The company’s overall strategy involves providing “high-value activities enabled by a family of devices and services” (Microsoft Corporation, 2015). This is done through achieving the company’s mission, which “is to help people and businesses throughout the world realize their full potential” (Microsoft Corporation, 2015). This is done in a variety of ways. For instance, in 2014, Microsoft reorganized the company to transform to a “devices and services company” (Microsoft Corporation, 2015). In fact, the company plans to continue developing advanced technologies to utilize in future innovations, such as software, hardware, and services. In fact, according to the company’s 2014 10-K report, the company states that “we believe that we will continue to grow and meet our customers’ needs as the productivity and platform company for the mobile-first and cloud-first world. We will continue to create new opportunities for partners, increase customer satisfaction, and improve our service excellence, business efficacy, and internal processes” (Microsoft Corporation, 2015). Based on this statement alone, it is obvious that research and development expenses are affected by this strategic initiative. It is noted that research and development costs are “charged to expense until technological feasibility has been established for the product” (Microsoft Corporation, 2015). In this situation technological feasibility is defined as that point where issues have been resolved through testing and coding.
According to the financial portion of the company’s 2014 10-K report, research and development expenses were $11,381 million, $10,411 million, and $9,811 million in 2014, 2013, and 2012 respectively. Thus, during this time period, research and development expenses increased 16%. Furthermore, the company notes that research and development expenses accounts for 13% of revenue during these years. The company does most of its research and development through four engineering groups: applications and services engineering, cloud and enterprise engineering, devices engineering, and operation systems engineering. These groups give the company the opportunity to increase its competitive advantage.
Significantly, the devices engineering group “focuses on all hardware development and supply chain, including Xbox consoles, Surface devices, Lumia Smartphones, other non-Lumia phones, Perceptive Pixel products, and accessories” (Microsoft Corporation, 2015). Therefore, through this group, the company increases its product differentiation. According to the company, it has “closer technical control over our products and services. It also gives us the freedom to decide which modifications and enhancements are most important and when they should be implemented. We strive to obtain information as early as possible about changing usage patterns and hardware advances that may affect software design. Before releasing new software platforms, we provide application vendors with a range of resources and guidelines for development, training, and testing. Generally, we also create product documentation internally” (Microsoft Corporation, 2015). This is beneficial in understanding how the company meets ethical requirements of the initiative.
For instance, the company is able to decide what modifications and enhancements are important to their services. This can allow the company the opportunity to improve its ethical standards by promoting those actions that benefits society as a whole. One way this is done is through the use of patents. The company currently owns thousands of patents and has thousands more pending. This shows ethical integrity because it protects the company from having its ideas and innovations misappropriated, as well as holds the company liable to the patent itself. As a result, the company will continue to “invest in a range of emerging technology trends and breakthroughs that we believe offer significant opportunities to deliver value to our customers and growth for the company. We maintain our long-term commitment to research and development across a wide spectrum of technologies, tools, and platforms spanning communication and collaboration, information access and organization, entertainment, business and e-commerce, advertising, and devices” (Microsoft Corporation, 2015). Through these investments, the company will continue to maintain ethical standards.