Category: Sony

Defining the current strategy of Sony

Sony Corporation has been undergoing rough corporate experiences forcing it to restructure its business operations and strategies. Evidently, the organization has been through numerous challenges since 1990s despite its efforts to recover. Nonetheless, the recent reformation strategies introduced by Howard Stringer (worked as the CEO and president of the corporation) have allowed Sony to revitalize its business operations despite the constant challenges experienced by the corporation.

Firstly, the company announced a prominent reorganization strategy that was to reface its managerial systems, departmental operations, marketing structures, and production strategies (Indul 2010, p. 1). It is important to agree that the organization needed such changes hence could not hesitate to enact them in order to remain relevant in the electronics industry.

It also strived to enhance its market visibility and revitalize its global presence. The organization needed new products, new production structures, managerial reforms, a break from obsolete silo cultures, and other dominant business provisions that could augment its competitive advantages against its rivals.

The first strategy was to reduce its business categories and cut down on its product models. This was to revitalize its electronic business by putting more efforts on the most selling products while withdrawing non-performing commodities from the market as well as in its production structures. The company equally intended to proceed with profitable business categories witnessed by its move to drop some of its corporate departments.

Another evident strategy is to eliminate redundancies and overlaps noticeable in its business processes. Additionally, proper management of resources and their diversion to high performing dealings namely HD products, mobile commodities, semiconductors, appliances, and others are among the prospected strategies to help in propelling Sony to the brighter future in the realms of business (Indul 2010, p. 3). Another prospected strategy is to unite the organization by integrated all in departments together for a unified business operations.

Initially, the company operated in different departments namely electronics, entertainment services, financial services, and others. Each department operated autonomously, a phenomenon named as a silo culture. The current strategy is to break the silo culture and integrate all the business departments as indicated earlier. In fact, Stringer promoted a new slogan named Sony United in order to enhance the cross-company integration.

Operating together as a team is the main strategy of the company. This will help in the reorganization processes prospected for its various departments. Reducing the number of its employees to a reasonable percentage while closing down some of the non-performing business structures could help.

Additionally, the company opted to reduce the number of its suppliers from 2500 to 1200 in order to induce effectiveness as it only works with performers (Indul 2010, p. 1). Precisely, the intention of Sony is to enhance its performance, competitiveness, competitive advantages, market share, and revitalize its business operations.

Evaluating the strategy being adopted by Sony to regain its lost market share

Notably, a strategy considers the aspects of change. Thus, whatever Sony is currently pursuing is in conformity with its desires to change its present business models so as to gain remarkable competitiveness in the concerned industry. It is important to agree that the current Sony’s efforts to reorganize its business operation are helpful and can aid its desires to regain the lost market share.

Evidently, there is a stringent competition in the electronics industry hence forcing every organization to strategize appropriately in the realms of business.

The archaic business models can no longer help following the emergence of new market demands, technology, globalizations, and competition among other pertinent factors. It is from this consideration that the Sony’s move to reorganize its business trends is important and time bound. It is advisable for any business to restructure its business models in order to match the new market demands as indicated earlier.

This is a supportive consideration in various contexts. Evidently, Sony cannot regain its lost market share if it continues with its old business models and operational activities. The organization requires promising overhauls in all its structures ranging from management to product models as mentioned earlier.

This will help the organization to compete favorably and respond to business challenges and dynamic market demands with promptness. Additionally, using visionary leaders like Howard Stringer is important in enforcing the desired business changes. It is from strategic leadership that the company will regain its lost competitiveness and market visibility (Indul 2010, p. 8).

Although the company faces numerous challenges in this context, it is still possible that Sony can perform wonderfully in the market. This is possible through introduction of novel and competitive products, appropriate business strategies, and customer focus. Ability to enact viable marketing concepts can equally help in this context.

Critically, the moves by the company to restructure its business models are quite decisive when scrutinized critically. The business has the mandate to enact the required prospective in the realms of constructive models. Additionally, it is evident that the company is embracing the virtues of change in its systems. Change is an evitable phenomenon, which must be ratified whenever its time comes.

Another important consideration in this context is the integration of the organization’s departments in order to consolidate its operations and match the current business demands with promptness. Similarly, this is a critical move as proposed by Howard Stringer in the business context. Allowing the company to operate uniformly and share common organization’s objectives is considerably important. Actually, the Sony United slogan (introduced by Stringer) is a credible strategy worth adoption by the organization.

It will enhance teamwork and collaboration between different business sectors as the organization strives to recapture its lost market share. This objective cannot be attained solitarily hence indicating the need for consolidating the entire business components under a centralized management and business norms.

Additionally, Stringer’s vision with the company is elaborate and effective despite the recently noticed challenges (Indul 2010, p. 1). Such strategies have allowed the company to reorganize its business trends and operational mechanisms with the intent of controlling its various components.

Additionally, the ability to unite the organization helps substantially when viewed from the business context. This is an imperative provision when considered critically. It is the mandate of various organizations to understand the nature of their businesses and the vitality of other rivals so as to strategize considerably.

Appropriate business strategies are demanded in various contexts. Precisely, the move by the organization to consolidate its business components and centralize their management is important. It will enhance teamwork and other operational mandates as indicated earlier. From this context, ability centralize management and enhance competitiveness will obviously help Sony regain its lost market share.

Constructive managerial strategies will ensure that the company remains customer focused, produces commodities that address the needs of the targeted customers, and prospects future changes in the market trends. This will allow the company to remain focused in its business endeavors.

Evidently, in order to revitalize its electronics business and remain competitive within the industry, Sony must enact various business strategies as witnessed in its recent endeavors. As indicated before, these moves are intended to regain the aspects of business and other probable business considerations. It is important to reorganize various components of the organization in order to enhance its relevancy and business focus amongst other factors.

Evidently, Sony also intended to reduce its business categories and drop other product models. This was to happen with the intent of focusing more on the profitable products with the available resources. It is worthless to run numerous business categories with massive losses in return.

This has forced Sony to drop some of its archaic products and focus fully on the selling ones. This could allow the company to regain faster in the realms of market growth and other considerable components. Hence, this is a critical move when evaluated critically. It means that the company is ready to focus on the changing customer demands rather than clinging on the obsolete business models. Previously, devastating business approaches led to the plunge of Sony.

When the company launched its Bravia flat screen TV and other new entertainment and network product models, it picked up tremendously in the market (Indul 2010, p. 4). This allowed the company to recognize the importance of being customer focused rather than embracing traditional status quo while market trends are significantly changing. It is important to recognize such trends in the realms of business operations and other considerable factors in the same trends.

Additionally, the need to reduce the number of employees within the business and closedown other business premises could help in lessening unnecessary costs. This was an important strategy when evaluated critically. It is crucial to realize the importance of that move in enhancing the aspects of profitability while reducing unconstructive business costs and unworthy operational burdens. Critically, introduction of new business trends is quite important in various aspects.

It shows that the company is committed in its endeavors and plans to regain its lost market share despite the stringent competition witnessed within the industry. Sony has been known for quality products and it still mandates to provide such products to its customers. Additionally, the brand name it had initially built is considerable in various contexts.

This had promoted its business operations globally despite the rivalry it received from various firms including Samsung and LG among others. It is important to realize such business trends and strategize cautiously so as to regain the previous competitiveness in the marketplace.

The entire strategies were meant to enhance profitability for the company by reducing cost and enhancing sales. Precisely, all the efforts and strategies by Sony are considerable in regaining its lost market share. They tend to restructure the company in order to render it relevant in the current market trends.

The theory/concept that the current strategy of Sony was based on

The strategy used by Sony in its endeavor to restructure its business operations for profitability can be based on the classical strategic theory (Mazzucato 2002, P. 8). Mazzucato (2002, P. 8) indicates that there are 4 concepts/perspectives on strategy. The classical theory indicates that the concerned manager has the entire control over the business operations.

This is evident in the allocation of both internal and external resources. Additionally, the very manager can manipulate the internal structures of the firm with the intent of accomplishing desired business objectives. In this regard, the strategic efforts are guided by rationality, opportunism, and self-interest as evident in the Sony’s strategic case.

For example, it is important to agree that the current move by Sony to revitalize its operation have been steered by Howard Stringer. Stringer managed to impose his business ideas in the reform processes embraced by Sony. All his proposals to unite the company, reduce costs, and increase profitability have been embraced with precision.

It is from this argument that the company attains its witnessed reformation strategies. The ability to address exact customer demands and restructure the company to meet the dynamic market trends is of a massive consideration (Mazzucato 2002, P. 8-9). Precisely, the company embraces classical concepts in its change prospects and strives to enact it with precision.

From the history of Sony (as provided in the case), all its previous CEOs have been introducing their operation models and business strategies, a fact that supports the aspects of classical concepts/theories indicated previously.

Critically discussing the feasibility of applying Porter’s diamond model on Sony’s case

Notably, it is possible to apply the Porter’s diamond model on the Sony’s case following its viability and capability to discern the aspects of competitiveness that Sony strives to achieve. This is an important consideration in the business context and in the realms of business growth. According to Porter, a given firm’s competitiveness depends on the performance of other rival organizations in the same industry (Walker 2003, P. 177).

This is an important consideration since it also unveils why some industries are quite competitive compared to others in a similar region. The entire business prospects currently assumed by Sony conform to the principles of Porter’s diamond model when considered critically. It is important to revitalize the business operations of any given firm with respect to the business’ supremacy. Precisely, it is possible to apply the Porter’s principles in the Sony’s context with precision.

There are theories that determine how a company can become quite competitive in a given industry. Evidently, Sony has been a very competitive organization in its endeavors following the strong brand name it had established before. The quality of its products has equally contributed to this phenomenon despite the recent challenges. Applying the Potter’s model in this context can actually illuminate the entire business aspects of Sony in the realms of vitality and other considerable factors.

Potter’s ideologies are classifiable into various factors that can be applied in the assessment of a firm’s competitiveness. This is also relevant in the Sony’s case as indicated earlier. The first consideration is the demand conditions for the firm’s products or services (Potter 2010, P. 1).

