SONY CORPORATION

SLIDE 1 HISTORY OF SONY Akio Morita and Masaru Ibuka started Tokyo Telecommunications Engineering on May 7 , 1946 with its headquartered in Minato, Tokyo Japan. The company produced the Japanese first tape recorder in 1950. In 1952, Ibuka traveled to United States and heard about Bell Laboratory invention of the transistor. He convinced Bell to license the transistor technology to his Japanese company. While most American companies were researching the transistor for its military applications Ibuka and Morita looked to apply it for communications. They launched one of the first transistor radios in 1955. Soon after they changed the company name to Sony. In 1960, the Sony Corporation of America was established in the United States which was the first Japanese company to be listed on the New York Stock Exchange.

SLIDE 2 PRODUCT PORTFOLIO Sonys product portfolio includes TV&Home Cinema, Camera&Camcoders, VAIO&computing, Reader e-book, home audio, portable audio, Playstation, Memory discs & batteries, headphones, Accessory finder, Car Audio, Other Sony products include SonyCard, Sony Computer Entertainment, Sony Ericsson, Sony Music, and Sony Pictures.

SLIDE 3 SONY BUSINESS OPERATIONS LCD Televisions During 2009, Sony implemented measures in its LCD television business aimed at strengthening operation and improving profitability, while at the same time focusing efforts on the development of appealing products. Developed in collaboration with Google, Sony Internet TV is an exciting new generation of television that not only offers new forms of enjoyment through unprecedented Internet integration, but is also able to evolve through the download of applications. They are also developing the next generation of TV display while targeting a 20% market share over a medium term.

DIGITAL IMAGING In the compact digital camera business, Sonys efforts are to further increase operating efficiency and heighten the appeal of its distinctive products. Sony released two new additions to the Cyber-shot family recently, TX7 and HX5V, with an Exmor R image sensor, these are the first integrated lens digital cameras in the world with Full HD.

HOME VIDEO Sales of Sony Blu-ray Disc players in 2009 amounted to 3.3 million units, a year-on-year increase of 1.1 million units.

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DIGITAL MUSIC PLAYER In the Japanese market, Sony took the number one share in units shipped for the first time in four years and eight months.This achievement reflected customer appreciation of the excellent sound quality and user-friendly digital music players, as well as consumer acceptance of its diverse product lineup including the hit Walkman S series with stand-alone speakers, and the new Walkman W series, which is a one-piece music player with built-in headphones,

PCs In April 2010, Sony implemented organizational changes within its PC business in order to strengthen operations. The VAIO Business Group, which is responsible for the headquarters functions of the PC business, was moved to the site of Sony EMCS Corporation Nagano TEC, which already hosts PC design, operations and manufacturing. With this move, everything from PC product planning to manufacturing occurs in one place, leading to strengthened collaboration and a more efficient structure that will support efforts to accelerate business growth.

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GAME In 2009, Sony launched a new slimmer, attractively priced PlayStation3 (PS3) computer entertainment system in markets around the world. Sony will work to further expand its lineup of packaged software for the PSP platform, as well as aggressively develop network services and content, thereby enhancing the distinctive entertainment experience PSP provides.

SONY ERICSON Guided by new president Bert Nordberg, Sony Ericsson commenced shipments of Xperia X10, its first Android-powered communications entertainment device featuring such signature applications as Timescape and Mediascape as well as Vivaz, a beautifully designed touch screen Symbian phone. Both Xperia X10 and Vivaz have enjoyed a positive reception from customers around the world. Sony Ericssons focus will continue to be on returning to profitability on an annual basis, through continued transformation of its product portfolio to target mid- to high-end open operating system based models and by providing the consumer a superior user experience.

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SONY PICTURES Sony Pictures Entertainment continues to be a leader in the development, production and distribution of motion pictures, television programming and online entertainment globally. One of the most exciting opportunities for content development and growth across the entertainment industry is 3D. Sony Pictures is uniquely positioned as part of the Sony Group to succeed in this exciting area. The studio has an established track record in 3D production, 3D visual effects and motion picture releasing.

