Category: Sony

Strategic Approach on Sony Corporation Global Strategy and Structure: Analytical Essay

This report provides a strategic approach on Sony Corporation global strategy and structure and how Sony manage its global operation, innovation and risks. This report begins by analyzing the brief overview of Sony, its business segments and geographical coverage. Furthermore, this report will examine mission and vision of Sony and shows how innovation is deeply rooted in the company mission and vision. This report then follows the global strategy and structure adopted by Sony which is a transnational strategy and matrix structure. Following that, due to the large size of the conglomerate and the nature of its diversification strategy, Sony’s electronic business segment is used in the report as a unit of analysis for its global operation. The second main body shows how big role innovation plays at Sony, on its product and process of innovation, Sony’s research and development centres and how they configure and co-ordinate. Finally, the report will

2. Company overview

i. Sony

Sony Corporation is a Japanese multinational conglomerate corporation established by Akio Morita and Masaru Ibuka on May 7, 1946. Sony Corporation is a global manufacturer of electronic devices, software and games consoles for consumers, industrial and professional markets (Sony, 2019). It operates in three main sectors which include electronics, entertainment and financial service. Sony’s operations are further carried out through diverse business segments as displayed in Appendix 1. With its pictures, music, game and online businesses, the company has successfully placed to be one of the world’s leading digital entertainment brands, providing an exceptional portfolio of inspiring multimedia content (The Forbes, 2018). Sony operates across America, Europe, Africa, Middle East, Asia Pacific and employed about 117,300 people as of March 31, 2018 (Sony, 2019).

ii. Mission and Vision

Sony’s mission is to deliver “Kando” through its superior products, content and services which inspires and fulfils curiosity of the customers (Sony, 2019). ‘Kando’ is a Japanese term which refers to move people emotionally and it is deeply rooted in Sony’s core philosophy to deliver a moving experience to its customers by their innovative products. For instance, the PlayStation attracts and engages consumers through an emotional bond based on the gaming experience. Sony Corporation vision also focuses on the concept of Kando. The engineers of Sony use their infinite passion for technology to create and produce new innovative products to fulfil the customer’s curiosity (Sony, 2019). In aspiring to achieve this, Sony aims to create social value by providing consumers with a sense of enrichment through the creation of a community of interest by connecting producers and customers together (Meyer, 2017). Thus, Sony’s mission and vision complement one another and maintain its strong influence on the business.

3. Global strategy and structure

Firms choose a suitable strategy for their businesses among the four main strategic postures while competing globally. They are international, multinational, global and transnational strategy (Hill and Jones, 2009). The appropriateness of each strategy differs with the extent of pressures for local responsiveness and cost reductions.

i. Transnational Strategy

Sony utilises a transnational strategy on their business. A transnational strategy is where firms produce and sell a certain degree of standardized as well as modified products in various markets according to the local preferences Ireland, et. al, 2006). With this strategy, Sony aims to consolidate the advantages of global scale efficiencies with the benefits of being locally responsive either in a geographic region or a country and the authority remains both centralized and decentralized (Sony Business Team, 2015). Sony depends on standardisation of products with global production and distribution; however, it also has a system called “Sony Pledge of Quality” through which new designs for local markets are developed and introduced. Sony Pledge of Quality helps Sony to create products that satisfy the needs of local preferences of consumers (Sony, 2019).

Bartlett and Ghoshal (1989) have stated that transnational strategy is superior in contrast to other strategies and is the ideal way for firms to reach success by reducing cost and achieving local responsiveness (Frynas and Mellahi, 2015). For instance, Sony PlayStation reduces its cost by locating most of its production facilities to low cost countries such as China. Sony PlayStation understands its customer needs in different markets with different cultures of both home and host countries (Steers and Nardon, 2015). Thus, with the effective formulation and implementation of the transnational strategy, Sony PlayStation is able to dominate the global video game market in oppose to Nintendo and Microsoft’s Xbox.

ii. Matrix Structure

Sony Corporation has diverse product portfolio and large global operations and sales in international markets. Following the Stopford and Wells (1972) structure model, a high level of product diversification and global operations and sales has led Sony to adopt a global matrix structure (Frynas and Mellahi, 2015). Sony has implemented a matrix structure to combine well with the transnational strategy as it helps Sony to coordinate the activities effectively between a parent company i.e. Sony Corporation and its subsidiaries or even within subsidiaries to subsidiaries (Sony, 2019).

Following a global matrix structure, Sony is more flexible in all of its activities such as manufacturing products, responding actively to customer needs from different geographical areas. Due to the complexity of the matrix structure, the headquarter of Sony, however, has to be in constant contact with product groups and countries (Ahrens and Guetz, 2015). Sony Corporation’s matrix structure shows that the subsidiaries have a certain level of autonomy depending on the business units. Therefore, the parent company of Sony do not possess complete control over its subsidiaries (Meyer, 2018). As Sony follows a transnational strategy and a global matrix structure, knowledge and ideas sharing exist between Sony Corporation and its subsidiaries.

4. Global operations of Sony

i. Supply Chain

Appendix 3 displays a generic illustration of Sony’s electronics supply chain (Sony, 2018). It is found that Sony’s configuration of their downstream value chain activities are organized according to how high-tech the product is. For example, Sony product items are classified as commodities and requires little technological expertise which are often manufactured abroad. The reasons for this decision are supply chain cost-related (Bin, 2003), as the low manufacturing costs of “commodity” products outweigh the higher costs of transport and longer lead times (Sony, 2018).

China, in particular has proven to be an excellent location for the outsourcing of many of Sony’s less innovative products, where competition is based on efficient, fast production. Alternatively, for leading edge products, Sony found that China’s manufacturing base, in amongst their many others, lack the critical “market mediation” capabilities i.e. the technological expertise, benefits of proximity and the supply chain flexibility to cope with the demands of high-margin, high-risk new product introductions (Sony, 2018). As such, products that fall into this category are often produced in Japan. Sony has several manufacturing facilities dispersed all over the world and the configuration of value chain activities varies according to the product and its manufacturing needs. It will now focus on the configuration and coordination of the manufacturing of Sony PlayStation.