Sony enjoys a massive demand for its products from clients globally. Its products are known all over the world having established a strong brand name. This has rendered the company quite competitive despite the stringent completion from LG and Samsung among other companies. Although its products have registered sluggish sales in the recent past, the company still enjoys a considerable demand for its products indicating how it is still quite competitive.

This is a considerable provision in the business contexts and global limelight (Walker 2003, P. 177). Frequently, buyers can induce a given company to introduce and embrace the aspects of new technologies in its systems, production capabilities, and products. This will allow the company to advance and enhance its competitiveness against other contenders in the same industry.

Contextually, when Sony had not introduced Bravia LCD TV sets, the market demanded them. Other companies like Samsung and LG had introduced such technologies.

When the company introduced the products, its competitiveness increased with Bravia registering massive sales globally. It is important to consider market demands and conform appropriately in order to gain the desired competitiveness and develop considerable competitive advantages. This demonstrates the possibility in establishing Porter’s diamond model on Sony’s case.

Another considerable component of the Potter’s model, which can be applied on the Sony’s context, is the factor conditions referring to human capitals, assets, infrastructures, and other vital resources that the organization possesses. Evidently, Sony has enough resources that it can utilize in the electronics industry to remain competitive and customer focused.

The ability to attain the required resources within an industry contributes considerably to the competitiveness indicated in such circumstances. This is an important provision when considered critically. Contextually, factor conditions are prominent determinants of competitiveness within a given firm. Sony has enough factor conditions that are helpful in its business endeavors as well as its prospected reforms.

Another important aspect in this context is the massive business capital that Sony possesses. The company can fund its research and development sectors in order to emerge with competitive commodities within the market. This is an important provision when considered critically especially in the business context. Actually, the aspects of resources make it possible to apply Porter’s diamond model on Sony’s case.

Concurrently, another determinant of competitiveness in this context is organization’s business strategies, its structures, and competition within the concerned industry (Potter 2010, P. 1). Contextually, Sony has formulated stringent business strategies meant to reform its operations with effectiveness. The proposed structure of the business will enhance its competitiveness in the realms of management, customer focus, ratification of technology, and profitability.

The organization strives to grasp a considerable market share despite the aspects of rivalry evident in the electronics industry. The way Sony was commenced and managed is a critical component of competitiveness discussed in this context. The initial objectives, missions, and vision of the company contribute massively to its competitiveness despite the challenges currently noticed in Sony.

According to Potter’s diamond model, another determinant applicable in the Sony’s context is the business eventualities or chance events. These are factors that the company can hardly control. Nonetheless, they can either augment a company’s competitiveness or contributes considerably to its loss.

For example, the recent global economic crisis affected numerous business with Sony included. In such a circumstance, Sony can do nothing but to adjust its business operations so as to remain competitive in the market. Additionally, the company can come with novel products at cheaper prices hence increasing its competitiveness within the market. Concurrently, supportive industries and government policies can dictate the competitiveness of a given firm (Walker 2003, P. 177).

Reference List

Indul, P. 2010, Sony corporation-Restructuring Continues, problems remain, IBS Center for Management and Research, Andhra Pradesh, India.

Mazzucato, M. 2002, Strategy for business: a reader, SAGE, London, UK.

Potter, M. 2010, What is Michael Porter’s Diamond Model?. Web.

Walker, G. 2003, Modern competitive strategy, McGraw-Hill, Massachusetts, US.

The HR and the entire management need to be updated about the financial data to help with the validity of the SWOT analysis. This is an analysis of the strengths, the weaknesses, the opportunities, and the threats faced by Sony. Sony should understand its strengths and capitalize on them to help in positioning itself better in the market and edging out its rivals. Understanding the weaknesses will also be an important factor to the success of the organization. For instance, it will be possible to know the areas that the competitors can take advantage of to outdo the company. The firm will, in turn, stay cautious and work towards improving such areas. Opportunities, on the other hand, will help the organization in increasing its profitability and chances of succeeding. Any opportunities should be taken to help the organization in its bid to remain profitable.

Threats are likely to limit the competitiveness and profitability of the organization. Therefore, understanding the threats will help the company position itself in a better way against such threats. Financial data will help the organization in guiding its activities at all times. It will play a very crucial role in carrying out a SWOT analysis. For instance, the opportunities that are identified in the SWOT analysis will only be relevant if there is the necessary back up to help the organisation capitalise on them. Sony will only be able to carry out the mergers and acquisitions it if has the financial ability. The prospective tablets can only be produced if the company has the financial ability; otherwise, the SWOT analysis will not be valid if the company is not able to support the findings with finances. Therefore, in carrying out the SWOT analysis, it is important to first take into consideration the financial data available in the company.

Executive Summary

Sony is going to start a new business in Saudi Arabia as a part of its brand expansion. However, the purpose of this paper is to discuss the background of the company, internal strengths and weaknesses, external opportunities and threats of the new projects of Sony and Michael Porter’s Five Generic Strategies and environmental situation analysis.

Introduction

Sony Corporation was formed in 1946 with center of operations in Japan and this company is the world’s largest media conglomerate, one of the biggest manufacturers of the electronics items and worldwide top 20 semiconductors leader of sales, which generates revenue by more than ¥7,214.0 billion.

Moreover, Sony uses complicated organizational structure in order to control the functions of its outlets and according to the structure, Howard Stringer is the chairperson, CEO, and head of company amongst delegate business decision-making officials of Sony, whilst Ryoji-Chubachi is the vice-chairman, Kazuo-Hirai is the administrative deputy-president, etc.

Company Background

Before starting a new telecommunication business in Saudi Arabia, it is important for Sony to focus on its current position and background to help the concerned strategy makers to designate the way in which it would be best for the company to accomplish its new business project. In order to do so, it is necessary to consider its financial position, product lines, competitive forces, as well as the performance of Sony in stock market.

It is arguable that the firm has categorized into seven major production departments, as the main manufactured items of the firm comprises auditory, video, TV, ICT devices, electrical apparatuses, and semi conductors; the following table shows the five years financial overview generated by each of the production departments of the firm for a better understanding of its financial background –

Table 1: Financial Overview of Sony Corporation

Source: Self generated from Bloomberg Businessweek (2011)

As shown in the figure below, the business has suffered awfully during the global financial crisis due to the reason that the demand fell tremendously. Although the business possesses a strong financial background as discussed above, this crisis put a great adverse impact over the company.

However, although the business started recovering from the very beginning of 2010, the recent creeping inflation, and the slight presence of recession that started from September 2011, has again caused a sudden drop on the share prices of the business, which is going below gradually –

Figure 1: Basic chart of Sony Corporation

Source: Bloomberg Businessweek (2011)

According to Bloomberg Businessweek (2011), Sony Corporation disclosed its estimated first quarter report in September 2011 and the graph below shows that the quarterly turnovers are not as impressive as it was supposed to be owing to the size and business structure of Sony as the expected quarterly revenues are $1.5 trillion, which prepared by the eight analysts.

However, these turnovers are quite lower than the last financial year by about 5.4 percent, which means that the new stroke of the recession has already started to hit the firm’s revenues once again like 2008 –

Figure 2: First quarter revenues 2012 of Sony Corporation

Source: Reuters (2011)

The Mission and Vision of Sony Corporation

Dogruer, Ferzly, and Nguyen (2001) argues that the company’s mission is to build up a broad-range of innovative-products and multimedia services that can assure consumers’ access to let them enjoy digital entertainment by making sure synergy between segments within the group; so, Sony’s aim is to create new worlds of entertainment continuously that can be present on variously assorted arenas.

According to Sony Corporation (2011), the company’s vision is to generate thrillingly new-fangled digital pursuit experiences for customers by bringing collectively forward-looking products with generation of latest contents and services; the main focus is to strengthen Sony’s much repeated electronics business and preserve market leadership in high profile areas such as TVs, digital imaging, home video equipment, and transportable audio.

Sony’s visions connect the entire firm; it aims to experience the ecstasy of progressing by applying technology for assistance of community, endorse education of science amongst people, reconstruct Japan, and to raise the country’s traditions through vibrant scientific and manufacturing actions, direct all workers in every segment along trails that escort to pioneering and exciting ways to enhance the world.

Moreover, as Sony’s new vision is to start a new business in Saudi Arabia concerning telecommunication services, it would start to focus on developing the networking of the country by expending more on the research and development department in order to bring up new technologies that Saudi Arabians have never ever experienced before.

SWOT Analysis of Sony’s New Business

Strengths

Brand Awareness: Sony’s brand image has great influence on the global customers, which always help this company to diversify product line and expand its business in new marketplace.

Employees: This Company has more than 168,200 employees who are working with team spirit to face any challenge in the competitive market and to increase loyal customer base in global market. However, the experience of the workforce would assist the management of Sony to introduce telecommunication services in Saudi Arabia.

Financial position: according to 2010 income statements, it generated consolidated-sales and operating income of ¥7,181,300m, which indicates this Company has enough financial capabilities to establish telecommunication network in Saudi Arabia; however, the subsequent table shows the financial capabilities of SONY –

Table 1: Financial information of Sony

Source: Self generated from Sony Corporation (2010)

Technology: This is one of the most important factors for Sony, as the company needs to upgrade product line and services considering market demand as well as competitors’ product range. However, the marketers of new business plan would like to capture the Saudi market by offering different value added telecommunication services and strong strategic network of vendors by developing technology; so, they would invest large amount for technological advancement to ensure the best telecommunication services.

Quality: Sony provides highest efforts on quality products and it has considered an icon for high quality products, so, the customers of global market are highly satisfied with this brand, for example, Sony television and other electronics successfully captured about 22% shares of the European market in 2009 and retail sales revenue from such electronics products were approximately £10.0 bn.

Rapid Expansion: According to the annual report 2010 of this company, Sony experienced huge success in case of global expansion because of quality, price of the products, marketing strategies, human resource plan, strong leadership, and so on. Thus, business expansion and new product developments are the key strategies of Sony that inspire the company to offer telecommunication services in the Saudi Arabia as this country provides some facilities to the foreign companies to enter this market.

