Microsoft Corporation – 2013

Forest R. David

A. Case Abstract

Headquartered in Redmond, Washington, Microsoft is the world's largest software firm with its core
product being the Windows PC operating system and Office business productivity application suite,
sold in part through PC makers. Selling online and through resellers, Microsoft also designs and
manufactures video game consoles (Xbox 360), enterprise applications (Microsoft Dynamics), server
and storage software, and digital music players (Zune). With 90,000 employees, Microsoft also
engages in online advertising and consulting services.

CEO Ballmer at Microsoft has announced his retirement so Microsoft is searching for a new CEO.
Founder and Chairman of the Board Bill Gates exercises substantial control over the Microsoft
organization; Mr. Gates is one of the four people serving on the search committee to locate a successor
to Mr. Ballmer. Mr. Gates is likely going to dominate this search process to the dismay of many
shareholders. The search for a new CEO is being led by John Thompson, the company’s lead
independent director. Mr. Gates’ stake in Microsoft has fallen to five percent, less than half its level of
a decade ago, though he remains the company’s biggest individual shareholder.

B. Vision Statement (proposed)

To help people around the world reach their fullest potential by utilizing our excellent software,
consulting services, and certification programs.

C. Mission Statement (proposed)

Microsoft is committed to providing the best operating systems (7), consulting services, certification
programs and gaming consoles (2) in the world (3) to our customers (1). We are able to accomplish
this vision by hiring only the most skilled employees (9) and providing them with cutting edge
technology (4) which results in great products and services for our customers and great returns for our
shareholders (5). Our philosophy is to connect the world through technology (6) while offering our
products at fair prices for all (8).

1. Customers
2. Products or services
3. Markets
4. Technology
5. Concern for survival, growth, and profitability
6. Philosophy
7. Self-concept
8. Concern for public image
 9. Concern for employees

D. External Audit
Opportunities

1. Smartphone shipments by 2016 are expected to exceed 1,200 million units.

2. In 2012, China surpassed the USA as the world’s largest smartphone market, yet there are millions
of untapped customers remaining in China.
3. Cloud services are expected to yield revenues of $100 billion in 2016, up from $40 billion in 2011.
4. High definition TVs and tablets of today are expected to soon lose market share to gadgets than
can read human emotions and to eye gaze technology that will allow for automatic scrolling and
opening of apps.
5. Improved technology allows for more web-based software products and applications.
6. Growing trend among firms to hire employees who have professional certifications.
7. Many firms now are competing on process and are in need of consulting services.
8. Growing middle class worldwide especially in Latin America, Eastern Europe, and Asia.
9. Many telecom providers in the USA will subsidize expensive phones if the customer signs a 2-
year contract.

Threats

1. Apple sold over 22 million iPads in Q4 of 2012.

2. Faltering PC market.
3. IBM has moved heavily into the consulting business with its acquisition of SPSS.
4. Google and other competitors are now offering web-based products that work much the same as
MS Office products work.
5. Skype─ it is estimated that a large percentage of its customers come from emerging markets and
do not have much money to spend.
6. Apple and Google operating system are the two most popular for smart phone users.
7. As the tablets video gaming experience increases and becomes closer to the experience on an
Xbox, PlayStation or Nintendo’s market share for traditional gaming consoles may decline.
8. PlayStation controls 45% of the video game market share.
9. Piracy remains a problem in the software industry.
Competitive Profile Matrix

