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Strategic Analysis on Sony
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Strategic Analysis on Sony
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Strategic Analysis on Sony
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Strategic Analysis on Sony 12-03-04 12:29 AM http://www.com/doc/43406139/Strategic-Analysis-on-Sony Page 5 of 46 .scribd.
scribd. If coordination between SBUs is needed (as is required between Sony’s SBUs). each further divided into smaller business units. music. Sony’s corporate-level strategy – the SBU form consists of 3 levels comprises the corporate headquarters. http://www.Strategic Analysis on Sony 12-03-04 12:29 AM With continuing growth and success. Sony is broadly divided into 6 SBUs (electronics. finance services and communication network). there is a drawback to the SBU structure. However. The divisions within each SBU are related in terms of shared products or markets or both. strategic business units and SBU divisions. but the divisions of each SBU have little in common with the divisions of the other SBUs. Sony’s headquarters exercises financial and strategic controls over its SBU. and commonly named as divisions. The SBU form of multidivisional structure is a proper match to Sony’s strategies as it inherent benefits allows the company to manage diversification’s many demands better. game. pictures. Atypically.com/doc/43406139/Strategic-Analysis-on-Sony Page 6 of 46 . Sony adopted the strategic business unit (SBU) form of the multidivisional structure to implement its related linked diversification strategy.
S. To this end. divisions that are part of the competitive structure do not share common corporate strengths. To foster cooperation between SBUs. problems arises because the SBU structure.-based CBS records in 1988 and Columbia Pictures in 1989. To ensure that the various initiatives mentioned early are successfully executed. establish liaison roles in each division and form temporary work teams or task forces around projects that also focus on extracting and sharing competencies that are embedded within several divisions – work teams/task forces should also be made to report to top management. Sony went into a joint venture with Swedish telecommunications company Ericsson to form Sony Ericsson to manufacture mobile phones as well as launched Sony Bank (an Internet-based bank for middle-class Japanese investors). However.com/doc/43406139/Strategic-Analysis-on-Sony Page 7 of 46 . http://www.scribd. Sony still continues to invest heavily in infrastructures so that the company has sufficient capacity to meet the growing needs and demands of their customers. It allows the company to achieve economies of scope and economies of scale on a global level. similar to the competitive form. Sony could increase the frequency of direct contacts between division managers. Sony also ensures a proper match between its international strategies and organisational structure exists so the company could effectively coordinate and control its global operations. As a result. the solutions that are meant to help overcome problems associated with strategic business unit form are also applicable to challenges of the global strategy/worldwide structure combination. Sony pursues economies of scale further by outsourcing as it allows the company to have better cost control.Strategic Analysis on Sony 12-03-04 12:29 AM structure. does not readily foster cooperation across SBUs. For example. Sony is also required to evaluate its divisional managers’ performance on the basis of how well they have facilitated interdivisional cooperative efforts. Sony uses the worldwide product divisional structure to implement the global strategy. Sony faces challenges of the global strategy/worldwide structure combination such as difficulty involved with coordinating decisions/actions and the inability to quickly respond to local needs and preferences. Sony acquired U. If coordination between SBUs is needed (as is required between Sony’s SBUs). d) Physical Resources Despite an already extensive domestic and international industrial infrastructure. Unlike the divisions included in the cooperative structure. Fortunately. The two companies were renamed to Sony Music Entertainment and Sony Pictures Entertainment respectively and eventually emerged as two of the world's largest content producers. besides the outcomes achieved by individual divisions to help overcome problems associated with strategic business unit form. they do not develop integrating devices for use. Sony’s reward systems should also emphasise on the overall company’s performance. Sony also invested substantially in the game business and entered into the industry to take on 5 established players like Nintendo and Sega directly. Sony dominated the market subsequently. In 2001.