Corporate Governance: the Board members of Sony maintain corporate governance system with high degree of compliance with general norms of corporate practice and pay care to the local legislation, follow Companies Act 2006 and the guidance of the recommendations of the reports and so on.

Corporate Social Responsibility: In addition, the CSR practices of the company would help the company operate its telecommunication services in KSA as it has a significant level of budgetary involvement for development of CSR^[1] policy and practice.

Customer Base: However, the strong base of loyal customers has turned as competitive advantage of the company and the existing customer base is gradually increasing, which would be core competence in Saudi market in order to develop its telecommunication services.

Weakness

Operating costs: Under the pressure of adverse economic position, the risk of high operating costs can be one of the major weak points for Sony’s new business while business expansion in the foreign country is a costly process.

Others: the external environment of the business, pricing, and availability of products and services for all sorts of customers, relatively small budget for promotional activities, and expatriates management are the weak points to operate Saudi Market.

Figure 3: SWOT Analysis of Sony

Source: Self generated from

Opportunities

Long Experience: Sony has long experience to continue its journey with remarkable footprint in the market, as this company was established in 1946 and become market leader of electronic market in EU zone.

Market leadership: At the same time, Sony is also popular to the customers of Asian Countries and it has enough financial capabilities to expand its market with new products and it has the opportunity to be the market leader within the target period; thus, it would be able to capture a significant part of market share of Saudi Telecommunication industry.

Cross-cultural centre: As a large multinational company, this company has opportunity to increase its brand awareness in Saudi market by adopting effective strategies, using capital more efficiently, and providing special facilities to the expatriates.

Demand: Telecommunication is a prospective sector of Saudi Arabia as numbers of subscribers of both local and foreign telecommunication companies are rapidly increasing here, for instance, Etihad Etisalat Company (Mobily) attracted more than 17.0 million subscribers within six months of its operation.

Easy to enter: Saudi Arabia is now member of World Tread Organization, which gives the opportunity to the multinationals to enter this market easily by applying any entry mode strategies, such as, joint venture or partnership; therefore, Sony has scope to joint venture with any renowned telecommunication company like Saudi Telecom Company (STC).

Diversification: According to the annual report 2010 of Sony Corporation, it is highly diversified company and it diversified its products both vertically and horizontally; consequently, new business project of Sony has scope to increase integrate profits within very short period.

Threats

Competitors: The existence of strong competitors in this market are one of the main threats for Sony Corporation while the competitors offer networking, internet and telecommunication services at lower price and use effective strategies considering their local culture. However, Saudi Telecom Company (STC), Arabian Internet & Communication Services, and Etihad Etisalat Company (Mobily) are the market leaders, those offer landlines, mobile phone, and internet service and so on.

Global Financial Crisis: It has huge financial risks to invest large fund in economic downturn and unstable market; therefore, the Board of Directors of Sony may not pass the investment plan, which would design to introduce telecommunication service in Saudi Arabia.

Merger: Merger with foreign companies may also subject of financial risks and it can destroy the image and originality of the product line of the parent company; therefore, it can fail to capture expected market share due to high competition and cultural gap.

Legal issues: Multinational companies are not interested to operate their business in Saudi Market due to frequent change of regulation and strict Islamic law, as it increases the costs to mitigate legal claims.

In addition, multinational companies like Coca-cola, Starbucks, and Sony Corporation pointed out that it is difficult for the company to practice their key values and corporate codes in KSA, for instance, Coca-cola experienced problem to promote products, Starbucks complained against the strict law for women and Sony ensured equal opportunities for all but here it is not possible to practice.

Porter’s Five Forces or Micro Environment Analysis of Sony

Threat of New Entrants: Threat of New Entrants is very low because of large investment required to enter telecommunication industry and it is difficult for any company to follow the rules and regulations of Saudi Arabia at initial stage. However, well-established multinational companies enter this prospective market by using several entry route strategies, such as they apply Joint Venture strategy to share competitive advantage and resources of other company;

Bargaining Power of Customers: This power is relatively high in Saudi telecommunication sector as the customers are highly concern about the price of the products along with the quality of the telecommunication service; therefore, most of the Telecommunication service providers in Saudi Arabia try to offer quality service at low price.

As a result, the switching off costs become too low to purchase the products of another company while the purchasing power of the Saudi Arabian customers are too high, therefore, the concept of customer loyalty is totally absent in the telecommunication industry of KSA. However, figure four shows Porter’s five forces

Figure 4: Porter 5 forces of Sony

Source: Self generated

Bargaining Power of Suppliers: According to the report of telecommunication service providers in Saudi Arabia, the bargaining power of the suppliers is moderately high. However, technological support providers, machinery suppliers, and other raw material suppliers are the key suppliers in the telecommunication industry; therefore, Sony needs to maintain good relationship with the suppliers by imputing flexible provisions in the agreement and clearing dues on time.

Threat of Substitutes: At present, the bargaining power of substitute products is too high in telecommunication industry, for instance, the customer can contact using e-mail service and can talk using Yahoo messengers, Google messengers, skype and so on. As a result, the importance of telephone for communication has reduced slowly, but this company can experience lose if the customers become more familiar with the services of substitute products.

Competitive Rivalry: The competition among existing companies is extremely high as market leader of Saudi Telecommunication industry was losing market share due to high competitive market and new entrants; however, the following tables show the Financial Overview of STC and Mobily to compare the position of an old and a new company in this industry.

Table 2: Financial Overview of STC

Source: Self generated from STC (2010)

Table 3: Financial Overview of Mobily

Source: self-generated from Mobily (2010)

Porter’s Generic Strategies for Sony’s New Telecommunications Business

In order to start a new telecommunication business in Saudi Arabia, it is essential for Sony Corporation to identify a suitable strategy through which it would be able to compete more aggressively in the extensive rivalry on the telecommunication sector of Saudi Arabia.

The following table shows three generic strategies introduced by Michael Porter, which would help the firm’s strategy makers to decide which one of these would suit the firm best to inaugurate the new business and bring about success at the very beginning of penetrating the market. The explanations of the generic strategies are given below to help the firm in making the decision about the choice of the initial market entry strategy-

Table 4: Porter’s Generic Strategies for New Telecommunications Business

Source: Self generated

In cost leadership, Sony will have to become the lowest cost producer in telecommunications business industry; the sources of cost advantage would vary depending on the structure of the industry in KSA; this may include pursuit of economies of scale, proprietary-technology, preferential-access to raw-materials and other factors; a low cost producer must find and exploit all sources of cost advantage.

If Sony can attain and prolong general cost leadership, then it will be an above-average player in its industry, provided it can command prices at or near the industry-average; with this strategy, the objective is to become the lowest-cost manufacturer in the industry; many (perhaps all) market fragments in the industry are supplied with the importance placed to minimize costs.

If the attained selling charge is at least alike (or close to) the average of the market, then the cheapest manufacturer would get pleasure from the best profits; however, this strategy is frequently connected with all-encompassing companies offering “standard” items with comparatively small differentiations that are absolutely satisfactory to the majority of consumers; moreover, this strategy further increases market share.

In differentiation strategy, firms try to be idiosyncratic in the market for several characteristics that have extensively appreciated by buyers; they choose features that many purchasers distinguish as noteworthy, and so exclusively position the business to meet those needs; additionally, they are rewarded for its uniqueness with a premium price; however, clear reasons to prefer the product should be present.

This strategy comprises choosing one or more principles used by buyers in a market – and then positioning the business exceptionally to meet those criteria; it is usually allied with indicting a premium price for the item habitually to mirror the superior production costs and additional value-added features provided for the consumers; differentiation more than covers the additional production costs.

Focus strategy rests on the alternative of contracted competitive scope within an industry, as the focuser selects a section or group of segments in the market and tailors its strategy to serving them to the segregation of others; the focus strategy has two alternatives – cost and differentiation focus; in cost focus firm seeks cost advantage in its target segment.

Here, a business seeks a lower cost advantage just in or on a little number of market sections; moreover, the manufactured goods would be fundamental – possibly a comparable item for consumption to the higher priced and attributed market leader, but satisfactory to adequate customers; such items for consumptions are often called “me too” items; this often exploits differences in cost-behavior.

Conversely, through differentiation focus, firms create differentiation in their intended fragment; both alternates of the focus strategy rest on dissimilarities amid a focuser’s intended fragments and other sections in the market; intended fragments should either possess purchasers with atypical needs or else production and delivery system that best serves the intended fragment should differ from that of other industry segments.

Differentiation focus exploits the special needs of buyers in certain niche segments, where a firm creates competitive advantage through demarcation within the niche or section; however, some possible troubles exist with the niche approach; for example, small, dedicated niches could depart in the long-term.

Best Fitting Strategy for Sony’s New Telecommunication Business

As discussed above, in cost leadership, producers offer goods, which are very common or similar to those of the rivals’; therefore, they try to charge lower prices to compete in the market.

Moreover, little or no distinction has noticed in the items for sale those are offered by the cost leader and its competitors. In addition, being a successful cost leader is only possible when the production costs of the items has kept substantially lower than the other players in the market; besides, it is also important for the firm to ensure that it operates in economies of scale.

It is significant to note that like most of the other products and services that Sony offers, its new telecommunications business would be differentiated as well, possessing a rage of different features that other telecommunication businesses in Saudi Arabia cannot afford with the outdated technological instruments.

In this context because of using the latest technological tools and hi- tech amenities that are specially designed by the research and development team of the company, where massive expenditures were carried out owing to facilitate innovative idea regarding ICT and telecommunications, it is quite natural for the firm that it cannot put its production costs at very lower level.

This indicates that because of very costly production process and highly differentiated services that possess a wide variety of new features which any other Saudi Arabian telecom firm may not offer so easily, cost leadership is not at a suitable generic strategy for Sony’s new business.

On the other hand, it is notable to argue that Sony always aim its products and services to mass people, and it always perceives the idea that its innovation is not for any particular group or ethnic origin, rather, for the entire humanity on the planet.

