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From; Commercial Director

Sony Ericsson

To; The Board of Directors


Sony Ericsson

18/11/2009

A Report on Our Corporate Strategy

Submitted by; Aoaeh Guinevere Bulli


(aoaehG@cavendish.ac.uk)
CONTENTS PAGES

Background 2

Resources, Competencies and Capabilities 3

The Governance Chain 7

Ethics And Corporate Social Responsibility 8

Development of Vision, Mission and Objectives 9

Recommendations and Conclusion 15

References 17

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BACKGROUND

In the past 20 years, the mobile phone industry has seen dramatic technological change and innovation.

The industry started off with mobile phones for elite executives who neede to be reached when away

from their tables, making them easily reachable wherever, whenever. Soon, other functions were added

to these mobile phones and they became a little bit more than just phones. The addition of instant

messaging or texting options, radio devises and torchlights made them more functional tools.Within the

last 5 years, mobile phones have become more dynamic than ever, being described as a versatile tool

with radios,cameras,recording devices, music storage, internet, calculators and all kinds of other

functions battling it out for space with the basic one of mobile telephony.

Ericsson is a company that has several hundreds of years experience in the telecphone industry and

dominated this sector for many years. Upon a caeful analysis of current trends in 1996, it begun to look

out for a strategic partner to create an alliance in view of the changes in the tephone industry. Sony

Corporation has a world wide reputation for its cutting edge technology in consumer electronics and

making bulky electronics smaller, smarter and better,hence the walkman,discman,digital camera, etc.

Sony Ericsson as we know it today, was formed by a joint 50:50 venture in 2001 by the Sony

Corporation and Telefonaltiebolaget LM Ericsson. Before this, Sony Corporation was a Japanese

company mainly manufacturing electonic products and Ericsson was a Swedish company dealing in the

telecommunications sector. Both companies had several years of experience in their various sectors and

were market leaders. The current product portofolio includes wireless systems,wireless voice devices,hi-

tech assesories, wireless data devices, mobile phones, mobile music devices, pc cards and multimedia

devices.

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This venture was born from the desire to combine the expertise of the two companies and since then

their individual manufacture of mobile phones ceased.After this, Sony and Ericsson started producing

moblie phones jointly and over the years, the Sony Ericsson brand of mobile cellular phones have

become quite popular with a current market share of 5.2% , a ranking of fifth in the supply of mobile

cellular phones. This shows a 0.5% decline over our past performance and this report will serve as a

guide towards finding ways to review and take startegic actions to solve this problem.

Due to current trends in the ever rapidly changing market environment,it has become imperative that we

review our strategy and this report will serve to outline some of the processes and ensure a continual

growth whilst maintaining our competitive advantage in the telecommuncations industry.

With this in mind, this brings us to the resources,competencies and capabilities that give us a

competitive edge.

RESOURCES, COMPETENCIES AND CAPABILITIES.

Resources are those things that a company possesses that serve to give them a more competitive edge

than their competitors. The resources employed by Sony Ericsson are;

• COMBINED TECHNOLOGY- Harnessing the excellence in the fixed telecommunications

sector of Ericsson and the technological expertise of Sony, with a long history in cutting edge

technology; gave Sony Ericsson an edge in having a resource of combined technology.

• HUMAN RESOURCES- In an industry that is as dynamic as the telecommunication industry, a

company must ensure that it keeps abreast of the technological innovation and its competition

and there is no greater resource that can support this than a workforce that is adequately

remunerated, motivated and inspired to serve as a driving force towards achieving the vision,

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mission and objectives set. Sony Ericsson has a dedicated workforce of approximately 60,000

worldwide. Of this number, over 45% hold degrees in relevant fields and over 55% hold both

first and second degrees in relevant fields. The skills set and experience that this workforce bring

is a major driver of acheiving the goals of the company. As a learning organization, skills and

knowledge transfer is enhanced between employees and this ensures that the company attains its

goals.

• FINANCIAL RESOURCES- The joint venture ensured that a large financial base was created

and this served as the the base for the take off of the venture. Investors and retained profits are

also a source of finance for the company.

• RELIABLE SUPPLIERS AND MANUFACTURERS- Meeting product specification in this

industry is a key to strong market presence and having a reliable set of suppliers and

manufacturers who meet the laid down specifications for our products is a key resource. Delivery

on time, high quality standards, the use of recyclable materials go along way to ensure the

sustainability of the brand.

• MANAGEMENT-At the core of any successful company is the leadership that ensures the

corporate strategic focus of the organization is aligned to the daily operations of the company.