the MiniDisc. Technologically. On this note. Some of these Sony’s technological creations have created new markets of their own. Sony is able to provide comprehensive training programmes worldwide to train its employees to equip them with superior knowledge and skills. Sony also possesses the ability to identify high calibre managers to take over top management positions so that the company would continue to be well managed and the innovation culture proliferated. It also has radio factories in places such as Shannon (Ireland). the Walkman. Sony is more advanced in producing consumer-electronics products than its competitors. Sony also patents its revolutionary innovations that include the trademark ‘Walkman’ and video tape ‘beta video format’.scribd. By 2003. the venerable PlayStation (PS) and the robot dog Aibo. Sony’s strength is also about the ability to leverage on technologies well and ahead of its competitors to create innovative and high quality products for its customers so as to increase sales and revenues. In addition. The past and present CEOs all possessed the necessary psyche and managerial capabilities to infuse innovation and creativity. Sony’s outstanding employees are recognised by receiving awards (such as the crystal and MPV awards) from the top management. e) Technological Resources Sony was first in many areas such as the Trinitron. the Betamax. its PS2 offers a substantial jump in performance and versatility. In short.Strategic Analysis on Sony 12-03-04 12:29 AM launched Sony Bank (an Internet-based bank for middle-class Japanese investors). with new features like “Emotion Energy” and Graphics Synthesizer” making possible more complex effects such as facial expressions and clothes fluttering in the wind. it can be deduced that the physical resources that Sony possesses are likely to generate value-creating competitive advantage which is the company’s strength. Sony owns 55 manufacturing plants after shutting down 15 worldwide. the company provide curriculums that are tailored to local needs for engineers and managers. f) Human Resources Management Sony’s official website often stresses that the development and vitality of Sony's employees drives dynamic growth for Sony. Sony also built a framework that promotes regular communication between employees and managers regarding work contributions.com/doc/43406139/Strategic-Analysis-on-Sony Page 8 of 46 . So far. receiving awards directly from top management elevates an employee’s status in the company and as such it is something that most staff sorts after . the Camcorder. For instance. In short. particularly the ability to motivate and improve productivity of the staffs is certainly Sony’s strength. 6 http://www. This in turn helps establish the basis of a compensation system that fairly and satisfactorily evaluates the contributions of each employee. the Compact Disc. Sony has 12 home-grown manufacturing based plants in Japan. Sony also set industry standards for TV design and picture quality. In addition. In Japan culture. Human Resources Management.
the world’s first colour video cassette recorder in 1971. cutting-edge technology and reliability. Firstly. and (3) credit risk.Strategic Analysis on Sony 12-03-04 12:29 AM g) Innovation Resources (Product Development) Innovation is one of the two central pillars of the Sony establishment – marketing is another.” On the same year. the PlayStation game system in 1995. and the robot dog Aibo as well as Network Walkman digital music player in 1999” (Sony. the Compact Disc (CD) in 1982. XXX said that “Reputation is one of the significant intangible resources for Sony that differentiates themselves from the competitors for them to charge a premium price for their innovative products and quality. the “Sony” brand is one of the world’s most recognisable and trusted brands. So far. (2) price risk. In short. the Walkman personal stereo in 1979. h) Reputation Resources In 1999. foreign currency option contracts. Secondly. through innovation. So far. In 2002. the types of risks Sony faces include: (1) pure risk. Digital Versatile Disc 7 / 37 (DVD) player in 1998. the transistor radio in 1955. interest rate swap agreements and currency swap agreements to hedge the potential downside risk on the cash flow from the normal course of business that caused by market fluctuation. the brand name is certainly the company's strength.scribd. Sony was ranked 21 in the XXX list of World’s 100 Most Valuable Brands with as estimated value of US$14 billion – and the 1st among its industry peers. http://www. Sony was recognised as one of the world’s 100 Best Managed Companies by XXX magazine. The company’s tagline for its electronic audio and video products “It’s a Sony” simply is a stamp of quality. This pillar was put in place by the company's founders. the world’s first all-transistor TV set in 1960. Sony purchased insurance policies to mitigate pure risk. Price risk and credit risk are being mitigated this way. Sony Corporation was proclaimed as the world’s largest consumer-electronics company. Sony’s holistic approach to risk management effectively is viewed favourably by its stakeholders most of the time. Given the positive perceptions of Sony’s reputation.com/doc/43406139/Strategic-Analysis-on-Sony Page 9 of 46 . set the foundations of a true culture of innovation at Sony. These innovations had created new markets of their own. especially the shareholders. through their complementary skills and enthusiastic leadership. Sony utilises several derivative instruments such as foreign exchange forward contracts. who. a significant player in the media industry and the fastestgrowing computer and communication equipment maker. Sony had produced many revolutionary products that include the first magnetic tape and tape recorder in 1950. i) Risk Management In general. the Minidisk (MD) player in 1992. for the third year in a row. Digital Mavica camera in 1997. the first 8mm Camcorder in 1985. The ability to continuously innovate and come up with revolutionary innovations that boost sales and helps widen profit margins shows that Sony possesses substantial quality innovation resources (including scientific capabilities) that are hard to imitate and valuable.com/en/corporate).