Owing to this vision of the corporation, it is usual that the new telecom business that it is commencing would not necessarily be for any niche in the market, but for all the Saudi Arabians who would love to take the opportunity from this awesome technological advancement of ICT and telecommunications.

For this rationale, the “focus” strategy will also not be the best generic tactic for this business to follow. Under this circumstance because of high production costs, extreme differentiations, and much consideration given to mass consumer base, it would be best for the company to go for differentiation strategy to start its new telecom business.

Assessment of the Differentiation Strategy in Unpredictable Environment

Differentiation strategy is not only the most suitable tactic for Sony to enter the telecom sector, but rather, a sustained differentiation would mean that under unpredictable environment, the sales of its telecom services would not get lower. Unpredictable environment may include declining demand that results from falling purchasing power of the customer and recession.

If the recent creeping-inflation throughout the globe together with the slight presence of recession that started from September 2011 may cause a massive fall of demand in the future, therefore, highly differentiated services mean, the service would turn out to be a necessity for people, where falling purchasing power would have little impact because of the “inelasticity” that it offers.

Conclusion

As discussed throughout the paper, it is prospective for Sony to start a new business in KSA. However, the decision makers should consider all sides of this investment, together with risks, weaknesses, and the strategic fits before starting the business.

Reference List

Bloomberg Businessweek (2011). Earnings & Estimates Summary – SONY CORP-SPONSORED ADR (SNE). Web.

Bloomberg Businessweek (2011). Sony Corp-Sponsored ADR (SNE: New York). Web.

Dogruer, B., Ferzly, M., & Nguyen, H. (2001). Report on Sony Corporation. Web.

Mobily (2010) Consolidated Financial Statements and Auditors’ Report for the Year Ended December 31, 2010. Web.

Reuters (2011). Sony Corp (6758.T). Web.

Sony Corporation (2010) Annual Report 2010 of Sony Corporation. Web.

Sony Corporation (2011). Company Profile. Web.

STC (2010) Consolidated Financial Statements for the Year Ended December 31, 2010. Web.

Footnotes

1. Corporate Social Responsibility

Japan has been on the receiving end of the recession with its effects dating as far back as post-World War II. On the other hand, although the yen was by then weak against the dollar, it rapidly appreciated in 2008, making it hard to operate using the currency. As a result, the export industry of Japan was affected. This situation is referred to as ‘endaka,’ and it ensures that imports remain cheaper while exports remain expensive. Japan has been hit by two strong endaka’s prior to the 2008 global financial crisis, and they have affected multinational corporations like Sony. The 2008 U.S house bubble and the Lehman Brothers bankruptcy followed by AIG’s fall affected the global economy greatly. The essay assesses the effects resulting from the contraction of both U.S and Japan economies and the effect of their respective currencies on MNC Sony.

Sony is a leading electronics manufacturer in Japan, and it relies heavily on exports. The contraction of the U.S economy resulted in the yen trading higher against the U.S dollar (Daniels, Radebaugh & Sullivan, 2011). Although this favored importers, it affected exports negatively. For example, exporting Sony products to the U.S market would lead to low sales revenue compared to the cost of production. When the yen was high, the export market became polarized because the export market could not be expanded. With a strong Yen against the dollar, the products produced had a high-cost value which would not be met at the international market. Production was affected by the contracting economies and volatile currencies. Since Sony converts all its overall financial statements into Japanese yen, the subsidiaries’ results would affect the consolidated financial statements. As a result, the financial statements of Sony were hurt. Also, the contraction affected the purchasing power of its customers hence reducing the sales revenues from the international market.

With a strong yen against the dollar, Sony faced a huge challenge from its competitors in Asia (Daniels et al., 2011). For example, it became increasingly impossible to compete with competitors from other Asian countries like the Korea-based Samsung. When the yen went high, and the Korean won low, Sony found it hard to compete as it would not meet the competitive price set at the international market. As a result, Sony has been forced to move its manufacturing plants from Japan to other Asian countries with a low currency exchange rate (Daniels et al., 2011). Offshore production would ensure that Sony reduces its operational and manufacturing costs. The currencies of these nations are better off as they would assist the organization to balance its dollar expenses and dollar revenues. The strong yen has affected the profit margin of Sony during the recession period. As a result, the earnings and net assets of Sony were low, given the rate of the dollar (Daniels et al., 2011). Subsequently, the company experienced a dry season as it was unable to sustain its production and workers fully.

On the other hand, a weak yen against the dollar would be safe to carry on business transactions. For an exporter like Sony, it would be possible to compete with other companies at the international level. The company would not worry about the production costs as the revenue generated and converted to the strong dollar would balance the consolidated financial statements from different subsidiaries. Also, with a strong yen, Sony would increase Japan’s suppliers’ orders as the Japanese economy would be enhanced. More importantly, the Japanese economy would be revived hence increasing the purchasing power of domestic consumers. The company would experience an increase in both the New York and the Japanese stock markets where it is listed and traded. Generally, operating under a weak yen also enables multinational corporations like Sony to expand their export base (Daniels et al. 2011). Lastly, from a cash flow point of view, when the yen is weak against the dollar, the dividends remittances from abroad would be valuable as the euro or dollars would be strong against the yen.

The polarity and volatility of the currency markets leading to instability is a bad signal for multinationals like Sony. Based on the case study, Sony is encouraged to invest more in offshore manufacturing in countries like the United States and Europe (Daniels et al., 2011). From an economic and financial perspective, all the financial transactions of Sony are translated from Euros and dollars to yen. This implies that if Sony has production plants in Europe and the U.S, where the market is high, Sony will gain from the international markets. Furthermore, Sony invoices its exports using the U.S dollars or Euros hence the need to match the dollar/Euro expenses with the dollar/Euro revenues (Daniels et al., 2011). By doing so, the financial statements of Sony would record a positive figure compared to when it had its manufacturing plants in Japan. Products manufactured in the U.S and Europe would be exported to Japan and other nations and still compete as the dollar would be used in the transactions. Balancing dollar expenses with dollar revenues and later converting them to yen would be more reliable than vice versa.

Japan stock exchange is ranked second in Asia after China implying that its currency is commonly used for currency exchange transactions. Therefore, getting suppliers from other Asian countries like Taiwan would be cheaper to purchase raw materials (Daniels et al., 2011). Consequently, Sony would safely invoice the purchase made in dollars, which is much cheaper. The cost of production would be low compared to having suppliers from Japan which has been struggling to stabilize its currency. The currency of other Asian nations such as the Chinese Yuen, which is also fixed against the dollar, was not affected by the recession. This implies that it would be much cheaper to outsource China’s supplies and cut its costs of production.

The global demand structure in which Japan depends on was affected much by the 2007 financial shock waves in the United States. The crisis was marred by a lot of speculation, and this saw many consumers abandoning high-end products that had by now become very expensive, in favor of the more affordable goods (Fukao & Yuan, 2010). This ended hurting Japan’s export industry hence affecting the yen.

Before the crisis, the yen in 2007 was about 106% higher, which caused a lag in the export market (Fukao & Yuan, 2009). The financial crisis started in the U.S in 2007 in the housing sector, followed by the collapse of Lehman Brothers. During this period, the U.S stock market started to collapse, which meant that other currencies like the yen were affected. As a result, of the shockwaves and the speculative nature of the markets, the yen was affected negatively, and it started to appreciate against the dollar.

Obstfeld (2009) notes that Japan’s economy has been bad since the bubble economy of the 1980s, and the yen has never been stable since then. The author adds that some financial observers note that the monetary policy is the one that needs to be blamed for late responses. This can be supported by Daniels et al. (2011), who notes that Japan has been on recession since the 1980s on several occasion. Recession causes inflation, which affects the currency stability and exchange rate. This can be reflected in the 1990s when both U.S and Japan were struggling with inflation, which threatened their currencies. For instance, in 2003, the yen was becoming stronger as the dollar weakened resulting from financial issues in both Japan and U.S. Other market forces which affected the yen before the 2008 financial crisis include disagreements among the G8 Members, high Japanese interest rates which decreased the borrowing levels hence affecting money supply in the economy.

The greatest effect on the Japanese yen since the global financial crisis in the last quarter of 2008 has been the financial recovery in the U.S. With the U.S dollar appreciating, the yen has been weakening, which is good for exporters in Japan. The Japanese yen would be more valuable in the future if proper monetary policies, regulatory policies, and measures are put into place to reduce the debts the country has as for now. With Japan’s exports increasing and the country recovering from the recession (Hays, 2011), the yen is expected to stabilize.

Reference List

Daniels, J., Radebaugh, L, & Sullivan, D. (2011). International business: environments and operations (13th ed.). Upper Saddle River, NJ: Pearson Prentice Hall.

Fukao, K., & Yuan, T., (2009). Why is Japan so heavily affected by the global economic crisis? An analysis based on the Asian international input-output tables. Web.

Hays, J. (2011). Japan, the global economic crisis in 2008 and afterwards: hard times, stimulus and slight recovery. Web.

Obstfeld, M. (2009). Time of Troubles: The Yen and Japan’s Economy, 1985-2008. University of California, Berkley. Web.

Introduction

Strategy formulation and management are some of the critical aspects that companies rely on to succeed in achieving their business objectives. The business context is highly dynamic for any firm, thereby requiring appropriate planning and implementation of measures to steer the firm steadily towards its goals. Factors such as government policies and regulations, recessionary pressures, technological changes, and social characteristics of the market lie outside the control of a firm’s management. Therefore, it requires a highly effective strategy to counter the negative pressures. This paper analyzes the competitive strategies adopted by Sony Corporation and Nintendo Consumer Electronics Company, using the Porter’s competitive advantages and the Blue Ocean strategy respectively.

Sony Entertainment Inc.

Sony is a multinational manufacturer of a wide range of electronics, which include televisions, gaming consoles, music systems, DVDs, among a variety of other commodities. The firm is headquartered in Tokyo, Japan, but it has established offices across its global market. Sony ranks amongst the biggest household names in terms of its heritage that has been built during its long period of operations. The Sony Online Entertainment (SOE) is the firm’s division concerned with the development and publication of video games. Among the most common games produced include EverQuest, PlanetSide, and the Star Wars Galaxies, among many others.

