Microsoft Corporation Accounting and Financial Analysis

Overview of Microsoft Corporation

Background of the Organization

Microsoft Corporation is an American technology company headquartered in Redmond, Washington. Founded by Paul Allen and Bill Gates in 1975, the company's core operations encompass the discovery, development, manufacturing, and licensing of goods and services related to computing (Bellis, 2017). According to Statista (2017), the company employs approximately 124,000 people worldwide. Over the decades since its inception, Microsoft has grown progressively into a large global corporation. Its extensive business portfolio encompasses electronics, personal computers, computer software, and, more recently, cloud computing. Notable products and services include Microsoft Office, Xbox, Internet Explorer, and the Microsoft Operating System.

The organizational structure of Microsoft Corporation supports its business growth and development. The firm's structure reflects the needs of the computer hardware and software industry in response to the dynamics of market supply and demand. A responsive organizational structure ensures the company's long-term success. Specifically, Microsoft employs a product-type divisional organizational structure, which involves company divisions founded on particular hardware and software products as well as organizational functions. Three features characterize this structure: product-type branches, multinational corporate groups, and geographic segments (Lombardo, 2017).

Stakeholders

Stakeholders of a corporation are the parties whose interests must be considered when generating and carrying out policies and programs. The key stakeholders of Microsoft Corporation, along with their primary objectives in relation to the organization, are as follows:

Employees: The company offers a wide range of resources to help employees achieve a work-life balance, including work leave, part-time hours, telecommuting, and referral services.

Suppliers: These include the various contractors and brokers working in partnership with the organization. Their objective is to ensure that dealing with Microsoft benefits and profits all parties involved.

Shareholders: The primary goal is to maximize shareholder returns. As the key owners of the company, shareholders significantly influence organizational direction.

Government: Microsoft works in partnership with government entities to cultivate a setting where prospects and development can succeed through invention, research, technology, acquisition of international talent, and infrastructure.

Consumers: Guaranteeing a high level of satisfaction among consumers and associates is a fundamental element of Microsoft's mission, achieved through its Customer Partner Experience program.

Civil society: Microsoft is dedicated to assisting non-governmental organizations (NGOs) in leveraging technology to facilitate social and economic progress. The firm's approach is centered on providing such organizations access to stable and more secure technology while enhancing the delivery of information technology solutions (Smithson, 2017).

Key Resources of the Organization

Key resources encompass assets that are specific to the organization. Microsoft Corporation possesses tangible resources, intangible resources, and human resources. In terms of tangible resources, the organization holds property and equipment, including computer equipment, hardware, and software (Anastasia, 2015), as well as land and buildings, totaling more than $18 billion. The company also holds significant cash reserves, which provide substantial financial flexibility, with cash reserves exceeding $6 billion. Additional tangible resources include established distribution channels—encompassing retailers and vendors—for its various products. These tangible assets indicate that Microsoft Corporation has substantial borrowing ability, strong investment capacity, and solid financial reserves (Microsoft, 2016).

Intangible resources consist of technology, organizational culture, and reputation. Microsoft's key technological resources include intellectual property and its capacity for research and development. Its distinctive corporate culture—deemed team-oriented and driven, with personnel valued for their contributions—is another important intangible resource. Taken together, Microsoft is strongly positioned with respect to intangible resources owing to its vast technological competencies, brand recognition, and culture (Microsoft, 2016).

Finally, human resources represent a critical asset. Microsoft has the ability to attract and retain some of the most outstanding talent in the information technology industry. The company's skilled and dedicated workforce is a major competitive resource (Microsoft, 2016).

Corporate Governance

Corporate governance at Microsoft is designed to establish and maintain management accountability by appropriately assigning roles and responsibilities. It is also intended to reinforce and protect an organizational culture of business integrity and responsible business practices, encourage the effective use of resources, and promote accountability for the management of those resources. The corporate governance structures are consistent with best-practice expectations: the composition of the board includes independent directors who are not responsible for day-to-day management. Business processes also include the use of independent advisors and the conducting of performance evaluations. The company maintains continuous communication with stakeholders to keep them informed of Microsoft's operations and financial position (Smithson, 2017).

The Role of Accounting within the Organization

Accounting plays a key role in the organization as a fundamental means of assisting managers, suppliers, consumers, and other stakeholders in making decisions. Accounting provides information to organizational managers for external reporting, routine internal reporting, and ad hoc internal reporting, making it possible to supply information to both internal and external users and to support key decision-making (Needles et al., 2013).

Accounting Software Used

The accounting software used by the company is Microsoft Dynamics 365, a product developed by Microsoft itself. This software helps bridge the silos between Customer Relationship Management (CRM) and Enterprise Resource Planning (ERP), driven by data and intelligence, and helps the company seize new business opportunities (Microsoft, 2017).