B - CSR - SM

Corporate Social Responsibility of Microsoft
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OF
MICROSOFT COMPANY
1.INTRODUCTION
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Corporate social responsibility (CSR, also called corporate conscience, corporate
citizensip, social per!or"ance, or s#stainable responsible b#siness$ Responsible
%#siness) is a form of corporate self-regulation integrated into a business model. CSR policy
functions as a built-in, self-regulating mechanism whereby a business monitors and ensures
its active compliance with the spirit of the law, ethical standards, and international norms. n
some models, a firm!s implementation of CSR goes beyond compliance and engages in
"actions that appear to further some social good, beyond the interests of the firm and that
which is re#uired by law." CSR is a process with the aim to embrace responsibility for the
company!s actions and encourage a positive impact through its activities on the environment,
consumers, employees, communities, sta$eholders and all other members of the public
sphere who may also be considered as sta$eholders.
%he term "corporate social responsibility" became popular in the &'()s and has remained a
term used indiscriminately by many to cover legal and moral responsibility more narrowly
construed.
*roponents argue that corporations ma$e more long term profits by operating with a
perspective, while critics argue that CSR distracts from the economic role of businesses.
Mc+illiams and Siegel!s article (,)))) published in Strategic Management -ournal, cited by
over &))) academics, compared e.isting econometric studies of the relationship between
social and financial performance. %hey concluded that the contradictory results of previous
studies reporting positive, negative, and neutral financial impact, were due to
flawed empirical analysis. Mc+illiams and Siegel demonstrated that when the model is
properly specified/ that is, when you control for investment in Research and 0evelopment, an
important determinant of financial performance, CSR has a neutral impact on financial
outcomes.
n his widely cited boo$

entitled Misguided 1irtue2 3alse 4otions of Corporate Social
Responsibility (,))&) 0avid 5enderson argued forcefully against the way in which CSR
bro$e from traditional corporate value-setting. 5e #uestioned the "lofty" and sometimes
"unrealistic e.pectations" in CSR.
Some argue that CSR is merely window-dressing, or an attempt to pre-empt the role of
governments as a watchdog over powerful multinational corporations. *olitical sociologists
became interested in CSR in the conte.t of theories of globali6ation, neo-liberalism, and late
capitalism. 7dopting a critical approach, sociologists emphasi6e CSR as a form of capitalist
legitimacy and in particular point out that what has begun as a social movement against
uninhibited corporate power has been co-opted by and transformed by corporations into a
!business model! and a !ris$ management! device, often with #uestionable results.
CSR is titled to aid an organi6ation!s mission as well as a guide to what the company stands
for and will uphold to its consumers. 0evelopment business ethics is one of the forms
of applied ethics that e.amines ethical principles and moral or ethical problems that can arise
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in a business environment. S8 ,())) is the recogni6ed international standard for CSR.
*ublic sector organi6ations (the 9nited 4ations for e.ample) adhere to the triple bottom
line (%:;). t is widely accepted that CSR adheres to similar principles but with no formal
act of legislation. %he 94 has developed the *rinciples for Responsible nvestment as
guidelines for investing entities.
&.APPROAC'(S
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Some commentators have identified a difference between the Canadian (Montreal school of
CSR), the Continental <uropean and the 7nglo-Sa.on approaches to CSR. 7nd even within
<urope the discussion about CSR is very heterogeneous.
7 more common approach to CSR is corporate philanthropy. %his includes monetary
donations and aid given to local and non-local nonprofit organi6ations and communities,
including donations in areas such as the arts, education, housing, health, social welfare, and
the environment, among others, but e.cluding political contributions and commercial
sponsorship of events. Some organi6ations do not li$e a philanthropy-based approach as it
might not help build on the s$ills of local populations, whereas community-based
development generally leads to more sustainable development.
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7nother approach to CSR is to incorporate the CSR strategy directly into the business
strategy of an organi6ation. 3or instance, procurement of 3air %rade tea and coffee has been
adopted by various businesses including =*M>. ts CSR manager commented, "3airtrade fits
very strongly into our commitment to our communities.?
7nother approach is garnering increasing corporate responsibility interest. %his is
called Creating Shared 1alue, or CS1. %he shared value model is based on the idea that
corporate success and social welfare are interdependent. 7 business needs a healthy, educated
wor$force, sustainable resources and adept government to compete effectively. 3or society to
thrive, profitable and competitive businesses must be developed and supported to create
income, wealth, ta. revenues, and opportunities for philanthropy. CS1 received global
attention in the 5arvard :usiness Review article Strategy @ Society2 %he ;in$ between
Competitive 7dvantage and Corporate Social Responsibility by Michael <. *orter, a leading
authority on competitive strategy and head of the nstitute for Strategy and Competitiveness
at 5arvard :usiness School/ and Mar$ R. =ramer, Senior 3ellow at the =ennedy School at
5arvard 9niversity and co-founder of 3S> Social mpact 7dvisors. %he article provides
insights and relevant e.amples of companies that have developed deep lin$ages between their
business strategies and corporate social responsibility. Many approaches to CSR pit
businesses against society, emphasi6ing the costs and limitations of compliance with
e.ternally imposed social and environmental standards. CS1 ac$nowledges trade-offs
between short-term profitability and social or environmental goals, but focuses more on the
opportunities for competitive advantage from building a social value proposition into
corporate strategy. CS1 has a limitation in that it gives the impression that only two
sta$eholders are important - shareholders and consumers A and belies the multi-sta$eholder
approach of most CSR advocates.
Many companies use the strategy of benchmar$ing to compete within their respective
industries in CSR policy, implementation, and effectiveness. :enchmar$ing involves
reviewing competitor CSR initiatives, as well as measuring and evaluating the impact that
those policies have on society and the environment, and how customers perceive competitor
CSR strategy. 7fter a comprehensive study of competitor strategy and an internal policy
review performed, a comparison can be drawn and a strategy developed for competition with
CSR initiatives.
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).COST*%(N(FITS ANA+YSIS ,IT' A
R(SOURS(S %AS(D -I(,
n competitive mar$ets the cost-benefit analysis regarding positive financial outcomes upon
implementing a CSR-based strategy, can be e.amined with a lens of the resource-based-view
(R:1) of sustainable competitive advantage. 7ccording to :arneyBs (&'')) "formulation of
the R:1, sustainable competitive advantage re#uires that resources be valuable (1), rare (R),
inimitable () and non-substitutable (S)." 7 firm can conduct a cost benefit analysis through a
R:1-based lens to determine the optimal and appropriate level of investment in CSR, as it
would with any other investments. 7 firm introducing a CSR-based strategy might only
sustain high returns on their investment if their CSR-based strategy were inimitable () by
their competitors. n competitive mar$ets, a firm introducing a CSR-based strategy might
only sustain high returns on their investment and there may only be a short-lived strategic
competitive advantage to implementing CSR as their competitors may adopt similar
strategies. %here is however, a long-term advantage in that competitors may also imitate
CSR-based strategies in a socially responsible way. <ven if a firm chooses CSR for strategic
financial gain, the firm is also acting responsibly. 7ttention to CSR as an element in
corporate strategy led to e.amining CSR activities through the lens of the resource-based-
view (R:1) of the firm. %he R:1, as introduced by +ernerfelt (&'CD) and refined by :arney
(&''&), presumes that firms are bundles of heterogeneous resources and capabilities that are
imperfectly mobile across firms. 7ccordingly, the imperfect mobility of heterogeneous
resources can result in competitive advantages for firms that have superior resources or
capabilities. Mc+illiams and Siegel (,))&) used a model based on R:1 to address optimal
investment in CSR. n their model, CSR activities and attributes may be used in a
differentiation strategy. %hey conclude that managers can determine the appropriate level of
investment in CSR by conducting cost benefit analysis in the same way that they analy6e
other investments. 7pplying the R:1 to CSR naturally leads to the #uestion of whether firms
can use CSR to achieve a sustainable competitive advantage. Reinhardt (&''C) addressed this
issue and found that a firm engaging in a CSR-based strategy could only sustain an abnormal
return if it could prevent competitors from imitating its strategy.
ncidents li$e the ,)&E Savar building collapse with more than &,&)) victims have led to a
shift from company-individual thin$ing towards supply-chain thin$ing in order to increase
social responsibility. %hus, best practices from supply chain management are increasingly
applied to the CSR conte.t. +ieland and 5andfield (,)&E) suggest that companies need to
audit products and suppliers and that supplier auditing needs to go beyond direct relationships
with first-tier suppliers. %hey also demonstrate that visibility needs to be improved if supply
cannot be directly controlled and that smart and electronic technologies play a $ey role to
improve visibility across the supply chain. 3inally, they highlight that collaboration with local
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partners, across the industry and with universities is crucial to successfully managing social
responsibility in supply chains.
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..POT(NTIA+ %USIN(SS %(N(FITS
%he scale and nature of the benefits of CSR for an organi6ation can vary depending on the
nature of the enterprise, and are difficult to #uantify, though there is a large body of literature
e.horting business to adopt measures beyond financial ones (e.g., 0eming!s 3ourteen
*oints, balanced scorecards). 8rlit6$y, Schmidt, and Ryne

found a correlation between
socialFenvironmental performance and financial performance. 5owever, businesses may not
be loo$ing at short-run financial returns when developing their CSR strategy. ntel employs a
G-year CSR planning cycle.
%he definition of CSR used within an organi6ation can vary from the strict "sta$eholder
impacts" definition used by many CSR advocates and will often include charitable
efforts and volunteering. CSR may be based within the human resources, business
development or public relations departments of an organisatio4 or may be given a separate
unit reporting to the C<8 or in some cases directly to the board. Some companies may
implement CSR-type values without a clearly defined team or programme.
%he business case for CSR

within a company will li$ely rest on one or more of these
arguments2
Triple botto" line
*eople planet profit, also $nown as the triple bottom line, are words that should be used and
practiced in every move an organi6ation ma$es. *eople relates to fair and beneficial business
practices toward labour, the community and region where corporation conducts its
business. *lanet refers to sustainable environmental practices. 7 triple bottom line company
does not produce harmful or destructive products such as weapons, to.ic chemicals or
batteries containing dangerous heavy metals for e.ample. *rofit is the economic value
created by the organi6ation after deducting the cost of all inputs, including the cost of the
capital tied up. t therefore differs from traditional accounting definitions of profit.
0espite the fact that adopting this triple measure has helped some companies be more
conscious of their social and moral responsibilities, the triple bottom line has its critics. %he
first criticism is that the reporting of environmental and socialFmoral responsibilities is
selective and ignores some real moral demands, thus substituting the adopted list for a
company or its members paying attention to its myriad moral obligations. %he second
criticism is that there is no guaranteed-upon way to carry out the environmental and
socialFmoral audits comparable to the way that companies carry out their financial audits-
much of which is governed by government re#uirements. 7n inherent difficulty with any
social reporting is that it is not #uantifiable in the way that a financial report is. %here is no
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#uantitative method that captures what is significantly at issue and no agreed-upon way to
represent #ualitative measures.
'#"an reso#rces
7 CSR program can be an aid to recruitment and retention, particularly within the
competitive graduate student mar$et. *otential recruits often as$ about a firm!s CSR policy
during an interview, and having a comprehensive policy can give an advantage. CSR can also
help improve the perception of a company among its staff, particularly when staff can
become involved throughpayroll giving, fundraising activities or community volunteering.
CSR has been found to encourage customer orientation among frontline employees.
Ris/ "ana0e"ent
Managing ris$ is a central part of many corporate strategies. Reputations that ta$e decades to
build up can be ruined in hours through incidents such as corruption scandals or
environmental accidents.%hese can also draw unwanted attention from regulators, courts,
governments and media. :uilding a genuine culture of !doing the right thing! within a
corporation can offset these ris$s.