Nintendo Company Ltd

Nintendo is an established manufacturer of electronics devices and digital content with a global market reach. The firm is the largest globally in terms of the manufacture and sale of video games. The firm has manufactured several generations of the home console since the 1980s, beginning with the Nintendo Entertainment System, the Super Nintendo Entertainment System released in the early 1990s, and the Nintendo 64 that was released in the mid 1990’s. The Game Cube and Wii were released in 2001 and 2006 respectively, incorporating new technological features such as optical discs and the Wii Remote controller. Presently, Nintendo’s latest generation of home console is the Wii U, which was announced in 2012. It supports high-definition graphics and features an in-built touchscreen capability.

Five-Force Analysis of the Entertainment Industry

New Entry Threats

New entrants into the digital entertainment content are faced with significantly high industry barriers that make it difficult for them to venture easily. An initial significant investment in the form of high capital outlay is required for an aspiring entrant to set base successfully. Part of this investment is needed for acquiring skilled workers and building critical techniques to enhance business continuity. Additionally, brand identity is useful to enable the new players to compete with other established players in the industry, such as Sony and Nintendo.

Buyers’ bargaining power

Buyers in the industry have a low bargaining power because of a combination of several aspects. Firstly, the switching cost is significantly higher because entertainment firms like Nintendo and Sony have established customer-locking mechanisms (Wada, 2011). These include the lack of compatibility between the accessories from different manufacturers and the games sold. Additionally, different customers have their own personal preferences that make them choose one company over the other.

Suppliers’ bargaining power

The bargaining power of suppliers is moderate in the industry. The entertainment companies, including Sony and Nintendo, have established strong relationships with their suppliers and other third party firms developing hardware and software for them. In essence, the suppliers are keen on sustaining long-term relations with the buying firms; thus, they set up friendly terms of doing business. Additionally, the buyer firms have succeeded to establish elaborate global supply networks that lower the bargaining power of their suppliers significantly. The entertainment firms, moreover, have been in business for long and have established huge capacities to integrate backwards in some instances, which further curtail the bargaining power of the suppliers (Wada, 2011).

Substitution threats

The threat of substitute products is equally moderate in the industry. The entertainment industry is considered as a maturing market, given that highly established firms, such as Sony and Nintendo, dominate it. However, personal computers and other mobile devices, such as smartphones and electronic tablets, also integrate games and other entertainment content that could act as substitutes to the other entertainment content offered by Nintendo and Sony. Additionally, consumers can also consider other forms of entertainment, such as participating in outdoor activities, without necessarily seeking an interaction with digital entertainment content.

Industry rivalry

Rivalry is high within the industry, especially because of the huge capacities of the individual players like Sony and Nintendo. As Wada (2011) points out, these firms have significant resources that they use for their research and development (R&D) activities to ensure high quality products and services.

Competitive Strategies

Sony

Current competitive strategy

Sony adopts a differentiation kind of competitive strategy, which is characteristic of its unique kind of products, such as its multiplayer online games released to the market since 1994. Given the industry’s high rivalry involving other well-established firms, such as Nintendo and Microsoft, Sony’s decision to adopt the differentiation strategy is meant to ensure that its video games provide consumers with a unique interactive experience that can hardly be acquired from other manufacturers (Rysman, 2009).

Actions by Sony to improve current competitive position

Sony sets aside a significant budget of its financial resources, purposely to strengthen and improve its current competitive position. The research and development (R&D) function of the firm receives the biggest budget allocation annually to ensure that extensive research is conducted. This has improved the firm’s capability to deliver both products and services that are of higher quality in the market. Additionally, Sony conducts comprehensive sales and marketing programs to raise awareness in the market so that more buyers can understand its products and acquire them to increase revenues.

Likely strategy shifts

Sony is likely to shift from its current differentiation strategy to adopt the focus strategy, given the high rivalry in the video gaming market that is considered matured. With a focus strategy, the firm will only concentrate on an exact niche market to understand its underlying dynamics and, accordingly, develop well-specified products to capture it fully (Rysman, 2009). This will be significant in helping Sony to improve on its current brand loyalty performance and dissuade other competitors from venturing into the niche market. In pursuing the focus strategy, Sony is more likely to consider the differentiation focus, as opposed to the cost focus, because of the high R&D expenses that are characteristic of the industry presently.

Weakness of the company

Sony’s video game is not the most sought after in the industry, compared to Nintendo’s game console that records the highest performance in terms of sales. This means that Sony does not acquire significant revenues from the industry, owing to the fact that its video games are not popular. With the market for video games being mature, this is a big threat to the firm as it may lose its current customers to rivals such as Nintendo.

Competitive move that will provoke the greatest and most effective retaliation

Sony should consider introducing customer-locking strategies that will play a significant role in enhancing its competitive stance in the market. It should equally focus on releasing a new generation of video games with unique, highly interactive features that will increase the market demand for its products (Rysman, 2009).

Recommendations on the current strategy of the company

I would recommend Sony to consider shifting its current differentiation strategy and adopting a focus differentiation strategy. The video game market is becoming saturated, thus a differentiation strategy is not adequate to enhance Sony’s competitive performance because all the competitors are working on unique product ideas to compete with each other. A focused differentiation strategy, however, will ensure that Sony only targets a smaller fraction of the market and presents highly effective products and services that no other industry player will manage to emulate.

Nintendo

Current competitive strategy

Nintendo pursues a differentiation and low cost strategies within the video game industry. The strategies have helped it to break the value-cost trade-off significantly (Hollensen, 2013). While producing unique video games in the market, Nintendo has succeeded to eliminate the threat of high cost products in the market that would discourage consumers from buying. Instead, the firm has continued to attract high market demand because of the unique nature of its video games.

Actions by Nintendo to improve current competitive position

Nintendo has focused on ensuring that all its products fulfill exceptional buyer utility within affordable limits. The firm concentrates on tackling possible hurdles of its product idea in advance by conducting wide range research that has resulted in highly interactive and effective video games. The pricing strategy adopted at Nintendo equally ensures that the firm is able to attain its cost target compared to profits.

Likely strategy shifts

Nintendo could more likely maintain its enhancement efforts on the brand power and sustain the current sales power, which is the highest in the video game industry. Additionally, the firm is likely to continue with the production and release of new game consoles with highly improved functionality and interaction. The company’s market focus is equally likely to target the entire globe, as a way of ensuring that its game consoles remain as the most popular in the market (Hollensen, 2013).

Nintendo’s weakness

The greatest weakness of Nintendo is its production of multiple game accessories that are incompatible with each other. While other manufacturers have focused on producing new games and new accessories that are compatible with the older hardware and software, Nintendo’s advanced games do not comply with the old hardware and software. It means that customers are required to buy a whole setup of hardware and software to interact with new games. This could result in customers buying other games manufactured by the rival firms, such as Microsoft and Sony.

Competitive moves that will provoke the greatest and most effective retaliation

The video game industry is characterized by high rivalry amongst the well-established industry players. This has resulted in a saturated market, whose profitability is likely to remain less lucrative. Nintendo should consider forming partnerships with other third party industry players, such as software and hardware developers, to enhance the creativity performance. An effort to form partnerships with other industry players, particularly suppliers and consultants, will result in combined technology that will make Nintendo video games highly efficient in a highly competitive market. This, combined with high research and development, will boost the competitive stance of the firm’s products and ensure that it retains higher sales (Hollensen, 2013).

Recommendation for continuation or modification of Nintendo’s current strategy

Nintendo should consider continuing with its current strategy to ensure it retains its competitive performance and market leadership. The current strategy performance is focused on producing unique products with higher functionality and interactivity. This has helped in raising huge revenues for the firm through higher sales performance. Additionally, Nintendo has perfected its global marketing efforts that have seen it achieve greater market awareness results on a worldwide scale.

Conclusion

The video game industry is characterized by intensive rivalry among the leading manufacturers, who are well established. The suppliers have moderate bargaining power owing to the manufacturers’ ability to integrate backwards, as well as their extensive distribution networks that cover the whole world. Both Nintendo and Sony pursue the differentiation strategy for their respective video game products to provide unique products to their consumers. However, Sony’s greatest weakness is the diminishing brand popularity that has seen it fail to match Nintendo’s industry lead in terms of sales performance. On the other hand, Nintendo’s continued release of new games and accessories that are incompatible with previous releases serves as its greatest weakness in the market. This could influence a mass exodus of its consumers to other video games manufactured by the rival companies.

References

Hollensen, S. (2013). The blue ocean that disappeared – the case of Nintendo Wii. The Journal of Business Strategy, 34(5), 25-35.

Rysman, M. (2009). The economics of two-sided markets. The Journal of Economic Perspectives, 23(3), 125-143.

Wada, T. (2011). Exploitation reduces novelty: An empirical analysis of the Japanese video game industry. Annals of Business Administrative Science, 10, 1-12.

Define the current strategy of Sony

To remain competitive and confront emerging challenges from its rivals, Sony Corporation has adopted a restructuring strategy resulting in organizational culture change, cost-cutting, and streamlining of operational processes.

Sony’s restructuring strategies were a big boost in cost reduction at the firm. The streamlining of the business categories, product models, and overlapping initiatives produced a more cost-effective company. The dismantling of the silo culture contributed to a more compact and centralized command center for the firm. Such a centralized system with the right people at the helm was critical in turning Sony’s fortunes around.

Sony Corporation also embraced organizational culture change as a strategy in several ways. Sony infused young blood at the management levels at the expense of the traditional Japanese set up creating a more robust, dynamic, and versatile firm. Sony Corporation also did away with the culture of retaining retired staff as advisors. The firm dismantled the ‘stand-alone’ or silo culture among various departments. The dismantling of such silos to introduce a more compact organization was aptly captured by the slogan ‘Sony United’. Howard Stringer marketed the concept to produce more coordinated cooperation between various departments.

In a nutshell, Sony’s strategies are geared towards greater product innovation, cost-cutting measures, and streamlining of operational processes.

