1. 0 Introduction 1 Company Overview Sony Corporation is a leading global manufacturer of any information technology products for consumer and professional markets. It typically named as Sony, is a Japanese multinational corporation that is headquartered in Tokyo, Japan. It founded at 7th May 1946 and their co-founders of the company are Maseru Baku and Kaki Moratoria. Sony have hired over 146,300 employees in 2013 and its diversified business is mainly paying attention on portable audio, digital imaging, home video equipment, entertainment, games and financial services area.
The vision of Sony is trying to rate a new digital entertainment experiences to enhance their customers life and mission are committed to develop and bring some new technology products (Sony, 2013). 1. 2 Industry Overview Electronic entertainment Industry Is considered as a potential Industry, but also inconsistent to describe on it. For those people who have witnessed the growth of CD-ROOM, Sony TV, Palpitation and the rise of internet or smart phone, it explained that no technology product has come along to dominate the technology market.
Nowadays, this Industry Is driven on the comeback trail. Based on the growth from Sony Palpitation, laptop, Smart phones or Tablets, most of the analysts were predicted that the next three to four years have been seen the rapid growth of high- end technology product and others new features which are favorable to playing entertainment software. 1. 3 The main issues in the case study Based on the evaluation of case study, the author discovered some of its issues that planted In the Sony Company.
Poor financial performance has lead Sony faced their losses revenue of VIA. 9 billion for the fiscal year ending March 2009. The author also found out that their revenue is start to declining in the following years. Besides, failed at planning and restructuring their organization plan has failed to achieve the desired outcomes that management could be expected (Sunlit, 2002). Some of the experts were blamed about the “silo culture” which have been banned the whole Sony employees’ communication and cohesiveness for their issues.
However, in the operation structure issues, the author ascertain that their innovation for product development are running too slow in progress and could feel bad at manufacturing plan and productivity level (Forbes, 2009). 2. 0 SOOT analysis and strategic position 2. SOOT Table Strength 1 Familiarity with the brand- Sony has built their brand reputation among the worldwide. It Is highlighted by the truth that Sony has been announced in a 2011 investigation as the Sais’s most valuable brand name. 2. Customer loyalty- Sony is a 1 OFF mind.
The largest potential customers from Japan which accounted as 42% of Sony revenues. 3. Good after-sales services- Sony offers a variety of warranty to any customers who purchase their products. The company maintain support and contact with almost all of their customers in addition to their repair services or warranty. . Supported by other Japanese company financially- Even through Sony have been facing their financial crisis, but the cash flow problem still can be overcome by the “Keiretsu” cultures. Toshiba and Ionians help each others in developing the country economies as well. . Diversification in product categories- Nowadays, Sony has been invested money in different kind of industry, including games, TV, movie, camera, financial services or smart phone. It helps to stabilize their revenue and opportunities to expand faster. I Weaknesses 1. Downward trending revenues and reductions four main business segment is declining in revenue from the years of 2009, particularly games fall 18%, electronics devices down 17%, pictures motion fall 16. 4% and financial services declines 7. 4%. 2. Bad at manufacturing and production. High production cost has been occurred in Sony company in long time years ago. It not only affected their company pricing strategy, but also started to lose to their competitors as well. 3. It’s also losing market share to manufacturers, such as LEG and Samsung. – Their TV business has lost an equivalent of $6. 3 billion for eight years in a row from 2004 to 2012. They also losing their market share compared with just 9% with 20% of Samsung. 4. Traditional management- Sony management team is afraid of losing face due to Asian cultures.
While restructuring has been implemented, but small scale of change has indicated in some unrelated area. They are more conservative and not willing to try on something new. 5. Low innovation in producing new products- Sony operates numerous of product lines that serves too many part of entertainment value chain. This “empire-building” strategy will caused their company innovation or make its operation to slow down I Opportunities 1. Growth in Electronics Market- Electronics Market is expected to grow faster at a rate of 7. % annually in 2014. Sony can uniquely take the advantages of this increase. They have capacity to make into changes in customer demands as they emerge. 2. Strong positioning in emerging economies- Sony is strongly deep-rooted in the BRIG country (Brazil, Russia, India and China) now. These regions represent over the 40% of the world population and it has the huge opportunities for the business industry to grow. Sony can have the plan to expands its model of business in those country here it helps to emphasize in cost saving. 3.
Improve in sales due to government subsidies to low income group people- Government has offer a variety of subsidiaries program to those people who have lower income or facing their financial problem. Sony can use this opportunities to offer their electronic products to the customers by lower prices in order for them to grab and buy it. I Threats 1. New technology advancement – Technology is keep changing and are not flexible in a competitive scenes. They have to adapt a new technology devices and this is arrogant for whole Sony segmentation as well. 2.
Pricing strategy from competitors – Many competitors like LEG and Samsung are offering lower price products than Sony, such as Television or smart phone. This make Sony have disadvantages in pricing abilities to fight with them. 3. Preference of consumer is changing. – Nowadays, most of substitute product and also directly change to others brand name. 4. Bad economy will affect the sales- The string of negative economic conditions in many countries has a bad impact on whole Sony Corporation. During the economic downturn, consumers not willing to spend money and its Sony sales are tumbled unexpectedly.