Microsoft Google Oracle

Critical Success Factors Weight Rating Score Rating Score Rating Score
Advertising 0.05 3 0.15 4 0.20 2 0.10
Market Penetration 0.09 4 0.36 3 0.27 2 0.18
Word Processing 0.10 4 0.40 2 0.20 1 0.10
Smart Phone Operating System 0.12 2 0.24 4 0.48 1 0.12
PC Operating System 0.09 4 0.36 2 0.18 1 0.09
Search Engine 0.07 2 0.14 4 0.28 1 0.07
Financial Profit 0.14 4 0.56 2 0.28 3 0.42
Consulting Services 0.08 4 0.32 2 0.16 3 0.24
Professional Certifications 0.08 3 0.24 1 0.08 2 0.16
Stock Appreciation over 5 Years 0.09 1 0.09 4 0.36 2 0.18
Excessive Goodwill 0.09 2 0.18 3 0.27 1 0.09
Totals 1.00 3.04 2.76 1.75

All three firms above are fantastic companies with net income over $10 billion in 2012. Microsoft
remains the leader based largely on their MS Office and Windows products. Google is a serious threat
by creating a web based version to compete with MS Office; Microsoft badly lags Google in providing
the operating system for smartphones. It is likely Google will have a higher score than Microsoft on
the same CPM within 3 years.

EFE Matrix

Opportunities Weight Rating Weighted Score

1. Smartphone shipments by 2016 are expected to exceed 1,200 0.04 2 0.08
million units.
2. In 2012, China surpassed the USA as the world’s largest 0.05 2 0.10
smartphone market, yet there are millions of untapped customers
remaining in China.
3. Cloud services are expected to yield revenues of $100 billion in 0.05 3 0.15
2016, up from $40 billion in 2011.
4. High definition TVs and tablets of today are expected to soon 0.04 3 0.12
lose market share to gadgets than can read human emotions and
to eye gaze technology that will allow for automatic scrolling and
opening of apps.
5. Improved technology allows for more web based software 0.05 2 0.10
products and applications.
6. Growing trend among firms to hire employees who have 0.04 3 0.12
professional certifications.
7. Many firms now are competing on process and are in need of 0.06 2 0.12
consulting services.
8. Growing middle class worldwide especially in Latin America, 0.04 3 0.12
Eastern Europe, and Asia.
9. Many telecom providers in the USA will subsidize expensive 0.03 2 0.06
phones if the customer signs a 2-year contract.
 Threats Weight Rating Weighted Score
1. Apple sold over 22 million iPads in Q4 of 2012. 0.05 2 0.10
2. Faltering PC market. 0.07 2 0.14
3. IBM has moved heavily into the consulting business with its
0.07 2 0.14
acquisition of SPSS.
4. Google and other competitors are now offering web-based
0.10 2 0.20
products that work much the same as MS Office products work.
5. Skype, it is estimated a large percentage of its customers come
0.04 2 0.08
from emerging markets and do not have much money to spend.
6. Apple and Google operating system are the two most popular for
0.10 2 0.20
smart phone users.
7. As the tablets video gaming experience increases and becomes
closer to the experience on an Xbox, PlayStation or Nintendo’s 0.06 3 0.18
market share for traditional gaming consoles may decline.
8. PlayStation controls 45% of the video game market share. 0.06 3 0.18
9. Piracy remains a problem in the software industry. 0.05 3 0.15
TOTALS 1.00 2.34

The 2.34 reveals room for improvement for Microsoft on external issues. The firm needs to move
to more web-based software, increase its market share in tablets & smartphones, and offer more
certifications, moving forward.

E. Internal Audit
Strengths

1. MS is the world’s largest software company and had record revenues of $73 billion in fiscal 2012.
2. MS offers consulting services, cloud-based services, and training certifications, as well as online
products such as Bing, MSN, adCenter, and Atlas.
3. MS owns Skype, has an alliance with Nokia, and recently introduced a Windows Phone, and a
Windows tablet computer named “Surface.”
4. The Server and Tools Division offers developer tools, training and certifications.
5. The Server and Tools division revenues grew 12% from in year-end 2012.
6. Revenues outside the USA in 2012 accounted for 47% of total revenue.
7. MS is developing technologies that increasingly enable touch screen and voice to be more readily
understood by PCs, tables and phones.
8. MS Office enjoys over 90% of the market share.
9. Firm is extremely healthy on most financial ratios.
10. Many PC makers such as Acer, Lenovo, Dell, Hewlett-Packard, and Toshiba pre-install MS software
on devices.