Evaluate the strategy being adopted by Sony to regain lost market share. About the material presented in the book Strategy for Business, which theory/concept that the current strategy of Sony was based on. You need to critically justify your argument

Sony adopted transformative leadership, joint ventures, cost-cutting measures, innovation, consumer focus, and consolidation strategies to regain its market share.

Transformative leadership

The appointment of Howard Stringer, a non-Japanese, as Sony Corporation’s Chief Executive Officer (CEO) marked a significant leadership change at the firm. Howard Stringer was a high achiever. For example, while serving at the CBS Company where he started his journalism career, Howard Stringer helped the company win several accolades (Sony 2012, p.1). Before assuming the post of Sony’s CEO, Howard Stringer had served as the Chief Operating Officer (COO), President, Chief Executive Officer (CEO), and Chairman of Sony Corporation of America (Sony 2012, p.1).

Howard Stringer initiated several radical restructuring measures that helped the company regain its footing in the electronics business. He reduced Sony’s business categories, consolidated product portfolio, and dismantled redundant business processes. He introduced the ‘Sony United’ concept aimed at dismantling the silo culture that was highly prevalent in the company. This enabled the company to work in a team environment with better consultations between departments. Finally, the company reoriented its focus on “…high growth business like HD products, mobile products, semiconductor/key component devices, and network-enabled products and appliances” (IBSCMR 2010, p.1).

Howard’s efforts paid off in Sony’s desire to recapture its lost market share. The ‘Sony United’ culture bore fruits through shared services between various departments in the United States enabling Sony to save over $700 million in the 2004 financial year (Sony 2012, p.1). In the same year, Sony’s entertainment business had a 200% increase in profits from operational activities.

Innovation and consumer focus

Innovation and consumer focus is another strategy that Sony is using to regain its lost market share. In the context of Innovation and consumer focus, Sony has realized the need to reorient its innovation towards products that the consumers needed and were willing to pay for them. During the various restructures under Howard Stringer’s watch, several non-core operations were shut down.

Reorganization of reporting and production lines

The reorganization of the reporting and production lines has been critical in revitalizing Sony and returning it to profitability. One of Howard Stringer’s immediate actions on assuming leadership of the firm in 2005 was the reorganization of the company’s reporting and production lines. The company was ‘…reorganized into five business groups-the electronics business, the games business group, the entertainment business group, the personal solutions business group, and the Sony financial holdings group’ (IBSCMR 2010,p.5). This reorganization was meant to produce a more efficient company with better coordination between departments. The reorganization would also result in cost-cutting leading to a more competitive firm.

The various restructuring also led to the reorganization of the command center at Sony’s corporation. Howard Stringer in addition to his role as the Chief Executive Officer of Sony assumed the roles of the president of the firm. In this context, Howard Stringer assumed far much greater powers than his predecessors had enjoyed in similar roles. This reorganization created a more centralized command center at Sony that gave Howard Stringer far much leeway to implement the necessary changes.

Mergers and joint ventures

Sony Corporation has entered into major mergers and joint ventures with different companies that have continued to cement the firm’s position in the market. Sony Corporation acquired BMG and MGM studios. These acquisitions further solidified Sony’s position in the market. For example, Sony was able to successfully lobby the industry’s support for the Blu-ray technology. On the other hand, Sony’s acquisition of MGM enabled it to successfully produce some box office hits in the movie industry. These acquisitions enabled Sony to achieve vital control over content production and distribution. This control further solidified Sony’s market control in the electronics industry. This was because the company able to have a greater say in the technology used in content development.

Critically, discuss the feasibility of applying Porter’s diamond model on the Sony case

Porter’s diamond model was proposed by Michael Porter in 1990 as an alternative to Smith’s Absolute Advantage Theory and Ricardo’s Comparative Advantage Theory (Barragan1996, p.10). These theories focused on the competitiveness of a nation and to a larger extent to the competitiveness of the industries within those nations. However, the determinants of competitiveness have changed over the centuries to new dynamics in the modern-day. Such dynamics included globalization and technological development amongst others. These changes in determinants of competitiveness have necessitated changes in models and theories of competitiveness.

Porter’s diamond model consists of four critical determinants of a company’s competitiveness including factor conditions, demand conditions, and the firm’s strategy, structure, and rivalry. The last Porter’s diamond model critical factor is related and supporting industries. This paper will examine Sony’s competitiveness with a view of determining whether it fitted into Porter’s diamond model.

Factor conditions

Factor conditions can simply be defined as specific factors in a country that the companies in those particular countries competitively exploit. This exploitation can also propel companies to international competitiveness. In the context of Sony, this paper will examine the specific factors in Japan that Sony has exploited over the years to propagate itself to a market force to reckon with.

The Japanese culture is notably known for placing value on family ties and bonds in contrast to the individualisms exhibited in Western culture. This Japanese culture is evident at Sony and significantly contributed to its product innovation in the company’s formative years. For example, Sony Corporation retained its retired personnel as advisors to the company. This personnel often had insights and experience in Sony’s operations thus making them a valuable source of knowledge. Most of these staff had worked during Sony’s glory days in the 80s and 90s amongst other eras and had strong loyalty to the company. It is this Japanese culture of the younger staff running the company on guidance from their seniors and experienced predecessors that has helped Sony stay at the very top.

The Japanese are also particularly noted for their patience and hard work. This Japanese culture is exhibited in Sony’s production processes in which the company invested time to produce superior products. One such example includes “…Sony’s 13-year program to introduce charge-coupled (CCD) image pickup components for the camcorder” (World Technology Evaluation Center 2012, p.1)

Demand Conditions

Companies venturing into export business may have different consumer experiences in those foreign markets. Sometimes companies may find their home markets more aggressive, quality-conscious, and price-conscious amongst other variables than the foreign markets. In such contexts, the company is forced to produce quality products or services at a far much faster pace at home than if the reserve was true.

Historically, Japan as a country has established a niche in the electronics manufacturing industry. The country has specialized in electronics manufacturing and has created a strong brand in the industry. The Japanese population is used for high-quality electronics items. In this context, the home market provides a tougher market than foreign markets. Sony together with other electronics companies has exploited the tough home market as their test ground for their export business products. In this context, Sony developed some of the world’s most innovative products including the Walkman, Compact Disc player, Play Station, and Camcorder amongst others. These innovations fuelled by a demanding home market gave Sony Corporation the magical touch it needed to succeed.

Firm’s strategy, structure, and rivalry

Sony’s strategy of innovation and its management structure has enabled the company to stay at the very top of the industry at least in the 1980s and 90s. IBSCMR (2010) noted that “…Sony focused on product innovation and on offering high-quality products” (p.2). IBSCMR (2010) further noted that “….Sony’s products were always innovative…and the company firmly believed that there was a huge demand for such products and did not attach much importance to market research” (p.5).

Sony’s attitude ensured that the company made quality and innovative products that were trendsetters in the company’s heydays. These products to a larger extent solidified Sony’s brand in the minds of consumers. Such strong brand awareness gave Sony a competitive edge over its competitors in a global context. Sony’s consistency in its product innovation is thus a competitive advantage that it has exploited over the years.

Related and supporting industries

While Sony’s core business has been in the electronics business, it has over the years expanded to content provision. This expansion to content provision has been with the view of further solidifying its market position in the electronics business. Early in its history, Sony realized that content providers played a critical role in the technology used in the electronics industry. For example, in 1975 Sony’s Betamax video cassette technology failed to take off due to content providers’ preference for a competing technology.

It is critical to note that at the time Sony intended to manufacture a wide range of products based on the technology. However, Hollywood studios preferred VHS technology by a different firm that won the market.

Sony’s entry into content provision through Sony music and later several acquisitions in the content provision segment was critical to its business. Such acquisitions include the acquisitions of MGM and BGM studios that enabled it to win the Blu-ray CD and DVD technology format. Through the acquisition of the two firms, Sony was in control of powerful content production and distribution channels. For example, Sony was able to produce international box hit movies the Casino Royale and the Quantum of Solace. In this context, Sony was able to dictate the technological format used in the compact discs. Such victories enabled Sony to produce a wide range of products built on the Blu-ray technology.

Conclusion

It is imperative to note that Porter’s diamond model applies to Sony’s case. This inference is informed by the firm’s applicability of the four benchmarks of the model to its operations over time and in various stages of its growth.

Summaries one of the chapters that were presented by the groups in the class. Remember, the chapter has to be OTHER than the one presented by your group

Summary of Strategy Chapter 7: The firm as an administrative organization by T. Penrose.

Penrose discusses the competitive advantage of a firm based on the resources at its disposal and the interaction between the resources. Physical and human resources do give firms competitive advantages subject to several conditions. For the resources to offer a competitive edge to the firm they must be unique to the firm. The resources can be unique in several ways. Resources that are difficult to substitute ensure that rival firms cannot produce alternative resources to fulfill the particular need. Resources that are difficult to imitate or replicate also do offer competitive advantages to a firm.

Penrose argues that even in contexts where firms have similar resources, the administration and utilization of the resources can give a firm a competitive edge over another. In this context, the competitive edge is exploited through prudent utilization of the available resources. However, this prudent utilization is subject to their manager’s perceptions of the advantages and challenges of utilizing the resources. The manager’s perception within the context of the market competitors, potential clients, and the market environment in general influences his administration of the resources. This administration eventually determines a firm’s growth or lack of growth.

The chapter goes to great lengths to define growth in a bid to bring out implicit dynamics in the meaning of the word. Penrose argues that the common day to day usage of the term implies an increase in amount. However, Penrose also perceives the term as an improvement in quality or size due to certain contributing factors. In this case, growth is seen as a normal and expected process.

The growth of the economy in a given country relies on the different firms as the building blocks of such an economy. In this context, any economic analysis of a country must use the firm as the building blocks of such an analysis. One of the theories that can be used in this regard includes the theory of the firm. The theory discusses the different utilizations of prices and resources to undertake an economic analysis. Economic analysis must also consider the growth or the size of the firms that it uses as its building blocks for the analysis.