%ran1 1i!!erentiation
n crowded mar$etplaces, companies strive for a uni#ue selling proposition that can separate
them from the competition in the minds of consumers. CSR can play a role in building
customer loyalty based on distinctive ethical values.Several maHor brands, such as %he Co-
operative >roup, %he :ody Shop and 7merican 7pparel are built on ethical values. :usiness
service organi6ations can benefit too from building a reputation for integrity and best
practice.
(n0a0e"ent planet
7n engagement plan will assist in reaching a desired audience. 7 corporate social
responsibility team, or individual is needed to effectively plan the goals and obHectives of the
organi6ation. 0etermining a budget should be of high priority. %he function of corporate
social responsibility planning2
&. %o add discussion and analysis of a new set of ris$s into corporate decision-ma$ing.
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,. %o represent issues within the corporation that watchdogs, 4>8s and advocates represent
within society.
E. %o assess the future. 7n organi6ations long term and short term future needs to be thought
of.
D. %o help prioriti6e consideration of socially and environmentally friendly proHects that
might otherwise lac$ a corporate advocate.
G. %o $eep corporations aware of potential maHor societal impacts even when a negative
impact may not be immediate, and thus lessen liability.
(. %o positively influence decision ma$ing where societal impacts are ma.imi6ed, whilst
ensuring efforts are within a given budget.
De2elopin0 an en0a0e"ent plan
Commit to coming up with and improving on your companies goals. CSR commitments
communicate the nature and direction of the firm!s social and environmental activities and,
will help others understand how the organi6ation is li$ely to behave in a particular situation
&. 0o a scan of CSR commitments
,. 5old discussions with maHor sta$eholders
E. Create a wor$ing group to develop the commitments
D. *repare a preliminary draft
G. Consult with affected sta$eholders
(. Revise and publish the commitments
I. Consider what is feasible within the budget
J %o ensure employee buy-in, include employees in the process of developing the vision and
values. %o spar$ the process, create a CSR wor$ing group or hold a contest for the best
suggestions, encouraging employees and their representatives to put some thought into their
submissions.
J 5ost a visioning session and as$ participants to thin$ about what the firm could loo$ li$e in
the future as a CSR leader.
J Review the CSR priorities to determine which codes of ethics or conduct fit best with the
firm!s goals.
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Consultants are recommended when planning for CSR activities involving small, medium
and large si6ed corporations. 7ll levels of management should be on board, and the support
of high ran$ing corporate officials should be given.
+icense to operate
Corporations are $een to avoid interference in their business through ta.ation or regulations.
:y ta$ing substantive voluntary steps, they can persuade governments and the wider public
that they are ta$ing issues such as health and safety, diversity, or the environment seriously as
good corporate citi6ens with respect to labour standards and impacts on the environment.
S#pplier relations
:usinesses are constantly relying on suppliers to reduce overall costs, while improving
the #uality of their goods or services. Many 4orth 7merican companies have downgraded the
volume of suppliers they do business with, and award contracts to a select few, in order to
lower operating costs. :y establishing a strong supply chain, companies are able to push for
continuous #uality improvements, and price reductions. %he long-term benefits of the listed
above create a better value for sta$eholders.
Some multi-national companies li$e >eneral Motors can shift suppliers, if a lower offer is
made by the competition. 7s a result, competitiveness, and greater profits are created, in turn
contributing to a stronger mar$et
%he strategic use of supplier relations can benefit single, double and triple bottom-lines.
Corporations e.celling in supply relations include +al-Mart, 3ord, >eneral
Motors, %oyota and 4estle. 7ll companies listed above have gained tangeable results through
the practice of ensuring sound supply chains, and sourcing materials from ethical sources.
<mphasi6ing the importance of practicing CSR to suppliers, researching their e.isting supply
chain, and sending out CSR chec$-sheets to e.isting suppliers is important to staying on-trac$
of a companyBs implemented CSR activity.
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3.Co""on Types o! Corporate Social
Responsibility Actions
%here are many aspects of corporate social responsibility/ whether a company decides to
develop one area of CSR, or multiple, the end result is a more profitable company
e.periencing a higher level of employee engagement. %he following is a list of common ways
corporate social responsibility is implemented by organi6ations.
(n2iron"ental S#stainability4
7reas include recycling, waste management, water
management, using renewable energy sources, utili6ing reusable resources, creating
!greener! supply chains, using digital technology instead of hard copies, developing
buildings according to ;eadership in <nergy and <nvironmental 0esign (;<<0)K
standards, etc.%here is a business sector dedicated to specifically to environmental
sustainability consulting for businesses of any si6e to utili6e. %he highest ran$ed
sustainability consulting firm is <rnst @ Loung
Co""#nity In2ol2e"ent4
%his can include raising money for local charities,
supporting community volunteerism, sponsoring local events, employing people from
a community, supporting a community!s economic growth, engaging in fair trade
practices, etc.Starbuc$s is an e.ample of a company that focuses on community
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involvement and engagement/ since these programs began the company has seen
higher profits and greater employee engagement.
(tical Mar/etin0 Practices4
Companies that ethically mar$et to consumers are
placing a higher value on their customers and respecting them as people who are ends
in themselves. %hey do not try to manipulate or falsely advertise to potential
consumers. %his is important for companies that want to be viewed as ethical.
5.CRITISISMS AND CONC(RNS
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Critics of CSR as well as proponents debate a number of concerns related to it. %hese include
CSR!s relationship to the fundamental purpose and nature of business and #uestionable
motives for engaging in CSR, including concerns about insincerity and hypocrisy.
Nat#re o! b#siness
Milton 3riedman and others have argued that a corporation!s purpose is to ma.imi6e returns
to its shareholders, and that since only people can have social responsibilities, corporations
are only responsible to their shareholders and not to society as a whole. 7lthough they accept
that corporations should obey the laws of the countries within which they wor$, they assert
that corporations have no other obligation to society. Some people perceive CSR as
incongruent with the very nature and purpose of business, and indeed a hindrance to free
trade. %hose who assert that CSR is contrasting with capitalism and are in favor of the free
mar$et argue that improvements in health, longevity andFor infant mortality have been
created by economic growth attributed to free enterprise.
MDDN
Critics of this argument perceive the free mar$et as opposed to the well-being of society and
a hindrance to human freedom. %hey claim that the type of capitalism practiced in many
developing countries is a form of economic and cultural imperialism, noting that these
countries usually have fewer labour protections, and thus their citi6ens are at a higher ris$ of
e.ploitation by multinational corporations.
7 wide variety of individuals and organi6ations operate in between these poles. 3or e.ample,
the R<7;eadership 7lliance asserts that the business of leadership (be it corporate or
otherwise) is to change the world for the better. Many religious and cultural traditions hold
that the economy e.ists to serve human beings, so all economic entities have an obligation to
society (see for e.ample <conomic -ustice for 7ll). Moreover, as discussed above, many CSR
proponents point out that CSR can significantly improve long-term corporate profitability
because it reduces ris$s and inefficiencies while offering a host of potential benefits such as
enhanced brand reputation and employee engagement.
Moti2es
7 story of CSR promoted by 76im *remHi 3oundation in ndia
Some critics believe that CSR programs are underta$en by companies such as :ritish
7merican %obacco (:7%), the petroleum giant :* (well $nown for its high-profile
advertising campaigns on environmental aspects of its operations), and Mc0onald!s (see
below) to distract the public from ethical #uestions posed by their core operations. %hey
argue that some corporations start CSR programs for the commercial benefit they enHoy
through raising their reputation with the public or with government. %hey suggest that
corporations which e.ist solely to ma.imi6e profits are unable to advance the interests of
society as a whole.
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7nother concern is that sometimes companies claim to promote CSR and be committed
to sustainable development but simultaneously engage in harmful business practices. 3or
e.ample, since the &'I)s, the Mc0onald!s Corporation!s association with Ronald Mc0onald
5ouse has been viewed as CSR and relationship mar$eting. More recently, as CSR has
become mainstream, the company has beefed up its CSR programs related to its labor,
environmental and other practices .7ll the same, in Mc0onald!s Restaurants v Morris @
Steel, ;ord -ustices *ill, May and =eane ruled that it was fair comment to say that
Mc0onald!s employees worldwide !do badly in terms of pay and conditions! and true that !if
one eats enough Mc0onald!s food, one!s diet may well become high in fat etc., with the very
real ris$ of heart disease.!
Royal 0utch Shell has a much-publici6ed CSR policy and was a pioneer in triple bottom
line reporting, but this did not prevent the ,))D scandal concerning its misreporting of oil
reserves, which seriously damaged its reputation and led to charges of hypocrisy. Since then,
the Shell 3oundation has become involved in many proHects across the world, including a
partnership with Mar$s and Spencer (9=) in three flower and fruit growing communities
across 7frica.
Critics concerned with corporate hypocrisy and insincerity generally suggest that better
governmental and international regulation and enforcement, rather than voluntary measures,
are necessary to ensure that companies behave in a socially responsible manner. 7 maHor area
of necessary international regulation is the reduction of the capacity of corporations to sue
states under investor state dispute settlement provisions in trade or investment treaties if
otherwise necessary public health or environment protection legislation has impeded
corporate investments. 8thers, such as *atricia +erhane, argue that CSR should be
considered more as a corporate moral responsibility, and limit the reach of CSR by focusing
more on direct impacts of the organi6ation as viewed through a systems perspective to
identify sta$eholders. 3or a commonly overloo$ed motive for CSR, see also Corporate Social
<ntrepreneurship, whereby CSR can also be driven by employees! personal values, in
addition to the more obvious economic and governmental drivers.
Principles
%he main principles involving corporate social responsibility
involve economic, legal, ethical and discretionary aspects. 7 corporation needs to generate
profits, while operating within the laws of the state. %he corporation also needs to be ethical,
but has the right to be discretional about the decisions it ma$es. ;evels of corporate social
responsiveness to an issue include being reactive,defensive, responsive and interactive. 7ll
terms are useful in issues management. Selecting when and how to act can ma$e a difference
in the outcome of the action ta$en.
(tical cons#"eris"
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%he rise in popularity of ethical consumerism over the last two decades can be lin$ed to the
rise of CSR. 7s global population increases, so does the pressure on limited natural resources
re#uired to meet rising consumer demand (>race and Cohen ,))G, &DI). ndustriali6ation, in
many developing countries, is booming as a result of both technology and globali6ation.
Consumers are becoming more aware of the environmental and social implications of their
day-to-day consumer decisions and are therefore beginning to ma$e purchasing decisions
related to their environmental and ethical concerns. 5owever, this practice is far from
consistent or universal.
6lobalization an1 "ar/et !orces
7s corporations pursue growth through globali6ation, they have encountered new challenges
that impose limits to their growth and potential profits. >overnment regulations, tariffs,
environmental restrictions and varying standards of what constitutes "labor e.ploitation" are
problems that can cost organi6ations millions of dollars. Some view ethical issues as simply a
costly hindrance, while some companies use CSR methodologies as a strategic tactic to gain
public support for their presence in global mar$ets, helping them sustain a competitive
advantage by using their social contributions to provide a subconscious level of advertising.
(3ry, =eim, Meiners &'C(, &)G) >lobal competition places a particular pressure on
multinational corporations to e.amine not only their own labor practices, but those of their
entire supply chain, from a CSR perspective. that all government is controlling.
Social a7areness an1 e1#cation
%he role among corporate sta$eholders is to wor$ collectively to pressure corporations that
are changing. Shareholders and investors themselves, through socially responsible
investing are e.erting pressure on corporations to behave responsibly. %he e.tension of SR
bodies driving corporations to include an element of Oethical investmentB into their corporate
agendaBs generates socially embedded issues. %he main issue correlates to the development
and overall idea of Oethical investingB or SR, a concept that is constructed as a general social
perspective.
