Essays on Strategic Change and Firm Performance Case Study

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The paper 'Strategic Change and Firm Performance' is a great example of a Business Case Study. This report will examine the strategic changes which were made by Microsoft in 2008 after the business made broad changes in relation to technology so that the business partners could be benefitted and the fortunes of the organization also change. To find out the manner in which the strategic changes benefitted Microsoft the report will analyze different items pertaining to the balance sheet and income statement to find out the changes which were seen. This will be matched by analysis of the statement of cash flow so that the impact it has on the business financials can be understood.

The report will also look to carry out a few financial ratios and highlight the manner in which businesses encountered different changes in the manner business was carried out. Lastly, the report will dwell on items that were not included and if included would help to improve the overall efficiency of the financials and would multiply the gains which were received due to strategic changes. Analysis of Income Statement Items The analysis of the items before and after the strategic changes for different items on the income statement is as follows Revenues: It is analyzed that even after making the strategic changes in 2008 the revenues for Microsoft didn’ t increase as expected.

In the year 2006, the revenues stood at $44,282 million which continues to increase and were $60,420 in the year strategic changes took place but after 2008 the revenues decreased and reduced to $58,437. This highlights that the business was ineffective in making the strategic change and the benefit that was expected out of the change didn’ t actually occur. Operating Expenses: It is analyzed that even after making the strategic changes in 2008 the operating expenses for Microsoft didn’ t increase but instead it remained constant showing it as a good sign but when compared to the revenues it generated the expenses should have reduced but it didn’ t thereby raise concerns regarding the manner in which strategic change was done.

In the year 2006, the revenues stood at $27,810 million which continues to increase and were $37,928 in the year strategic changes took place but after 2008 the expenses increased slightly and went to $38,074.

This highlights that the business was ineffective in making the strategic change and the benefit that was expected out of the change didn’ t actually occur as the revenues had decreased but the overall expenses for the business didn’ t decrease but instead remained constant. Sales & Marketing Expenses: It is analyzed that even after making the strategic changes in 2008 the sales and marketing expensed for Microsoft reduced showing a good sign. In the year 2006, the sales and marketing expenses stood at $9,818 million which continues to increase and were $13,039 in the year strategic changes took place but after 2008 the sales and marketing expenses decreased and reduced to $12,879.

This highlights that the business was effective in making the strategic change and the business was able to reduce the overall sales and marketing cost but to a limited degree. Despite it, the benefit was limited as the business witnessed a reduction in sales but the actual reduction in expenses didn’ t meet it signifying that the changes were not properly implemented.

References

Annual Report. 2014. Annual Report Microsoft: 2006 to 2009. Retrieved on April 28, 2014 from http://www.microsoft.com/investor/reports/ar09/10k_fr_inc.html

Antony, T. 2004. Thin Capitalization: Issues on the Gearing Ratio. Journal on Australian Taxation, 7 (1), 39-57

Deloof, M. 2003. Does Working Capital Management Affect Profitability of Belgian Firms? Journal of Business Finance & Accounting, 30(3&4), 573-587.

Eljelly, A. 2004. “Liquidity-Profitability Tradeoff: An empirical Investigation in an Emerging Market”, International Journal of Commerce & Management, 14(2), 48 - 61

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