Sony Ericsson has a competent management that has come together from both Sony and Ericsson

with a wealth of experience.

COMPETENCIES

Our core competencies lie in the creation and innovation of fantastic products that appeal to the

consumer and sustainability in production by ensuring the use of environmentally friendly materials and

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the recyclability of our products. Our distinct competency lies in the cutting edge superiority of our

additional functions to our phones that turn them into functional tools.

CAPABILITIES

Our capabilities lie in being able to combine creativity and innovation to meet the demands and

expectations of the consumer whilst meeting standards of sustainability of production in the industry and

our stron experience in phone technology.

All these combine to give Sony Ericsson an edge in the mobile cellular phone industry. So who are our

stakeholders and how do our current strategies affect them?

Stakeholder Map showing the relationship between Sony Ericsson and its various stakeholders.

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The bold lines show a strong relationship whilst the faint lines signify an awareness of these

stakeholders but that they do not have much of an impact on our strategies. The stakeholders sustain a

company by their reaction, involvement and investment. In light of this, a map showing the degree of

stakeholder involvement is important.

High

Keep satisfied Manage Closely

Shareholders Mobile Phone Industry regulators

Board of Directors Government

Employees Suppliers and Manufacturers

Monitor( With minimum effort) Keep informed

Competitors Public

Consumer Groups

Customers

Low Interest High

From the above, we see that the shareholders ,employees and board of directors play an crucial role in

the strategy employed as we need their total support to run the business. We must ensure that the

regulators and government are satisfied with our work, whilst we ensure that our suppliers and

manufacturers are completely aligned to our strategy of being the best global brand as far as mobile

cellular phones are concerned. The public, customers and consumer groups need to informed of our new

product offerins and we need to keep an eye on what our competitors are up to. All these factors have

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played a role in our current strategy of providing the tool that helps people to do more than just

communicate. Going forward, the role of our stakeholders will also help us to identify emerging

strategies of differentiation and geographic expansion.

GOVERNANCE CHAIN

A simple adaptation of the “Priciple Agent Theory” (set out below), which shows the responsibilities of

the ‘agent’ who are the management towards the shareholders and the linkages between them is set out

below. The objectives of management is to create value for the shareholder and the customer whilst

operating in a manner that does not fall foul of the regulatory bodies. Getting this mix right is as a result

of sound strategies that are usually evolving as the organization grows.In Sony Ericsson, this is

displayed by the numerous awards won in the industry and its current market position.

Objectives Performance
Indicators
Creating
Market Stock Market
Value Price
Corporate
Ensuring Governance Corporate
Profitability Finance

Balanced
Per-
Managing Corporate Operations
formance,
Management
Reporting
Customer
satisfaction

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ETHICS AND CORPORATE SOCIAL RESPONSIBILITY

Ethics refers to the set out standards of what is right or wrong within a certain context and in this case

the mobile cellular industry and what one perceives to be fairness of treatment to others as well as to the

society on the whole.

Sony Ericsson lays high regards on being an ethical organization and the human rights of its employees

and stakeholders. It also ensures that its operations are in compliance with the standards set out by the

industry regulators and as such have a code of social responsibility that is applicable to our suppliers.

We need to ensure that those we do business with have the same values that we have and as such they go

through thorough checks to ensure that they have similar corporate social responsibility codes as we do

and are equally committed to ensuring a safe environment by the proper use of limited resources. We

support the work of the Global e-Sustainability Initiative (GeSI) and Electronics Industry Citizenship

Coalition (EICC) that are trying to create better conditions for improving work standards and the use of

raw materials in production and the recyclability of materials.

The early economists came up with some of the following views on what ethics should be and how this

would impact on the role of business in society. The four major schools of thought were;

 Moral Philosophy – This promoted the thought that ethics should have self ownership giving one

the ability to decide what is right and wrong.

 Deontology- This was of the view that there are inherently good or bad ethics but did not take

into consideration the consequences of these actions.

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 Utilitarianism- This was of the view that anything that gave the greatest joy to the largest number

of people was therefore alright.

 Teleology- This was simply of the view that an action was either right or wrong.

 Egoism- This was a self-centered approach that felt people should act in their own self interest.

 Ethical Relativism- This was of the view that different people ought to have different standards

for evaluating right and wrong based on their values, culture and beliefs.

All these approaches tried to go to either one extreme or the other in either advocating for too much

liberty or too little. In view of this, there are regulations imposed to try and secure the interest of the

greater number for the good of society.