One factor that remains consistent across all value chains is how the subsidiaries are controlled. In 2016, Sony made drastic changes to the management of its manufacturing operations of its electronics division (Sony, 2018). Effective April 2016, Sony created the Sony Global Manufacturing & Operations Corporation (SGMOS). This was created through the merging of Sony Engineering, Manufacturing and Customer Services (EMCS) previously in charge of domestic engineering, manufacturing and repair services of electronics and Sony Corporation, which is in charge of supervising operations globally (Sony, 2018). As a result, SGMOS assumed the responsibilities of EMCS in managing domestic manufacturing operations in Japan and administering manufacturing facilities overseas. In addition, it is also responsible for global shared services functions that oversee procurement, logistics, quality and environment-related initiatives in manufactures all across the globe (Sony, 2018). Through this realignment, Sony has brought together the extensive knowledge and expertise in operations that its various organizations have accumulated, in order to streamline and continue evolving its operations that transcend national or regional boundaries and product categories.

ii. Value Chain

The value chain of Sony PlayStation is displayed on Appendix 4. Now, the report will discuss on how some of the activities of Sony PlayStation’s value chain are configured and coordinated across the globe. Appendix 5 shows Sony’s manufacturing downstream activities are primarily performed in Japan, with parts outsourced to China and some others imported from the U.S. hence the decentralized configuration is pretty clear. The reason Sony implements this strategy is because the PlayStation is relatively low-tech and is classified as a commodity (Sony, 2018). Other products classified as innovative, such as the Aibo, are manufactured solely in Japan, because Sony has found that China’s manufacturing base, in amongst their many others, lack the critical “market mediation” capabilities i.e. the technological expertise, benefits of proximity and the supply chain flexibility to cope with the demands of high-margin, high-risk new product introductions (Sony, 2018). As such, it uses mass production, which China does both efficiently and cost-effectively which is a location advantage. The products are then distributed for sale and all upstream activities are outsourced to retailers across the globe. The idea is developed in Japan and sold everywhere in the world to fulfill the global mindset of the corporate strategy of Sony (Sony, 2019).

These activities are linked through the Sony Global Manufacturing and Operations Corporation which leads to high degrees of coordination for the communication and operations between domestic and foreign manufacturers. Sony’s approach is defined as “global localization”. SGMO sets out the global strategy whereas the various locations across the world have the autonomy to adapt it to local needs, still referring back to the core strategy. The compatibility across the operations back to the core is further explained in the Research and Development (R&D) section.

5. Innovation creation

Innovation is important for companies like Sony to maintain and gain a competitive advantage. The main corporate responsibility of Sony Corporation is to enhance its corporate value through innovation and sound business practices to its customers. Thus, Sony ends generating innovation in various ways either creating products or services which inspires and fulfils its customers curiosity (Sony, 2018).

i. Product and Process Innovation

Innovation has always been the core philosophy and spirit of Sony Corporation (Sony, 2018). The ground-breaking spirit of continuous innovation has always encouraged Sony to create innovative products from its establishment to date. Sony was the first firm to produce portable music players in 1979 such as Classic Walkman as given in Appendix 6 before any other companies could actually conceptualise them. It completely transformed the way to listen to music (Neate, 2014). Furthermore, Sony built PlayStation in 1994 which is one of the most profitable and successful products of the company and manage to dominate the gaming industry.

Recently, Sony also introduced “Aibo” the AI-driven entertainment robot pet for various use in environments in addition to the home and to bond actively with humans. Sony also creates innovation as a process which refers to the implementation of a new or advanced production or delivery method (Frynas and Mellahi, 2015). An example of process innovation is the invention and evolution of Seed Acceleration Program (SAP) and Sony Innovation Fund (SIF) by Sony Group in 2014 and 2016 respectively. Seed Acceleration Program generates start-up projects and supports its business operation while Sony Innovation Fund assists as a corporate venture capital fund to the start-up or early-stage companies (Sony, 2018).

ii. Research and Development (R&D)

In 1986, Sony established a “zone management system” where the worldwide market was divided into four regions which include Japan, America, Europe and South East Asia. The regional headquarters were established in each area with its own R&D main centre and six each sub-laboratories (Noam, 2018). The network of R&D has high coordination despite a decentralised configuration because of the various locations.

The parent company of R&D centres in Japan Sony Corporation assumed the role of the planner of the company’s R&D global strategy (Pablos, 2014). The European, Asian and the US head offices coordinate their regional R&D strategy, while making this strategy compatible with the corporate strategy and its global focus. Also, every main laboratories has its own chief technology officer (Noam, 2018). In order for them to remain consistent and coherent across the regions, not only engineers were moved across the laboratories, but also R&D meetings is held twice a year. This helped Sony R&D to reach synergy and flexibility. At the same time, the laboratories never lose their autonomy. They plan and control their own projects, suitable market needs, following the concept of global localisation. As Bartlett and Ghoshal (1989) suggested having both centralization and decentralization is very challenging but, tools like R&D meetings helped Sony to provide communication among the network of the various R&D across the globe.

The goals for the foreign subsidiaries were to meet the local needs, advance expertise in the local area, contribute to the local society while establishing a global human and information network. Every R&D facility is specialised in one or more fields of technology. For example, Beijing focuses on wireless networks, Las Vegas specialises in 3D Television and Paris focuses on personal music experience.

iii. Foreign Direct Investment for R&D

The FDI reason was home-base augmenting FDI for R&D because, although Japan being advanced in technologies, it benefitted from the various peculiarities of the multiple locations, leading to a dynamic continuous learning in order to keep up with innovations. This complies with the never ending pursuit of global localization, Japanese at its core but localized at the same time. Also, the centres are regarded as international technology creators, since the products designed are meant to be sold across the globe in a boundary-less fashion. The most famous product, PlayStation although designed and developed in Japan was sold everywhere, to fulfill the international mindset of the company.

iv. Innovative Capabilities for Competitive Advantage

The innovative capabilities of Sony are definitely a reason behind Sony’s sustainable competitive advantage. The field of consumer electronics is highly competitive and keeps on changing. Therefore, Sony always makes an effort to keep up with innovations and be competitive in the market. Usually, the firms invest around 2 to 3 percent of revenue to their R&D sector but 6 percent of the company revenue which is extremely high is spend on the research and development by Sony Corporation. The founder of Sony Akio Morita and Masaru Ibuka strongly believes in the power of innovation and innovative capabilities as the main source for Sony’s competitiveness. Hence, the global localization perspective helped the Sony to adapt itself to the various locations as well as market changes, which helped Sony to leverage its technological know-how very dynamically.

