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ASSIGNMENT for Business Environment
As a group you are required to chose and evaluate a large international company in the light of its current business environment.

The factors you should consider, are the social, economic, political, technological and legal factors. Whilst all of these are important- For this assignment you are required to concentrate in particular on the legal environment of the business.

Part a. Please provide an overview of the company’s operations (750 words max)

Part b. Evaluate and comment upon the legal environment(s) of your chosen company

Part c. Comment upon the threats and opportunities future changes to the legal environment(s) may present for your company

The written report should be no more than 3500 words in total

SUBMISSION TO THE SCHOOL OFFICE TUESDAY OF WEEK 11 BY 3PM

Suggested outline for the answer - for discussion
Introduction

General background information about microsoft

Company overview

Social environment document on social responsibility - Bill gates dream to have pc in every home society - need to have the latest and greatest Economic environment Political environment technological environment Legal Environment

1. US AntiTrust case - United States v Microsoft another Ref Real Networks case 2. EU Commission case -

Microsoft and the European Union
Most developed countries have introduced law to try to remove market imperfections that are deemed to be not in the best interest of the consumer. The European Union (EU) is at the forefront of this battle to remove market imperfections. Therefore in 1998 when Sun Microsystems alleged to the EU Commission that Microsoft was abusing its dominant position within the PC operating systems market, the EU Commission ordered proceedings against Microsoft Corp. EU Press Release 03.08.2000 – The European Commission at the initiative of the Commissioner in charge of competition, Mr. Marion Monti, has sent a statement of objections to Microsoft Corp for allegedly abusing its dominant position in the market for personal computer operating systems software by leveraging this power into the market for server software.

At the time of Suns complaint Microsoft held 95% of the market share. Initial investigations by the EU Commission found evidence that backed up these claims. Then in 2003 the EU Commission addressed a final Statement of Objections that, according to Mario Monti (2003) ‘includes the identification of appropriate remedies and gives Microsoft a last opportunity to comment’ (EU Press Release 06.08.2004). In 2004 after a five-year investigation Microsoft was found guilty of breaking EU competition law, (EU Press Release (24.03.2004)) by leveraging its near monopoly in the market of PC operating systems (OS) onto the markets for work group server operating systems and for media players.

Microsoft was fined Euro 497 million plus ordered to disclose to its competitors the necessary information to enable the competitions products to be able to ‘talk’ with Windows OS. Microsoft Corporation had broken the ‘EU Treaty’s competition rules (Article 82) by abusing its near monopoly position. Palmer and Hartley (2006) explain ‘a monopoly means that one person or organisation has complete control over the market’. And in the case of Microsoft they had been found to have deliberately restricted the interoperability between Windows PCs and non-Microsoft servers giving them near complete dominance.

In order to comply with the EU Commissions directives Microsoft has developed the Work Group Server Protocol Program (WSSPP, or Program), which according to Microsoft enables competitors the use of its technology in the manner required by the EU Commission (Microsoft Implementation of European Commission Decision 25.01.2005 – Microsoft web-site). However in a press release dated 22nd December 2005 from the EU Commission, Microsoft had until 15th December 2005 to meet all obligations laid down by the EU Commission. Therefore it would appear that Microsoft had only reacted to another threat from the commission.

It would now appear that Microsoft has run in to more problems with the EU Commission. In an article in EU Business (29.03.2006) Microsoft have had to attend a hearing with the EU Commission regarding their failure to comply with the landmark 2004 competition ruling. Failure to comply this time will result in a daily fine of $2.4million dollars a day, back-dated to December 15, 2005. Microsoft’s top lawyer Brad Smith states in the article ‘we need clear guidance to find a solution. Ultimately, the point I think we’ll underscore is this: we have complied and we’re willing to do more’ (Microsoft battles to avoid daily fines in the EU standoff 29.03.2006 – www.eubusiness.com). In the same article the EU Commission warned that ‘it would open a new front in the standoff with Microsoft if its new delay-plagued Vista operating system did not respect anti-trust law’.

Microsoft and Asia
With Asia becoming one of the fastest growing markets in the world it is no wonder that Microsoft are heavily invested into it. It may not have the same legislative frameworks as the USA and Europe and there may be areas not as developed but Microsoft still has to conduct itself properly. The Japanese Fair Trade Commission (FTC) has investigated whether Microsoft attempted to illegally pressure Asian PC makers to use Windows XP. This in turn has prompted the Korean FTC to investigate Microsoft Korea. Korea, like the EU, issued Microsoft with an anti-trust ruling. Microsoft has rejected the ruling and is appealing in the best interests of the consumer. However Korea feels, like the EU, there should be two versions of Windows (Microsoft files formal Korea Fair Trade appeal by Ed Sutherland – 27.03.2006).

The Observer (March 28th 2004) commented that Microsoft had run into trouble playing its worldwide monopoly. It also suggested that Asia is risky territory for Microsoft and in particular China where the (free) Linux operating system has a better chance of appeal against Microsoft’s more expensive Windows software.

Intellectual Property Rights (IPR)
According to Daniels, Radebaugh and Sullivan (2002) is the creative idea, innovative expertise and intangible insight that give an individual company a competitive advantage. IPR can be broken into two sections: industrial property and copyright. In the case of Microsoft industrial property would be trademarks (symbol) and software. Primary areas of use for copyright would be web tools and software. IPRs enable the owners the right to exclude others from using or accessing their property. However in the case of software this is very difficult. Microsoft has very stringent guidelines for the use of any of its property.