Weaknesses

1. Sales of MS’s new Surface tablet were fewer than 1 million in Q4 of 2012.
2. MS remains heavily reliant on Windows software sales as a percent of companywide revenue.
3. Consulting services only accounted for around 5% of total 2012 revenue.
4. Over $14 billion in goodwill on the balance sheet.
5. All divisions other than Server and Tools experienced slow growth or negative growth in 2012.
6. 90% of all revenues in the MS Business segment are derived from MS Office.
7. Xbox sales declined $113 million in 2012.
8. With the Skype purchase price of $8.5 billion, MS is in essence paying around $1,000 for each
customer who is worth around $30 each.
9. No dedicated users. Apple users love to show that they are using Apple devices, but few are proud of
using an MS device.
10. With virtually no debt, MS is not using debt in this low interest rate environment to its full advantage.

Financial Ratio Analysis

Profit Margin Percent Microsoft Industry

Gross Margin 73.99 75.58
Pre-Tax Margin 34.75 35.06
Net Profit Margin 28.08 28.28

Liquidity Ratios
Debt/Equity Ratio 0.16 0.24
Current Ratio 2.71 2.77
Quick Ratio 2.53 2.58

Profitability Ratios
Return On Equity 30.09 28.41
Return On Assets 16.58 15.7
Return On Capital 24.9 22.77

Efficiency Ratios
Income/Employee 220,838 123,791
Revenue/Employee 786,353 470,524
Receivable Turnover 4.68 6.27
Inventory Turnover 13.17 12.75
Asset Turnover 0.59 0.56

Microsoft is a healthy company performing well on most all financial ratios.

Net Worth Analysis (in millions)

Microsoft Company Worth Analysis

Stockholders' Equity - (Goodwill + Intangibles) $61,206
Net Income x 5 $109,315
(Share Price/EPS) x Net Income $293,032
Number of Shares Outstanding x Share Price $289,089
Method Average $188,160

Google Company Worth Analysis

Stockholders' Equity - (Goodwill + Intangibles) $53,705
Net Income x 5 $53,685
(Share Price/EPS) x Net Income $294,128
Number of Shares Outstanding x Share Price $335,331
Method Average $184,212
 Microsoft and Google are worth approximately the same using the 3 method average. However, using
method number four (possibly a more accurate method), Google is worth about 16% more than Microsoft.

IFE Matrix

Strengths Weight Rating Weighted Score

1. MS is the world’s largest software company and had record
0.06 4 0.24
revenues of $73 billion in fiscal 2012.
2. MS offers consulting services, cloud based services and training
certifications as well as online products such as Bing, MSN, 0.05 4 0.20
adCenter, and Atlas.
3. MS owns Skype, has an alliance with Nokia, and recently
introduced a Windows Phone and a Windows tablet computer 0.05 3 0.15
named “Surface.”
4. The Server and Tools Division offers developer tools, training
0.05 4 0.20
and certifications.
5. The Server and Tools division revenues grew 12% from in year-
0.04 4 0.16
end 2012.
6. Revenues outside the USA in 2012 accounted for 47% of total
0.03 3 0.09
revenue.
7. MS is developing technologies that increasingly enable touch
screen and voice to be more readily understood by PCs, tables 0.03 3 0.09
and phones.
8. MS Office enjoys over 90% of the market share. 0.06 4 0.24
9. Firm is extremely healthy on most financial ratios. 0.06 4 0.24
10. Many PC makers such as Acer, Lenovo, Dell, Hewlett-Packard,
0.05 4 0.20
and Toshiba pre-install MS software on devices.

