Topic 1 DQ 2

Topic 1 DQ 2 Aug 3-7, 2023 Using your Wall Street Journal subscription, select an article about any publicly traded firm that enjoys a large shareholder base. How has the company incorporated ethics into the financial management practices? Discuss what challenges the firm has encountered (or is likely to encounter) and how they have sustained ethical practices despite internal or external (market) pressures. Frame your response relative to the financial manager's fiduciary duty to maximize shareholder's wealth. Microsoft is facing several challenges that have led to belt-tightening and job cuts, despite being in the midst of embracing new artificial intelligence (AI) tools and technologies. The challenges the firm has encountered are: 1. Slowing Economic Growth: The company's growth has remained subdued due to economic concerns that have dampened consumer demand and hurt corporate orders for its software and cloud services. Slower economic growth affects Microsoft's revenue generation and profitability. 2. Increased Competition: Microsoft faces stiff competition in the tech industry, particularly in the cloud computing and AI sectors. Competitors are constantly innovating and expanding their offerings, which puts pressure on Microsoft to invest heavily in research and development to stay competitive. 3. Market Shifts: Microsoft is undergoing a major platform shift as it embraces AI technologies. Such shifts require substantial investments and changes in business strategies, which can be financially demanding. 4. Talent Attraction and Retention: As a technology company, Microsoft's success heavily relies on the talent it attracts and retains. With the growing demand for AI expertise, attracting and retaining skilled employees becomes more challenging, leading to increased competition for talent and potential wage pressures. Despite these challenges, Microsoft has sustained ethical practices and has been mindful of its fiduciary duty to maximize shareholders' wealth. Here's how they have managed to do so: 1. Strategic Decision Making: Microsoft's spokesperson mentioned that they are making critical decisions on how to invest in their people, business, and future. By evaluating investments in research, development, and employee benefits, they aim to optimize returns for shareholders while keeping the long-term success of the company in mind. 2. Focus on AI and Innovation: Microsoft's investment in AI and its collaboration with OpenAI demonstrate their commitment to staying at the forefront of technological advancements. While such investments might have short- term financial impacts, they can lead to a competitive advantage and increased shareholder value in the long run. 3. Employee Incentives: While the company has decided not to raise salaries for full-time employees, it plans to offer promotions, bonuses, and stock awards [ CITATION Avi23 \l 1033 ]. These incentives can align employees' interests with shareholder interests, as they become more motivated to contribute to the company's success. 4. Prudent Cost Management: The decision to eliminate jobs and reduce staff in the face of market challenges reflects a focus on cost management and efficiency. Prudent cost-cutting measures can help maintain profitability and protect shareholders' wealth. In conclusion, Microsoft faces challenges related to economic conditions, market shifts, and increased competition. Despite these challenges, they have sustained ethical practices by making strategic decisions, investing in innovation, offering employee incentives, and managing costs efficiently. Microsoft's overall commitment to ethical behavior, compliance, and transparency across the organization would naturally extend to financial management practices as well. Ethical considerations would likely guide financial decision-making, risk management, and financial reporting to ensure the company's financial practices align with its broader ethical values [ CITATION
Mat21 \l 1033 ] . These actions are in line with their fiduciary duty to maximize shareholders' wealth while navigating a dynamic and ever-changing tech industry. References Avila, J. D. (2023, May 10). Microsoft Won't Raise Salaries for Full-Time Employees This Year: Software company still plans to offer promotions, bonuses and stock awards. Wall Street Journal . Retrieved August 6, 2023, from full-time-employees-this-year-3112d6 Penarczyk, M. (2021, March 2). Microsoft recognized as one of the world's most ethical companies . Retrieved from Linkedin: most-ethical-matt-penarczyk/
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