References

Barragan, S 1996, Assessing the power of Porter’s diamond model in the automobile industry in Mexico after ten years of NAFTA. Web.

IBS Center for Management Research, 2010, Sony Corporation Restructuring Continues, Problems Remain.

Sony, 2012, Sony Corporation of America. Web.

World Technology Evaluation Center, 2012, Japan’s technology development strategy. Web.

Introduction

As indicated in the marketing plan, Sony Corporation plans to diversify its operations to emerging markets in developing countries such as Brazil. The company has established a new market niche that is comprised of middle aged people that can purchase its music system. The market is large and is characterized by other competitors such as Samsung and LG. In addition, the market is characterized by free entry and exit of firms. In order to maximize on its market niche in Brazil, Sony Corporation should market its music system to its new market. For effective marketing, the firm needs to set aside a large sum of funds that will be used for different marketing functions (Kitchen & De Pelsmacker, 2004). The proposed budget for the marketing department for Sony is indicated in the table below.

Marketing budget estimates for Sony Corporation

Discussion

From the above table, it is clear that marketing of the music system of Sony will cost the corporation a good amount of money at least for the first quarter of its foreign venture. The allocation of the funds as seen will be on different cost items.

First, the firm needs to increase awareness of its music system to online customers. Technology has advanced and many people are increasingly doing business online. The ability of Sony to establish a website is significant because it will enable the firm to tap revenue from its online customers in the emerging market. Online customers may not come from Brazil alone, but other countries as well. A website should be accompanied by a blog on which the music system will be described by the firm while allowing customers to post their feedback on different company features. The cost of website tracking must be incurred because it helps the firm establish the level of customers’ traffic to the website of the company. In addition, out of the total number of visits to the website, tracking will determine the sales conversion. Lastly, online campaigns can be effectively carried on the company’s website besides marketing the music system on other websites such as social sites (Schenk, 2012).

Sony will have to incur more costs on SMS where by the firm will be sending potential customers SMSs to convey information on the promotion of music system. Print magazines are a significant way of marketing the firm’s music system. The magazines can be sold at a low price to allow as many potential buyers as possible to access them. Magazines on Sony’s music system are also related to the catalogue of the company’s products. However, the catalogue is more detailed as it indicates all products of the firm and their prices.

Road shows are other ways that Sony can market its music system. This is one of the items in marketing that consumes much money as it involves moving from one region to another while publicizing the music system of Sony. Last is the sales team that has to be trained on marketing strategies to be applied in marketing the music system of Sony. The team will have to be paid especially at the beginning and at the end of the training. Marketing is a continuous process and it has to continue even when the firm has gained a dominant position. However, the budget for marketing can only be for the first quarter of the financial year that begins from March to May. The road shows and online campaigns are the activities that will consume much of the marketing funds.

References

Kitchen, P. & De Pelsmacker, P. (2004). Integrated marketing communications: A primer. London, Routledge.

Schenk, B. (2012). Small Business Marketing Kit for Dummies. (3 ed.). Hoboken, NJ: John Wiley & Sons.

The background of this issue is that Sony Pictures encountered difficulties when releasing their “The Interview,” featuring stories of several North Korean officials. A hacker group, “Guardians of Peace,” stole terabytes of information, including the company’s unreleased products and the personal information of their employees. The issues discussed in this case are economic and legal difficulties, which Sony Pictures encountered as a result of threats and hacking. The main problem was the threat that an attack might happen if the movie is released, which prompted cinema theatres to cancel the screenings of this film. Sony had to find an appropriate way to respond to these threats to avoid legal troubles. Moreover, the breach of data security that results in a risk of losing money since the unreleased movies can be leaked by hackers.

For the analysis, the generic strategies framework will be used to examine the issues and solutions. Sony’s CEO would have to evaluate the risk of releasing the film without changes and compare the outcomes that this move would have in regards to the company’s reputation with the overall strategic vision. According to this strategy, there are three main elements of a business strategy – cost, differentiation, and scope. Arguably, Sony Pictures developed a unique product, a film that would gain public attention because of its controversial nature. Focus on costs requires minimization of spendings, which in the case of Sony would mean canceling the film’s screening. This is because if a potential attack would occur, the company could be held responsible for proceeding with the release despite the threats. In addition, because many theatres refused to screen this movie, and Sony would be unable to gain a profit, while still having to spend money on promoting the film and ensuring safe screenings. Sony could also lower the prices to attract more people to the film’s screening.

Next, differentiation focus means pursuing a strategy that would allow for Sony’s differentiation within the United States market. This would require persuading the cinema theatres to proceed with the release and ignoring the data breach issues. However, arguably, the CEOs of cinema theatre chains would refuse to cooperate because of the risk of undergoing an attack that can damage property and result in victims. In addition, Sony would have to invest in altering its data protection systems to mitigate the risks of breaches in the future. In general, the differentiation strategy requires Sony Pictures to focus on effectiveness by offering new products and improving efficiency. Finally, the focus strategy requires choosing a niche, and in this case, “The Interview” highlighted issues of modern-day dictatorship, which is a controversial topic.

Recommendations for the short term would include responding to the possible concerns of Sony’s clients, who wanted to see the film and were scared by the threats, by the cost focus framework. Medium-term recommendations are connected to managing damage from the data breach and assessing the possible ways of minimizing the economic impact of losing the unreleased materials. The long-term recommendations would include better data control for Sony, which would eliminate the possibility of further data breaches. Besides, the company should develop and implement a strategy for evaluating risks and responding to threats that arise as a result of releasing controversial fils for the future. This can include cooperation with the government agencies, as the case study mentioned that the FBI was involved in the investigation.

Introduction

In light of the new globalization, many companies have restructured their distribution models. In this regard, many multinational firms are increasingly embracing global supply chain systems. “Global supply chain management involves a company’s worldwide interests and suppliers rather than simply a local or national orientation” (Long, 2003). Therefore, global supply chain is likely to mitigate procurement expenses and purchasing risks.

Since global supply chain encompasses numerous nations, it mostly exhibits myriad challenges which should be handled appropriately. “A company’s real core capability lies in its ability to design and manage the supply chain in order to gain maximum advantage in a market where competitive forces are changing” (Christopher, 2011). This paper examines how Sony Corporation has been approaching its distribution systems through global supply chain.

Distribution Strategies

Sony Company has two perspectives of approaching global supply chain. The first one is about formulating effective business corporation with distributors. This process is often governed by internal guidelines of Sony and the relevant laws. “The other approach relates to production processes and involves providing the necessary support to realize global supply chain from such standpoints as the environment, human rights and labor conditions” (Long, 2003).

Specifically, Sony has extended its supply chain such that its distribution encompasses developing countries. This is meant to widen the market frontiers of Sony products. Procurement activities adopted by Sony Company are fair and transparent. They also endeavor to give equal opportunities to its competitors in the electronics industry. For instance, personal ties, aimed at personal gains cannot be forged by procurement agents dealing with Sony.

“In addition to the quality of the products it delivers to consumers, Sony also ensures appropriate standards throughout its production processes from such standpoints as the environment, human rights and labor conditions” (Sony Corporation, 2010). A suppliers’ hotline has been created to facilitate the reporting of suppliers that contradict compliance policies. The company acts promptly on such reports after they have verified them.

“With the aim of improving processes in the electronics industry supply chain, Sony, as one of the member companies, participate in the establishment of the Electronic Industry Citizenship Coalition (EICC) in 2004” (Sony Corporation, 2010). Moreover, Sony has created a policy that aims at regulating its suppliers conduct. Hence, suppliers of Sony know its expectations, which are in line with the EICC code.

Sony has encountered some constraints in its global chain distribution and they include the following. The global distribution channel of Sony has undergone significant re-modeling. The Yen has also been experiencing steady decline. This has partly impacted profitability of most Sony products.

“In consumer electronics, the company was slow to respond to the vastly popular digital music product entries from Apple, such as the iPod and iPhone” (Sony Corporation, 2010). The same trend has stretched to television products where Samsung is increasingly gaining market dominance.

These distribution challenges have been sorted through evaluating distribution systems. By doing this Sony Corporation has now adopted better strategies of supply chain and production. “The Sony brand also has enormous power within the market, something which other companies have failed to learn in wholesale slashing of supply chain costs” (Sony Corporation, 2010). By closing some plants, Sony Corporation has the chance of mitigating its overall expenditures.

Conclusion

Global supply chain is among the viable distribution channels that companies can think of embracing. However, they need to formulate sound mechanisms of dealing with potential expenses and risks that often accompany global supply chain. Sony is currently grappling with regaining it stability. “Therefore, it will be interesting to observe in the coming years, how Sony will approach its supply chain transformation challenges”. (Sony Corporation, 2010)

References

Christopher, M. (2011). Logistics and Supply Chain Management. New York: Wiley.

Long, D. (2003). International Logistics: Global Supply Chain Management . New York: Springer.

Sony Corporation. (2010, March 5). Supply Chain Management. Retrieved from Corporate Social Responbility: https://www.sony.net/

Cyert and March’s analysis of organizational decision making

Cyert and March’s analysis of organizational decision making is mainly concerned with the strategies used by business organizations to come up with economic decisions. They lay a lot of emphasis on the microeconomic factors affecting the organization in relation to the internal operations within the organizational framework.

In making these allegations, they argue that “one way of understanding modern organizational decision making is by supplementing the microeconomic study of strategic factor markets with an examination of the internal operation of the business firm – to study the effects of organizational structure and conventional practices on the development of goals, the formation of expectations and the implementation of choices” (Cyert and March, 1963 p.154). In their research, Cyert and March came up with a model with focus on the following.

First, focus is emphasized on the few key economic resolutions being made within the organization. Second there is a development of models which are mainly focused on the internal processes in the organization. Third is to ensure that there is a linkage between the models in the organization and the pragmatic observations. Fourth and last is to come up with a general presumption on the organization under review.

From this, Cyert and March were able to develop a theory that takes the organization as an independent unit. This model ensures that the prediction of the organizational behavior goes hand in hand with the decisions such as price determination, output determination and resource distribution. In order to achieve this, the model is broken down into four subsections comprising of goals, expectations, choices and control.