MGDN
%he problem becomes defining what is classified as Oethical investingB. %he
ethics or values of one SR body will li$ely different from the ne.t since ethical opinions are
inherently parado.ical. 3or e.ample, some religious investors in the 9S have withdrawn
investment from companies that fail to fulfill their ethical e.pectations. %he 4on-
governmental organi6ations are also ta$ing an increasing role, leveraging the power of the
media and the nternet to increase their scrutiny and collective activism around corporate
behavior. %hrough education and dialogue, the development of community awareness in
holding businesses responsible for their actions is growing.
MGGN
n recent years
MwhenPN
, the
traditional conception of CSR is being challenged by the more community-
conscious Creating Shared 1alue concept (CS1), and several companies are refining their
collaboration with sta$eholders accordingly.
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(tics trainin0
%he rise of ethics training inside corporations, some of it re#uired by government regulation,
is another driver credited with changing the behavior and culture of corporations. %he aim of
such training is to help employees ma$e ethical decisions when the answers are unclear.
%ullberg believes that humans are built with the capacity to cheat and manipulate, a view
ta$en from %rivers (&'I&, &'CG), hence the need for learning normative values and rules in
human behavior. %he most direct benefit is reducing the li$elihood of "dirty hands" (>race
and Cohen ,))G), fines and damaged reputations for breaching laws or moral norms.
8rgani6ations also see secondary benefit in increasing employee loyalty and pride in the
organi6ation Caterpillar and :est :uy are e.amples of organi6ations that have ta$en such
steps.
ncreasingly, companies are becoming interested in processes that can add visibility to their
CSR :ranco and Rodrigues (,))I) describe the sta$eholder perspective of CSR as the
inclusion of all groups or constituents (rather than Hust shareholders) in managerial decision
ma$ing related to the organi6ationBs portfolio of socially responsible activities. %his
normative model implies that the CSR collaborations are positively accepted when they are in
the interests of sta$eholders and may have no effect or be detrimental to the organi6ation if
they are not directly related to sta$eholder interests. %he sta$eholder perspective suffers from
a wheel and spo$e networ$ metaphor that does not ac$nowledge the comple.ity of networ$
interactions that can occur in cross sector partnerships. t also relegates communication to a
maintenance function, similar to the e.change perspective.
In1#stries consi1ere1 2oi1 o! CSR
Several industries are often absent from CSR research. %he absence is due to
the presumption that these particular industries fail to achieve ethical considerations of their
consumers. %ypical industries include tobacco and alcohol producers ("sin industry"
manufacturers), as well as defense firms
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8.COMPANY ADOPTIN6 CORPORAT(
SOCIA+ R(SPONSI%I+ITY
<arlier this year, Reputation nstitute, a private global consulting firm based in 4ew Lor$,
invited about DI,))) consumers across &G mar$ets to participate in a study that ran$ed the
worldBs &)) most reputable companies--all multinational businesses with a global presence.
%he study found that D,Q of how people feel about a company is based on their perceptions
of the firmBs corporate social responsibility (CSR).
=nowing how important it is to a corporation!s overall reputation, Reputation nstitute
decided to separately ran$ and honor the firms with the best CSR. 5ere are the top &).
T'( FU++ RAN9IN64
&:1) Ran/ Co"pany &:1) CSR RepTra/;
& Microsoft I,.'I
, %he +alt 0isney Company I,.CE
E >oogle I,.I&
D :M+ I,.&D
G 0aimler (Mercedes-:en6) I).(G
( Sony ('.D'
I ntel ('.E,
C 1ol$swagen ('.,'
' 7pple ('.,&
&) 4estlR ('.))
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<.A%OUT MICROSOFT COMPANY
Microsoft Corporation is an 7merican multinational corporation head#uartered
in Redmond, +ashington, that develops, manufactures, licenses, supports and sells computer
software, consumer electronics and personal computers and services. ts best $nown software
products are the Microsoft +indows line of operating systems, Microsoft 8ffice office suite,
and nternet <.plorer web browser. ts flagship hardware products are Sbo. game console
and the Microsoft Surface series of tablets. t is the world!s largest software ma$er measured
by revenues. t is also one of the world!s most valuable companies.
Microsoft was founded by :ill >ates and *aul 7llen on 7pril D, &'IG to develop and
sell :7SC interpreters for 7ltair CC)). t rose to dominate the personal computer operating
system mar$et with MS-08S in the mid-&'C)s, followed by the Microsoft +indows. %he
company!s &'C( initial public offering, and subse#uent rise in its share price, created an
estimated three billionaires and &,,))) millionaires from Microsoft employees. Since the
&'')s, it has increasingly diversified from the operating system mar$et and has made a
number of corporate ac#uisitions. n May ,)&&, Microsoft ac#uired S$ype %echnologies for
TC.G billion in its largest ac#uisition to date.
Company
20
7s of ,)&E, Microsoft is mar$et dominant in both the :M *C-compatible operating system
and office software suite mar$ets (the latter with Microsoft 8ffice). %he company also
produces a wide range of other software for des$tops and servers, and is active in areas
including internet search (with :ing), the video game industry (with the Sbo., Sbo. E() and
Sbo. 8ne consoles), the digital services mar$et (through MS4), and mobile phones (via
the +indows *hone 8S). n -une ,)&,, Microsoft entered the personal computer production
mar$et for the first time, with the launch of the Microsoft Surface, a line of tablet computers.
'istory
197283: Founding and company beginnings
*aul 7llen and :ill >ates (r.) on 8ctober &', &'C&, in a sea of *Cs after signing a pivotal
contract. :M called Microsoft in -uly &'C) in#uiring about programming languages for its
upcoming *C line/ after failed negotiations with another company, :M gave Microsoft a
contract to develop the 8S for the new line of *Cs.
*aul 7llen and :ill >ates, childhood friends with a passion in computer programming, were
see$ing to ma$e a successful business utili6ing their shared s$ills. n &'I, they founded their
first company named %raf-8-0ata, which offered a rudimentary computer that trac$ed and
analy6ed automobile traffic data. 7llen went on to pursue a degree in computer science at the
9niversity of +ashington, later dropping out of school to wor$ at 5oneywell. >ates began
studies at 5arvard. %he -anuary &'IG issue of *opular <lectronics featured Micro
nstrumentation and %elemetry Systems!s (M%S) 7ltair CC)) microcomputer. 7llen noticed
that they could program a :7SC interpreter for the device/ after a call from >ates claiming
to have a wor$ing interpreter, M%S re#uested a demonstration. Since they didn!t actually
have one, 7llen wor$ed on a simulator for the 7ltair while >ates developed the interpreter.
7lthough they developed the interpreter on a simulator and not the actual device, the
interpreter wor$ed flawlessly when they demonstrated the interpreter to M%S
in 7lbu#uer#ue, 4ew Me.ico in March &'IG/ M%S agreed to distribute it, mar$eting it
as 7ltair :7SC. %hey officially established Microsoft on 7pril D, &'IG, with >ates as
the C<8. 7llen came up with the original name of "Micro-Soft," the combination of the
Company
21
words microcomputer and software, as recounted in a &''G 3ortune maga6ine article. n
7ugust &'II the company formed an agreement with 7SC Maga6ine in -apan, resulting in
its first international office, "7SC Microsoft". %he company moved to a new home
in :ellevue, +ashington in -anuary &'I'.
Microsoft entered the 8S business in &'C) with its own version of 9ni., called Seni..
5owever, it was MS-08S that solidified the company!s dominance. 7fter negotiations
with 0igital Research failed, :M awarded a contract to Microsoft in 4ovember &'C) to
provide a version of the C*FM 8S, which was set to be used in the upcoming :M *ersonal
Computer (:M *C). 3or this deal, Microsoft purchased a C*FM clone called C(-
08S from Seattle Computer *roducts, branding it as MS-08S, which :M rebranded to *C
08S. 3ollowing the release of the :M *C in 7ugust &'C&, Microsoft retained ownership of
MS-08S. Since :M copyrighted the :M *C :8S, other companies had to reverse
engineer it in order for non-:M hardware to run as :M *C compatibles, but no such
restriction applied to the operating systems. 0ue to various factors, such as MS-08S!s
available software selection, Microsoft eventually became the leading *C operating systems
vendor. %he company e.panded into new mar$ets with the release of the Microsoft Mouse in
&'CE, as well as a publishing division named Microsoft *ress. *aul 7llen resigned from
Microsoft in 3ebruary after developing 5odg$in!s disease.
1=<.>=.4 ,in1o7s an1 O!!ice
+hile Hointly developing a new 8S with :M in &'CD, 8SF,, Microsoft released Microsoft
+indows, a graphical e.tension for MS-08S, on 4ovember ,), &'CG. Microsoft moved its
head#uarters to Redmond on 3ebruary ,(, &'C(, and on March &E the company went public/
the ensuing rise in the stoc$ would ma$e an estimated four billionaires and &,,)))
millionaires from Microsoft employees. 0ue to the partnership with :M, in &'') the 3ederal
%rade Commission set its eye on Microsoft for possible collusion/ it mar$ed the beginning of
over a decade of legal clashes with the 9.S. >overnment. Microsoft announced the release of
its version of 8SF, to original e#uipment manufacturers (8<Ms) on 7pril ,, &'CI/
meanwhile, the company was at wor$ on a E,-bit 8S, Microsoft +indows 4%, using ideas
from 8SF,/ it shipped on -uly ,&, &''E, with a new modular $ernel and
the +inE, application programming interface (7*), ma$ing porting from &(-bit (MS-08S-
based) +indows easier. 8nce Microsoft informed :M of 4%, the 8SF, partnership
deteriorated.
n &''), Microsoft introduced its office suite, Microsoft 8ffice. %he software bundled
separate office productivity applications, such as Microsoft +ord and Microsoft <.cel. 8n
May ,, Microsoft launched +indows E.) with a streamlined user interface graphics and
improved protected mode capability for the ntel EC( processor. :oth 8ffice and +indows
became dominant in their respective areas. 4ovell, a +ord competitor from &'CDU&'C(, filed
a lawsuit years later claiming that Microsoft left part of its 7*s undocumented in order to
gain a competitive advantage.
Company
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8n -uly ,I, &''D, the 9.S. 0epartment of -ustice, 7ntitrust 0ivision filed a Competitive
mpact Statement that said, in part2 ":eginning in &'CC, and continuing until -uly &G, &''D,
Microsoft induced many 8<Ms to e.ecute anti-competitive "per processor" licenses. 9nder a
per processor license, an 8<M pays Microsoft a royalty for each computer it sells containing
a particular microprocessor, whether the 8<M sells the computer with a Microsoft operating
system or a non-Microsoft operating system. n effect, the royalty payment to Microsoft
when no Microsoft product is being used acts as a penalty, or ta., on the 8<M!s use of a
competing *C operating system. Since &'CC, Microsoft!s use of per processor licenses has
increased."
1==3>&::34 Internet an1 te )&*bit era
:ill >ates giving his deposition in &''C for the 9nited States v. Microsoft trial. 8nce the 9.S.
0epartment of -ustice &''E too$ over from the 3ederal %rade Commission, a protracted legal
wrangling between Microsoft and the department ensued, resulting in various settlements and
possible bloc$ed mergers. Microsoft would point to companies such as 78;-%ime +arner in
its defense.