Weaknesses Weight Rating Weighted Score

1. Sales of MS’s new Surface tablet were fewer than 1 million in Q4
0.05 1 0.05
of 2012.
2. MS remains heavily reliant on Windows software sales as a
0.05 1 0.05
percent of companywide revenue.
3. Consulting services only accounted for around 5% of total 2012
0.06 1 0.06
revenue.
4. Over $14 billion in goodwill on the balance sheet. 0.02 1 0.02
5. All divisions other than Server and Tools experienced slow
0.08 1 0.08
growth or negative growth in 2012.
6. 90% of all revenues in the MS Business segment are derived
0.05 1 0.05
from MS Office.
7. Xbox sales declined $113 million in 2012. 0.05 1 0.05
8. With the Skype purchase price of $8.5 billion, MS is in essence
paying around $1,000 for each customer who is worth around 0.07 1 0.07
$30 each.
9. No dedicated users. Apple users love to show that they are 0.06 1 0.06
using Apple devices, but few are proud of using an MS device.
10. With virtually no debt, MS is not using debt in this low interest
0.03 2 0.06
rate environment to its full advantage.
TOTALS 1.00 2.36
 The 2.36 reveals room for improvement at Microsoft in addressing internal issues. Moving forward, the
firm needs to allocate more resources to phones and consulting services as the firm remains too dependent
on Windows and MS Office software.

F. SWOT
SO Strategies

1. Further develop MS certification programs (S2, S4, O6).

2. Invest $100 million to improve consulting services (S1, S2, O7).
3. Invest $200 million in advertising and marketing to promote the Windows phone in Latin America (S3,
S6, O1, O8).
4. Form an alliance with telecom providers in the USA to help subsidize the prices of phones for
customers who sign a two year contract (S1, S3, O9)

WO Strategies

1. Spend $30 million to promote X-Box sales in Latin America (W7, O8).
2. Invest $200 million in advertising and marketing to promote the Windows phone in China (W1, O1,
O2).
3. Invest $200 million in advertising and marketing to promote the Windows phone in Latin America
(W1, W2, O1, O8).
4. Invest $100 million to improve consulting services (W3, O7).

ST Strategies

1. Lower prices by 50% on the Surface tablet (S3, T1, T6).

2. Invest $100 million to improve consulting services (S1, S2, T3).
3. Further develop MS certification programs (S2, S4, T2, T4).

WT Strategies

1. Lower prices by 50% on Surface tablet (W1, T1, T6).

2. Divest the X-box business line (W7, T7, T8).
3. Divest Skype (W4, W8, T5).
G. SPACE Matrix

FP
Conservative Aggressive
7

4
X = 4.2
3 Y = 0.8

CP IP
-7 -6 -5 -4 -3 -2 -1 1 2 3 4 5 6 7
-1

-2

-3

-4

-5

-6

-7
Defensive Competitive
SP

Internal Analysis: External Analysis:

Financial Position (FP) Stability Position (SP)
ROA 5 Rate of Inflation -2
Debt/Equity 5 Technological Changes -6
Net Income 5 Governmental Regulations -2
Excessive Goodwill 3 Competitive Pressure -6
Company Worth 6 Barriers to Entry into Market -4
Financial Position (FP) Average 4.8 Stability Position (SP) Average -4.0

Internal Analysis: External Analysis:

Competitive Position (CP) Industry Position (IP)
Market Share -2 Growth Potential 7
Product/Service Quality -2 Financial Stability 6
Monopolistic Nature of Key Products -1 Ease of Entry into Market 5
Technological know-how -4 Public's Dependence on Products/Services 7
Access to Capital -1 Profit Potential 6
Competitive Position (CP) Average -2.0 Industry Position (IP) Average 6.2
Microsoft is in the Aggressive Quadrant of the SPACE Matrix. It is important the firm expand consulting services
as well as acquire market share in the smartphone market. SP scores of -6 on Technological Changes and
Competitive Pressure will eventually erode into FP factors such as ROA and Net Income and move Microsoft into
the Competitive Quadrant.