a) In-bound Logistics Sony engages in a series of complex in-bound logistics activities that the company either possess or provided by 3 rd parties.S and Europe together accounted for the remaining slightly less than 25% of total annual production (most of which was destined for local distribution and sale).com/doc/43406139/Strategic-Analysis-on-Sony . Page 10 of 46 http://www. China accounted for slightly more than 10% of total annual production (approximately 70% of which was destined for other regions).Strategic Analysis on Sony 12-03-04 12:29 AM viewed favourably by its stakeholders most of the time. As the company expands. especially the shareholders. The ability to manage the complex and geographically dispersed in-bound logistics activities is certainly Sony’s strength. To lower its cost of production. the company has shifted some of its production plants to low cost countries such as China to take advantage on the cheaper labour cost. In fact.S andacross different details are as follows: (1) (2) (3) (4) Almost 50% of the electronics segment's total annual production during the fiscal year 2002 took place in Japan (approximately 65% of the annual production in Japan was destined for other regions). 7 Value Chain Analysis The value chain analysis is used to evaluate the value of every primary and support activity that is added to Sony’s products or services. Asia. b) Operations Sony’s businesses span to Europe. excluding Japan and China.scribd. the US and the EU). Sony also begin to engage 3rd parties such as Flextronics and Solectron to manufacture some of its product components so that the company will continue to possess sufficient wave length to engage in its core businesses and core competencies. accounted for slightly more than 10% of total annual production (approximately 60% destined for Japan. It production empire alone is spread from Asia to the U. The continents. Sony also restructured and shut down some manufacturing facilities. The U.
PC and television markets in just a few years after entering the markets. the possession of the capability to train employees and business partners to manage the complex and geographically dispersed out-bound logistics activities to enhance the various operation protocols is surely Sony’s strength. In fact. To ensure that the company solidifies its image and reputation as well as achieves the desired sales http://www. Sony’s inability to address the inter-operativeweakness. Sony is very sensitive towards its competitors’ actions and reactions.com/doc/43406139/Strategic-Analysis-on-Sony Page 11 of 46 . For instance. d) Marketing and Sales Sony's marketing strategy is to position itself as an innovator and a maker of high quality products which enable it to sell its products at a premium higher than its competitors. logistics function to track sales orders. to ensure that Sony’s products and services are delivered and reached their destinations on time. In fact they had been making losses. As such. the respective business units within the organisation are still not communicating and cooperating (although there were some improvements) with one another enough and this has affected inter-operative synergy and productivity. Sony has invested heavilyof products and payments. For instance. Walkman and WEGA. the company’s related issues is a cause of concern and therefore could possibly be c) Out-bound Logistics 8 Sony is well connected to the distribution networks that every country possesses. Sony has been able to manage its businesses well and hence is able to achieve successes with some of its products. company’s music business. there are also challenges that Sony somewhat cannot find better solutions to address them. advertising business and locationbased entertainment business have not been doing well. On the other hand. movement to automate parts of the out-bound Sony also allows its music and pictures to be distributed through the broadband networks.Strategic Analysis on Sony 12-03-04 12:29 AM Generally. the company’s innovations are commonly backed by massive and zealous marketing efforts which have had helped to create several successful sub-brands such as Trintron. Although piracy is partly responsible for the poor performance. To achieve these goals. it was also reported in prominent magazines such as InfoWorld and PC Magazine that many customers felt that Sony’s products and services were among the best in the world and their staffs were well trained to handle the various operations and services.scribd. In 2002. Sony was able to make a capture a sizable market shares in the video. These successes in turn further strengthen the brand “Sony”. In addition.