3ollowing :ill >ates!s internal "nternet %idal +ave memo" on May ,(, &''G, Microsoft
began to redefine its offerings and e.pand its product line into computer networ$ing and
the +orld +ide +eb. %he company released +indows 'G on 7ugust ,D, &''G, featuring pre-
emptive multitas$ing, a completely new user interface with a novel start button, and E,-bit
compatibility/ similar to 4%, it provided the +inE, 7*. +indows 'G came bundled with
the online service MS4, and for 8<Ms nternet <.plorer, a web browser. nternet <.plorer
was not bundled with the retail +indows 'G bo.es because the bo.es were printed before the
team finished the web browser, and instead was included in the +indows 'G *lusV
pac$. :ranching out into new mar$ets in &''(, Microsoft and 4:C 9niversal created a
new ,DFI cable news station, MS4:C. Microsoft created +indows C< &.), a new 8S
designed for devices with low memory and other constraints, such as personal digital
assistants. n 8ctober &''I, the -ustice 0epartment filed a motion in the 3ederal 0istrict
Court, stating that Microsoft violated an agreement signed in &''D and as$ed the court to stop
the bundling of nternet <.plorer with +indows.
:ill >ates handed over the C<8 position on -anuary &E, ,))), to Steve :allmer, an old
college friend of >ates and employee of the company since &'C), creating a new position for
himself as Chief Software 7rchitect. 1arious companies including Microsoft formed
the %rusted Computing *latform 7lliance in 8ctober &''' to, among other things, increase
security and protect intellectual property through identifying changes in hardware and
software. Critics decry the alliance as a way to enforce indiscriminate restrictions over how
consumers use software, and over how computers behave, a form of digital rights
Company
23
management/ for e.ample the scenario where a computer is not only secured for its owner,
but also secured against its owner as well. 8n 7pril E, ,))), a Hudgment was handed down in
the case of 9nited States v. Microsoft, calling the company an "abusive monopoly"/
MEEN
it
settled with the 9.S. 0epartment of -ustice in ,))D. 8n 8ctober ,G, ,))&, Microsoft
released +indows S*, unifying the mainstream and 4% lines under the 4% codebase.
MEDN
%he
company released the Sbo. later that year, entering the game console mar$et dominated
by Sony and 4intendo.
MEGN
n March ,))D the <uropean 9nion brought antitrust legal action
against the company, citing it abused its dominance with the +indows 8S, resulting in a
Hudgment of WD'I million (T(&E million) and to produce new versions of +indows S*
without +indows Media *layer, +indows S* 5ome <dition 4 and +indows S*
*rofessional 4.
&::5>1:4 ,in1o7s -ista? "obile? an1 ,in1o7s 8
C<8 Steve :allmer at the MS event in ,))C. n an interview about his management style in
,))G, he mentioned that his first priority was to get the people he delegatesto in order.
:allmer also emphasi6ed the need to continue pursuing new technologies even if initial
attempts fail, citing the original attempts with +indows as an e.ample.
Released in -anuary ,))I, the ne.t version of +indows, +indows 1ista, focused on features,
security, and a redesigned user interface dubbed 7ero. Microsoft 8ffice ,))I, released at the
same time, featured a "Ribbon" user interface which was a significant departure from its
predecessors. Relatively strong sales of both titles helped to produce a record profit in ,))I.
%he <uropean 9nion imposed another fine of WC'' million (T&.D billion) for Microsoft!s lac$
of compliance with the March ,))D Hudgment on 3ebruary ,I, ,))C, saying that the company
charged rivals unreasonable prices for $ey information about
its wor$group and bac$ office servers. Microsoft stated that it was in compliance and that
"these fines are about the past issues that have been resolved". ,))I also saw the creation of a
multi-core unit at Microsoft, as they followed in the steps of server companies such as Sun
and :M.
:ill >ates retired from his role as Chief Software 7rchitect on -une ,I, ,))C, while retaining
other positions related to the company in addition to being an advisor for the company on $ey
proHects. 76ure Services *latform, the company!s entry into the cloud computing mar$et for
+indows, launched on 8ctober ,I, ,))C. 8n 3ebruary &,, ,))', Microsoft announced its
intent to open a chain of Microsoft-branded retail stores, and on 8ctober ,,, ,))', the first
retail Microsoft Store opened in Scottsdale, 7ri6ona/ the same day the first store
opened, +indows Iwas officially released to the public. +indows I!s focus was on refining
1ista with ease of use features and performance enhancements, rather than a large rewor$ing
of +indows.
7s the smart phone industry boomed beginning in ,))I, Microsoft struggled to $eep up with
its rivals 7pple and >oogle in providing a modern smart phone operating system. 7s a result,
in ,)&), Microsoft revamped their aging flagship mobile operating system, +indows Mobile,
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replacing it with the new +indows *hone 8S/ along with a new strategy in the smart phone
industry that has Microsoft wor$ing more closely with smart phone manufacturers, such
as 4o$ia, and to provide a consistent user e.perience across all smart phones using
Microsoft!s +indows *hone 8S. t used a new user interface design language, codenamed
"Metro", which prominently used simple shapes, typography and iconography, and the
concept of minimalism.
Microsoft is a founding member of the 8pen 4etwor$ing 3oundation started on March ,E,
,)&&. 8ther founding companies include >oogle, 5* 4etwor$ing, Lahoo, 1eri6on, 0eutsche
%ele$om and &I other companies. %he nonprofit organi6ation is focused on providing support
for a new cloud computing initiative called Software-0efined 4etwor$ing. %he initiative is
meant to speed innovation through simple software changes in telecommunications networ$s,
wireless networ$s, data centers and other networ$ing areas.
3ollowing the release of +indows *hone, Microsoft underwent a gradual rebranding of its
product range throughout ,)&& and ,)&,Athe corporation!s logos, products, services, and
websites adopted the principles and concepts of the Metro design language. Microsoft
previewed +indows C, an operating system designed to power both personal computers
and tablet computers, in %aipei in -une ,)&&. 7 developer preview was released on September
&E, and was replaced by a consumer preview on 3ebruary ,', ,)&,. 8n May E&, ,)&,, the
preview version was released.
8n -une &C, ,)&,, Microsoft announced the Microsoft Surface, the first computer in the
company!s history to have its hardware made by Microsoft. 8n -une ,G, Microsoft announced
that it was paying 9ST&., billion to buy the social networ$ Lammer. 8n -uly E&, ,)&,,
Microsoft launched the 8utloo$.com webmail service to compete with >mail. 8n September
D, ,)&,, Microsoft released +indows Server ,)&,. 8n 8ctober &, Microsoft announced its
intention to launch a news operation, part of a new-loo$ MS4, at the time of the +indows C
launch that was later in the month. 8n 8ctober ,(, ,)&,, Microsoft launched +indows C and
the Microsoft Surface. %hree days later, +indows *hone C was launched. %o cope with the
potential for an increase in demand for products and services, Microsoft opened a number of
"holiday stores" across the 9.S. to complement the increasing number of "bric$s-and-mortar"
Microsoft Stores that opened in ,)&,.
8n March ,', ,)&E, Microsoft launched a *atent %rac$er. %he =inect sensor device was
upgraded for the ,)&E release of the eighth-generation Sbo. 8ne and its capabilities were
revealed in May ,)&E. %he new =inect uses an ultra-wide &)C)p camera, it can function in
the dar$ due to an infrared sensor, it employs higher-end processing power and new software,
it can distinguish between fine movements (such as a thumb movements), and the device can
determine a user!s heart rate by loo$ing at hisFher face. Microsoft filed a patent application in
,)&& that suggests that the corporation may use the =inect camera system to monitor the
behavior of television viewers as part of a plan to ma$e the viewing e.perience more active.
8n -uly &', ,)&E, Microsoft stoc$s suffered its biggest one-day percentage sell-off since the
year ,))) after its fourth-#uarter report raised concerns among the investors on the poor
showings of both +indows C and the Surface tablet/ with more than && percentage points
Company
25
declining Microsoft suffered a loss of more than 9S0 E,billion. 3or the ,)&) fiscal year,
Microsoft had five product divisions2 +indows 0ivision, Server and %ools, 8nline Services
0ivision, Microsoft :usiness 0ivision, and <ntertainment and 0evices 0ivision.
%#sinesses
,in1o7s Di2ision? Ser2er an1 Tools? Online Ser2ices Di2ision
%he company!s Client division produces the flagship +indows 8S line such as +indows C/ it
also produces the +indows ;ive family of products and services. Server and %ools produces
the server versions of +indows, such as +indows Server ,))C R, as well as a set of
development tools called Microsoft 1isual Studio, Microsoft Silver light, a web application
framewor$, and System Center Configuration Manager, a collection of tools providing
remote-control abilities, patch management, software distribution and a hardwareFsoftware
inventory. 8ther server products include2 Microsoft SX; Server, a relational
database management system, Microsoft <.change Server, for certain business-oriented e-
mail and scheduling features, Small :usiness Server, for messaging and other small business-
oriented features/ and Microsoft :i6%al$ Server, for business process management.
Microsoft provides % consulting ("Microsoft Consulting Services") and produces a set of
certification programs handled by the Server and %ools division designed to recogni6e
individuals who have a minimal set of proficiencies in a specific role/ this includes
developers ("Microsoft Certified Solution 0eveloper"), systemFnetwor$ analysts ("Microsoft
Certified Systems <ngineer"), trainers ("Microsoft Certified %rainers") and administrators
("Microsoft Certified Systems 7dministrator" and "Microsoft Certified 0atabase
7dministrator"). Microsoft *ress, which publishes boo$s, is also managed by the division.
%he 8nline Services :usiness division handles the online service MS4 and the search
engine:ing. 7s of 0ecember ,))', the company also possesses an &CQ ownership of
the cable news channel MS4:C without any editorial control/ however, the division develops
the channel!s website, msnbc.com, in a Hoint venture with the channel!s co-owner, 4:C
9niversal.
%he Commons, located on the campus of the company!s head#uarters in Redmond
%he Microsoft :usiness 0ivision produces Microsoft 8ffice including Microsoft 8ffice ,)&),
the company!s line of office software. %he software product includes +ord (a word
processor), 7ccess(a relational
database program), <.cel (a spreadsheet program), 8utloo$ (>roupware, fre#uently used
with <.change Server), *ower*oint (presentation software), *ublisher (des$top publishing
software) and Sharepoint. 7 number of other products were added later with the release of
8ffice ,))E including 1isio, *roHect, Map*oint, nfo*ath and 8ne4ote. %he division also
Company
26
develops enterprise resource planning (<R*) software for companies under the Microsoft
0ynamics brand. %hese include2 Microsoft 0ynamics 7S, Microsoft 0ynamics
471, Microsoft 0ynamics >*, and Microsoft 0ynamics S;. %hey are targeted at varying
company types and countries, and limited to organi6ations with under I,G)) employees. 7lso
included under the 0ynamics brand is the customer relationship
management software Microsoft 0ynamics CRM, part of the 76ure Services *latform.
(ntertain"ent an1 De2ices Di2ision
%he <ntertainment and 0evices 0ivision produces the +indows C< 8S for embedded
systems and +indows *hone for smart phones. Microsoft initially entered the mobile mar$et
through +indows C< for handheld devices, eventually developing into the +indows
Mobile 8S and now, +indows *hone. +indows C< is designed for devices where the 8S
may not directly be visible to the end user, in particular, appliances and cars. %he division
also produces computer games, via its in-house game publisher Microsoft Studios, that run on
+indows *Cs and other systems including titles such as 7ge of <mpires, 5alo and
the Microsoft 3light Simulator series, and houses the Macintosh :usiness 9nit which
produces Mac 8S software including Microsoft 8ffice ,)&& for Mac. Microsoft!s
<ntertainment and 0evices 0ivision designs, mar$ets, and manufactures consumer
electronics including the Sbo. E() game console, the handheld Yune media player, and the
television-based nternet appliance MS4 %1. Microsoft also mar$ets personal computer
hardware including mice, $eyboards, and various game controllers such
as Hoystic$s and gamepads.
