Midterm Examinationmultinational Corporationmicrosoft.pdf

lOMoARcPSD|38146348 MINISTRY OF EDUCATION AND TRAINING IN HCMC UNIVERSITY OF ECONOMICS AND FINANCE MIDTERM EXAMINATION MULTINATIONAL CORPORATION MICROSOFT Lecturer : Tu Cao Anh Team members: Nguyen Ngoc Hoang Vy - 195082396 Bui Thi Kim Yen - 195080096 Dao Nguyen Huyen Vy – 195080101 Huynh Le My Huyen – 195021112 Nguyen Tan Khoa - 195041735 HO CHI MINH – 2022 Downloaded by van Nguyen (hacngocbachvan.1003@gmail.com) lOMoARcPSD|38146348 TABLE OF CONTENT Company Introduction 1.1 History of the development of Microsoft Corporation .4 1.2 Organizational structure 1.3 Vision, mission 1.4 Business areas .7 Global Report Vietnam Report 13 Corporate Governance (Policy) 18 4.1 Board of Director .18 4.2 Operation of Microsoft 21 4.3 Microsoft assesses and manages risk across the enterprise .22 Financial risk management 24 5.1 Mitigate the risk by derivatives 24 5.2 Monitoring thousands of bank accounts, and providing just-in-time cash manahement on a global basis by The Microsoft Treasury 28 Conclusion 29 Reference 32 Downloaded by van Nguyen (hacngocbachvan.1003@gmail.com) lOMoARcPSD|38146348 Lists of Table Table Financial Highights Table The components of basic and diluted EPS .11 Table ROE & ROA 12 Table Provide Board of Director 19 Table The notional amounts of Microsoft's outstanding derivative instruments measured in U.S dollar equivalents 27 Table Presenting Microsoft’s derivative instruments .27 Table of Figures Figure Board of Director 18 Figure Microsoft 365 risk management program 23 Table of Chart Chart Gross margin Chart EPS 11 Chart ROE ranking (MSFT) 12 Chart ROA ranking (MSFT) 13 Downloaded by van Nguyen (hacngocbachvan.1003@gmail.com) lOMoARcPSD|38146348 Company Introduction Microsoft is an American multinational corporation headquartered in Redmond, Washington; specializes in the development, production, sales of software copyrights and support for a wide range of computer-related products and services The company was founded by Bill Gates and Paul Allen on April 4, 1975 In terms of revenue, Microsoft is the largest software manufacturer in the world It is also called "a of the most valuable companies in the world" In 2000, Steve Ballmer replaced Gates as CEO, reorienting the company to "equipment and service" strategy The change began with the merger of Danger Inc In 2008, the company entered the computer manufacturing market for the first time in 2012 with launched the Microsoft Surface tablet, and then founded Microsoft Mobile after acquiring Nokia's devices and services business But since Satya Nadella took over as CEO in 2014, they've shifted their focus from hard manure to cloud computing services, and that's brought the company's value to its highest level since December 1999 The market share of Microsoft products always accounts for nearly 90% of the world market This has shown the power of this leading software empire.n[CITATION HaN221 \l 1066 ] 1.1 History of the development of Microsoft Corporation • April 4, 1975: Microsoft was founded by Bill Gates and Paul Allen under the name MicroSoft • January 1979: Company moved to Bellevue, Washington • 1980: Company operating system with Unix version, called Xenix • November 1980: Received an agreement to supply the CP/M operating system used in personal computers from IBM • August 1981: Microsoft retains ownership of MS-DOS • 1983: Market expansion with the release of the Microsoft Mouse In that year, co-founder Paul Allen resigned due to health reasons • August 1985: Release of Microsoft Windows, graphical expansion for MS-DOS Downloaded by van Nguyen (hacngocbachvan.1003@gmail.com) lOMoARcPSD|38146348 • March 13, 1986: The stock price increased sharply, helping the company's management to become billionaires and millionaires • April 2, 1987: Release of OS/2 version to original equipment manufacturers (OEMs) • 1990: Introduced the Microsoft Office suite of office applications • May 22, 1990: Windows 3.0 Released • May 26, 1995: Expanding product line to computer network and World Wide Web • 1996: Released Windows CE • January 13, 2000: Bill gates awarded the CEO position to Steve Ballmer • October 25, 2001: Released Windows XP • January 2007: Released Microsoft Office 2007 and subsequent version Windows – Vista • June 27, 2008: Bill Gates retires and holds the position of technical advisor of the company • February 12, 2009: Opening a retail store under the Microsoft brand • Year 2010: improved mobile operating system Windows Mobile • October 2012: Release of Windows operating system • September 4, 2012: Released Windows Server 2012 • July 2012: Selling 50% stake in MSNBC.com • March 29, 2013: Xbox One console launch • February 4, 2014: Steve Ballmer stopped keeping the word CEO and replaced it with Satya Nadella On the same day John W Thompson took over as Chairman, replacing Bill Gates • April 25, 2015: Microsoft acquires Nokia devices and services for $7.2 billion • January 21, 2015: Announced the release of the Microsoft Surface Hub Interactive whiteboard Downloaded by van Nguyen (hacngocbachvan.1003@gmail.com) lOMoARcPSD|38146348 • July 29, 2015: Windows 10 is released • March 1, 2016: Announced merger of PC and Xbox divisions • February 20, 2019: Microsoft Corp provides network security service AccountGuard [CITATION Tha21 \l 1066 ] 1.2 Organizational structure Microsoft was founded by Bill Gates and Paul Allen on April 4, 1975, when they converted the programming language