the business system is separated into a series of value-generating 9 activities referred to as the value chain. they may affect the operational efficiency and effectiveness of the primary activities (out-bound logistics.scribd. The summary of strengths and weaknesses of AirAsia is appended in Table 1 below: http://www. The processes of transferring inputs into finished products and services (operation) seem to have run into some problems that require Sony’s immediate attention. Given that Sony is able to provide and manage the service activities well. The practice of good networking must eventually become a culture of Sony for the company to sustain its competitive advantage. e) Service Sony has established many service related activities that are designed to enhance customer satisfaction – that is the feeling that a product or service has met the customer expectation. If the various operation-related issues mentioned above are not adequately and quickly addressed. Although Sony has reported that it has witnessed a dramatic increase in internal cooperation between the hardware and software managers. For instance. print and on-line advertising. To better understand the activities through which Sony develops a competitive advantage and creates shareholder value. the Walkman brand (MiniDisc format) was re-launched in 2000 at an estimated cost of US$30 million and it was supported by massive broadcast. These activities are mostly carried out at Sony service centres and call-in stations that are manned by friendly and knowledgeable customer service offices. The lack of inter-unit coordination and synergies due to the company’s mix are diverse businesses are properly the two grounds that have affected operation efficiency and effectiveness. Internet and dealer events and promotions as well as Grass-roots public-relations campaigns to target the Generation Y target market. warranty and installations are provided by the company. it helps in further enhancing the “Sony” brand. exchanges of defective or broken merchandise are carried out speedily. Sony’s marketing shrewdness had to the No. Sony’s possession of a world-class marketing acumen that has made Sony a global mega brand is certainly a strength that is hard to imitate and valuable. In short. more work need to be done and continuous surveillance is still required. marketing and sales as well as service) downstream. it has no qualms of incurring exorbitant expenses. At the service centres. The re-launch was a great success. Sony was also named as the world's 21 st most valuable brand in the same year. 1 brand rating in the United States by Harris poll (2000). In order to meet customers’ expectations.com/doc/43406139/Strategic-Analysis-on-Sony Page 12 of 46 .Strategic Analysis on Sony 12-03-04 12:29 AM that the company solidifies its image and reputation as well as achieves the desired sales and revenues targets.
Positive perceptions of Sony’s reputation that help to • • boost sales and revenues. • Weaknesses of divisional structure that include: (1) duplication of functions at the different "levels" that resulted in high cost in maintaining the management structure. • With such huge reserves means that Sony is capable of generating internal funds to finance any expansion.com/doc/43406139/Strategic-Analysis-on-Sony Page 13 of 46 . Possession of a world-class marketing acumen that has made Sony a global mega brand. • Possess capability to train employees and business partners to manage the complex and geographically outbound logistics activities to enhance operations protocol. (2) competing business units allow office politics instead of sound strategic thinking to affect its view on such matters as allocation of company resources.scribd. Ability to manage the complex and geographically dispersed in-bound and out-bound logistics activities well. • Ability to leverage on technologies well and ahead of its competitors to create innovative and high quality products for its customers so as to increase sales and profit margins. • Ability to motivate and improve productivity of the staffs. This in turn runs the risk of in incompatibilities of its products and services. Possession of the necessary physical resources is likely to help Sony generate value-creating competitive advantage. and (3) Sony’s business units allow compartmentalisation to settle in that lead to lack in communication and cooperation. • Ability to innovate and come up with revolutionary innovations that mesmerise customers into buying them.Strategic Analysis on Sony 12-03-04 12:29 AM Strengths • Weaknesses Sony’s high debt ratio (highly leveraged) could put itself in danger if the company’s creditors start to demand repayment of debt. • • Table 1: Summary of Sony’s Strengths and Weakness 10 http://www.
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