DEVELOPMENT OF MISSION, VISION AND OBJECTIVES.

According to Johnson, Scholes and Whittington (2008), an organization’s mission should describe what

it functions are in the society in terms of its products and services that it has on offer to its customers.

This should include its details of purpose and values.

Sony Ericsson’s mission (2008) is “to establish the Sony Ericsson brand as the most attractive and

innovative global brand in the mobile phone industry and be the prime driver in an all

communicating world. A world in which people can use voice, data, images and video to share ideas

and information wherever and whenever they want.”

Sony Ericsson’s (2008) vision “is to become THE communication entertainment brand. We inspire

people to do more than just communicate. We enable everyone to create and participate in

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entertainment experiences. Experiences that blur the lines between communication and

entertainment.”

A vision should be one that gives the description of a desired state of being. It is separated into corporate

and strategic vision. The corporate vision is the usually one that is all encompassing and an aspiration to

a future state. A strategic vision is one that the staff can relate to and lays out the operations to ensure

that the goals and objectives are made. The Polygon of Purpose can help do this.

Timing of
Strategy

Stakeholders
Leadership Leading to the
attainment of
Company Goals and
Objectives

Innovation
Growth and
Survival

Adding Value

An adaptation of The Polygon of Purpose from Lynch and

As the Polygon shows, no particular one of these elements is more important than the other. They all

play a role leading to the attainment of goals and objectives.

 Timing of entrance to suit strategy with a view to making sure that it is done at the right time and

ensures that when changes need to take place with regards to customer preferences and

technological innovation and advancement, they are also done on time.

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 Stakeholder mapping into three broad categories that have an impact on the mission of an

organization- shareholders for whom the organization needs to create the expected return on

investment, the employees who need to be given a workplace culture that fosters productivity,

stimulates creativity and delivers them with both intrinsic and extrinsic rewards, and the

customers who creates the revenue of the organization.

 Innovation of strategy, differentiation of products and the creation and sustainability of the

competitive advantage that makes the company stand out.

 Adding Value to products and the employees to get the desired results- better productivity and

higher revenues.

 Survival and Growth- ensuring that strategies employed promote growth and engender survival

whilst delivering stakeholder satisfaction.

 Leadership- keeping oversight duties of monitoring, reporting and critically appraising and

ensuring that stakeholder interests are met.

In view of the information that the

TRANSLATING MISSION INTO ACTION

Unfortunately, many organizations go for rather ambiguous and poorly conceptualized mission

statements that serve to leave everyone confused as to what their purpose is. A mission statement

should be realistic and highlight the capabilities of a company. Objectives then take the general purpose

of the mission statement and make it more area specific so that the operational strategy employed goes

on to support and achieve this statement.

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In order to translate a mission into action and thereby create value for shareholders, satisfy the customer

and create an enabling working environment, the following questions need to be answered;

 How will we evaluate our performance?

 Is the outlook bright from the position of our current strategy and if not, what emergent strategies

will we apply?

 Are there changes in the competitive environment that we need to analyze on how it may affect

our prospects?

 Is our technology narrow, sound, or broad and appealing to a large number of people?

 What are our resource strengths that will ensure us a competitive advantage when it comes to

innovation and product development?

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These questions can be examined with the aid of the Balanced Scorecard by Kaplan and Norton

(1996) who state that this ensures that organizations are able to translate their missions into the

desired outcomes of profitability and consumer satisfaction. It has turned out to be a better way of

performance assessment due to the fact that it not only considers the financial reports but looks at

other areas that monitor progress whilst ensuring that the organization prepares itself to meet the

challenges it will face by preparing adequately and acquiring future growth capabilities.

It has four basic perspectives-the financial perspective which deals with the shareholders perception

of what the financial objectives of a company are. The customer perspective which focuses on

customer satisfaction and increasing profitability, the growth and survival perspective which looks at

the ability of an organization to change and develop and the internal operational objectives which

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should foster productivity and have an effect on the image held by the customer of the organization.

All these have core measurements and ask specific questions.It should be noted that there is no one

generic formula for a balanced scorecard and the questions and measures can be made up to suit a

particular organization’s objectives.

However, it must be noted that the performance scorecard will only be valuable if its uses and

implementation is thoroughly understood throughout the organization, therefore the need for a

proper articulation of what it is and how it is meant to work is important for the whole organization.

In order to ensure that our mission and vision statements are viable and well thought out , it is

imperative that the following considerations are made;

 Ensuring that the mission of gaining the trust of the customer is a key concept and deeply

embedded in our actions.