H. Grand Strategy Matrix

Rapid Market Growth

Quadrant II Quadrant I

Weak Strong
Competitive Competitive
Position Position

Quadrant III Quadrant IV

Slow Market Growth

Difficult to place Microsoft in the Grand, as the PC market is experiencing slow market growth while
smartphones are still growing rapidly outside the USA. Microsoft has a strong footing on traditional
products and will likely remain here for the next few years, but desperately needs to shift resources to
smartphone operating systems, consulting services, and professional certifications in order to maintain their
position within the Grand.
I. The Internal-External (IE) Matrix

The Total IFE Weighted Scores

Strong Average Weak
4.0 to 3.0 2.99 to 2.0 1.99 to 1.0
4.0 I II III

Server and Tools

High

Microsoft Business

3.0 IV V VI

The
EFE
Total Medium
Weighted
Scores Entertainment and Devices

Windows and Windows Line

2.0 VII VIII IX

Low

1.0
Segment 2012 Total Sales 2012 Profits (in billions)
(in billions)
Windows and Windows Line $18.4 $11.5
Server and Tools 18.7 7.4
Microsoft Business 24.0 15.7
Entertainment and Devices 9.5 0.4
Online Services (not used in IE calculations) 2.9 (8.1)
Corporate Level Activity (not used in IE calculations) - (5.1)
Totals $73.7 $16.9

Microsoft Business division continues to power the firm forward; however, with this segment consisting mostly of
the popular MS Office package, it is at extreme risk of Google producing a popular web-based alternative. The
Sever and Tools division consists of software such as SQL, Visual Studio and others, but also consists of training
and certifications. There is a large external market for services such as these as revealed by the high EFE placement
of this division. The firm should work to grow and build these services. Microsoft’s Entertainment division
includes the X-Box and Skype. This division, while having a sustainable product line, faces extreme pressure from
Sony and other video game manufacturers as well as from free video chat platforms online that affect the Skype line.
It is possible this division should be divested as resources could be better allocated elsewhere, even though Skype
was just purchased.
J. QSPM

Spend $300M Spend $400M

to Improve to Promote
Consulting the Windows
and Phone and
Certification Surface
Programs Tablet
Opportunities Weight AS TAS AS TAS
1. Smartphone shipments by 2016 are expected to exceed 1,200
0.04 1 0.04 4 0.16
million units.
2. In 2012, China surpassed the USA as the world’s largest
smartphone market, yet there are millions of untapped customers 0.05 1 0.05 4 0.20
remaining in China.
3. Cloud services are expected to yield revenues of $100 billion in
0.05 3 0.15 1 0.05
2016, up from $40 billion in 2011.
4. High definition TVs and tablets of today are expected to soon
lose market share to gadgets than can read human emotions and
0.04 0 0.00 0 0.00
to eye gaze technology that will allow for automatic scrolling and
opening of apps.
5. Improved technology allows for more web based software
0.05 0 0.00 0 0.00
products and applications.
6. Growing trend among firms to hire employees who have
0.04 4 0.16 1 0.04
professional certifications.
7. Many firms now are competing on process and are in need of
0.06 4 0.24 1 0.06
consulting services.
8. Growing middle class worldwide especially in Latin America,
0.04 2 0.08 4 0.16
Eastern Europe, and Asia.
9. Many telecom providers in the USA will subsidize expensive
0.03 1 0.03 2 0.06
phones if the customer signs a 2-year contract.

