CORPORATION et

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