6. RIsk management

Sony recognizes various risks and manages them well because of the geographical dispersion as well as industrial diversification. Among the others, Sony does not have a centralized decision-making for risk management. Rather, all of the risks are conducted under the company with “committees” as the board of directors where every subsidiary provides mechanism of identification and response to challenges, tailored to their respective locations which gives them great autonomy in the matter.

i. Cyber Attack

Cyber security has been the major risk for the businesses. There were some of the incidents that took place back in 2011 and 2014 where Sony Pictures and PlayStation Network was crippled by hackers. This incidents can be labelled as a black swan event as it proved the weakness of the company in serious situations. The online services were shut down as Sony attempted to secure the breach, which put the sensitive personal data for over 100 million customers at risk. Protecting the data privacy of Sony users are very important to Sony. Hence, to fulfil this commitment to privacy, Sony took a number of steps to prevent future breaches including enhanced levels of data protection and encryption; enhanced ability to detect software intrusions, unauthorized access and unusual activity patterns; additional firewalls; establishment of a new data centre in an undisclosed location with increased security and the naming of a new Chief Information Security Officer. Sony has also improved its stance against cyber-attack. For instance, through a risk mitigation strategy of partnering with Amazon Web Services.

i. Intellectual Property Right (IPR)

According to the Vice President of Sony Interactive Entertainment (SIE), one of the biggest intellectual property challenges facing the industry is the copyright which refers as given the need to protect creative content. Sony has been the copyright owner of the innovations related to its video games. Sony sued Eric Davis in America because he has the marketing and sales distribution of the ‘Jailbreak’ PS4. Jailbreak refers to modify electronic device to remove restrictions in the game. Eric’s production and design of such is not only for the purpose of profit, but also detrimental to the original intention of the PS4 system to prevent pirated game works.

ii. Investment Strategies

Sony focuses its investments into more profitable businesses and divests from businesses performing less well in order to maximise profits and minimise costs. From Appendix 7, the green are the most profitable industries of Sony receiving the most funding in their R&D so entertainment as a whole is doing great. In Yellow, are the stable profit generators which receive less large-scale investment and are focusing more on cost efficiencies. In Red is the least profitable industry, Mobile Communications, due to market volatility in consumer tastes and high competition.

7. Recommendation & conclusion

It can be seen from Appendix 8 that Sony is doing well on most of its business sectors. However, Sony is struggling in their smartphone business which is part of the mobile communication industry in comparison to its competitors. Hence, change in their strategy is needed. Sony is divesting in this area by cutting down jobs and is also considering a partnership as they still plan to continue producing smartphones. Sony should use a change agent to mitigate the risks and partner up with Huawei as they have previously collaborated together in the television industry and have similar competencies and have potential for synergy.

The Death and Revival of Sony’s Artificial Intelligence Robot (AIBO): Discursive Essay

Introduction

The king has fallen from his crown. The sentence cannot be more perfect to describe the failure of the once-upon-a-time master of consumer electronics industry: Sony. From early 1980s until 1990s Sony was known for its cutting-edge technology, sophistication, and desirability. With infamous Walkman and Trinitron, Sony was considered as Apple of its era.

Now everything has changed. Sony may continue to produce high-quality products, but people do not get excited from them anymore. As people moved to competitor products and sales declined, some of Sony products were discontinued. In this case, we will look further why exactly Sony discontinued artificial intelligence robot as known as AIBO and how they revive it.

The History of Sony AIBO

ERS-110. Picture: Sony

Sony AIBO – a robotic dog pet designed as adult companion – was first introduced in May 1999. The first model, called ERS-110, were sold in Japan and U.S. at ¥250.000. Several months later, Sony decided to introduce ERS-111 limited edition to the European market and surprisingly there were 135.000 orders in a week. This first version of AIBO can walk, perform some movements, and show different moods.

ERS-210. Picture: Sony

In October 2000, Sony launched the second generation of AIBO which called ERS-210. This newer version offered improvement in mobility, touch sensors, and facial LEDs. With additional features such as Name Recording Function and Face Recognition, ERS-210 was closer to its owner. The ERS-210 could also respond up to 40 words and phrases.

Almost a year later, Sony introduced LM series of AIBO. L stands for Latte, while M stands for Macaron. The ERS-311 Latte was only available in white color, while the ERS-312 Macaron was available in dark grey and black colors. Although there were some features lacking, such as LED facial expressions and wireless capabilities, they had advantage in terms of price.1

ERS-311 Latte. Picture: Sony

ERS-312 Macaron. Picture: Sony

ERS-220. Picture: Sony

In the same year as LM series launching, Sony introduced the futuristic-looking dog called ERS-220. Compared to the previous version, ERS-220 had additional digital camera for this AIBO version for taking pictures.

ERS-7. Picture: Sony

Two years later, Sony launched its ambitious AIBO project called ERS-7 which capable of speaking 1000 words and understanding more than 100 words. This version was special in terms of its functionalities. Scheduling, news or email reading, music playing, video recording, and diary writing could be done with this ERS-7 version. The ERS-7M3 version, variant of ERS-7, was the last AIBO that Sony produced before it being discontinued in 2006.

Sony Struggles Over Lost Opportunity

If we must choose the day when Sony lost its title as the king of technology industry, it was October 3rd, 2001. That was the day when Steve Jobs introduced iPod in Apple Music Event. A small, portable music hearing device with high regard of simplicity and carry more than 1000 music inside.

At that time, Sony had the all the resources needed to build something like iPod. The question is, why did not they make one? To answer this simply is because they were too late to realize the importance of digitalization, a shift towards software or user experience, and the importance of Internet.2

“Why Sony did not invent iPod is one of the great lessons in corporate failure.”

