Topic Of Presentation

Sony Corporations Globalization And Strategic Operation

(Presentation for partial fulfillment of the requirement to pass Corporate Management in Action)

Presented Presented A B M Golam Kibria

By To Bhuiyan...............ID-4047

Dr. Hemakshi Chokshi

MD.Minhazur Manpreet

Rahman Kaur

.........................ID-6090 ......................ID-4054

Business Course Coordinator

North West College London

Sony Corporation is a multinational conglomerate corporation headquartered in Tokyo, Japan, and one of the world's largest media conglomerate with revenue of US$78.6 billion (as of FY 2009) based in Minato, Tokyo. Sony is one of the leading manufacturers of electronics, video, communications, video game consoles and information technology products for the consumer and professional markets. Its name is derived from Sonus, the Greek goddess of sound. Sony Corporation is the electronics business unit and the parent company of the Sony Group, which is engaged in business through its five operating segmentselectronics, games, entertainment (motion pictures and music), financial services and other.

Mile Stones of Sony:

1946 Establishment of Tokyo Telecommunications Engineering Corporation by Masaru Ibuka 1946 Electronic Rice Cooker was innovated. 1958 Company name changed to Sony Corporation 1959 The first transistor TV was launched 1960 Sony Corporation of America was established. 1967 The first factory in abroad was opened in Taiwan. 1968 Sony Ltd. Established in the United Kingdom. 1968 Trinitron Color TVs were in the shops. 1975 Home-use Betamax 1979 Walkman 1989 The first miniaturized camcorder 1994 Sony Playstation one was started to be sold. 1996 Sony Home PCs (VAIO) were launched. 2000 - Sony develops small biped entertainment robot

2001 Sony Ericcson Mobile Communications established. 2003 World's 1st next-generation optical disc Blu-ray Disc recorder 2004 Sony BMG Music Entertainment established and World's 1st consumer digital HD video camera recorder HDR-FX1 2005 BRAVIA brand for Sony widescreen LCD HDTV launched 2009 HDR-XR520V and HDR-500V Handy cam (World's first camcorder with new back-illuminated CMOS image sensor) released Today Sony is one of the most important companies in the world of business with 167,900 (as of March 31, 2010) employees.

Sony SWOT Analysis:

Sony Strenghts:

Strong Brand Image High Market Share High Technological quality Products Diversified geographic base Pioneer in the Industry as Being Creative and Innovative Supports R&D Activites

Weaknesses :

Over self-confidence whichs level sometimes reaches not paying attention to their rivals. Short product lifecycle: Many Sony products seem to be obsolete or have one foot out of door. For example: Digital Camera in the place of Film Camera and Email in place of Fax machines They insist on their own formats. Competitively high prices.

Opportunities :

Continuous growth in their sectors. Increasing demand in technological products around the world. Attraction of Chinese, Brazilian, Russian, Indian market. Partnership with FIFA Business reorganization

Threats:

Strong competitors in the market such as SAMSUNG, LG, NOKIA Diversifications in unsuitable businesses for itself. Unfavorable foreign exchange rates Increasing raw material prices Counterfeit goods Government regulation Imitation of technology: We know that Sony strategy is to introduce new technology in
the market. But after their invention many competitor companies imitate Sonys technology with adding some extra feature. For example: Portable walkman is Sonys concept. But now many companies has launched portable walkman with different design and feature.

Sonys Global Strategies:

Making the product the same for each market Centralised control Identify customer needs and wants across international borders Economies of scale Lower costs Co-ordination of activities Faster product development

Sony PESTLE Analysis:

Political - Tariff reduction in EU countries since this organization has been expanding with new members, This affects directly Sonys import and export. Subsequently, price will be a subject to be modified due to this policy. - Stable political situations are becoming more and more important to Sonys production and manufacture; unfavorable political factor can be thread for growth and could have impact on financial condition. For Example, the Pictures segment is dependent upon high specialized union members thus; a strike by one or more of these unions could delay or halt production activities. Economical - In general, Sonys products are fairly expensive therefore; people in developing countries with minimum wage are not able to purchase their products. Despite the fact that Sonys productions are costly but durables, its competitors such as Samsung or Hitachi can produce similar products with competitive prices. As a consequence, Sony could lose its advantage in competition in developing countries which are considered as emerging and potential markets. - Foreign exchange rate fluctuations can affect financial results because a large portion of Sonys sales and assets are denominated in currencies other than the yen. For Example, Only 24.2 percent of Sonys sales and operating revenue in the fiscal year 2009 were originally recorded in Japan. Whereas Sonys operating revenue (sales) decreased 12.9 percent compared with the previous fiscal year because the average value of the yen was 99.5 yen against the U.S. dollar and 142.0 yen against the euro, which was 13.8 percent and 12.7 percent higher against the U.S. dollar and the euro than previous FY. Social

In the UK, peoples lifespan has been increasing. This has increased Sonys pension payments costs for their employees because their staff are living longer. Now educated people are increasing in all over the world. Educated people and young generation has a demand for technological products. It increases Sonys sales.

