Corporate Responsability - Microsoft PDF

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[Past Assignment] Overview of Microsoft and their corporate responsibility...

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Module: Corporate Responsibility

Assignment 1 Corporate Responsibility Plan: Microsoft

Table of Contents

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Company Overview..................................................................................2 Corporate Responsibility Program Overview...........................................3 Advantages and Disadvantages of Corporate Responsibility..................5 Advantages of Corporate Responsibility...............................................5 Disadvantages of Corporate Responsibility..........................................6 Customer & Consumer Perspectives: Does it matter?..........................7 Conclusion...............................................................................................7 References...............................................................................................8 Appendix................................................................................................10

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Company Overview Microsoft is one of the biggest multinational technology corporations, it was founded in 1975 by Bill Gates and Paul Allen in Albuquerque, New Mexico. Microsoft offer a plethora of products and services and they gain revenue through creating, licencing, and maintaining a wide range of software products and services, building, and selling hardware, and utilizing internet advertising to the global audience. The corporation’s most profitable products and services are the ‘Windows’ operating system, ‘Microsoft Office’ software, the ‘Xbox’ video gaming platform, ‘Bing’ a widely used search engine and Microsoft Azure which is a cloud computing software. Microsoft has such a diversified range of products and services, this unfortunately comes with stiff competition in many areas of the technology sector, the biggest competitor threats are Apple and Google, who are right up there with Microsoft, being the top 3 largest tech companies in the world. As of 2021 Microsoft have over 181,000 staff in full time positions across 175 locations worldwide (Microsoft Overview, 2021), these positions are scattered across Microsoft’s four main business units

Operations

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Product Research & Development

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Sales & Marketing

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General and Administration

In addition to this they also have 17 million partners and over 75 million customers. Microsoft builds it’s customer base around multi-segment positioning, meaning that they target multiple customer segments at the same time offering different products and services, as of 2021 the most profitable segment is what Microsoft calls ‘More Personal Computing’ which includes products like the Windows operating system, handheld devices, search engines and video gaming devices. The company generated an income of 4.87 billion U.S dollars in the fourth fiscal quarter of 2021 from this segment alone (Microsoft personal computing segment income FY 2015-2021 | Statista, 2021).

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Corporate Responsibility Program Overview “It is in times like these that our ability to stay true to Microsoft’s mission and corporate purpose is of the utmost importance. As a company, we are steadfast in our mission to empower every person and every organization on the planet to achieve more.” – Satya Nadella, Chief Executive Officer at Microsoft (Nadella, 2021). Niall FitzGerald defines corporate social responsibility as a ‘hard-edged business decision. Not because it is a nice thing to do or because people are forcing us to do it because it is good for our business’. Inside Microsoft is a Regulatory and Public Committee of the Board of Directors, whose purpose is to give guidance to the board about the policies and programs that relate to corporate citizenship, like human rights, sustainability, social responsibility, charity gatherings and political standings and activities. This team is called the Microsoft Technology and Corporate Responsibility or TCR team, who are also working inside the Bill and Melinda Gates Foundation. Microsoft’s corporate responsibility mission states that it is a mission to “empower every person and every organization on the planet to achieve more”. They commit to this by working across the private and public sectors and fixate on four key elements:

1. Supporting inclusive economic opportunity Microsoft support this by ensuring that everyone has an economic opportunity regardless of for every country, community, business, person. Some of their activities in this area include closing the broadband gap; roughly 40 percent of people in the world do not have access to broadband (Kemp, 2021), Microsoft have an initiative they call ‘Airband’ to which they pursue to extend affordable broadband to millions who don’t have it by July 2022. The company also pursue a goal to help those effected by COVID-19 to build skills that they need for work, standings from workplaces state that 54% of employees will need to acquire a new skill within the next two years (Technology Career Paths: 21st Century Careers | Microsoft CSR, 2021), Microsoft aims to give access to the technology and opportunity that is needed.