Copyright in Europe
Microsoft has launched a legal fight with ‘phishers’ in Europe; similar to the legal campaign it has successfully started in the United States. These are fraudulent web sites claiming to be Microsoft sites in order to steal consumers’ private details. Neil Holloway (21.03.2006), president of Microsoft for Europe, has said ‘ Phishing is a crime. It undermines consumers’ trust in the internet and is an impediment to European policymakers’. Webopedia defines Phishing as the act of sending an e-mail to a user falsely claiming to be an established legitimate enterprise in an attempt to scam the user into surrendering private information that will be used for identity theft. Microsoft intends to pursue these people for copyright infringement. Microsoft has helped take down 4744 phishing sites worldwide by collaborating with police forces (Microsoft to fight phishers in Europe by Candance Lombardi – 21.03.2006). Microsoft knows that by ‘weeding’ out these criminals they are protecting their image and future. Palmer and Hartley (2006) feel that the Internet presents a serious risk of copyright infringement liability.

Piracy
Software Publishers Association estimated in 1998 that in Russia 92%, China 96%, Egypt 85% and Indonesia 93% [(source p249) Daniels, Radebaugh and Sullivan (2002)] of all software in these countries was pirated. According to Daniels, Radebaugh and Sullivan (2002) China in 2000 was estimated to have 25 CD laser manufacturing laser disc factories supplying 50 million pirated commercial CDs. Bill Gates (2006) has told business leaders at the World Economic Forum in Davos ‘that beating software piracy in China and India and getting compliance up to US and European levels will take 10 years’ (source Piracy a ten-year fight, says Gates by Ben Hirschler in Davos – 30.01.2006 – http//australiait.news.com).

In developing markets software makers are happy to turn a blind eye to piracy as this builds up brand recognition (source www.asiamarketresearch.com - 13.04.2006). In the UK Microsoft has a launched a campaign against software piracy – it is called ‘Keep IT Real’. Microsoft hopes to reduce the piracy level for Windows by 5% to 12% within three years which, it is hoped will help the UK economy (source Microsoft reveals piracy battle plan for the UK by OUT-LAW.COM – 20.02.2006). Microsoft has decided it is time to fight back.

Employment
Steven Ballmer, CEO Microsoft (2004), states that Microsoft employees are responsible for understanding and complying with the Business Conduct, applicable government regulations and Microsoft’s policies (source Letter from Steven A. Ballmer, Chief Executive Officer – 04.05.2004). With 65,000 employees worldwide, in the USA, Europe and Asia, Microsoft must be aware of all the different legislation governing these employees. Daniels, Radebaugh and Sullivan (2002 p332) cite governments discourage or legally restrict the number of allowable expatriates within a nation for political, cultural and economic reason. For this reason Microsoft must recruit from the countries they are setting up and cannot take ‘home grown’ employees. This can be viewed as a positive move as local managers will be best positioned to interpret the local legislation governing their area.

Microsoft offers equal employment opportunities to all employees as well as a safe and healthy work environment. Microsoft was named one of the 100 Best Companies for Working Mothers in 2004 by Working Mother magazine (source http://en.wikipedia.org).

Codes of Conduct
Palmer and Huntley (2006) comment that all systems need rules if they are to operate efficiently and effectively. Microsoft has developed their Standards of Business (SBC) to ensure that all employees have a set of clear guidelines when doing business on behalf of Microsoft. From this Microsoft has developed further codes of professional conduct such as: Procurement Code of Professional Conduct and the Finance Code of Professional Conduct (source www.microsoft.com - codes of conduct 14.04.2006). Daniels, Radebaugh and Sullivan (2002) suggest that codes help clarify a collective attitude toward specific company practices – these codes in turn enable governments to pass restrictive legislation without fear of it being out of step with world opinion. By setting codes of conduct Microsoft is telling the world that their organisation works to ethical standards.

Opportunities
Microsoft hires many domestic American workers who are foreign workers with H1B visas – Bill Gates has criticized congress for the cap on H1B (source http//:en.wikipedia.org/wiki/Microsoft 14.04.2006) – is this done to enable the moving of these foreigners to their original country – complying with legislation?

 news article 31st March on EU case New York Times Article 31st March 3. Asian Case Microsoft in Korea see and 4. Intellectual Property Rights / Piracy links    5. Employment Law / Contracts / Codes of Conduct

Note these for EU case

March 24, 2004: The European Commission fines Microsoft a record $613 million for antitrust violations and orders it to divulge certain protocols to competitors and to produce a version of Windows that does not include the Windows Media Player. This penalty is later suspended while a judge hears Microsoft's appeal.

Dec. 22, 2004: An EU court rejects Microsoft's appeal of the March penalty. The decision effectively thwarts Microsoft's attempt to delay implementation.

Nov. 8, 2004: Novell Inc., which had raised antitrust claims in Europe, settles its civil suit for $536 million.

Threats

Linux - free alternative operating system Popularity of apple - Mac os X   Open Office - free open source office software

Opportunities

Apple using intel chips in MACs. Macs can now use windows OS - Growth in computing in developing countries