-Michael Pascoe, editor. Source: The Sydney Morning Herald

Many argued that one of the reasons why Sony did not invent something like iPod is bad-timing. Two years prior iPod launching, Sony had tried to create something similar but failed due to expensive small hard drive. Because of these first expensive players, Sony left the idea behind.

Although some people may agree that Samsung failed because they lost their timing, but others like CEO ChangeLabs Dominic Thurbon and New York Times journalist Hiroki Tabuchi argued that the most reasonable cause of Sony’s lost opportunity is their silo structure and culture.

“With its catalog of music and foundation in electronics, Sony had the tools to create a version of the iPod long before Apple introduced it in 2001. It didn’t happen. Initially, Sony engineers resisted the power of the company’s media divisions.”

-Dominic Thurbon, CEO ChangeLabs. Source: The Sydney Morning Herald

To create something as radical as iPod, all Sony divisions had to forget their jealousy of each other and move towards common purpose. For example, Sony hardware engineers had to cooperate with software engineers. On the other hand, Sony Music need to support this invention by completely tear down their current distribution process and make it align to support the iPod-like product from Sony. The lack of common purpose and highly competitive silos eventually damage the company reputation in technology industry.

This is the proof that the more expert and balanced a company is, the more they probably resist to change. All their effort can be too focused on the existing dominant design and it will slower their reaction to new technology architecture. This kind of “comfort zones” can be alluring trap for a successful company, and Sony is living proof for that.

One of the greatest mistakes of Sony is they failed to reevaluate their business strategy amid technological changes. There are at least three mistakes that Sony did. The first mistake is Sony was too late to realize the importance of software, hardware, and service integration in its products. This mistake was mainly caused by the company’s silo structure. The second mistake is Sony completely missed changes in mobile phone industry. Sony completely exit the mobile phone industry now, due to its unpopular product. This can affect Sony badly, because nowadays consumers using mobile phone more than digital camera. The third mistake of Sony is its “kludgy” software in products.

As technology innovation moves in very fast phase, change within industry is unavoidable. There are two choices: change or become extinct. The story of Kodak is a proof for this. When Kodak had failed to move from chemical photography to digital photography, Fujifilm existed to “kick” Kodak out of business.

The need to change is not only driven by the company, but also by user. The big part of Sony success story from 1950s until 1990s was their disruptive technology in hardware. Unfortunately, they became too focused in innovating and selling hardware while the shifting from hardware to software started to happen. It was not enough for user to have smaller, lighter, MP3 version of Sony Walkman. Users’ typical question of “What are the specs?” slowly changed to “What is it like to use?” They need a new user experience – combining hardware, software, and social identity in one device, which Apple’s iPod successfully achieved. 3

The failure of Sony to realize the business change in technology industry came with huge price. The shifting from product-oriented customer to experience-oriented customer made Sony market value today is roughly the same as when Walkman ruled in 1980s, only one-ninth of Samsung Electronics and just one-thirtieth of Apple’s.

In 2004 until 2005, Sony’s annual revenue of US$68.6 billion were the lowest for five years, and it also were 5% below forecast. Moreover, Sony reported loss three times between 1999-2005: in 2001, 2003, and 2005.

Decreasing sales, especially in gaming entertainment and consumer electronic segment of Sony, forced Sony to change their business strategies. Sony needs to make its business operation lean to get more profit. One of the impacts from this situation was Sony decision to discontinue AIBO until Sony get better financial outcomes. This decision was made with consideration of AIBO’s high production and maintenance cost. With Sony’s struggle in consumer electronic industry, it was just not profitable for Sony to pursue such an ambitious project.

Samsung Is Now What Sony Once Was

When we talk about consumer electronics industry today, it is not complete without Samsung. Twenty-six years ago, Samsung was known as a supplier, a high-volume, low quality manufacturer without brand recognition outside Korea. At that time, Samsung’s chairman, Lee Kun-hee, had been traveled around the world to review how his company was faring. To put it simple, he was not happy with what he saw. After he ended his trip, he called a spontaneous meeting with his top executive and said literally and figuratively:

“Change everything but your wife and children.”

-Lee Kun-hee, Chairman of Samsung. Source: Forbes

At that time, Lee already recognized the need to change the way the company was doing business. The process is known as business process reengineering, which in some way was the catalyst for Samsung’s transformation in the market.

So, what makes Samsung can surpass Sony today? There are at least two reasons why Samsung – an unrecognized brand in 1990s – was able to beat Sony. The first is strong value proposition from its products, and the second is the business model that enable value to be delivered to customer. For value proposition, Samsung always consider quality, design, and price of products. Samsung wants to be a premium brand, therefore Samsung management had to ramp up the quality, established design centers around the world, and release the product at competitive price. Combined with innovation and relevance, Samsung give customer what they want to and can buy into. To balance quality, design, and price, Samsung needed to create business model as enabler.

From Sony case, Samsung had learned the consequences of misses of inflection points. To sustain in high-technology industry, Samsung cannot ignore that sensing changes in the market is also important. In this competitive industry, there is always something new, and if the firm does not realize that, it will fall out of favor quickly. 4

The Revival of Sony AIBO

In recent years, Sony was slowly regained its standing. Sony’s PlayStation sales in Q2 2018 caused Sony’s operating profit jumped by 59 percent and revenue increased by 6 percent. Analysts said that Sony was entering a growth phase after many years of huge losses.

Samsung Revenue 2007-2017. Source: Statista

After watched its prominence evaporate in nearly everything from televisions to smartphones, Sony decided to relaunch AIBO in 2018, twelve years after it was discontinued. It was Sony’s attempt to show its prowess in AI, robotics, and high-quality consumer electronics.

AIBO also acts as a proof that Sony learned from its past mistakes. Under the leadership of Kazuo Hirai, Sony had to knocked down barriers between divisions and created products that connect with people at emotional level. While most of its products may not captured consumers affection yet, Sony hoped that AIBO will serve as a statement of the brand-new Sony.