2. Protecting fundamental rights

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Defending the rights of the people, the company supports a plethora of groups, including preserving democracy, protecting human rights, and racial injustice. In 2020 whilst the Black Lives Matter movement was in full swing, Microsoft addressed the pressing issue by engaging in an investment within the company to increase the number of Black and African people in employment by adding 150 million U.S dollars to their diversity and inclusion momentum, they state that the current numbers of Black and African people employed will double by 2025 (Addressing racial injustice, 2020).

3. Committing to a sustainable future From Microsoft’s 2020 Annual report it can be seen how serious that the company is taking their corporate responsibility, inside, Nadella talks about the goals and commitments they have in place towards a sustainable future including a goal to be carbon negative, zero waste, and water positive by 2030 and also a $1 Billion Climate Innovation Fund to help innovation in the climate crisis (Nadella, 2020). Microsoft are also working with the United Nations Sustainable Development Goals (SDGs) with their goals of sustainable development, the SDGs have 17 unique goals to pursue to ensure a sustainable future (see appendix 1.a). Recognising that many of their goals were relatable and shared Microsoft’s interest they decided to work alongside the SDGs in many projects that affect many of the goals listed. Within this scope Microsoft have planned out the future commitments and deadlines it hopes to reach. (See appendix 1.b)

4. Earn trust Microsoft takes safety very seriously and is why so many people have trust in the company, between a strong adherence to the privacy principles of their products and services. Microsoft was the first major technology company to expand GDPR’s core rights to all of their customers and consumers by putting users in control of their own data, making users feel at ease knowing that their personal information is secured with a data protection act (Brill, 2018). Page 5 of 11

Advantages and Disadvantages of Corporate Responsibility Advantages of Corporate Responsibility Good corporate responsibility improves company profitability and value, it also brings better brand recognition, a positive company reputation, and a greater customer loyalty. A good corporate responsibility programme can also improve a businesses accountability and transparency in the eyes of it’s investors, such as mutual funds that consider corporate responsibility when selecting stocks. Microsoft have proven year after year that they have excelled at corporate responsibility, proof of this can be seen by their RepTrak scores. RepTrak is a company that publishes reports on the reputation of corporations based on consumer surveys and media coverage. Microsoft placed #3 in their top 100 corporations in 2019, #5 in their 2020 rankings and #9 in the 2021 rankings with a RepTrak score of 77.1 (2021 Global RepTrak® 100, 2021). With this constant positive rankings Microsoft is viewed as an esteemed and ethical company. With this reputation in mind, companies with positive corporate responsibility activities are more likely to bring in prospects that look for employment easier, also it is said that when companies get a good reputation through corporate responsibility the employees are more likely to stay with the company for a longer period, it allows employees to get a level of self-pride through their work. A 2015 study shows that 62% of millennials state that they would take a pay cut to work for a company that’s socially responsible (2015 Cone Communications Millennial CSR Study, 2015).

Disadvantages of Corporate Responsibility The main disadvantage of corporate responsibility is that it costs money to implement and maintain, although this can be seen as a negative for a small company and whilst Microsoft have the capacity to bear such a cost, the cost of corporate responsibility plans can be an obstacle to even the biggest of companies, it can also increase an investors resistance to get involved. It is true that many investors would invest in companies that are involved in corporate responsibility, however there are also many that look to consider companies with a desire to create high profits. However, this conflicts with a report from ‘Nielsen’ that states that 66% of people are willing to pay more for products and services from companies that Page 6 of 11