of the first mainframe computer into a language that could be used on the first personal computers and succeeded beyond imagination The first year profit was $16000 but by the 5th year it jumped to $7.5 million and expanded the business globally, establishing relationships with all the top computer manufacturers in the world, earning to nearly $150 million in 1985 Microsoft then went public while maintaining a staggering profit of 25% on sales Today, Microsoft has more than 115,000 employees and is continuing to make the computer's legacy feature in new ways [CITATION Vie21 \l 1066 ] However, few people know that Bill Gates is no longer the main leader of this famous multinational corporation The current chairman of Microsoft Corporation is Mr John W Thompson and CEO is Satya Nadella Bill Gates' current position at Microsoft is the company's technical advisor 1.3 Vision, mission Vision: “to help people and businesses throughout the world realize their full potential.” Mission: “to empower every person and every organization on the planet to achieve more.” Microsoft’s mission is to enable people and businesses throughout the world to realize their full potential They work to achieve this mission by creating technology that transforms the way people work, play, and communicate They develop and market sofware, services, and hardware that deliver new opportunities, greater convenience, and enhanced value to people 's lives -The tenets central to accomplishing their mission include: Downloaded by van Nguyen (hacngocbachvan.1003@gmail.com) lOMoARcPSD|38146348  Broad Customer Connection: Connecting with customers, understanding their needs and how they use technology, and providing value through information and support to help them realize their potential  A Global, Inclusive Approach: Thinking and acting globally, enabling a multicultural workforce that generates innovative decision-making for a diverse universe of customers and partners, innovating to lower the costs of technology, and showing leadership in supporting the communities in which them work and live  Excellence: In everything Microsoft does  Trustworthy Computing: Deepening customer trust through the quality of oun products and services, our responsiveness and accountability, and our predictability in everything we 1.4 Business areas • Staff: 182,268 At Microsoft, they mission is to empower every person and every organization on the planet to achieve more Microsoft enables digital transformation for the era of an intelligent cloud and an intelligent edge Microsoft operates in 190 countries and is made up of 182.268 passionate employees worldwide.[ CITATION Mic211 \l 1066 ] Microsoft is present in most countries and has branches in 190 countries and is classified into regions: • North America • Latin America • Europe, Middle East, Africa • Japan • Asia-Pacific (APAC) Downloaded by van Nguyen (hacngocbachvan.1003@gmail.com) lOMoARcPSD|38146348 • China Thanks to that, created jobs for many workers around the world Over 40 years of construction and development, this business has established a solid foundation for a sustainable existence Specializing in developing, manufacturing, trading in software copyrights and supporting a wide range of computer-related products and services Business Software, Developer Tools, Home &Educational Software, Tablets, Search, Advertising,Servers, Windows Operating System, Windows Applications & Platforms, Smartphones, Cloud Computing, Quantum Computing, Future of Work,Productivity, Al, Artificial Intelligence, Machine Learning, Laptops, Mixed Reality, Virtual Reality,Gaming, Developers, and IT Professional[CITATION Placeholder3 \l 1066 ] Global Report Table Financial Highights SUMMARY RESULTS OF OPERATIONS 2.1 Revenue Increased $25.1 billion or 18% driven by growth across each of segments Intelligent Cloud revenue increased driven by Azure Productivity and Business Processes revenue increased driven by Office 365 Commercial and LinkedIn More Personal Computing revenue increased driven by Gaming for fiscal year 2021 Thoughout four years, revenue has steady increased 152% since 2018, with $57.728 billion changed Downloaded by van Nguyen (hacngocbachvan.1003@gmail.com) lOMoARcPSD|38146348 2.2 Cost of revenue Increased $6.2 billion or 13% driven by growth in commercial cloud and Gaming, offset in part by a reduction in depreciation expense due to the change in estimated useful lives of server and network equipment for fiscal year 2021 Thoughout four years, cost of revenue has steady increased 136% since 2018, with $13.827 billion changed 2.3 Gross margin Gross margin Average MSFT 140 82.93 96.94 115.86 120 71.68 71.68 71.68 100 87012.6081 60 40 20 2018 2019 2020 2021 Chart Gross margin Microsft has increased $18.9 billion or 20% driven for the fiscal year 2021 by growth across each of segments and the change in estimated useful lives of server and network equipment Gross margin percentage increased with the change in estimated useful lives of server and network equipment Excluding this impact, gross margin percentage decreased slightly driven by gross margin percentage reduction in More Personal Computing Commercial cloud gross margin percentage increased points to 71% driven by gross margin percentage improvement in Azure and the Downloaded by van Nguyen (hacngocbachvan.1003@gmail.com) lOMoARcPSD|38146348 change in estimated useful lives of server and network equipment, offset in part by sales mix shift to