SONY PICTURES TELEVISION Sony Pictures Television (SPT) had a successful year expanding its portfolio of leading international channels and continuing a strong U.S. programming lineup.

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SONY MUSIC Sonys music business consists of Sony Music Entertainment (SME), which operates worldwide outside of Japan, and Sony Music Entertainment (Japan) Inc. (SMEJ) SMEs continuing dedication to great artistry also yielded strong sales from Beyonc, the Glee franchise, Whitney Houston, Ke$ha, Alicia Keys, Kings of Leon, Leona Lewis, Maxwell, P!nk, Sade and Carrie Underwood.

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Sony Corporation Overview Sony corporation is a multi-billion company that is based in Tokyo, Japan. It is mostly involved in manufacturing of electronics, video, communications, video game consoles and information technology products for the consumer and professional markets. Moreover, this corporation has been involved in consumer electronics since the end of the world war 2, with their vast experienced and their involvement in the market has developed the company into one of the world's biggest and richest companies.

SLIDE 9 Sony Electronics Inc. One of the biggest subsidiaries of Sony Corporation of America, due to its role as US Sony based electronics and entertainment involvement. The Sony Electronics headquarters is based in San Diego. In Europe, Sony's consumer electronics products and services are marketed through 19 sales subsidiaries including Sony United Kingdom Limited, Sony Deutschland, and Sony France. Sales of professional electronics products, electronic components, and services are made through several divisions, differentiated by product, covering all of Europe. Sony is engaged in the development, design, manufacture, and sale of various kinds of electronic equipment, instruments, and devices for consumer and professional markets in the "Electronics" business.

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Manufacturing Their principal manufacturing facilities are located in Japan, the U.S. Mexico, Europe, and many Asia countries. Sony are integrated manufacturers in that they have developed the skills and capabilities that inclined to do everything in-house, from their design of the device to the fabrication of integrated circuits. To relieve pressure on their manufacturing capacity, they have also often subcontracted some of their manufacturing work to the electronic contract manufacturers (ECMs) while retaining control over the bulk of the manufacturing and distribution work.

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MISSION Japanese electronics giant, Sony, has changed its mission statement several times in its history. Previously, Sony's mission statement was, "Become the company most known for changing the world-wide poor-quality image of Japanese products." According to the 2009 annual report, their mission statement is To become a leading global provider of networked consumer electronics, entertainment and services. Their mission is not published in 2010s annual report.

VISION Their vision is about innovation, welcome new thinking and new ideas. Their campaign of make. believe reflects Sonys ability to turn ideas into reality and, more importantly, to help consumers turn their own ideas into realityas we believe that anything you can imagine, you can make real. Sony aims to inspire consumers around the world with innovation and fun through their unique combination of technology and entertainment based on their electronics, game, motion picture, music, mobile phone and network services businesses.

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CORE COMPETENCIES TBC

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FINANCIAL OVERVIEW Operating income of 31.8 billion was achieved, compared to an operating loss in the previous fiscal year. The Financial Services segment and the Consumer Products & Devices segmentin particular, LCD televisionscontributed to the improvement in operating results year-on-year. Cash flow from operating and investing activities combined was positive and exceeded 300billion excluding the Financial Services segments activities

SLIDE 14 Sales and operating revenue falls from 8.9 trillion to 7.7 from 2008 to 2009. and 7.2 in 2010. The operating income for 2008 was 475.3 billion yen but in 2009 there was a loss 227.8 million yen. Even though in 2010, the sales was lower than 2009, there was an operating income of 213.4 million yen. This was done through reducing headcount and closing or consolidating 11 manufacturing sites worldwide. They have a target of cost reduction of 330 billion yen group wide and they achieved and beat the target. They reduce their procurement cost by 20% which is nearly 500 billion yen.