Threats Weight AS TAS AS TAS

1. Apple sold over 22 million iPads in Q4 of 2012. 0.05 1 0.05 4 0.20
2. Faltering PC market. 0.07 4 0.28 3 0.21
3. IBM has moved heavily into the consulting business with its
0.07 4 0.28 1 0.07
acquisition of SPSS.
4. Google and other competitors are now offering web-based
0.10 0 0.00 0 0.00
products that work much the same as MS Office products work.
5. Skype, it is estimated a large percentage of its customers come
0.04 0 0.00 0 0.00
from emerging markets and do not have much money to spend.
6. Apple and Google operating system are the two most popular for
0.10 1 0.10 3 0.30
smart phone users.
7. As the tablets video gaming experience increases and becomes
closer to the experience on an Xbox, PlayStation or Nintendo’s 0.06 1 0.06 2 0.12
market share for traditional gaming consoles may decline.
8. PlayStation controls 45% of the video game market share. 0.06 0 0.00 0 0.00
9. Piracy remains a problem in the software industry. 0.05 0 0.00 0 0.00
 Spend $300M Spend $400M
to Improve to Promote
Consulting the Windows
and Phone and
Certification Surface
Programs Tablet
Strengths Weight AS TAS AS TAS
1. MS is the world’s largest software company and had record
0.06 0 0.00 0 0.00
revenues of $73 billion in fiscal 2012.
2. MS offers consulting services, cloud based services and training
certifications as well as online products such as Bing, MSN, 0.05 4 0.20 1 0.05
adCenter, and Atlas.
3. MS owns Skype, has an alliance with Nokia, and recently
introduced a Windows Phone and a Windows tablet computer 0.05 1 0.05 4 0.20
named “Surface.”
4. The Server and Tools Division offers developer tools, training
0.05 4 0.20 1 0.05
and certifications.
5. The Server and Tools division revenues grew 12% from in year-
0.04 4 0.16 1 0.04
end 2012.
6. Revenues outside the USA in 2012 accounted for 47% of total
0.03 0 0.00 0 0.00
revenue.
7. MS is developing technologies that increasingly enable touch
screen and voice to be more readily understood by PCs, tables 0.03 1 0.03 3 0.09
and phones.
8. MS Office enjoys over 90% of the market share. 0.06 0 0.00 0 0.00
9. Firm is extremely healthy on most financial ratios. 0.06 0 0.00 0 0.00
10. Many PC makers such as Acer, Lenovo, Dell, Hewlett-Packard,
0.05 0 0.00 0 0.00
and Toshiba pre-install MS software on devices.

Weaknesses Weight AS TAS AS TAS

1. Sales of MS’s new Surface tablet were fewer than 1 million in Q4
0.05 1 0.05 4 0.20
of 2012.
2. MS remains heavily reliant on Windows software sales as a
0.05 0 0.00 0 0.00
percent of companywide revenue.
3. Consulting services only accounted for around 5% of total 2012
0.06 4 0.24 1 0.06
revenue.
4. Over $14 billion in goodwill on the balance sheet. 0.02 0 0.00 0 0.00
5. All divisions other than Server and Tools experienced slow
0.08 3 0.24 1 0.08
growth or negative growth in 2012.
6. 90% of all revenues in the MS Business segment are derived
0.05 4 0.20 3 0.15
from MS Office.
7. Xbox sales declined $113 million in 2012. 0.05 0 0.00 0 0.00
8. With the Skype purchase price of $8.5 billion, MS is in essence
paying around $1,000 for each customer who is worth around 0.07 0 0.00 0 0.00
$30 each.
9. No dedicated users. Apple users love to show that they are
0.06 1 0.06 3 0.18
using Apple devices, but few are proud of using an MS device.
10. With virtually no debt, MS is not using debt in this low interest
0.03 0 0.00 0 0.00
rate environment to its full advantage.
TOTALS 2.95 2.73
 Both options have approximately the same weighted scores, and with Microsoft’s capital position, both
should be implemented. Microsoft desperately needs to allocate resources away from the traditional PC
market.

K. Recommendations
1. Invest $100 million to improve consulting services.
2. Invest $200 million in advertising and marketing to promote the Windows phone in Latin America.
3. Spend $30 million to promote X-Box sales in Latin America.
4. Invest $200 million in advertising and marketing to promote the Windows phone in China.
5. Lower prices by 50% on the Surface tablet.
6. Further develop MS certification programs for $200 million.