C#lt#re
%echnical reference for developers and articles for various Microsoft maga6ines such
as Microsoft Systems -ournal (MS-) are available through the Microsoft 0eveloper
4etwor$ (MS04). MS04 also offers subscriptions for companies and individuals, and the
more e.pensive subscriptions usually offer access to pre-release beta versions of Microsoft
software. n 7pril ,))D Microsoft launched a community site for developers and users,
titled Channel', that provides a wi$i and an nternet forum. 7nother community site that
provides daily video casts and other services, 8n&).net, launched on March E, ,))(. 3ree
technical support is traditionally provided through online 9senet newsgroups, and
CompuServe in the past, monitored by Microsoft employees/ there can be several
newsgroups for a single product. 5elpful people can be elected by peers or Microsoft
employees for Microsoft Most 1aluable *rofessional (M1*) status, which entitles them to a
sort of special social status and possibilities for awards and other benefits.
4oted for its internal le.icon, the e.pression "eating our own dog food" is used to describe
the policy of using pre-release and beta versions of products inside Microsoft in an effort to
test them in "real-world" situations. %his is usually shortened to Hust "dog food" and is used as
noun, verb, and adHective. 7nother bit of Hargon, 3L31 or 3L1 ("3uc$ Lou, !m M3ullyN
1ested"), is used by an employee to indicate they are financially independent and can avoid
Company
27
wor$ anytime they wish. %he company is also $nown for its hiring process, mimic$ed in
other organi6ations and dubbed the "Microsoft interview", which is notorious for off-the-wall
#uestions such as "+hy is a manhole cover roundP".
Microsoft is an outspo$en opponent of the cap on 5&: visas, which allow companies in the
9.S. to employ certain foreign wor$ers. :ill >ates claims the cap on 5&: visas ma$es it
difficult to hire employees for the company, stating "!d certainly get rid of the 5&: cap" in
,))G. Critics of 5&: visas argue that rela.ing the limits would result in increased
unemployment for 9.S. citi6ens due to 5&: wor$ers wor$ing for lower salaries. %he 5uman
Rights Campaign Corporate <#uality nde., a report of how progressive the organi6ation
deems company policies towards ;>:% (lesbian, gay, bise.ual and transse.ual) employees,
rated Microsoft as CIQ from ,)), to ,))D and as &))Q from ,))G to ,)&) after they
allowed gender e.pression.
Criticis"
Main article2 Criticism of Microsoft
:ad 1ista and 0efective by 0esign groups protest against +indows 1ista
Criticism of Microsoft has followed the company!s e.istence because of various aspects of its
products and business practices. <ase of use, stability, and security of the company!s software
are common targets for critics. More recently, %roHan horses and other e.ploits have plagued
numerous users due to faults in the security of Microsoft +indows and other programs.
Microsoft is also accused of loc$ing vendors into their products, and not following and
complying with e.isting standards in its software. %otal cost of ownership comparisons
of ;inu. as well as 8S S to +indows are a continuous point of debate.
%he company has been in numerous lawsuits by several governments and other companies
for unlawful monopolistic practices. n ,))D, the <uropean 9nion found Microsoft guilty in a
Company
28
highly publici6ed anti-trust case. 7dditionally, Microsoft!s <9;7 for some of its programs is
often critici6ed as being too restrictive as well as being against open source software.
Microsoft has been critici6ed (along with Lahoo, 78;, >oogle and others) for its
involvement in censorship in the *eople!s Republic of China. Microsoft has also come under
criticism for outsourcing Hobs to China and %here were reports of poor wor$ing conditions at
a factory in southern China that ma$es some of Microsoft!s products.
Corporate a!!airs
%he company is run by a board of directors made up of mostly company outsiders, as is
customary for publicly traded companies. Members of the board of directors as of 3ebruary
,)&D are2 -ohn +. %hompson, Steve :allmer, 0ina 0ublon, :ill >ates, Maria
=lawe, Stephen ;uc6o, 0avid Mar#uardt, Mason Morfit, Satya 4adella, Charles 4os$i,
and 5elmut *an$e. :oard members are elected every year at the annual shareholders! meeting
using a maHority vote system. %here are five committees within the board which oversee more
specific matters. %hese committees include the 7udit Committee, which handles accounting
issues with the company including auditing and reporting/ the Compensation Committee,
which approves compensation for the C<8 and other employees of the company/ the 3inance
Committee, which handles financial matters such as proposing mergers and ac#uisitions/ the
>overnance and 4ominating Committee, which handles various corporate matters including
nomination of the board/ and the 7ntitrust Compliance Committee, which attempts to prevent
company practices from violating antitrust laws.
3ive year history graph of 47S07X2 MS3% stoc$ on -uly &I, ,)&E
+hen Microsoft went public and launched its initial public offering (*8) in &'C(, the
opening stoc$ price was T,&/ after the trading day, the price closed at T,I.IG. 7s of -uly
,)&), with the company!s nine stoc$ splits, any *8 shares would be multiplied by ,CC/ if
one was to buy the *8 today given the splits and other factors, it would cost about ' cents.
%he stoc$ price pea$ed in &''' at around T&&' (T().',C adHusting for splits). %he company
began to offer a dividend on -anuary &(, ,))E, starting at eight cents per share for the fiscal
Company
29
year followed by a dividend of si.teen cents per share the subse#uent year, switching from
yearly to #uarterly dividends in ,))G with eight cents a share per #uarter and a special one-
time payout of three dollars per share for the second #uarter of the fiscal year.
M'CNM''N
%hough
the company had subse#uent increases in dividend payouts, the price of Microsoft!s stoc$
remained steady for years.
8ne of Microsoft!s business tactics, described by an e.ecutive as "embrace, e.tend and
e.tinguish," initially embraces a competing standard or product, then e.tends it to produce
their own version which is then incompatible with the standard, which in time e.tinguishes
competition that does not or cannot use Microsoft!s new version.
M&)&N
1arious companies and
governments sue Microsoft over this set of tactics, resulting in billions of dollars in rulings
against the company. Microsoft claims that the original strategy is not anti-competitive, but
rather an e.ercise of its discretion to implement features it believes customers want.
Financial
Standard and *oor!s and Moody!s have both given a 777 rating to Microsoft, whose assets
were valued at TD& billion as compared to only TC.G billion in unsecured debt. Conse#uently,
in 3ebruary ,)&& Microsoft released a corporate bond amounting to T,.,G billion with
relatively low borrowing rates compared to government bonds.
3or the first time in ,) years 7pple nc. surpassed Microsoft in X& ,)&& #uarterly profits and
revenues due to a slowdown in *C sales and continuing huge losses in Microsoft!s 8nline
Services 0ivision (which contains its search engine:ing). Microsoft profits were TG., billion,
while 7pple nc. profits were T( billion, on revenues of T&D.G billion and T,D.I billion
respectively.
Microsoft!s 8nline Services 0ivision has been continuously loss-ma$ing since ,))( and in
X& ,)&& it lost TI,( million. %his follows a loss of T,.G billion for the year ,)&).
8n -uly ,), ,)&,, Microsoft posted its first #uarterly loss ever, despite earning record
revenues for the #uarter and fiscal year, with a net loss of TD', million due to a write
down related to the advertising company a Xuantive, which had been ac#uired for T(.,
billion bac$ in ,))I.
7s of -anuary ,)&D, Microsoft!s mar$et capitali6ation stands at TE&D:, ma$ing it the Cth
largest company in the world by mar$et capitali6ation.
(n2iron"ent
n ,)&&, >reenpeace released a report rating the top ten big brands in cloud computing on
their sources of electricity for their data centers. 7t the time, data centers consumed up to ,Q
of all global electricity and this amount was proHected to increase. *hil Radford of
>reenpeace said "we are concerned that this new e.plosion in electricity use could loc$ us
into old, polluting energy sources instead of the clean energy available today," and called on
"7ma6on, Microsoft and other leaders of the information-technology industry must embrace
Company
30
clean energy to power their cloud-based data centers." n ,)&E, Microsoft agreed to buy
power generated by a %e.as wind proHect to power one of its data centers.
Microsoft is ran$ed on the &Ith place in >reen peace!s >uide to >reener <lectronics (&(th
<dition) that ran$s &C electronics manufacturers according to their policies on to.ic
chemicals, recycling and climate change. Microsoft!s timeline for phasing out :3Rs and
phthalates in all products is ,)&, but its commitment to phasing out *1C is not clear. 7s yet
(-anuary ,)&&) it has no products that are completely free from *1C and :3Rs.
Microsoft!s main 9.S. campus received a silver certification from the ;eadership in <nergy
and <nvironmental 0esign (;<<0) program in ,))C, and it installed over ,,))) solar panels
on top of its buildings in its Silicon 1alley campus, generating appro.imately &G percent of
the total energy needed by the facilities in 7pril ,))G.
Microsoft ma$es use of alternative forms of transit. t created one of the worlds largest
private bus systems, the "Connector", to transport people from outside the company/ for on-
campus transportation, the "Shuttle Connect" uses a large fleet of hybrid cars to save fuel.
%he company also subsidises regional public transport as an incentive.
M&&GNM&&(N
n 3ebruary
,)&) however, Microsoft too$ a stance against adding additional public transport and high-
occupancy vehicle (581) lanes to a bridge connecting Redmond to Seattle/ the company did
not want to delay the construction any further.
Microsoft was ran$ed number & in the list of the +orld!s :est Multinational +or$places by
the >reat *lace to +or$ nstitute in ,)&&.
Mar/etin0
n ,))D, Microsoft commissioned research firms to do independent studies comparing
the total cost of ownership (%C8) of +indows Server ,))E to ;inu./ the firms concluded
that companies found +indows easier to administrate than ;inu., thus those using +indows
would administrate faster resulting in lower costs for their company (i.e. lower %C8).
M&&'N
%his
spurred a wave of related studies/ a study by the Lan$ee >roup concluded that upgrading
from one version of +indows Server to another costs a fraction of the switching costs from
+indows Server to ;inu., although companies surveyed noted the increased security and
reliability of ;inu. servers and concern about being loc$ed into using Microsoft
products. 7nother study, released by the 8pen Source 0evelopment ;abs, claimed that the
Microsoft studies were "simply outdated and one-sided" and their survey concluded that the
%C8 of ;inu. was lower due to ;inu. administrators managing more servers on average and
other reasons.
7s part of the ">et the 3acts" campaign, Microsoft highlighted the .4<% trading platform
that it had developed in partnership with 7ccenture for the ;ondon Stoc$ <.change, claiming
that it provided "five nines" reliability. 7fter suffering e.tended downtime and
unreliability the ;S< announced in ,))' that it was planning to drop its Microsoft solution
and switch to a ;inu. based one in ,)&).
n ,)&,, Microsoft hired a political pollster named Mar$ *enn, whom the 4ew Lor$ %imes
called "famous for bulldo6ing" his political opponents as <.ecutive 1ice-*resident,
Company
31
7dvertising and Strategy. *enn created a series of negative ads targeting one of Microsoft!s
chief competitors, >oogle. %he ads, called "Scroogled", attempt to ma$e the case that >oogle
is "screwing" consumers with search results rigged to favor >oogle!s paid advertisers,
that >mail violates the privacy of its users to place ad results related to the content of their
emails and shopping results which favor >oogle products. %ech publications li$e %ech
Crunch have been highly critical of the ad campaign, while >oogle employees have
embraced it.