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This graph shows that they have positive cash flow from operating activities in 2008, 2009 and 2010.But negative cash flow from investing activities. They have invested huge amount of money on capital investment in 2008 and 2009. According to annual report 2010, the improvement in cash flow is because, they aggressively managed their inventory and account receivable and payable.

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SONYS PORTERS 5 FORCES Michael Porter five forces are power of supplier, power of buyer, threat from substitute product and lastly threat of entry by new competitors. For Sony the bargaining power of supply is low. Sony respects each supplier as an independent company working on an equal basis with Sony. Sony makes itself fully accessible to suppliers that can function as true partners by working together in building relationships based on mutual trust. The price of parts and materials provided by suppliers has a major impact on the cost competitiveness of Sony products. Sony therefore expects its suppliers to offer items at highly competitive prices and make a concerted effort to constantly reduce cost. Buyer power is one of the two horizontal forces that influence the appropriation of the value created by an industry (refer to the diagram). The most important determinants of buyer power are the size and the concentration of customers. Other factors are the extent to which the buyers are informed and the concentration or differentiation of the competitors. Research shows that it is often useful to distinguish potential buyer power from the buyer's willingness or incentive to use that power, willingness that derives mainly from the risk of failure associated with a product's use. For Sony. The bargaining power of buyer is high where Sony produce the product that meet customers requirement. Besides that, by introducing innovative product like eco-friendly projector makes the consumer to stay with Sony. The threat of new entrants pose to an industry's profitability depends on the relative price-toperformance ratios of the different types of products or services to which customers can turn to satisfy the same basic need. For Sony threat of new entrants is low is because it is a well establish firm and consumers trust their product since they have been using it for a long period of time.To be safe Sony have strategic assets such as knowledge or core competences, gained through research or experiences, which newer entrants can struggle to match. Other than that, established company like Sony have strong relationship with their distributors, so it is difficult for new entrants to find place to sell their products. Next we will look at the threat of substitute product or services. Buyer power is strongly influenced by the availability of substitute products. If customers have a choice, not just between rival products but between competing demands for their spending, then this will increase their

power. It is obvious that, substitute products are not the same as competitors product, is just because they are made in another industry. For Sony, threat of substitute product is low because they are highly competitive and very innovative. Lastly, the competitive rivalry between the firms in the industry is strongly affected by the other five forces. The stronger the power of buyers, suppliers, and complementors, and the stronger the threats of new entry and substitutions, the more intense competition is likely to be. For Sony rivalry is high. Firms will compete away (in form of price wars or other undercutting moves) much of the profit that might have been extracted from the industry.

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INTERNAL CAPABILITIES Standardized Product The reason Sony uses standardized products is because they can reduce on cost. Besides that,it would be easier for Sony to improve the quality and to meet customers expectations by spending more on R&D and to be more innovative. At the same time, to cover global customer so that everyone can enjoy a quality and an innovative product in any part of the world. By standardizing the product Sony also could reach the global market segment easily by covering consumer globally.

Centralized Control Sony practices centralized control from its HQ in Minato, Tokyo .This is to make sure that product are not overpriced in certain place. If there are any changes it is done at the same time.

Focus on efficiency Sony focuses on efficiency to increase the business and by increasing the business it will give their share holder confident to invest with them. Besides that, it also creates trust among the existing and future customers. Besides that, by being efficient Sony could improve on competitive advantage where Sony could compete with their competitors like Panasonic easily. Other than that, to maintain customer service level, in order to solve customers problem fast.

Youth Market

It can be said that Sony captured the youth market by innovating more entertaining products. Sony is one of the most comprehensive entertainment companies in the world. For example, PlayStation was introduces in 1994 and become the most successful video game console all the time. With a high demand Sony introduced PSP (Play Station Portable) in 2005 and 2009 where most youngsters are interested in it.