L. EPS/EBIT Analysis (in millions expect for EPS and Share Price)
Amount Needed: $730
Stock Price: $ 34.58
Shares Outstanding: 8,360
Interest Rate: 3%
Tax Rate: 19%

Common Stock Financing Debt Financing

Recession Normal Boom Recession Normal Boom
EBIT $20,000 $30,000 $40,000 $20,000 $30,000 $40,000
Interest 0 0 0 23 23 23
EBT 20,000 30,000 40,000 19,978 29,978 39,978
Taxes 3,800 5,700 7,600 3,796 5,696 7,596
EAT 16,200 24,300 32,400 16,182 24,282 32,382
# Shares 8,382 8,382 8,382 8,360 8,360 8,360
EPS 1.93 2.90 3.87 1.94 2.90 3.87

30 Percent Stock 70 Percent Stock

Recession Normal Boom Recession Normal Boom
EBIT $20,000 $30,000 $40,000 $20,000 $30,000 $40,000
Interest 16 16 16 7 7 7
EBT 19,984 29,984 39,984 19,993 29,993 39,993
Taxes 3,797 5,697 7,597 3,799 5,699 7,599
EAT 16,187 24,287 32,387 16,195 24,295 32,395
# Shares 8,367 8,367 8,367 8,375 8,375 8,375
EPS 1.93 2.90 3.87 1.93 2.90 3.87

Debt financing is the most attractive for Microsoft given that it maximizes EPS, and the firm has a low
debt/equity ratio.
M. Epilogue
In mid-June 2013, Microsoft announced that it is partnering with Best Buy to open 500 Windows Store
locations inside Best Buy stores across USA. The strategy could help both companies but especially
Microsoft, which was late to the game on tablets and smartphones, and its offerings -- the Surface and the
Windows Phone have struggled. Microsoft has already dabbled into retail with its shops, kiosks, and pop-
ups mainly dedicated to Surface tablets, but Windows Stores inside Best Buy stores will expand that model
to include PCs from its original equipment manufacturer partners. The store-within-store will help
Microsoft get its brand seen by electronics shoppers without the company having to make a big capital
investments for stores.

Also in June 2013, Windows Phone in the USA vastly improved its voice capabilities to improve the speed
and accuracy of voice to text and voice search. Now when Windows Phone users compose a text message
or search using voice, Bing will return results twice as fast as before and increase accuracy by 15 percent.

Also in June 2013, Microsoft opened its newest retail store at Ala Moana Center in Honolulu, with the help
of Seattle-based megastars Macklemore and Ryan Lewis and alternative group Neon Trees. More than
4,000 customers came out for the grand opening, some of whom camped out the night before to be the first
ones in the door.

Microsoft's new strategy and organizational structure is focused around integrated "devices and services"
and championed by both Chairman Gates and CEO Ballmer. However, many analysts say this focus is bad
for Microsoft; and that a new, visionary CEO is needed to help the company change course before it's too
late. Microsoft in 2013 reorganized itself around devices and services. The move is somewhat unorthodox.
Through introduction of its Surface tablet and its rollout of dedicated retail stores, Microsoft has been
transforming itself structurally into something similar to Apple.

Chapter 19: Microsoft

10 Basic Questions

1: D

2: C

3 B

4: B

5: C

6: C

7: B

8: B

9: A

10: C

15 Applied Questions
Projected Financial Statements

1: C

2: B

3: D

4: D

5: A

Grand Strategy Matrix & Quantitative Strategic Planning Matrix (QSPM)

1: A

2: B

3: C

4: B

5: B

Strengths, Weaknesses, Opportunities, Threats (SWOT) Matrix

1: A

2: D

3: D

4: B

5: B