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Fin370 Week 3 Essay

1446 words - 6 pages

Microsoft Strategic Initiative
The ability to compete and maintain a higher level of success derives from strategy and financial planning. One corporation has distinguished itself among the best as one of the most successful in its industry as well as one of the world’s most profitable empires. Microsoft is the epitome of what strategic and financial planning can do if done properly. Team B has comprised a paper that will discuss one of the initiatives Microsoft has embraced and illustrate the affiliation involving strategic and financial planning as applied to their initiative.
YouthSpark is one of Microsoft’s initiatives to empower the youth of today. They provide mentorship and the ...view middle of the document...

The decision to move ahead with social programs as a strategy requires understanding of the competitive environment. The competition in the technology sector is fierce and companies are not just competing for customers, but for the talent. The YouthSpark program demonstrates Microsoft’s commitment to give back to the communities it operates in and shows current employees it is dedicated to technology education that can help to attract and retain staff. Furthermore, the program serves to perpetuate the talent pool for years to come.
Microsoft has received past negative publicity and the YouthSpark program generates goodwill with customers. Financial analysis can be done to project increased sales as a result of the goodwill of the brand and decreases in operating expenses due to productivity increases and lower staff turnover costs. On the balance sheet for 2013, there was an increase in goodwill of approximately $1.2 billion compared to 2012. Revenue increased by $1.7 and inventory increased by $800 million. Goodwill impairment, an expense that measures a loss of income due to negative brand issues, was zero in 2013 compared to $6 billion in 2012. Last, shareholder earning per share increased $0.59 in 2013 compared to 2012 (Microsoft, 2013a). The improved financial situation is not solely due to the YouthSpark initiative, but investing in corporate social responsibility provides a benefit to business results and should be considered during financial planning.
Initiative and Costs
All endeavors begin with some sort of financing whether large or small it all comes out of a budget. The project will consist of strategic and financial planning. The ultimate goal is to spend less and gain more in the form of a profit. Microsoft is no different from any other corporation and when it decides to develop and pursue an initiative it will take funding. Cost is something that cannot be ignored; therefore, it will affect its capital budgeting. According to Microsoft Corporate Citizenship (2014), “Microsoft provides cash grants to eligible organizations whose missions and activities support youth development. Microsoft also donates software and services to a broad array of eligible nonprofit organizations.”
Microsoft makes software and cash donations every day approximately $2 million per day is spent on these types of contributions. Therefore, this initiative affects its capital budget as an expense. However, not all is lost even thought this initiative is an honorable one Microsoft sees it as a long-term investment and it will receive a return on its investment. The first thing that must be realized is that all these corporations that give grants, scholarships, and other types of monetary contributions also receive a tax break or credit. The tangible assets that are used may also be included in the taxes. So, not all of the contributions that are made are considered lost, since it will see some them that expense returned in some form either tax...

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