AIBO was set to be a personal companion of adults. With more than 400 parts, this new AIBO can move like a real animal. Its eyes are Sony displays which can follow the owner around the room. It also can imitate gesture, act on commands, and take pictures with voice initiation.

With $2900 price tag, it is sure an expensive pet. Even so, this new Sony AIBO was already sold as many as 20.000 units in Japan. Sony AIBO was a true expression of brand-new Sony, it was made to show Sony’s ability of high-technology consumer electronics innovation. Sony AIBO may not as profitable as Sony PlayStation, but this product is a statement of how the company is changing towards the future and that is highly important to regain Sony’s own reputation.

It still to be seen whether this new Sony AIBO will be continued. It was mentioned by Mike Fasulo, the president and COO of Samsung Electronics, that demand of AIBO outside Japan predicted to be fewer. Moreover, the high-price of AIBO does not ensure its profitability. As mentioned before, there is a risk of discontinuing the product if Sony does not have good financial outcomes. There are other factors too, such as change in trends and highly competitive market that may disrupt the growth of Sony. Therefore, Sony’s future business strategy will play a vital part of Sony AIBO continuity.

References

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Critical Analysis of Sony Subsidiaries and International Exposure

Introduction

Sony is a world-renowned large-scale comprehensive multinational conglomerate. Headquartered in 1-7-1, Gangnam, Minato-ku, Tokyo, Japan.

Sony is a world leader in audiovisual, video games, communications products, and information technology. It is the world’s first pioneer of portable digital products. It is one of the world’s largest electronics manufacturers and one of the world’s three major players in the video game industry. One of the six major movie companies in Hollywood, USA. Its brands include Xperia, Walkman, Sony Music, Columbia Pictures, PlayStation, and more.

There was a brand of Vaio, but on February 6, 2014, Sony divested VAIO business, and the Vaio brand will be operated by Japan Industrial Partners Inc.

From April 1st, 2018, the current deputy director and chief financial officer Yoshida Kenichiro was promoted to the president. The current president and CEO, Hirai Kazuo, is the chairman of the company.

On December 18, 2018, the ‘2018 World Brand Top 500’ compiled by the World Brand Lab was announced, and Sony ranked 100th.

It has emerged as an industry leader in technology by designing, developing, and manufacturing electronic devices such as transistor radios, tape records, and televisions.

Sony introduced products such as CD Player and portable music system popularly known as “Walkman” which revolutionized home media industry. Sony further diversified into cameras, gaming consoles, home news PC’s, mobile phones, and televisions which helped them build their value and image in the international market.

Sony has established production base in Asia with a wide sales network in around 200 nations across the globe. They have a strong marketing network in Japan, US, and Europe.

Sony Subsidiaries and International exposure

In October 1968, the world’s first color TV with Trinitron TV image technology was released: KV-1310. In May 1975, the world’s first BETAMAX video recorder was released.

In 1978, a revolutionary CCD (charge-coupled device) sensor technology was developed. In July 1979, the revolutionary Walkman World’s first Walkman product was released: TPS-L2. In 1983, the United Kingdom Philips jointly released a compact disc (CD) and led the 74-minute standard. In December 1996, the first digital camera was released: CyberShot DSC-F1. In March 2000, the Sony PlayStation 2 generation game console was released. In October 2001, Sony and Ericsson each held 50% of the shares and jointly established Sony Ericsson. In February 2002, the Blu-ray Disc standard for the next generation DVD disc storage format was released. In December 2004, the next generation of PlayStation Portable handheld game consoles using UMD storage media was released. In January 2005, IBM and Toshiba (TOSHIBA) jointly released the Cell-microprocessor with 4GHz start-up. On May 16, 2005, the E3 show in the United States released the PlayStation 3 generation game console equipped with the Cell processor. On July 19, 2005, he announced a partnership with Konica Minolta (Konica Minolta) to join the digital SLR camera market in response to the saturation of consumer digital cameras. On August 25, 2005, the joint IBM and Toshiba (TOSHIBA) announced the detailed process of the Cell-microprocessor. On September 13, 2005, September, BRAVIA’s next-generation LCD TVs were released worldwide. On September 30, 2005, SanDisk released a Memory Stick Micro (M2) memory card. On February 21, 2006, the world’s smallest support high-definition 1080i HDV-HC3 was released. On April 10, 2006, it again cooperated with South Korea’s Samsung Electronics to produce the eighth-generation S-LCD LCD panel factory. On April 20, 2006, the brand new digital SLR camera brand alpha (alpha) was released. In November 2006, PlayStation 3 equipped with Cell processor and next-generation Blu-ray Blu-ray technology was officially launched in Japan, the United States, Taiwan, and Hong Kong. On November 2, 2006, the eighth-generation S-LCD LCD panel factory, which was put into operation with South Korea’s Samsung Electronics, officially started construction. It is expected to officially put into production capacity in the fall of 2007. On November 11, 2006, the PlayStation 3 generation game console was officially launched in Japan, and 100,000 consoles were sold out in an instant. In 2006, with Ericsson announced that it will expand its cooperation, in addition to continuing the original mobile phone design and manufacturing business, the two parties will jointly develop software for mobile and broadband TV applications.

On January 19, 2006, Sony and Kemei jointly announced the acquisition of Kemei Camera Business by Sony. The acquisition agreement officially decided to transfer some assets related to Kemei digital SLR cameras to Sony, while Kemei will camera and related. The customer service of the product is entrusted to Sony, and the agreement will take effect from now on. In February 2008, with the release of the new flagship Xperia X1, Sony Ericsson’s high-end smartphone brand Xperia officially entered the public’s field of vision. In January 2011, the PlayStation VITA second-generation handheld game console with quad-core, dual joystick, and front, and rear touch screens was released. On October 27, 2011, Sony announced that it will acquire the remaining 50% of the shares for 1.50 billion euros. It is wholly-owned and announced that it will stop using the ‘Sony Ericsson’ brand from mid-2012. In the future, the mobile phone will be unified with the ‘SONY’ logo. In April 2012, Sony was approved by the European Commission to acquire the established music company EMI for $2.2 billion. So far, Sony has become the world’s largest music company, controlling one-third of the world’s music copyright. In July 2012, Sony acquired the cloud game company GAIKAI for $400 million to expand its future gaming machine business. On February 21, 2013, the PlayStation 4 was released in London, but product information such as the appearance of the price was not announced at the time. On June 10, 2013, the PlayStation 4 was officially released at the E3 Electronics Show in the United States, and the appearance, price, and starter games of the mainframe were announced. At the press conference, Sony confirmed that it will not restrict second-hand game transactions, regular online certification, etc., like competitor Xbox One.