I 2. 2 Sony Strategic Position Most of the Sony strengths are more toward about their customers and brand image that have been build through a long times ago, including brand familiarity, customer loyalty, after-sales services that helps Sony company to stabilize their market position. But in overall, it does not really necessary can help to solves their weaknesses due to their poor financial performances. According to the Sony “One Sony” strategy, they are more focuses on manufactures some exclusive and high-end technology products for their customers.
Its focus give the hints to author for understand the strategy that implemented by Sony Company are basically on the differentiation approaches (Dynamic, 2001). However, their weaknesses that occurred in the Sony Corporation are not overcome by their strength as well. The declining on profit and products are dropping down in Sony segments, such as games, TV or financial services. The author found that, opportunities from the external market enable Sony to boost their sales, including the growth in electronic market, emerging market and government subsidiaries.
In the poor production and low market share problem, high cost have been become one of the main issues to sustaining Sonny’s products. But in the author opinion, since their prices are getting expensive, Sony can offer some guarantee or repair services to those customers who recently purchase their products due to their excellent in after sales procurement. That mean, even through Sony are no longer to fight with LEG or Samsung competitors in cost leadership strategy, but Sony can focus on both strategy to cover its weaknesses (Larkin, 2002).
In the part of threat issues, technology advancement, competitors pricing, consumer preferences and bad economy recession is not an easily task for Sony to control or solve it. New technology can make the products become old-fashioned. In addition, competitors will boost their sales volume by reduce price and they are willing to increase more satisfaction in order to grab Sonny’s potential customers since customers preferences are always constantly moving around. Nowadays, bad economy recession also continued to slump globally and it affected to whole industry level.
In the ways of minimizing or avoid these threats, author provide some suggestions for Sony to mitigate these risks. Lower costs or generate extra revenues could be the recommendations to fight against the reloaded global recession, competitors pricing or their customers perspectives. 3. 0 Recommendations 3. 1 Disposal and Finding a segment focus Nowadays, Sony has successfully expanded into different business divisions, including games, smart phones, television and financial services. Even through these businesses divisions have help Sony to increase their brand reputation and resources.
In different kind of segment, Sony has been facing highly specialized competitors, such as SHARP or Philips. Therefore, it explained that Sony may have difficulties in establish their own competitive advantages in their business divisions. In the author opinion, Sony should focusing on segmentation and trying to restructure the company based on the target segment. One of the reasons that support this recommendation is Sony could basically have an advantages and it allow the company to utilize their most useful resources in their most productive product lines.
Besides that, some of the less profitable and potential segment will be either cut-off or combined into the main focused segment. Author defined that, Sony should paying attention on three major business segments, such as mobile devices, cameras and camcorders, and games. It is a best recommended suggestion to shrink off the Sony TV business since the fierce competition from Samsung and LEG. Lack of synergy from the Sony TV and low market share has lead Sony face some troubles in maintain its competitive advantages.
In the end, restructuring could provide some strong signal to the market share, and therefore will significantly improve the situation of declining trend in customers and investors confidence (Miser, 2012). 3. 2 Acquisition aggressively and Strategic Alliances Once Sony has started to establish focus segmentation, they should initially acquire mom business within their focused target segment as well. This acquisition will bring some benefits to Sony and it allows them to increase their market share, reduce the production costs or have access to new technologies advancement.
Higher market share would help Sony with their high pricing abilities. The reduction of manufacturing costs can enhance and benefit Sony in pricing competitions among their rival. Technologies and patents could potentially enable Sony to speed up their product innovation progress, which will raise the productivity level. However, based n the current financial performances, Sony should step out slowly to acquire those smaller companies within their focused segmentation, and trying not to overpay those unnecessary premiums for the synergies that could be expected (Yell-Reno, 2001).
If Sony did not manage to acquire those businesses effectively, they should consider another alternative solutions which are partakes a strategic alliances with them in order to keep input costs to a minimum for their focused market segment. This arrangement could helps Sony to bargaining their power in maintain the input rises always low and ensure the most reasonable price to negotiate on it due to their global supply chain around the world Eagerest, 2005). 3. Renew and change management style Sony CEO have been pushed for transformation many years ago since they work on their first day of executive Job, but nowadays most of them are totally failed to achieved the desired result and it still haunt the whole company. The author understands that, “Keiretsu” is playing an important role in transforming a Sony company. In the sense of that, Sony executive must have their own management style to bring effort for restructuring program. It is recommended option to follow some guidelines from one of the top transmutable leaders, Carols Shown.
In Sony afraid of losing face to others people. A new establishment for enforcement of rules and regulation is applicable for their employees and workers. They could have potentially to get their reward and punishment according to their working performance and desired result. In the recruitment and selection, they can try to recruit some non-Japanese staffs to balancing the organization culture and make sure that it not effected and controlled by long working years Sony employees Simon, 2002).
