INVESTMENT RECOMMENDATION REPORT
Executive summary
Microsoft is an American multinational technology company. Its primary purpose is to develop, support, license and sell the computer software. It has been in operation since 4th April 1975. One of the most significant acquisitions done by the company was that of LinkedIn for $26.2 billion. Another acquisition done by the company was that of Skype Technologies for 8.5 billion. The company has been able to sell its products all over the world, hence being one of the most used brands. Due to the growth that the company is experiencing, there is a need for the company to make adjustments that will lead to more investment. With and investment plan, the company will be able to gain more customers.
The recommendation for the investment that the company should implement include:
- The setting of new branches in developing countries to be able to capture the growing number of people who have an interest in technology.
- We have a department that will be able to do a cash refund to the customers who are unsatisfied with our product.
- Production of affordable phone operating system to tap into the growing number of people who own phones.
- Increase in product marketing.
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- Creation of vacancy for employment.
The main factors that influence the recommendation given for the investment plan include:
- The use of technology is spreading all over the world. Hence there is a need for the company to set up new stations in the developing countries. It will make it easier for people who want to use our products and cannot access it, to have easy access.
- The department for cash refund will able to return the amount given by the customer back if he or she is not satisfied with the products.
- The production of affordable phone operating system will make it easier for people in developing countries to access the software straightforwardly produced by the company.
- Marketing our products in the right way will lead to an increase in the number of our customers, hence a significant increase in profits.
- With the setting up of new sites, there will be a need for the company to hire labour.
The potential risk factor for the recommendation include:
- Customer demand, we may face the problem of getting the customer to buy our products on the sites that we will set.
- Some people will forge an incident that did not happen so that they can be refunded with their money.
Microsoft develops, manufactures, licenses, supports and sells personal computers, software and consumer electronics. The software products that are produced by Microsoft include Microsoft windows (operating system), the Microsoft Office suite and browsers (internet explorer and edge web browser). It also provides the Xbox video game console and the Microsoft Surface lineup of touchscreen personal computers.
The senior leadership of Microsoft is made up of fourteen senior leaders, and the board has six people. The senior leadership includes Satya Nadella as the chief executive officer, Judson Althoff as Executive Vice President Worldwide Commercial Business, Chris Capossela chief marketing officer. The top leaders also included Jean-Philippe Courtois, Kurt Delbene, Scott Guthrie’s, Kathleen Hogan, Amy Hood, Rajesh Jha, Peggy Johnson, Kevin Scott, Brad Smith, Phil Spencer and Jeff Weiner. According to the Securities and Exchange Commission Satya Nadella, the current CEO has common shares totalling to 778,596, which is worth $100 million. He also owns 2 million shares of various types in the company. Bradford Smith, president, and chief legal officer of Microsoft is the fourth-largest individual shareholder of the company’s stock. In addition to his position at Microsoft, Smith serves on the board of directors at Netflix and chairs several non-profit organizations. Smith owns 946,742 shares of the company, according to an April 2019 filing from the Securities and Exchange Commission. According to Microsoft policy for payment, Microsoft pays a quarterly dividend of $ 0.5 per share.
Microsoft company is doing well in terms of global macroeconomic variables. Microsoft’s latest twelve months effective interest rate is 3.0%. Microsoft’s effective interest rate for fiscal years ending June 2015 to 2019 averaged 2.9%. Microsoft’s operated at a median effective interest rate of 3.0% from fiscal years ending June 2015 to 2019. Looking back at the last five years, Microsoft’s effective interest rate peaked in June 2019 at 3.1%. Microsoft’s effective interest rate hit its five-year low in June 2015 of 2.7%. Microsoft’s effective interest rate decreased in 2015 (2.7%, -11.8%) and increased in 2016 (2.8%, +3.7%), 2017 (3.0%, +7.1%), 2018 (3.0%, +0.8%) and 2019 (3.1%, +3.4%). There is a need for more investment in various departments of Microsoft to make sure that there is profitability, hence an increase in the interest rate. In the united states, Microsoft company has led to the increment of the gross domestic product. The company has been able to create employment opportunities. Therefore, it has been a great contributor to the economy of Americans. In future, the company will be able to promote the country’s economy, that can be achieved through employment. Employing many people will help in reducing the number of unemployed people.