Joint Ventures

Sony Ericsson

Sony Mobile Communications is an international company founded on October 1, 2001. It is a joint venture between Sony and Ericsson. It was originally founded on February 16, 2012, and is headquartered in London. It is Sony Ericsson Mobile Communications. Sony Mobile’s exclusive operation is to create smartphones under the Android-Xperia sub-brand, as well as device accessories and software. The strategy is to release new models that enable digital photography and other multimedia features.

Sony ESPN

Sony Pictures Networks India partnered with ESPN to form a joint venture called Sony ESPN, which was officially launched in October 2015. The channel is aimed at the Indian subcontinent and is commented in 6 languages, the NFL season (2016) aired IPL competition (2016-17) -17) with NFL playoffs, Super Bowl, and Pro Bowl. Sony ESPN’s content includes cricket, football, hockey, tennis, golf, NBA basketball, badminton, and other activities.

Ghelia

Sony Computer Science Labs, in collaboration with Japan’s AI venture capital firm UEI and the Business Incubator World Innovation Lab, launched a new joint venture to help companies collect data and develop artificial intelligence programs. This joint venture through UEI aims to create a platform to provide basic services to companies that incorporate AI into their business.

According to the pie chart, the data showed that the FY2017results accounted for about 180 bin yen of Games and Network Services, which was the most propotion in the whole pie chart, and the Financial was the second proportion, about 170 bin yen. Other factors are Semiconductors, Music, Home Entainment and Sound, Pictures, Imaging Product and Solutions, Mobile Communications.

According to the value of supply chain transaction by geographic area, mainland were China and Hongkong region, accounting for 39%, the smallest proportion is in the United States, only 1%.

Opportunities

Sony is one of the most recognized and loved brands in the world. Sony plans to implement some network initiatives to expand the T.V business. International consumption of American TV dramas continues to remain strong. On the international market side, Sony plans to launch six new regional language games, and Sony will transfer its gaming technology from the London studio to India.

Challenges

European economic issues have slowed growth of the AD sales market in many territories.

Programming prices are expected to rise, volatility of foreign currencies create uncertainty for predicting financial results in US dollars.

To enhance the brand further by taking advantage of all the assets across the organization globally, including both electronics and environment.

The damage from cyber-attacks is estimated at $170 million. On April 25, 2011, the Sony PlayStation Network was attacked, forcing the company to rebuild the network. Sony revealed that more than 100 million accounts of personal data were stolen, and the service was not available for a few weeks until recently partially restored. The hacker has obtained user information and may include a credit card number. The PlayStation Network had a total of 77 million users. On April 27, the network was attacked again and Sony was forced to shut down the network.

Sony has notified the PlayStation network users that personal information (including name, address, payment history, and birthday) was obtained by an ‘unlawful person’. Last week, the ‘illegal person’ attacked the Sony network and caused service disruption. Sony user credit card numbers may also be mastered.

On July 13, 2006, the European Court of First Instance in Luxembourg overturned the EU’s 2004 approval of the merger of Sony Music and Bodman (BMG), making SONY BMG the world’s number one. The two major record companies are in danger of being split. The European Court of First Instance said in this historic judgment that the European Commission that approved the merger at that time only conducted a very sloppy examination of the consequences of the merger. The Commission did not provide sufficient evidence to legally prove that the two mergers did not There is a dominant market position, and there is no such possibility after the merger.’

The European Court’s decision means that Sony Music and Bodman (BMG) will re-submit the merger plan to the European Union, and the new plan will include market conditions. The European Commission will re-examine the merger of Japanese Sony Music and German BMG.

At the end of 2005, Dell (DELL), the world’s largest personal computer manufacturer, continuously reported a laptop explosion accident and caused an investigation by the US Consumer Product Safety Commission and the Ministry of Economy, Trade and Industry.

On August 15, 2006, Dell and the US Consumer Product Safety Commission conducted ‘the largest global battery recall notice in the history of the electronics industry.’ The recall included approximately 4.1 million Dell lithium ions manufactured by Sony. After the battery, Apple, Toshiba’s Dynabook, Lenovo’s IBM-ThinkPad, Fujitsu, Hitachi, Sharp, Gateway are announced. Recall the laptop battery. On September 29th, Sony decided to launch the ‘Lithium Battery Autonomous Replacement Program’ on a large scale to recycle lithium batteries for notebook computers produced worldwide, and to provide free replacement of new products.

Sony said that the reason for the recall is that in extremely rare cases, tiny metal chips in the relevant battery cells will contact other parts of the battery core, resulting in a short circuit. In general, when this happens, the battery pack will be powered down. However, under some extremely rare conditions, this internal short circuit can cause overheating of the cell and possible fire. The probability of this happening will vary depending on the computer system configuration used by different computer manufacturers.

On October 19, 2006, Sony announced the “Fiscal Year 1 of the fiscal year 2006”. Due to the impact of the “Lithium Battery Autonomous Replacement Plan”, Nobuyuki Oneda, the financial founder, said that there may be a total of 9.6 million recalls worldwide. The Sony-made notebook battery will cost the company about 51 billion yen, which is much higher than the previous estimate of 20 billion to 30 billion yen.

On February 29, 2016, Sony (China) Co., Ltd. submitted a recall plan to the AQSIQ to recall some imported VAIO notebook battery packs. The production date is from January 2013 to April 2013. The model number is VGP-BPS26. According to the company’s statistics, the number of battery packs affected in mainland China is 10,617. Due to the incorporation of metallic foreign matter in the production process, the battery pack in the scope of the recall has a risk of burnout in some cases.