Cooperation 7it te Unite1 States 6o2ern"ent
Microsoft provides information about reported bugs in their software to intelligence agencies
of the 9nited States government, prior to the public release of the fi.. 7 Microsoft
spo$esperson has stated that the corporation runs several programs that facilitate the sharing
of such information with the 9.S. government.
3ollowing media reports about *RSM, 4S7!s massive electronic surveillance program, in
May ,)&E, several technology companies were identified as participants, including
Microsoft. Microsoft Hoined the *RSM program in 3ebruary ,)&&. 5owever, in -une ,)&E,
an official statement from Microsoft read2
+e provide customer data only when we receive a legally binding order or subpoena to do so,
and never on a voluntary basis. n addition we only ever comply with orders for re#uests
about specific accounts or identifiers. f the government has a broader voluntary national
security program to gather customer data, we don!t participate in it.
0uring the first si. months in ,)&E, Microsoft had received re#uests that affected between
&G,))) and &G,''' accounts.
MICROSOFT IN INDIA
Company
32
Microsoft ndia *rivate ;imited head#uartered in 5yderabad, ndia is a subsidiary of 9S
software giant Microsoft Corporation. %he company first entered the ndian mar$et in &'')
and has since wor$ed closely with the ndian government, the % industry, academia and the
local developer community to usher in some of the early successes in the % mar$et.
Microsoft currently has offices in the &E cities.
7hmedabad, :angalore, Chandigarh, Chennai, Coimbatore, 5yderabad, ndore, -aipur, =ochi
, =ol$ata, Mumbai, 4ew 0elhi, and *une. ncreasingly, the company has become a $ey %
partner of the ndian government and industry, supporting and fueling the growth of the local
% industry through its partner enablement programs. Since its entry into ndia, Microsoft has
focused on three $ey obHectives2
%o become a $ey % partner of the ndian government and the local % industry
%o support and fuel growth of the local % industry through its partner enablement
programs
%o use the Microsoft 9nlimited *otential program to enhance education, Hobs and
opportunities and foster innovation through relevant, affordable access to computing.
Microsoft in ndia employs about G,))) people and has si. business units representing the
complete Microsoft product portfolio.
Company
33
=.MICROSOFT IN CSR

Microsoft citi6enship mission is to serve globally the needs of communities and fulfill
responsibilities to public. >ood corporate citi6enship plays a vital role in mission to help
people and business reali6e their full potential. Microsoft is inspired every day by employeesB
passion for their communities. 7nd honor their commitments by driving social change with
hundreds of non-profit partners around the world.
,or/in0 responsibly
>ood corporate citi6enship starts at home. %o meet microsoft responsibilities as a global
company, Microsoft is continually wor$ing to create a respectful and rewarding wor$
environment for itBs nearly &)),))) employees. %hey are also pioneering new ways of
reducing environmental impact. %his year, they introduced an internal carbon fee that helped
them meet our 3L&E goal of carbon neutrality. n addition, they are continually strengthening
e.pectations for our hardware production suppliers to improve the wor$ing conditions and
environmental performance of electronics factories around the world. %hey recogni6e the
important responsibility they have to respect human rights, and we wor$ to bring the power
of technology to bear to promote respect for human rights throughout the world. %hrough the
Microsoft %echnology and 5uman Rights Center, they are wor$ing internally to promote the
integration of human rights into the companyBs culture, business operations, and strategies.
<.ternally, they are see$ing to advance public understanding of the role business can play in
driving respect for human rights.
Company
34
Ser2in0 co""#nities
%hey are active members of the communities everywhere they do business.
7t the heart of our efforts is the passion of their employees, who generously donate their
time and money to causes around the world. %his year, the E)th year of our employee giving
campaign, we met an e.citing milestone A T& billion in employee contributions and
Microsoft matching gifts to more than E&,))) nonprofits since &'CE.
;aunched in September ,)&,, our Microsoft LouthSpar$ initiative is also a maHor focus of
our community wor$. %hrough partnerships with governments, nonprofits, and businesses,
we are wor$ing to empower young people to imagine and reali6e their full potential by
connecting them with greater education, employment, and entrepreneurship opportunities.
3urthermore, we donate, on average, T, million a day in software to more than I),)))
nonprofits around the world A one of many ways our technology and resources help
nonprofit organi6ations serve individuals and communities in need.
Citizensip 0o2ernance
%he Regulatory and *ublic *olicy Committee of our board of directors oversees the
companyBs policies and programs that relate to public policy and corporate citi6enship. %he
committeeBs oversight includes public issues of significance to Microsoft and our
sta$eholders that may affect MicrosoftBs operations, performance, or reputation. 8ur
Citi6enship and *ublic 7ffairs team has day-today responsibility for all citi6enship related
wor$, including sta$eholder engagement. 7s part of our ;egal and Corporate 7ffairs >roup,
the E)-plusperson team develops and coordinates our global strategy, supports our local
citi6enship teams worldwide, and partners with e.ternal sta$eholders to fulfill our citi6enship
mission. More broadly, citi6enship at Microsoft relies on the combined efforts of all our
employees, including colleagues in do6ens of other leadership roles, business and operational
groups, and global subsidiaries.
%ogether, they help us identify the societal challenges where Microsoft can add the greatest
value, develop and implement new strategies and programs, and monitor our progress.
Settin0 priorities an1 sta/eol1er en0a0e"ent
+e regularly communicate with thousands of sta$eholders, including global human rights
e.perts, environmental nongovernmental organi6ations (4>8s), and parents concerned about
their childrenBs safety and education. %hose conversations help inform and guide our
citi6enship strategies and programs. 8ur sta$eholder engagement ta$es several forms.
Company
35
<mployees from our business and operational groups regularly identify and engage with
sta$eholders in the course of their daily wor$ activities. 8ur Citi6enship and *ublic 7ffairs
team also manages a number of sta$eholder engagements and e.ternal relationships to help
guide our strategies. +e connect with leading thin$ers on corporate responsibility issues as
participants in groups such as :SR, the :oston College Center for Corporate Citi6enship, the
Clinton >lobal nitiative, 4et mpact, and the +orld <conomic 3orum. n partnership with
our colleagues in corporate governance and investor relations, we discuss environmental,
social, and governance issues twice a year with our largest institutional investors. +e also
wor$ closely with and learn from a range of advocacy groups, socially responsible investors,
corporate responsibility rating agencies, and our own employees to identify new and
emerging citi6enship issues.
(@ternal !ra"e7or/s
8ur wor$ is informed by international framewor$s such as the >lobal Reporting nitiativeBs
Sustainability Reporting >uidelines, the 9nited 4ations (94) >uiding *rinciples on :usiness
and 5uman Rights, and the 94 >lobal Compact. %his report serves as the annual
Communication on *rogress of our commitment to the 94 >lobal
<ngaging customers and partners
8ur success depends on creating new and compelling products and services, while also
building strong relationships with our customers and partners. ;istening and responding to
customers is core to our business. +e $eep in touch through online feedbac$ forms, support
communities, product satisfaction surveys, usability studies, research forums, and our
customer service %witter account, ZMicrosoft5elps. %he insights we gain help us understand
and respond to our customersB and partnersB e.periences. +e also use information drawn from
global customer and partner satisfaction surveys as a measurement for employee, e.ecutive,
and regional performance.
8ur partner ecosystem A appro.imately (D),))) mostly small to medium-si6e local
businesses around the world A develop, mar$et, sell, and service Microsoft products,
supporting millions of Hobs and contributing to local and global economic growth.
Microso!t Yo#t Spar/
Company
36
%odayBs youth aspire to ma$e a better future A for themselves and the world around them.
Microsoft Louth Spar$ empowers hundreds of millions of future achievers to imagine,
e.plore, and reali6e their potential by connecting them with greater opportunities for
education, employment, and entrepreneurship.
Loung people face a world thatBs rapidly changing. 7s economies shift, industries emerge,
and technology sets the pace, the gap between those who have access, s$ills, and
opportunities and those who donBt is glaring. +e believe technology can help bridge this
opportunity divide and secure the future of young people and the global economy. %hatBs why
weBre empowering youth by increasing access to technology and e#uipping them with the
tools and s$ills they need to succeed. %hrough our partnerships, programs, and initiatives,
weBre inspiring youth to imagine and build a better future for themselves and their
communities.
Tecnolo0y !or 6oo1
4onprofits use technology to better support individuals and communities in need. 0onated
software and services help these nonprofits magnify the social change they drive around the
world.
Donatin0 so!t7are an1 ser2ices to nonpro!its 7orl17i1e
+ith the right software, nonprofits can provide faster, better service and operate more
efficiently. +e donate hundreds of millions of dollars in software each year through our
%echnology for >ood program.
J ncreased software donations to &E percent more nonprofits in 3L&E, empowering I),,C(
organi6ations globally. +e now have software donation programs in &&I countries around the
world.
J *rovided TI'G million worth of software to nonprofits around the world A including
matched donations through our employee giving program.
J ;aunched new software donation programs in 7ustria, ndonesia, and 1ietnam through our
partnership with %ech Soup >lobal.
J 0eveloped a pilot program to help nonprofits implement Microsoft 8ffice E(G, a cloud
based software solution that provides email, productivity, and collaboration tools in the
Company
37
familiar Microsoft 8ffice format. +e will launch the full 8ffice E(G for 4onprofits program
in 3L&D.
Sarin0 /no7le10e to 1eepen i"pact
%o complement our technology donations, we help nonprofits and other organi6ations better
understand how technology can advance their wor$.
J %rained nonprofits around the world on how to use technology and software to increase
organi6ational effectiveness by hosting GE 4>8 Connection 0ays in E, countries for more
than E,(G, 4>8s and G,(IG individuals.
J *artnered with %ech Soup >lobal to host nine technology-focused webinars for the
nonprofit community. %he webinars A which provided demos and training on Microsoft
products, including +indows C, 8ffice ,)&E, 8ne4ote, and *ublisher A garnered &,,G) day-
of participants and &,)GE online views.
J +or$ed with 7idmatri. to develop tools using the +indows 76ure cloud platform that ma$e
it easier for governments and organi6ations to communicate disaster relief needs and get aid
to the communities and people who need it most.
+e also supported 7idmatri. in 3L&E with an investment of T&IG,))).
J 5elped develop services and support for nonprofits adopting Microsoft 8ffice E(G through
a T,G,))) grant to %ech mpact, an organi6ation committed to helping nonprofits reali6e their
potential through technology.
("ployee 0i2in0
Communities and charities around the world depend on the engagement and support of
individuals. +hether volunteering time or donating money or software, our employees are
passionate about giving bac$ to their communities and improving peopleBs lives. +e support
our employees by matching their contributions of time and money, enhancing their impact.
'#"anitarian response
+hen disaster stri$es, every minute counts. Relief agencies rely on #uic$, accurate
communications to help people and businesses get bac$ to normal as #uic$ly as possible. 8ur
technology helps organi6ations $eep vital information flowing during emergencies.
Company
38
+hen 5urricane Sandy hit the 9.S. mainland in 8ctober ,)&, A destroying thousands of
homes and leaving millions without power A the Microsoft 0isaster Response team was
ready.
7s the hurricane was still gathering momentum over the 7tlantic 8cean, the team deployed
Microsoft ReadyReach, a cloud-based information portal that uses +indows 76ure to help
emergency-management agencies and relief wor$ers rapidly coordinate response efforts. n
addition to offering cloud-based maps that show the impact of a disaster in real time, the
portal ma$es use of social media to communicate information to meet disaster victims about
shelters, aid, and safe driving routes. t also ma$es it easier for people to connect with
humanitarian relief agencies in the area in need of money, food, or volunteers. %he portal
received a record E,,I(( views during 5urricane Sandy. %he Ready Reach response portal is
one of many ways the Microsoft 0isaster Response team uses technology to $eep vital
information flowing during emergencies A both individually and in tandem with leading
humanitarian response organi6ations and technology partners. Microsoft also provided a safe
location for people to store their family emergency response plans or insurance policies
through S$y 0rive for +indows or Mac A accessible from any *C or smartphone. n
addition, in partnership with 7idmatri., the team launched the 4otes from the >round
program in late
,)&,. %his web portal delivers eyewitness responder stories to readers via photos, videos, and
messages, helping increase awareness of conditions on the ground and rally community
support.