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EXTERNAL RELATIONSHIPS

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COMPETITIVE ADVANTAGE (Most current) Sony is the first to produce green TVs and started selling in Japan on 30th July 2008. Sonys green TV , a new flat panel 32 inch ($1400), offers ecological consumer advantages of less energy consumption (70%) than regular models with same image quality. Sony was able to reduce carbon dioxide emissions totalling 79kg a year, without sacrificing quality by developing a brighter back light and better filtering, which produces light more efficiently. The TV will have crystal displays along with high definition digital broadcast capabilities. Other eco-products to be more competitive advantage are laptop, projector, mobile phones and rechargeable batteries.

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SONY PEST ANALYSIS Source: Kasim, Axel, and Maqsood

Political

Political factors for Sony Corporation are volatile as the Japanese government holds the power to change any policies and regulations which may affect Sony. The credit crunch and the recession may become reduced, therefore resulting in better trades for Sony Corporation. However this also means that the same has occurred for Sonys competitors, forcing Sony to develop ideas on how to stay ahead of its competitors. The laws which can affect Sony Corporation would consist of new international policies. Internationally the Government may change or increase trading restrictions which would definitely change the way Sony works, because it needs to trade. The Government also has the power to change minimum wage, tax, VAT etc. These factors must be concentrated on so that Sony is prepared for any major global changes.

Economical The current state of the Japanese economy is not exactly healthy. The economic growth has shrunk which means that the growth of the economy is negative. The recession and the credit crunch has had significant affects on interest and exchanges rates. Due to the recession being deducted in the near future, exchange rates may steadily decrease.. Sony must be aware of any trading restrictions the Government has made. Since Sony is an international company the exchange rates can be different to whichever country they trade with. If the exchange rates in different countries have changed, Sony would need to work out what prices are their products being sold at and whether it would be worth it.

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Social The company has already gained a lot of reputation because of the quality products and services they provide that cater to all types of demographics - from the young and trendy to the old and sophisticated. Sony may even have new competitors which may impact on them. Sony must ensure that they stay ahead of technology. They must be able to create revolutionary equipment for people because thats what their company would rely on to stay alive especially since companies such as Microsoft and Apple would be doing the same.

Technological Sony Corporation works around the use of technology every day. It depends on technology so that it may provide efficient productivity of work internationally. Sony would use upgraded and new technology to increase its productivity level and to stay ahead of its competitors. Sony would need to use new technology to conduct its research and development which would help the business create new products using customer information and also by conducting market research.

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SONY PEST ANALYSIS BENEFITS Sony Corporation would use these factors to monitor the external factors of the business. PEST can be useful towards Sony Corporation because it can be used to identify any new legislation, trading restrictions, VAT, tax laws, social trends, technological improvements etc. PEST can also be used as a marketing technique towards Sony business Sony marketers would want to know how well the business is running. By using PEST Sony marketers can develop new strategies to help develop the business overall. They could do this by advertising new products or advertising the company and its components. The company is able to predict what their future business environment will be using political, environmental, technological and social factors.

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SONY SWOT ANALYSIS (FOCUSED) Strengths Able to create high quality products suited for customers shifts in trends. Engineers are good learners. High levels of competition towards other brands. Flexible and able enough to suit any market of any size.

Weaknesses Has been making losses with sales starting to slow down.

Company has lack of direction under current management. Functional department lack any effective communication channels in turn decreasing productivity.

Opportunities Increase in engineer talent so improve productivity. More product differentiation strategies to win back brand reputation. Advertising budgets increased to attract new customers. Attempting to sell their high quality products cheaper especially in new markets.

Threats Sonys competitors have become to powerful, e.g. Microsoft. A lot of their products are forged and sold as fakes, inflicting dangerous levels of damage to brand image and loyalty. Lack of direction has given competitors ample time to pull away. Competitors products are reaching more demographics than Sonys.