Competitive risk

Sony must deal with the bargaining power of some suppliers and the bargaining power of customers, the threat of new entry, the competitive competitiveness, and the threat of alternative service products. Although Sony is trying to differentiate their products through modern design, high-quality graphics, and superior technology. They still exist as alternatives to Sony Walkman, iPad or Android or tablet games that threaten Sony PlayStation and HD, DVDs via Blu-ray. Alternatives to music downloads or streaming media will have an impact on Sony’s recorded music industry.

Sony and ERICSSON

The Sony G-TYPE recorder (tape player or recorder) was the first hardware device created by Ibuka and Morita in 1950, and the first pocket-transistor radio was released in 1957. In order to penetrate the global market, they introduced the image quality of Trinitron TV in 1968. Ericsson was founded in 1876 by Lars Magnus and began to manufacture mobile phones with potential technological improvements that shape the future of mobile and broadband Internet communications. Ericsson is the only company in the world to provide systems for all major mobile communication standards, actively promoting standardization and delivering innovative solutions in more than 140 countries.

Ericsson used to buy chips from a single source from Philips. In 1999, due to the interruption of the fire in Philips, it was unable to provide chips, and Ericsson had to face huge losses. Sony is a fringe player in the global mobile phone market, with a share of less than 1% in 2000. Sony Ericsson’s joint venture began on October 1, 2001, and the main goal of the joint venture is to develop an alliance that allows Ericsson to reduce the cost of expensive development of the next generation of mobile phones. Ericsson has also successfully innovated cheap camera phones, cross-platform technology, operating system experiments, and color screens. After 2007, due to the rise of smartphones on the market, the company’s feature phones gradually lost market, and the company’s operations slipped into the slump. After half a year of negotiations, on October 27, 2011, two-parent companies, Sony and Ericsson, reached an agreement. Sony paid Ericsson 1.50 billion euros ($1.47 billion). The former bought Sony Ericsson from Ericsson. On October 27, 2011, Sony announced that it will acquire 50% of Sony Ericsson’s shares held by Ericsson for 1.05 billion euros. Sony Ericsson becomes a wholly-owned subsidiary of Sony. The transaction was completed in February 2012 and Sony Ericsson was renamed Sony Mobile.

The word ‘Sony Ericsson’ has ceased to exist. The original 50% of Sony Ericsson shares in the past 10 years have also officially returned to Sony. The mobile phone series product was named ‘Sony Mobile’, and the mobile phone logo produced in the future was also changed to ‘SONY’. On February 15, 2012, the Sony mobile communication subsidiary was established, and Sony Ericsson was officially out of the market. After Ericsson exited the mobile terminal business, it focused on 2G, 3G, and 4G mobile communication networks and professional services in the communications market.

New Model

The first device introduced by the Sony Ericsson brand is the T68i, which includes a color screen, a connectable camera, and an email function. The new products feature digital photography and multimedia capabilities (download, view video clips, and personal information management features). In 2003, it introduced the iconic T610, the first model to include a built-in camera. In 2005, Sony promoted its brand through K750 devices including Cyber-shot camera technology. Ericsson effectively provides hardware, and Sony can use its technology and exclusive products to help itself stand out from competitors’ manufacturers. In 2007, shipments reached an all-time high of $103 million each year. In 2008, sales fell to 96 million, Sony Ericsson has been too focused on high-end mobile phones, and was affected by failure to keep up with competitors, highlighting HTC, the Apple iPhone launched in 2007, and Google’s Android accounted for its share of sales.

A few days ago, Sony Ericsson officially said that the Ice Cream Sandwich operating system, Android 4.0 version, will start to log in to XPERIA smartphones in mid-March and late-March 2012. The world’s first V phone Xperia arc S LT18i.

Sony Ericsson released the latest performance Android 2.3.4 smart new Xperia arc S LT18i at the International Electronics Show (IFA) in Berlin, Germany. As the flagship new Xperia series, the Xperia arc S LT18i not only inherits the award-winning design of the Xperia arc LT15i but also features a high-speed processor upgraded to 1.4GHz. At the same time, it is advanced with Sony Exmor R for Mobile image sensor and 3D panoramic scanning. The outstanding performance of video technology, Xperia arc S LT18i was awarded the ‘2011-2012 European Best Camera Phone’ award by the European Video Association (EISA). Xperia arc S LT18i continues the appearance of Xperia arc LT15i won the 2011 Germany Red Dot 2011 ‘slim design, the thinnest part of the fuselage is only 8.7mm, coupled with arc, add The three colors of white, pink and black, upgrade the fashion taste; under the refined appearance, the high-speed processor upgraded to 1.4GHz speeds up the mobile phone in the startup camera mode, media and application conversion by 25%, and the web browsing growth rate is also high. 20%. In conjunction with the leading Android 2.3.4 smart operating system, the Xperia arc S LT18i will fully enhance the consumer’s mobile-connected life experience.

The Xperia arc S LT18i combines Sony’s high-end imaging technology to provide users with an optimized entertainment experience: the multi-touch Reality Display with 4.2-inch, Sony Mobile BRAVIA Engine image processing engine, perfect for beautiful images and videos; Sony xLOUD enhanced speakers, superior audio effects; 8.1-megapixel camera with HD recording and Sony Exmor R image sensor for clear shooting in low-light environments; 3D panoramic scanning for users to break space constraints, shooting Have fun in it.

Start Over

In June 2008, it launched a £756 million cost-cutting plan, and by the end of 2010, about 8,000 employees were laid off. Cutting costs has helped the company build a platform. Mobile World Congress 2011 – Return to the Black Economy – Android is a major factor. Sony launched the Xperia series, which is available from Android, including the Xperia X10, Mini Pro, Vivaz Pro, the game-centric PlayStation-certified phone Xperia Play and more Sony brands such as its camera sensor Exmor R and image processor Bravia engine. In 2011, it differentiated its market. However, after the loss of £37 million in the second quarter results report, its problems reappeared and were attributed to the impact of the earthquake in Japan, which caused four locations to close and stop production. Shipments fell by 11 million to 7.6 million year-on-year.