Technological

Online shopping increased Sonys sells. Now people do not need to go to the shop to buy a Sony product, just need to go onto Sonys Website and purchase product.

Various types of automation have reduced Sonys production cost. Because a work which can be completed by ten men in two days, a machine can do this within one day. It saves time and cost. Sony has followed bring it first strategy. Therefore, nearly about 10% of the companys sales were committed to research and development. Research and development costs for the fiscal year 2009 were 497.3 billion yen .This R& D helps Sony for new invention as well as increase its market share, sales and profit.

Environmental
Climate change issues regulation for electronics products can increase additional

costs. A regulation for less energy consumption and CO2 emission has already been introduced in Japan, and other countries may introduce similar regulations in the near future. It will increase cost of sales.

In 2001, The Dutch government blocked Sonys entire European shipment of PlayStation game systems. Because a small, but legally unacceptable, amount of cadmium was found in the cables of the game controls. To solve this problem it cost over $130 million. Now Sony entertainment products, all Blu-ray Disc Player parts and all other products are lead and cadmium-free.

Legal
In 2010, UKs national minimum wage has increased by 13p an hour to 5.93

where the age threshold for paying the adult rate has also been reduced from 22 to 21 - giving an estimated 50,000 people a pay rise of more than 20%. This rule has increased Sonys labor cost in UK. Because of competition policy in the UK and in the European Union, Sonys profit margin has decreased.

Generic Business Level Strategies

Alliances:
Consortia: Sony and eight leading electronic companies (Panasonic, Pioneer, Philips, Thomson, LG (Lucky Gold Star) Electronics, Hitachi, Sharp, and Samsung) were started by "Blu-ray Disc founder group" in May 20, 2002. In order to enable more companies to participate, in 2005, it formed the Blu-ray Disc Association. The aim of the BDA was to develop Blu-ray Disc with an immense storage capacity (up to 50GB) that is perfect for High Definition video recording.

Franchising: In October 2005, Shailesh Chaudhari opened a franchise of Sony World in Vashi, Mumbai, India. Licensing: Sony Pictures Entertainment and Warner Bros. Entertainment have licensed a selection of films and TV shows to Ku6, a Chinese online video company in September 17, 2010.

Subcontracting: AIBO (Europe) is an affiliated subcontractor of Sony for product servicing and repair. Sony Electronics, Waste Management Inc. and its wholly owned subsidiary, WM Recycle America, LLC, has announced the Sony Take-Back program, the first national recycling program for post-consumer electronics.

Joint venture:

Sony Ericsson: This joint venture was established in 2001 between LM Ericsson (Ericsson), Sweden, and Sony Corporation (Sony), Japan, with both partners having 50% ownership in the company. By 2009, it was the fourth-largest mobile phone manufacturer in the world after Nokia, Samsung and LG with 7.9% market share. The aim of this joint venture was to reach one of the worlds leading mobile companies. Sony Toshiba: In February 2008, Toshiba Corporation (Toshiba), Sony Corporation (Sony) and Sony Computer Entertainment Inc. (SCEI) formed a new joint venture to produce high-performance semiconductors for digital consumer products such as SCEI's PlayStation computer entertainment systems. It will be 60% owned by Toshiba, and Sony and SCEI will each take a 20% stake. Sony can now continue to lower PS3 prices without risking even bigger losses at its gaming unit. Sony Sharp: In July, 2009 Sharp and Sony enter into definitive agreement regarding Joint Venture named Sharp Display Products Corporation to produce and sale large-Sized LCD panels and modules. In this joint venture Sharp has 66% share and Sony has 34%.

Acquisition:
In 1988 Sony bought CBS Records Group from CBS Inc. (now CBS Corporation), thus acquiring the worlds largest record company, and the next year it purchased Columbia Pictures Entertainment, Inc.

The Sony BMG merger was completed on August 5, 2004. The week before the merger, Sony's market share was 13.76% and BMG's share was 16.02%. The pre-merger combined album market share was 29.78%. But on August 5, 2008 Sony Corp. agreed to buy Bertelsmann AG's 50 percent stake in the music company for $1.2 billion to get full control. The music company was renamed Sony Music Entertainment Inc. and has became a unit of Sony Corporation of America. This will allow Sony rights to the artists on the current and historic BMG roster and would allow Sony Corporation to better integrate its functions with its Playstation 3 and upcoming new media initiatives.