In order to increase revenues and subsequently profits the management of Sony managed to adopt Cyert and March’s analysis of decision making in that they were concentrating on the microeconomic factors in the organization. From the case study, Sony was a failing strategy since in a series of eight years; seven were a failure since the organization was unable to attain the forecasted profits. This failure was attributed to poor planning and occurrence of unprecedented challenges and or failure to execute the laid plan effectively.

Either way, the bottom line of the entire problem was with the management processes especially in decision making. This came at a very crucial economic time in the whole world, since most economies were undergoing a recession hence cutting down on spending. This would mean worse outcomes in the years to come and this therefore called for drastic measures to be taken in order to save the organization.

Plans to reorganize the operations of the company were announced at the beginning of 2009 and this was just one of the reorganization plans since 1994. The previous one’s had been short-lived and the management therefore anticipated for different results in this latest development. The management laid down a plan that is in line with Cyert and March’s model in the sense that they were concentrating on the economic variables such as price, competitive advantage and the cost of production and distribution.

One of the strategies that were adopted to reduce the cost of operation included reducing the range of products and business classes. This company dealt with many products in the name of diversification. The failure however proved that this was not working for the good of the company since it increased the cost of operation. The many business categories also contributed to the high operating costs which later on translated to consecutive losses.

All the business categories were amalgamated into a single business unit and the number of products reduced by eliminating those products which were already obsolete or which would become obsolete in the near future. With these changes the management had taken care of the cost of operation. They then reviewed their prices as per the market demands in order to acquire competitive advantage in relation to their competitiveness.

Brunsson’s view of organizational decision making

Brunsson’s view on decision making complements Cyert’s and March’s analysis since he insists on rational decision making. This involves putting into consideration the alternative consequences of the decisions being implemented besides the positive anticipations. These consequences include but are not limited to responsibility allocations, actions mobilizations and organizational legitimization.

In his analysis, Brunsson explains that “these consequences of decisions can influence decision making and the assumptions about feasible norms that provide their context and the result of this is that these decisions will run counter to actions leading to organizational hypocrisy” (Brunsson, 1989 p.453). He goes ahead to explain that some decisions substitute their respective actions or reduce the likelihood of the actions taking place hence leading to what he calls systematic irrationality.

This means that organizational decisions can be made, but if these decisions are not implemented effectively, then they are as good as nonexistent. This explains why the strategies in Sony worked effectively in the long run to revive the company. The decisions were made and implementation plans effected promptly. From this therefore, we can deduce that Cyert and March’s model and Brunsson’s model work hand in hand to ensure that organizational decisions are made and implemented effectively.

Zimmerman’s insights on rules and decision-making

Zimmerman’s insights on decision making revolve around decision making issues and ideas in groups are concerned. In most organizations, decisions are made by a group of people mostly referred to as the board. This in most cases is done through voting whereby the majority votes win.

Examples of such groups involved in decision making include the legislature, jury, school boards, sales teams, corporate boards and so on. These groups are very important in their respective setups since they come up with the most important decisions that affect the outcomes of very crucial events. In such cases, individual decisions play a very minimal role irrespective of how reasonable they could be.

If the decisions do not get the support of the majority of the members present, then it is considered non viable. One of the reasons as to why group decision making is considered to be more viable is because decisions made therein are a representative of opinions from more than one person. The adage that goes two is better than one is given a firsthand in this kind of decision making since one person can make a mistake, but in a group there has to be at least some people or person who will notice this mistake and highlight it.

Sequential straw polling is one of the methods mostly adopted in group decision making. This is defined as “a non binding polling procedure to publicize members’ preferences and facilitate consensus processes” (Salaman, 2002 p.334). This procedure is considered to be the neutral way of arriving at major organizational decisions since it takes into consideration different perspectives of the same decision and these include age differences, sitting positions or level of profession.

People of the same age group are more likely to have the same opinions, or people who belong to a clique or the same level of profession, due to peer influence. Sequential straw polling therefore dictates that representatives in decision making boards should be selected across the organization so that their decisions are considered a viable sample of the whole.

This is one decision making strategy that the CEOs of Sony failed to implement from the beginning, hence contributing to the downward trend. From the case, it is notable that the CEO did his own analysis of the company and identified the major problems as first, the existence of the silo culture, second some businesses making losses while others are making profits, third producing products which are already obsolete in terms of technology, fourth lack of software competency and fifth existence of non strategic assets in the company.

After identifying these problems, Stringer went ahead and developed a restructuring plan which worked alright in ensuring that the company stopped making losses but still it was not able to resume its initial position. The CEO had great ideas but from the results, it is clear that he needed more people to assist him in making decisions.

This means that he would have constituted a board consisting of members from different professions such as economists, marketers, IT personnel and strategic planners so as to ensure that the decisions made cover all departments in the organization. Such mistakes are what Zimmerman and her colleagues were trying to avoid when they came up with the sequential straw polling decision making process.

They meant to ensure that before any major final decision is made, opinion has been sought from people of different calibers and the eventual decision determined by the majority similar opinions. The assumption made in this case is that a group is less prone to mistakes compared to individuals. This therefore is one of the things that lacked in Sony Corporation hence preventing it from bouncing back to its initial position despite all the investments made in this attempt.

Bates model on normative factors and decision-making

Bates model on normative factors and decision making is based on the consumer decision making models which affect their choice of products and services. When conducting marketing and advertising activities, organizations should consider the market trends by conducting a research on what is appalling to a majority of the target population.

One of the factors highlighted in Bates model is the kind of language used in advertising and the nature and quality of the adverts. This should be in line with the group being targeted that is whether children, young people, teenagers or people over the age of 60.

Young people for example prefer slang language and highly advanced technology and despite being unprofessional, it should be adopted by companies dealing with electronics since this is what attracts the youth. Most people below the age of 60 value entertainment and they tend to sacrifice many other things to have the best entertainment facilities at their disposal especially items such as televisions, music systems and games equipments.

From this therefore, the most important decisions in any company dealing with electronics and entertainment is on the advertising strategies being employed. This is what creates awareness and ensures that customers perceive the existence and usefulness of these products in the market. As a result of this, the market share increases steadily since more people will adapt the products and the final result will be increase in profits.

This explains why any organization should be willing to invest highly in advertising campaigns in all kinds media. This includes television advertisement, print media advertisements and thanks to technology nowadays there is also advertising through the internet. The latter is the most effective since information is able to get to the universal audience in the shortest time possible.

The CEO of Sony was able to apply this concept after coming up with new products and this is what enabled the company to bounce back. The television department specifically played a major role in this come back after the introduction of the LCD brands under the name Sony Bravia.

This replaced the CRT versions which were being faced out of the market gradually. This product was however already being produced by competitors such as LG and Samsung and this meant that this step was not an automatic success since a lot of publicity was still required (IBS center for management research, 2009 p.12).

As a result, Sony was forced to reduce its prices and increase the cost of advertising a strategy which worked well with the young consumers, as stipulated by Bates model. From this, the company was able to acquire a bigger share of the market that had initially been lost to the other competing companies.

The advertisements which were developed were appealing especially to the young people who mostly value high quality videos and music sound. As a result, the market that was attracted to this organization was mostly made up of college students and young professionals who also form a majority of the population in most parts of the world.

Factors that have hindered Sony from preserving its competitive position in the market

From the year 2005, Sony has been undergoing a series of transformations in the quest to restore it to its former position. In the early years, this company was one of the most profitable companies and most famous in the electronics business. It was known for producing high quality electronics which were also high cost. Despite this the company still had a high percentage of the market share compared to its competitors.

Besides the electronics business, Sony also had businesses in other lines such as cosmetics, restaurants and mailing company. These were all doing well owing to the goodwill generated by the electronics business. This however ended up working against the company once market conditions changed. More companies joined the electronics business and competition went up in a way that forced the company to re-strategize its operations.

The first step towards re organizing the company was to do away with the businesses which were not making profits. This step left only the electronics business standing since the rest were considered irrelevant. Besides that production in the electronics business was also cut down in order to concentrate on the most profitable products.

The management also came up with cost reduction strategies which included the amalgamation of departments such as procurement, customer service and distribution. These were economically viable steps but they did not fully address the problem at hand which was an increase in the number of competitors in the market. Technological advancements were on the rise on a daily basis and this meant that the company had to be very vibrant in order to catch up with the competition.

All these efforts proved futile in the bid to improve the profitability of the company. Investments were made in the most recent technology but still this did not take the organization back to its initial position. One of the reasons behind this is increase in the number of competitors over time. Many electronics companies came up over time and the greatest challenge to Sony seemed to be coming from LG and Samsung.

The greatest achievement by these two companies that threw Sony off balance was the invention of the LCD televisions at a time when Sony was busy trying to restructure their business model. By the time Sony was coming up with a similar product, these two had already taken up the biggest share of the market. Through advertising however, they were able to get back a portion of the market share, though a small bit of it.

Over the years, the company had been concentrating more on the television and this created a channel for their next big problem. Other companies were taking over their market for other products especially in the game business. New gaming software was being developed and this took Sony long to adopt owing to the fact that it had reduced its operations in this sector.

As a result, competitors took over the market and offered high technology products which phased out the previously used software technology. All these issues can be blamed on the failure to plan ahead of time and forecast according to the current market trends.

It was like the management was always waiting to learn from mistakes and this cost them a market share that they have not been able to recover for so many years. From this therefore, a conclusion can be made that despite having many products to offer, Sony has not been able to preserve its competition due to lack of information on the market trends and the direction being taken by their competitors.

Reference List

Brunsson, N 1989, The organization of hypocrisy: talk, decisions, and actions in organizations. Wiley, Chichester.

Cyert, R & March, J 1963, A behavioral theory of the firm. Prentice-Hall, New Jersey.

IBS Center for management Research, 2009, Sony Corporation – Restructuring continues, Problems remain, <http://www.icmrindia.org/>

Salaman, G 2002, Decision making for business: a reader, SAGE, London.