demonstrate corporate responsibility and show commitment and enthusiasm to sustainability (The Sustainability Imperative, 2021). Nowadays the sustainability, and corporate responsibility strategies are widely used but they always lead to a conflict of interest between what stakeholders and shareholders want. With the main objective of any business is to make a profit, on the other hand companies have an obligation to promote activities that benefit society, with this in mind the true art of a company is to balance out the two objectives at the same time. The confliction between profit and corporate responsibility is so constant in a companies lifetime, it could also be a limiting factor in the shoes of a new manager of a company, for instance, if a new manager strays the path of making a profit, and instead has a greater focus on benefits to society may expect to lose their job and be replaced with someone who has profits as a priority, the ebb and flow of such a conflict is completely different in each company. It is this view that led Nobel prize winning economist Milton Friedman to write about how he thought that returning value to shareholders was the primary responsibility of a company, he suggested that greed was good, and the only business of business is business in his article; “The Social Responsibility of Business Is To Increase Its Profits” (Friedman, 1970). None of these disadvantages would seem to hinder Microsoft’s incentives in their corporate responsibility activities, they have the capital to expand their programs and they actively encourage all employees in the company to be innovative in their approach to the work.

Customer & Consumer Perspectives: Does it matter? Having sound ethics and good corporate responsibility activities is of great value as already discussed, but does it matter in the eyes of customer & consumers in regard to which company they choose to do business with? Studies show that 81% of millennials will go with the company with good corporate responsibility (BoldenBarrett, 2017), and following a 2018 Conscious Consumer Spending Index – 59% of people acquired products or services from companies they thought were socially responsible (Conscious Consumer Spending Index, 2018). From this it can be seen that the greater a company works on their corporate responsibilities, the greater change they will see in the market. Page 7 of 11

Conclusion As both the business world and the environment develop excessively, Microsoft adjusts their attitudes towards the environment and recognises how important of a role they play as one of the world’s largest corporations. They seem to understand that it is a mixture of their duty towards the job and obligation to lead the world and to serve as a role model for every other company in order to change. It is important that the management and the activities are consistent with the long-term growth goals. From information gathered it would be beneficial of Microsoft to constantly take the initiative to continue venturing into their corporate responsibility goals and objectives, and because they have a market that touches all over the world, they could encourage all shareholders and partners to follow suit by promoting a good acknowledgment of social responsibility.

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References 2021. A Year of Action. 2020 Environmental Sustainability Report. [online] Microsoft, p.69. Available at: [Accessed 20 October 2021]. Bolden-Barrett, V., 2017. Study: 81% of millennials want companies to be good corporate citizens. [online] HR Dive. Available at: [Accessed 21 October 2021]. Cone Communications. 2015. 2015 Cone Communications Millennial CSR Study. [online] Available at: [Accessed 21 October 2021]. Craft. 2021. Microsoft Overview. [online] Available at: [Accessed 20 October 2021]. Friedman, M., 1970. The Social Responsibility Of Business Is to Increase Its Profits. [online] Nytimes.com. Available at: [Accessed 21 October 2021]. Good Must Grow. 2018. Conscious Consumer Spending Index. [online] Available at: [Accessed 21 October 2021]. Microsoft Corporate Blogs, 2020. Addressing racial injustice. Available at: [Accessed 20 October 2021]. Nadella, S., 2020. Microsoft 2020 Annual Report. [online] Microsoft.com. Available at: [Accessed 21 October 2021]. Nadella, S., 2021. Microsoft Corporate Social Responsibility - Microsoft CSR. [online] Microsoft.com. Available at: [Accessed 26 October 2021]. Nielsen.com. 2021. The Sustainability Imperative. [online] Available at:

[Accessed 21 October 2021].

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RepTrak. 2021. 2021 Global RepTrak® 100. [online] Available at: [Accessed 21 October 2021]. Sdgs.un.org. 2021. SDGs Sustainable Development. [online] Available at: [Accessed 20 October 2021]. Statista. 2021. Microsoft personal computing segment income FY 2015-2021 | Statista. [online] Available at: [Accessed 20 October 2021].

Appendix

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1.a – The United Nations Sustainable Development Goals

(SDGs Sustainable Development, 2021)

1.b – 2020 Environmental Sustainability Report: A Year of Action, Microsoft Corporation, 2021 (A

Year of Action, 2021).

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