Product/Market Development Strategies:

Market Penetration: Market penetration means increasing the market share of current products this can be achieved by a combination of competitive pricing strategies, advertising, sales promotion.

The management of Sony decided to cut the price by half and take advantage of the economies of scale to penetrate the American market. Therefore it is increasing all products market share (especially PDAs market) share in USA. In 2010 Sony is targeting 34% Chinese market. Therefore Sony China, in Beijing and Shanghai has released 11 new models of notebooks priced below 5,000 Yuan a rare and LCD TV is as low as more than 2000 Yuan. In 2009 Sony focused on the Chinese market is to ensure profits, did lose some market share. Sony BRAVIA LCD TV which was not running well then they re-launched the product with a promotion which was when you purchase a BRAVIA TV you get their dog product, a PlayStation3 for free.

Product Development: Since the early days Sony is famous for invention, imagination and reliability. Over the years, there have been many groundbreaking innovations. In 2009 they launched Sony Ericsson W995 Walkman phone. After a few months they released Sony Ericsson Xperia X10 mini, Sony Ericsson XPERIA X10, Sony Ericsson Vivaz. Whenever they notice their product losing market share, they introduce a new product.

Sony launched VAIO in 2000 in New Delhi, India. After 4 years they started a new business of IT peripherals targeting the same Indian market. Sony launched the Playstation 3 to replace their existing model. When DVD (Digital Versatile Disk) recorders market share was dropping ,Sony released Blu ray recorder. Market share of Blu-ray recorders exceeded 50 percent for DVD recorders in unit terms.

Market Development: As a multinational company, we can get Sonys footprint all over the world. Sony targeted their PlayStation 3 to children and after the maturity stage they targeted it for adults. Sony uses the following strategies for market development:

New geographical markets: When Sony introduce a new product / technology , at first they launch it in the first world country then gradually it goes to the third world countries New distribution channels: Sometimes they serve the product directly from the vendor to the consumer. Sometime include several intermediaries such as wholesalers, distributors, agents, retailers. Different pricing policies to attract different customers or create new market segments. For first world countries its price and quality is high where as for third world countries it sometimes different.

Diversification: And the fourth strategy is diversification where the company enters new markets with new products. When Sony walkman was introduced into the market, there were no existing markets for portable music. Sony is well known for its diversification. Although at first it starts with electronic product now you can see Sony in Game, Music, Entertainment, and Networking and Financial service. In the financial year 2009 Sony had the following sales segments:

Electronics 66% Games 13% Motion Picture 9% Financial service 6%

Others 6%

Electronics Industry Analysis

Threat of New Entrants (Low): Sony is a well established company it will be very tough for a new company to come and compete with Sony. Because it is very tough for a new company to meet the following requirement which has already been achieved by Sony.

Economies of Scale Product Differentiation Capital Requirements Switching Costs Technology and Innovation

Bargaining Power of Suppliers (Low): Because Sony has

Big global supply chain management therefore suppliers are not concentrated Suppliers are forced to cut their prices or go out of business Direct negotiation with suppliers in order to encourage: Reliable supply, Faster delivery, Lower prices Many OEMs start to produce their own components in-house

Threat of Substitute Products (High): There are many entertainment substitutes that can directly compete with Sony products. For example PC games, MMORPG PC games, portables consoles, mobile phones all these entertainment alternatives can directly affect Sonys video games existing customers and the conversion of new ones. Bargaining Power of Buyers (Rather High): Products are fairly undifferentiated; therefore customers can take a Sonys LCD TV or can buy a Samsung LCD TV because both TVs features are almost same. Buyers face few switching costs therefore they can easily switch from one supplier to another.

Online shopping has increased the bargaining power of buyers. By online shopping customer can verify various companies product and price on a website. Therefore there is a strong chance to lost own market share.

Buyers are price sensitive and demand high quality. Now inside a store one can find various brand products. More over Sonys product price is higher than other strong competitors. So customers can go to competitors.

Rivalry among Existing Competitors (High): Numerous and rather equally balanced competitors like Microsoft, Samsung, Apple Lack of differentiation or switching costs High exit barriers

Therefore: Short product life-cycle High R & D costs. It increase product cost Low profit margins. Now at this moment Sonys profit margin is 4%. Because of high competition to attract customer sometimes they became bound to reduce this margin. What Sony is doing to deter the threat? Ongoing process/product innovation and Advanced R & D Strengthening Profits (through lower materials cost and greater operational efficiency) Forming joint-ventures (e.g. Sony-Ericsson) Concentrating on Core Business

Positioning Strategy: BCG Matrx:

Sony Group Corporate Strategic Operation:

Sony today presented a series of new initiatives designed to build on its previous threeyear revitalization plan and to position the company as the leading global provider of networked consumer electronics and entertainment. In particular, the company will focus on strengthening core businesses, enhancing network initiatives and leveraging international growth opportunities to build for the future and drive further growth and profits. In addition, Sony announced the following key mid-term goals: Expand Sonys PC, Blue-ray Disc-related products and component

/semiconductor businesses into "trillion yen businesses," joining LCD TVs, digital imaging (digital cameras and camcorders), game and mobile phones and raising the total number of "trillion yen businesses" to seven. - Strive for the global No. 1 position in LCD TVs by FY2010. Ensure that 90% of our electronics product categories are network-enabled and

wireless-capable by the fiscal year ending March 31, 2011. Roll out video services across key Sony products by FY2010, starting with the

summer 2008 launch on the PLAYSTATIONNetwork.

Double annual revenue from BRIC (Brazil, Russia, India, China) countries to 2

trillion yen by FY2010.

Sonys Strategic Operation Analysis:

The business environment in which Sony operates is changing rapidly and with the advance in digital technology and broadband networks, technological innovation is moving at a pace never experienced before. In order to be a leading company in the digital age, Sony aims to leverage its unique advantage of producing both hardware and content, continuing to offer cutting-edge products together with superior content and services to meet the needs and expectations of our customers.

SONYs Management Structure:

In June, 2010 at Sony Corporation's Ordinary General Shareholder's Meeting BOD selected the following new management team that will lead the company: 1) Sir Howard Stringer (currently Chairman & CEO Sony Corporation of America, Corporate Executive Officer, Vice Chairman and COO Sony Entertainment Business Group) will assume the position of Chairman, Group CEO and Representative Corporate Executive Officer, Sony Corporation. 2) Dr. Ryoji Chubachi (currently Corporate Executive Officer, Executive Deputy President and COO of MSNC and EMCS) will assume the position of Representative Corporate Executive Officer, President of Sony Corporation and CEO of the Electronics Business Group of the company. 3) Mr. Katsumi Ihara (currently Corporate Executive Officer, Executive Deputy President and Group CFO) will assume the role of Representative Corporate Executive Officer, Executive Deputy President and Group CFO, Sony Corporation

Source: Sony.net(2010)

Sony Corporations Value Chain:

Since the maximum value addition in Sony is towards the End user, it is the Integrated and decentralization management model which is at the heart of it. The decentralization empowers the individual business units to work close to the customer and pick the product from the market and integration helps it to exchange information back and forth with HQ and sell under the one brand "Sony". Also the independence from Keiretsu system helped Sony to go global and form business relationships rather than group relationships which is hallmark of Japanese culture. Core Value of value chain: Search new market for new product. Find out the best product for that new customers. Cost control for manufacturing and production process. Proper distribution channel. Best Customer service for post distribution Try to touch customer satisfaction level.

Value Chain for PlayStation 3 :

Source: Rassweiler, A. (2009)

Sony Corporations Value System:

Honesty: Sonys customers and the community at large. Sony does not engage in sales of stolen mobile and never hide truth for the sake of a quick deal. A long-term relationship can only be built on foundation of honesty and trust. Honesty is one of the four principles enunciated by Sonys business. Customer Delight: Sony seeks 100% customer satisfaction before, during and after the purchase process. Sony serves their customers with excellent products, services and support. Sony put clients' interests squarely, convincingly, and unmistakably first. Customer orientation is their second guiding principle of the four founding principles. Responsibility of Financial Power: Sony uses their financial power to buy in bulk, purchase in advance of price moves, survive market fluctuations, and make investments. Sony can then pass on these savings to their local and global customers because they want to use their financial power to maximize Sonys customers profit. Capability: Continually building Sonys capability to maintain their leadership in International electronics market. They use their installed base, industry connections, financial power and purchasing clout to get top selection. Top Selection and top quality are the fourth guiding principle enunciated by their parents company.

Teamwork: Sony is dedicated to a singleness of purpose - delighting the customer - and insists upon mutual support for one another in everything they do. The talents and productivity of Sonys employees are the heart and brains of the company. Goodwill and Brand Image: Sony will conduct themselves honorably and with integrity in our dealings with all of these communities. Sony has accumulated enormous goodwill in 6o years of successful operations. Sony will never fritter it away and will continue to build on it every day. Sony and Ericson are respected brands in most markets. Accountability: Accountability is the obligation to be answerable for Sonys actions and decisions to their customers, company and one another. Ownership is the willingness to assume proprietorship for ones position, showing initiative, independent action, and accountability at all times.

Recommendation:
Should continue to be creative. Should pay more attention to their rivals. Sub brand which can be cost leader. They should accept the technologies preferred by customers.

References:
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