Accessibility
%odayBs rapid advances in technology give people the opportunities to connect, engage, and
contribute more fully to society. 8ur technologies inspire people of all ages and abilities to
ma$e the most of their potential A eliminating barriers, improving lives, and strengthening
communities.
(@pan1in0 opport#nity !or people 7it 1isabilities
3or people with disabilities or hearing and vision impairments, accessible technologies can
eliminate obstacles and broaden opportunities. +e strive to build accessibility into many of
our products and services, provide resources that open new doors, and partner with others to
discover ways of using technology to improve lives.
J %oo$ a leadership role on accessibility by supporting the formation of the nternational
7ssociation of 7ccessibility *rofessionals. %his group will provide the strategic leadership,
international perspective, and operational focus needed to globally elevate the accessibility
profession and build a worldwide infrastructure for accessible technology development.
J +or$ed with 94 5uman Rights to strengthen provisions in the nternational Convention on
the Rights of *ersons with 0isabilities. Supported by a study conducted in collaboration with
Company
39
Middlese. 9niversity and others, the new provisions also suggest ways that the 9nited
4ations could improve its own accessibility.
J 5elped address the needs of people with autism by sponsoring and hosting 5ac$ 7utism in
March ,)&E. Supported by the :ing 3und, the hac$athon brought people together A thin$ers,
hac$ers, designers A to develop scenario-specific prototypes to help advance $nowledge and
develop solutions.
J Created a set of Microsoft 8ffice templates for families to use after a child has been
diagnosed with autism, in conHunction with 7utism Spea$s.
%he templates were one of many Microsoft initiatives in support of autism-related causes this
year.
J *rovided assistance to customers with disabilities or who need support with accessibility
features on assistive technologies A such as screen readers, screen magnifiers, or speech-
recognition commands
A by opening the Microsoft 7ccessibility
Support 0es$. 3ree of charge, the support des$ offers speciali6ed assistance from trained
agents.
J mproved the accessibility of the Sbo. 1ideo service by adding closed-captioning support
for Sbo. 1ideo across Sbo. and +indows C devices.
J <.plored how =inect for Sbo. E() could unloc$ ways for people who use sign language to
interact with their computers. n collaboration with the nstitute of Computing %echnology at
the Chinese 7cademy of Sciences, =inect uses precise movement recognition to interpret
hand gestures. +e also began wor$ing with the 9.S. 7ir 3orce in
3L&E on a physical-therapy system based on =inect for Sbo. E().
I"pro2in0 7ellness !or seniors
8lder adults can live more independent and productive lives with the help of innovative
technologies.
+e partner with community groups and local governments to promote the use of technologies
that reduce social isolation, increase wellness, and enhance the #uality of life for seniors.
J :roadened our effort to help seniors get fit, sociali6e, and manage their personal health
online with the <.ergamers +ellness Club. %he program A which employs Microsoft =inect
for Sbo. E(), Sbo. ;1<, and Microsoft 5ealth1ault A is now offered to senior centers
throughout ;os 7ngeles. *articipants can ta$e part in friendly video-game competitions while
also uploading and trac$ing important health data, such as blood pressure and glucose
readings, through their online profiles.
Company
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J ;aunched a new <.ergamers program in 4ew Lor$ City in collaboration with 4ew Lor$
CityBs 0epartment for the 7ging and 0epartment of nformation %echnology @
%elecommunications.
%he fitness program is part of the cityBs nnovative Senior Centers proHect, a citywide effort to
encourage better fitness and wellness among 4ew Lor$ CityBs older adults.
J Received an innovation award for senior programming from the 4ational 7ssociation of
7rea
7gencies on 7ging (nDa), the leading voice on aging issues. %he award recogni6ed our
success with the <.ergamers +ellness Club, which we developed in collaboration with the
City of ;os 7ngeles 0epartment of 7ging.
(n2iron"ental s#stainability
%echnology can help create a more sustainable future. %his year, we modeled a way forward
by ma$ing our operations leaner and more energy efficient A helping us meet our 3L&E goal
of carbon neutrality A and reducing the environmental impact of our services and devices.
Ma$ing our operations carbon neutral Climate change presents serious global challenges that
re#uire bold responses. +ith our commitment to carbon neutrality, weBre ta$ing
accountability for the impact of our operations by embedding sustainability into all of our
business decisions.
O#r approac to carbon ne#trality as tree pillars.
%e lean4 0riving energy savings internally :eing efficient in our operations is fundamental to
our sustainability goals. +eBre implementing new technologies to reduce energy and water
use throughout Microsoft, while encouraging employees to choose more sustainable
behaviors.
Company
41
J Reduced resource use with data centers that use half the energy and between & to E percent
of the water re#uired to cool traditional data centers. +eBre also tightly integrating resilient
software across our cloud services to better manage the data centers, networ$s, and services
hosted within them A helping reduce energy consumption and ma$ing them increasingly
fle.ible and reliable.
J Reali6ed energy savings for our data center in 0ublin, reland, by implementing adiabatic
cooling, which reduces our energy costs per megawatt by up to E) percent. +eBre also
retrofitting e.isting data centers to be more efficient with harder-wor$ing, lower-energy
servers, compressor energy reduction, custom light-emitting diode (;<0) lighting, and more.
J 0ramatically increased insight into our energy use at our &,G-building, G))-acre Redmond
campus as part of our <nergy-Smart :uildings (<S:) initiative, helping us cut energy costs
by an estimated ( to &) percent. 7n interconnected energy-management system identifies
savings opportunities by collecting G)) million data transactions from E),))) pieces of
e#uipment per day.
J Reduced our carbon footprint by increasing our use of Microsoft collaboration technology
as an alternative to travel. +e have tools within our corporate travel reservation site that
encourage employees to carefully evaluate the business benefit and environmental impact of
travel. Since
,))I, weBve reduced our carbon footprint from air travel by E),))) metric tons.
J <.panded %he Connector, MicrosoftBs free commuter bus service for employees at our
global head#uarters in +ashington stateBs *uget Sound region to ,, routes, ID buses, and
I)),))) annual rides. %he service has helped eliminate D(.E million miles of travel and
reduced carbon emissions by &','E( metric tons since its debut five years ago.
%e 0reen4 More renewable energy, less waste
9sing resources efficiently re#uires both commitment and investment. +eBve increased our
purchase of green energy while ma$ing responsible choices with our energy, waste, and
water.
J More than doubled our investment in renewable energy in 3L&E by purchasing ,.E billion
$+h of green power globally.
J Recogni6ed by the 9.S. <nvironmental *rotection 7gency (<*7) as the second largest
purchaser ofgreen energy in the 9nited States. 8ur totals increased nearly I) percent from
last year, and were e#uivalent to the energy consumed by
,)D,))) average 7merican homes.
J 8ffset more than E)),))) metric tons of C8, emissions through a growing portfolio of
innovative carbon-offset proHects.
Company
42
J nvested TG.G million in a demonstration proHect to power a data center in Cheyenne,
+yoming, using biogas from a wastewater treatment facility, providing ultra-clean, carbon-
neutral electricity. =nown as the 0ata *lant, it will be completely independent of the grid and
will sustainably power cloud services.
J 5elped %ur$ey put nearly D(G,))) megawatt hours of clean electricity bac$ into its national
power grid by investing in the &&' wind turbines of the Soma +ind 3arm in the Manisa and
:ali$esir provinces.
J Reduced, reused, or recycled '' percent of the waste from our Redmond dining facilities by
switching to compostable tableware, administering aggressive recycling programs, and
adapting our menu to get the most from each item of food served.
%e acco#ntable4 5olding ourselves to a new standard
7 critical aspect of addressing climate change is holding ourselves accountable. 3or the first
time ever, weBve integrated carbon use into the financial decision ma$ing of the company.
8ur internal carbon fee builds a more responsible corporate culture while giving us a new
perspective on the e.ternal costs of our emissions.
J 5eld every business group at Microsoft responsible for their emissions with our internal
carbon fee A the cornerstone of our commitment to carbon neutrality. 9sing technologies to
measure the impact of our operations, we charge our business groups according to their actual
carbon impact, from electricity use to air travel. %his adds discipline to our business decisions
and helps guide the resource choices made both at our corporate head#uarters and through
our local subsidiaries.
J Created an internal investment fund for our carbon fee payments. %he fund will be used to
support a variety of energy-efficiency and carbon- offset proHects, helping us reduce net
emissions and meet our carbon neutrality goal.
J mproved transparency by measuring emissions with advanced trac$ing software. +e rolled
out the cloud-based Carbon Systems <nterprise Sustainability *latform A based on
Microsoft technology A to more than ()) facilities in &)) countries, providing visibility into
our energy use and emissions.
0eveloping technologies to reduce environmental impact
nformation technology accounts for up to D percent of electricity consumed globally. %o
$eep such power use in line, weBre building new efficiencies into our products and services to
help our customers reduce their environmental impact. 7nd as our customers and
collaborators put their energies into using our products, weBre advancing the conversation
about conservation and climate change mitigation. mproving energy efficiency in products
and services
Company
43
Much li$e the cloud has revolutioni6ed business efficiency, weBve transformed how efficient
cloud storage can be. %hrough our online products and solutions, weBre helping Microsoft
users worldwide reduce their own energy consumption.
J Reduced our customersB environmental impact by hosting Microsoft cloud services in our
advanced, highly efficient data centers. Small and medium-si6e businesses that use Microsoft
cloud services can reduce their energy use and associated carbon emissions by up to ')
percent compared with on-premises delivery.
J Cut *C energy consumption while driving better performance through power management
features built into our hardware and +indows C.
J <#uipped % managers to better discover, trac$, and implement potential energy efficiencies
with centrally managed tools such as MicrosoftBs System Center Configuration Manager.
J 5elped customers avoid emissions from shipping and pac$aging through our 0igital by
Choice program, which offers digital software distribution and demateriali6es C0 and 010
production.
Re1#cin0 li!e cycle i"pact
<nvironmental sustainability is core to our hardware design and manufacturing. 7s part of
our 0esign for >reen (0f>) initiative, weBre rethin$ing how we build hardware from the
ground up, incorporating such environmental criteria as energy efficiency, recyclability,
materials selection, and power type.
J Redesigned our products for improved environmental performance. +indows C, for
e.ample, ma$es power management seamless and efficient across multiple devices, including
laptops, netboo$s, des$tops, or tablets. +e also e.panded on the significant battery-life
improvements made in +indows I and further developed them in
+indows C, such as giving *Cs and laptops the ability to instantly switch between low- and
highpower modes.
J ntroduced an environmental scorecard into our 0f> initiative to evaluate energy efficiency,
use of recycled or alternate materials, and minimi6ation of pac$aging earlier in the product
inception process.
Company
44
J Reduced standby power use for the Sbo. E() by a factor of &) since its launch in ,))G.
4ow using less than three-tenths of a watt, the efficiencies have resulted in a () percent
reduction in energy use.
J Created a public website and hosted events and programs to foster community $nowledge in
life cycle sustainability, particularly the environmental choices related to buying, using, and
disposing of electronics.