• Nokia 24.2%
• Samsung 9.2%
• LG Electronics 6.8%
• Apple 5.6%
• ZTE 4.5%
• Sony Ericsson 2%

Many of their production centers and research and development centers around the world. Closed, they had to cut off about 3,000 employees. Sony decided to acquire Ericsson’s shares at Sony Ericsson’s price as a subsidiary of Sony Electronics. Therefore, Sony Ericsson became Sony Mobile Communications.

Foreign exchange

Sony’s electronic business, R&D, and headquarters management fees are mainly calculated in Japanese yen, and manufacturing costs (including material costs, parts procurement costs, and outsourcing manufacturing service costs) are mainly from the US dollar and the Japanese yen. Derivatives, foreign exchange forward contracts, foreign currency option contracts are used to mitigate the effects of fluctuations in foreign currency exchange rates and expected cash flows from intercompany transactions. London’s Sony Global Treasury Services (‘SGTS’) hedges the net foreign exchange exposure of Sony and its subsidiaries.

The SGTS typically forecasts an expected risk exposure for the three months prior to the actual transaction. However, in some cases, SGTS will partially hedge the expected risk exposure one month before the actual transaction occurs when certain products are produced with a shortened production-sales cycle. Sony’s foreign exchange transactions with third-party financial institutions are mainly for hedging purposes. Minimize the adverse effects of foreign exchange fluctuations on their financial performance, especially in the electronics sector. Sony seeks to localize materials and parts procurement, design, and manufacturing operations outside of Japan. Changes in fair value of derivatives designated as cash flow hedges (including foreign exchange forward contracts and foreign currency option contracts) are initially recorded in accumulated other comprehensive income and reclassified as profit when the hedged trade affects revenue.

It shows the electronic manufacturing facilities at Sony all over the world.

Drawbacks

Sony does not offer premium phones like other competitors in the mobile phone manufacturing industry. Their research and development is very slow. If your R&D department is not up-to-date, it means that you are not providing satisfactory products to your customers. They offer innovative products, but marketing strategies are not as effective as attracting customers. They face problems because they focus on cost-cutting plans and unemployment. In June 2008, they had 12,000 employees. After the launch of this cost-cutting plan, the number of employees worldwide decreased by about 8,000.

In 2008, Sony’s quality problems were mainly concentrated on notebook products.

The motherboard of the Sony FZ35 laptop is exploding with design flaws. The complainant said that because the purchased notebook is still under warranty, Sony’s maintenance department replaced the machine or motherboard for free, but Sony denied the notebook has design flaws.

Sony’s CR series notebooks produced since January 2008 have been accused of short-lived phenomenon. This notebook series, which once occupied the ‘sales champion’ of Sony notebooks, was almost found to have problems after one week of consumer purchase.

The quality issue in 2009 involved the expansion of the product line.

First of all, there are endless TV problems. At the beginning of the year, Sony LCD rear-projection TV KF-E42A10 and other five problems TV problems, Sony took a free on-site service to upgrade the TV software for users but did not provide any compensation.

There are camera problems. On August 20th, Sony China Branch released a product announcement on its official website, stating that it will replace the DSC-W170 housing parts of the Cyber-shot digital camera sold from April 2008 for consumers. At the end of August, 315 Consumer Electronic Complaints Network received several complaints about the Sony T20 digital camera in the country, and “starting inexplicable jitter” became the complaint keyword.

Mr. Luo from Shenzhen felt deeply about the process of defending his rights caused by the purchase of the Sony FX1000E camera. ‘Sony has been suffocating and evasive to consumers. There is nothing in the communication except for the feedback. Sony’s every push Step by step is testing consumers, and the complaints ‘hiding cats’ and ‘playing Tai Chi’ also seem to be their way of handling.

The notebook problem also exploded. In the second half of 2009, Sony received 209 complaints about abnormal computer fever, including 83 in Japan and 126 outside Japan. The main reason is that computer design defects can cause computer overheating and short circuit. To this end, Japan Sony announced the recall of hundreds of thousands of VAIO TZ series notebooks on September 4, 2008. However, Sony seems to be lacking in handling complaints from Chinese users.

Dozens of Sony Sony notebook users reported that the fan built into the computer was noisy, and the computer screen showed “water ripples”, which seriously affected normal use. Although Sony (China) Co., Ltd. timely introduced measures such as extended warranty and explanation for the user’s response, the user did not recognize it. The stalemate until January 17, 2010, Sony China announced: VGN-CS1 listed in October 2008 The series, the CS2 series listed in February 2009, and some of the VAIO notebooks listed in the CS3 series listed in May 2009 may have a horizontal line on the LCD panel after a period of use. The company decided to base on the original two-year warranty period. , extended 1 year warranty period, that is, 3 years of free repair service from the user’s purchase of products. Users who have purchased the 3-year extended warranty service are not covered by this policy.

In 2010, complaints against Sony products entered a period of high incidence. Not long ago, People’s Daily Online analyzed the results of online and offline surveys of 3,000 consumers and found that Sony occupied the second place with 23% of the brand’s ownership, but at the same time, Sony’s proportion of complaints was also related to brand ownership. Just proportional. In this survey of People’s Daily Online, the focus of consumer complaints is on after-sales service. For Sony digital cameras, the problems that reflect more are: the door repair is not timely, the maintenance level is not high, and the maintenance point cannot be contacted.

In the 315 consumer rights online, Sony’s complaints in recent years have also shown a significant upward trend. From the 1st to the 15th of this month, there are 64 on the 315 Consumer Electronic Complaints website. A complaint about Sony.

On January 24, 2016, Sony announced that there is a light leakage problem with its high-end full-frame card camera RX1RII, and Sony will provide free inspection and repair services for this camera.

Conclusion

R&D is an important part of any organization, and it plays an important role in mobile phone manufacturing companies, but Sony Ericsson uses it as a cost and closed R&D department. Companies must seek to innovate and implement new marketing strategies to provide customers with a satisfying product and raise awareness. Equally important, we should also know that customers always want new and different things. Therefore, providing them with new and different mobile phone companies should always seek the best R&D tools and technologies.