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SONY SWOT ANALYSIS (WIDE) Source: Datamonitor (2010)

Strengths Strong Corporate Brand Identity Diversified geographic Base Focus on Research and Development

Weaknesses High Cost manufacturing base Unfunded employee post retirement benefits

Opportunities

Growing global consumer and industrial electronics market Strategic acquisitions and alliances Focus on BRIC (Brazil, Russia, India, China) economies

Threats Unfavorable foreign exchange rates Economic conditions Government regulations

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SONY CONTROVERSIES Controversial promotions In July 2006, Sony released a Dutch advertising campaign featuring a white model dressed entirely in white and a black model garbed in black. The first ad featured the white model clutching the face of the black model. The words "White is coming" headlined one of the ads. The ad has been viewed as racist by critics A Sony spokesperson responded that the ad does not have a racist message, saying that it was only trying to depict the contrast between the black PSP model and the new ceramic white PSP. Other pictures of the ad campaign include the black model overpowering the white model.

Digital Rights Management In August 2007, security firm F-Secure reported that the MicroVault USB thumb drive installs a rootkit in a hidden directory without consent on user computers. The directory is intended to protect fingerprint data, however it can be used for malicious means as most virus scanners will not search for the directory or its contents. Sony advised it was conducting an investigation on the third-party product, and would offer a fix by mid-September.

NGO Strategy In 2000, Sony was ridiculed for a document entitled "NGO Strategy" that was leaked to the press. The document involved the company's surveillance of environmental activists in an attempt to plan how to counter their movements. It specifically mentioned environmental groups that were trying to pass laws that held electronicsproducing companies responsible for the clean up of the toxic chemicals contained in their merchandise. I

n early July 2007, Sony ranked 14th on the Greenpeace chart "Guide to Greener Electronics." This chart graded major electronics companies on their environmental work. Sony fell from its earlier 11th place ranking due to Greenpeace's claims that Sony had double standards in their waste policies.

Government Links In 2005, it was made public that the videogame Full Spectrum Warrior, developed by Sony Pictures Imageworks and Pandemic Studios, was paid for in whole by the United States Department of Defense, for use as an urban combat trainer. Not only was the simulation never used as intended, but the Army lost its full investment while Pandemic Studios went on to release the simulation, now an entertainment game, through THQ and it became a success.

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ENVIRONMENTAL RECORD In October 2010, Sony was ranked 6th (jointly with Panasonic and Motorola) in Greenpeaces Guide to Greener Electronics that assesses the policies on toxic chemicals, recycling and climate change of 18 leading electronics manufacturers. Number of Sonys models on the market are partially free of PVC and BFRs, including all models of the VAIO PC, and many models of video recorder, Walkman, camcorder and digital camera. The company has committed to removing PVC in all new models of mobile products (excluding accessories), and BFRs in the casing and main PWBs of all new models of mobile products by April 2011. However for the improvement in its ranking it still needs to set a timeline for eliminating all phthalates, beryllium copper and antimony and its compounds Sony publishes on its website a list of products, for which the company had (as of February 2010) or intended to replace PVC and BFR with alternative substances by the end of FY 2010 (April 2011), nevertheless as of January 2011 the list does not identify which products are fulfilling these criteria at the moment.

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Improvement efforts

Since 1976, Sony has had an Environmental Conference. Sony's policies address their effects on global warming, the environment, and resources. They are taking steps to reduce the amount of greenhouse gases that they put out as well as regulating the products they get from their suppliers in a process that they call "green procurement". Sony has said that they have signed on to have about 75 percent of their Sony Building running on geothermal power. The "Sony Take Back Recycling Program" allows consumers to recycle the electronics products that they buy from Sony by taking them to eCycle (Recycling) drop-off points around the U.S. The company has also developed a biobattery that runs on sugars and carbohydrates that works similarly to the way living creatures work. This is the most powerful small biobattery to date.

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RECOMMENDATIONS In order to be competitive Sony can go through their product price and give out discount for loyal customers in order to repeat purchase. Besides that, Sony also can also compete through expensive advertisement and by having aggressive promotions. People have trends which Sony must learn so that they may create products which can relate towards them. For example, many young adults tend to listen to music; therefore Sony would create products which may allow people to listen to music anywhere at any time. People will have different tastes of style, trends, activities etc. Sony must also improve their work of ideas so that they can still please their customers and that they have adapted with the ageing of the company.