Azure Microsoft start to have higher gross margin than the average since 2018 with steady-state growth by 160% from $72.007 billion to $115.856 billion 2.4 Cash Flows Cash from operations increased $16.1 billion to $76.7 billion for fiscal year 2021, mainly due to an increase in cash received from customers, offset in part by an increase in cash paid to suppliers and employees Cash used in financing increased $2.5 billion to $48.5 billion for fiscal year 2021, mainly due to a $4.4 billion increase in common stock repurchases and a $1.4 billion increase in dividends paid, offset in part by a $1.8 billion decrease in repayments of debt and a $1.7 billion decrease in cash premium paid on debt exchange Cash used in investing increased $15.4 billion to $27.6 billion for fiscal year 2021, mainly due to a $6.4 billion increase in cash used for acquisitions of companies, net of cash acquired, and purchases of intangible and other assets, a $5.2 billion increase in additions to property and equipment, and a $4.1 billion decrease in cash from net investment purchases, sales, and maturities 2.5 EPS (Earning per share) Basic earnings per share (“EPS”) is computed based on the weighted average number of shares of common stock outstanding during the period Diluted EPS is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method Dilutive potential common shares include outstanding stock options and stock awards 10 Downloaded by van Nguyen (hacngocbachvan.1003@gmail.com) lOMoARcPSD|38146348 Chief Executive Officer (“CEO”) evaluation, oversees CEO succession planning, and oversees internal control over financial reporting and external audit In addition, Board committees focus on the following Audit Financial reporting; internal and external audit; cybersecurity, including with the Regulatory and Public Policy Committee; certain other risks not otherwise assigned Compensatio Compensation and benefits; success and development plans; human capital n management, including with the Regulatory and Public Policy Committee Governance Board effectiveness, director qualifications and continuing education, and shareholder engagement, governance framework Nominating Regulatory Corporate social responsibility; government relations activity and political and Public activities and expenditures; certain legal, regulatory, and compliance matters Policy Table Provide Board of Director 4.1.2 Management drives Microsoft strategy and operations Each part of the corporate has separate responsibilities, is closely connected with one another, and always updates the knowledge continuously in order that the corporate can operate smoothly by: The Senior Leadership Team is answerable for achieving their mission, establishing and delivering on our strategy, creating Microsoft culture, inspiring and creating innovative products, establishing accountability, and controlling risk The Senior Leadership Team also aligns our structure, operations, people, policies, and compliance efforts to our mission and strategy The Senior Leadership Team: consists of these leading particular engineering, business, and sales and marketing groups, further as those leading central functions like finance and legal and compliance Members of the Senior Leadership Team appear before the Board regularly, with most attending a Board or committee session each quarter, and also interact with the administrators outside the boardroom [CITATION Placeholder1 \l 1033 ] 19 Downloaded by van Nguyen (hacngocbachvan.1003@gmail.com) lOMoARcPSD|38146348 In addition, those representing certain core functions also regularly appear before the Board and its committees Representatives from the Company’s Corporate, External, and Legal Affairs group address public policy, regulatory, government affairs, compliance, legal risk, and other issues The Company’s Enterprise Risk Management group anticipates, identifies, assesses, and prioritizes risks, and, through regular reporting and discussion, assists our directors with the governance of risk Microsoft’s internal audit function provides objective audit, investigative, and advisory services geared toward providing assurance to senior leadership and therefore the Board that the corporate is anticipating, identifying, assessing, and prioritizing risks Our Tax and Treasury departments report regularly to the Board [CITATION Placeholder1 \l 1033 ] The Corporate Development team, together with others, assists the Board in its governance of strategic acquisitions Our Board and its committees also work closely with representatives from the Company’s human resources function Human Resource Overview of Microsoft -Recruit personnel: Microsoft follows rigorous personnel screening requirements for all employees, interns, and contingent staff All candidates are pre-screened prior to beginning employment at Microsoft Background checks on employment candidates generally include a review of the following components, to the extent permitted by law: [ CITATION Mic18 \l 1033 ] • Identity check • Education verification • Employment verification • Criminal record review • Sex offender registry review • Global sanctions list review All Microsoft employees are required to complete basic security awareness training Initial training occurs when a new employee begins working at Microsoft, and annual refresher training takes place every year thereafter The training is designed to provide the employee with an 20 Downloaded by van Nguyen (hacngocbachvan.1003@gmail.com)