J <nabled our sales teams and encouraged partners to highlight green product offerings by
flagging more efficient products and holding <*<7%K training courses in Central and
<astern <urope. <*<7% is a comprehensive environmental rating system that helps identify
environmentally preferable electronics.
nforming discussions of climate change
Climate change mitigation re#uires action and understanding. +eBre helping collect, study,
and manage research into the impact of climate change to support conservation strategies and
inform public policy.
J 7dvocated for large-scale ecosystem modeling through a partnership with the 9nited
4ations
<nvironment *rogramme +orld Conservation Monitoring Centre. MicrosoftBs
Computational <cology and <nvironmental Science (C<<S) group and Microsoft Research
too$ on the challenge of creating a vast, data-driven >eneral <cosystem Model in hopes of
enhancing environmental understanding and promoting conservation and biodiversity.
J +or$ed to restore large a#uatic ecosystems particularly in the *uget Sound region A
through a cooperative proHect with the 9.S. <*7. %he
Microsoft Research Connections team e.plored how available data and technology can help
build relationships between community members, land holders, and decision ma$ers at the
county and city level.
J Mapped out threats to endangered wildlife in partnership with the nternational 9nion for
Conservation of 4ature and 4atural ResourceBs Red ;ist of %hreatened Species. 8ur
dedicated team of C<<S environmental scientists developed software built on SX; Server
,)&, and :ing Maps to strengthen research and create a repository of evidence for threats to
species.
J 5elped preserve threatened plant and animal species in ;atin 7merica through
;ive740<S, a data collection and processing tool developed by Microsoft Research in
collaboration with the
*ontifical Catholic 9niversity of Chile and the ;atin 7merican and Caribbean Collaborative
C%
Company
45
Research 1irtual nstitute.

1:. S,OT ANA+YSIS OF MICROSOFT
Company
46
Company Background
Name Microsoft Corporation
Logo
Industries served Computer software, Electronics
Geographic areas served orldwide
!ead"uarters #$%$
Current CE& %atya Nadella
'evenue ( )*$)+ ,illion -+./+0
Company
47
1rofit ( /2$3) ,illion -+./+0
Employees 34,... -+./+0
Main Competitors
5pple Inc$, Google Inc$, %amsung Electronics Co$, Ltd$, International Business
Machines Corporation and many others$
Microsoft Corporation is one of the ,est6known software companies in the world$ 7he
corporate is famous for its indows and &ffice software$ In addition to software
products the ,usiness manufactures and develops consumer electronics such as
ta,lets and game system$
%&7
Microsoft %&7 analysis +./*
%trengths eaknesses
Brand loyalty
Brand reputation
Easy to use software
%trong distri,ution channels
'o,ust financial performance
5c"uisition of %kype
1oor ac"uisitions and investments
8ependence on hardware manufacturers
Criticism over security flaws
Mature 1C markets
%low to innovate
Company
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&pportunities 7hreats
Cloud ,ased services
Mo,ile advertising
Mo,ile device industry
Growth through ac"uisitions
Intense competition in software products
Changing consumer needs and ha,its
&pen source pro9ects
1otential lawsuits
%trengths
1. Brand loyalty. &ver the years, Microsoft has ,een the leading &% and software
provider, which resulted in more than 3.: market share for 1C &%$ Most of us grew up
using its easy to use &%, are familiar with it and will keep using it$ ;ew other ,rands are
capa,le to compete with Microsoft for this reason$ Even open source &%, which are
completely free and well suited to use for common user, find it hard to attract users$
2. Brand reputation. 5ccording to Inter,rand, Microsoft<s ,rand is the =th most
valua,le ,rand in the world, valued at ( =)$> ,illion$ ;or,es listed the corporate as the )th
most reputa,le ,usiness in the world$ Brand reputation leads to higher sales and greater
market share$
3. Easy to use softare. indows &% and &ffice software products are so popular not
9ust ,ecause Microsoft has great monopolistic power, strong distri,ution channels and good
,rand reputation ,ut also ,ecause its products are of great "uality and really easy to use$
4. !trong distribution c"annels. 7he company works with all the ma9or computer
hardware producers such as Lenovo, 8ell, 7oshi,a and %amsung and ma9or computer
retailers to make sure computers would ,e sold with already pre6installed indows software$
7he company also invested in 8ell and Nokia to tighten its relationships with these
companies$
5. #obust financial performance. Microsoft grew its revenues ,y +.: from +..> to
+./+ and holds more than (2* ,illion of cash and cash e"uivalents that can ,e used for
ac"uisitions and su,stantial investments into '?8$
6. $c%uisition of !&ype. ith nearly *.. million users, %kype is a significant ,oost to
Microsoft<s online presence and have a lot of potential in generating income from online
advertising$
Company
49
eaknesses
/$ 'oor ac%uisitions and in(estments. ;ew of Microsoft<s ac"uisitions were
successful and ,rought not 9ust revenues and products ,ut new skills and competencies to
the company$ Massive, LinkE@change, e,7A, 8anger are 9ust few e@amples of multimillion
ac"uisitions made ,y Microsoft ,ut soon shut down or divested$
+$ )ependence on "ardare manufacturers. Microsoft is a giant software corporation
,ut it does not produce its own hardware and depends on computer hardware manufacturers
to develop products that run indows &%$ If cheap and popular alternative &% would
appear, hardware manufacturers may simple choose the alternative and Microsoft could do
little to change the situation$
*$ *riticism o(er security flas. indows &%, the main Microsoft product has ,een
heavily criticiBed for ,eing so weak against various viruses< attacks$ Compared to other &%,
indows is the least protected against such attacks$
4$ +ature '* mar&ets. &nly recently has Microsoft entered the mo,ile technology
sector and still heavily depends on its &% and software sales for standalone and laptop
computers$ 7he market for these products has matured and Microsoft will find it harder to
grow revenues in these sectors$
=$ !lo to inno(ate. Microsoft has huge '?8 resources and great position to enter
new markets with innovative products ,ut constantly failed to do so$ It had an opportunity to
,e the first player in online advertising ,ut missed the opportunity$ It<s entrance to mo,ile &%
was also too late, while Google and 5pple captured the market share$
&pportunities
/$ *loud based ser(ices. Microsoft could e@pand its range of cloud services and
software as the demand for cloud6,ased services is e@panding$
+$ +obile ad(ertising. Mo,ile advertising markets are e@pected to grow in dou,le
digits over the ne@t few years and Microsoft has a great opportunity to tap into these markets
with its mo,ile &%$
*$ +obile de(ice industry. %martphones and ta,lets markets will grow steadily over
the ne@t few years and Microsoft could e@ploit this opportunity ,y introducing more of its own
ta,lets and a new company phone$
4$ ,rot" t"roug" ac%uisitions. ith a huge reserve of cash Microsoft could start
ac"uiring new startups that would ,ring new technology, skills and competences to the
,usiness$
Company
50
7hreats
/$ -ntense competition in softare products. Microsoft is more than ever on the
pressure to introduce successful &% ,oth in 1C and mo,ile markets as such competitors like
Google and 5pple have already esta,lished positions$
+$ *"anging consumer needs and "abits. Customers shift from ,uying laptops and
standalone 1Cs to ,uying smartphones and ta,lets, the markets, where Microsoft has only a
modest market share and may never esta,lish itself$
*$ .pen source pro/ects. Many new open source pro9ects are coming to the market
and some of them ,ecame "uite successful, such as new Linu@ &% and &pen %ource &ffice$
&pen source pro9ects are free and so they can ,ecome an alternative to e@pensive
Microsoft<s products$
4$ 'otential lasuits. Microsoft has already ,een sued for many times and lost "uite a
few large scale lawsuits$ Lawsuits are e@pensive as they re"uire time and money$ 5nd as
Microsoft continues to operate more or less the same way, there is high pro,a,ility for more
e@pensive lawsuits to come$
Some Key Facts:
1. Total Income: $73.7B
2. Revenue growth: !."# $ %atest &uarter' &3:13#
3. ()erat*ng +arg*n: 3,$
!. Total Five Business Division: -*n.ows 2"$#/ Server 0 Tools 2"$#/ (nl*ne !$#/
+*croso1t Bus*ness Solut*on 33$#/ 2nterta*nment 13$#
". Total 3ash: $7!.!B Inclu.*ng Short term *nvestments#
4. Total 5e6t: $11.7B
7. S809 as $ o1 Revenue: 2"$ 8o*ng .own s*nce F:,7/ was 27$#
;. R05 as $ o1 Revenue: 13.3$ 8o*ng .own s*nce F:,7 was 1".!$
9ll 1*gures are 6ase. on F:12 earn*ngs e<ce)t revenue growth rate
Key Strategy: +*croso1t .es*re to trans1orm *ts 6us*ness an. wor=*ng towar.s )rov*.*ng not only
so1tware 6ut so1tware > serv*ces >5ev*ces. Th*s result *n a 1un.amental sh*1t *n the way com)any
*s .o*ng 6us*ness an. where they are e<)ect*ng growth. 9t )resent over ",$ o1 revenue comes
Company
51
1rom So1tware an. +BS 6ut +*croso1t *s wor=*ng on other segments such as 3lou./ Secur*ty/
2nterta*nment an. smart )hone.
Key Risk: I see +*croso1t com)et*ng w*th )layers such as 8oogle/ 9))le/ 9ma?on/ an. Sony. 2ach
one has come u) w*th un*@ue )ro.uct an. )os*t*on*ng an. well esta6l*she. 6ran.. Aow +*croso1t *s
l*ttle 6eh*n. *n the race an. thus they have to tw*n challenge B get the )ro.uct strategy r*ght an.
get the mar=et share.
11.CONC+USION
t is now recogni6ed that poverty reduction and sustainable development will not be achieved
through government action alone.
*olicy ma$ers are paying increasing attention to the potential contribution of the private
sector to such policy obHectives.
%he concept of CSR is sometimes used as shorthand for businessesB contribution to
sustainable development. 7 number of core development issues are already central to the
international CRS agenda.
%hey include labour standards, human rights, education, health, child labour, poverty
reduction, conflict and environmental impacts.
CSR is often associated with large companies and particularly with multinational and global
enterprises. %he international CSR agenda is dominated by 8<C0-based 4>8Bs, investors,
consumers, business and business associations.
CSR has even on occasion attracted criticism for being insensitive to local priorities and the
basic livelihood needs of people in developing countries, particularly where CSR codes of
conduct are perceived as barriers to mar$et access for some producers.
Company
52
:ut the CSR agenda needs to be locally owned if it is to ma$e a significant contribution to
local development priorities U and it must be relevant to local enterprises, whether large or
small.
%his means creating a space to e.plore the relationship between business and society at a
regional, national or local level and finding the appropriate language for these discussions.
7s the e.tremely successful entrepreneur, Raymond 7c$erman, founder of the multi billion
Rand retailer, *ic$ n *ay, often cites2 O0oing good is good businessB.
%his comment has been based on direct $nowledge of developing and implementing sound,
regular social responsibility programmes within the organi6ational structures and within the
local communities.
:rand loyalty, customer brand ambassadorship and revenue are all direct results of this
philosophy and in e.cess of R(D million is spent annually by this group in Southern 7frica
alone to maintain this brand loyalty, mar$et leadership and country and people investment.
8ther CSR spend, is distributed to various initiatives throughout 7frica and the :o.er chain,
also owned by the *ic$ n *ay group.
1&.CONC+USION ON
MICROSOFT R(PORT
%his report covers MicrosoftBs nonfinancial performance and impact related to the companyBs
global citi6enship wor$ in 3L&E across our worldwide operations.
%he report covers material citi6enship issues based on2
J nternal assessments
J 8ngoing engagement with a broad array of sta$eholders, ranging from socially responsible
investors, nongovernmental organi6ations, and public officials to our employees
J Re#uests for information by global reporting and rating agencies
Company
53

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