 Making our brand so reliable that our customers gain brand loyalty for it. This ultimately

translates to higher profitability. A strong brand leads to survival and growth.

 Ensuring our commitment to the sustainability of the environment as this will engender us to the

community by promoting products that are friendly to the environment.

 Fostering a sense of oneness and eliminating discrimination by putting in place regulations that

do not look at race, class, sex or religion as a basis for employment.

Missions, visions goals, but do they really have an impact on the daily operations of a company?

There is the need for a link between these statements and the strategy as it is implemented on a day

to day basis in Sony Ericsson. In order to do this, there must be what is called the tradeoff point-

sometimes compromises have to be made for certain things.

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 SHORT TERM VERSUS LONG TERM- A mixture of both long term and short term

strategies to keep the business going. For example during the Christmas season ,Sony

Ericsson can make the most of this season with some interesting marketing concepts that are

just for the season and then go to the long term marketing plans of increasing the number of

phones it sells in the year.

 PROFIT MARGIN VERSUS COMPETITIVE ADVANTAGE- To gain competitive

advantage, in the short term, Sony Ericsson must focus on maintaining a competitive

advantage whilst gaining lower profit margins. This will translate to larger customer

appreciation which will translate to increased profits later onwards.

 PROFIT VERSUS NON-PROFIT OBJECTIVES- Profit emphasizes the returns made on the

investments of the shareholder as against that which complements the well being of the

general environment

 RELATED MARKET PENETRATION VERSUS MARKET DEVELOPMEMT- This is

the point when the company decides whether it should embark on strategies to get a bigger

share of an already existing market or rather pursue the capture of a bigger and newer market

with the rigorous development of distribution channels and the use of competitive pricing to

endear us to the local populace. Our current major markets are in USA, China, Italy, and

Spain to mention a few. It would be interesting to pursue the Latin American and African ith

markets as the people are gaining more economic empowerment and therefore acquiring

more sophisticated tastes.

RECOMMENDATIONS AND CONCLUSION

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Sony Ericsson, with its cutting edge technology and collaboration with BMG Sony, has taken

a step towards establishing a strong strategic partnership that will ensure that it is ahead of its

rivals in technological innovation. However, I believe attention to the following details will

help it to boost its position and emerge as one of the top three mobile telephone producers.

 Foster and create a culture of shared ownership that encourages collaboration,

learning and innovation, thereby encouraging entrepreneurs to spring up from inside

the company.

 Totally harness the power of its technology and promote research and development of

new products and new markets.

 Develop a strong distribution network that pushes the products all over either as

bundle packages or as stand-alone phones.

 Maintaining high ethical standards and punishing unethical and any discriminatory

action that could cause a dent on the image of the company.

According to Thompson Strickland and Gamble (2010), any future direction, performance appraisal and

future strategy is dependent on having a properly articulated strategic vision, clearly mapped out

objectives and strategies to achieve operational excellence lead to a strategic plan on how the

corporation as whole will progress.The driving forces of the continual growth of Sony Ericsson will be

determined by the emergent strategies that will arise out of the changes in lifestyles, increased

globalization, innovation of products and the appeal for an all round functional tool. Sony Ericsson is

positioned to take charge and grow as a leader in the industry and there are indeed exciting times ahead.

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REFERENCES

BOOKS

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Johnson, G.,Scholes, K.,and Whittington R. (2008) Exploring Corporate Strategy. 8th Ed. England: FT

Prentice Hall

Kaplan R.B., and Norton D.P. (1996) Translating Strategy into Action; The Balanced Scorecard.1st Ed.

USA: Harvard Business School .Pages 21-107

Lynch, R. (2006) Corporate Strategy. 4th Ed. England: FT Prentice Hall Pages 40-150

Mintzberg, H., Ahlstrand, B., and Lampel,J. (2009) Strategy Savannah 2nd Ed. United Kingdom: FT

Prentice Hall. Pages 185-238

Mintzberg, H., Lampel,J.,Quinn,J.B. and Ghoshal,S.(2003) The Strategy Process; Concepts, Contexts

and Cases.2nd Ed. England: Pearson. Pages 10, 20, 24-35

Schilling , M.A. ( 2005) Strategic Management of technological Innovation.1st Ed.New York: McGraw

Hill. Pages 84-89

Thompson, A.A.,Strickland ,A.J.,and Gamble, J.E. ( 2010) Crafting and Executing Executive Strategy;

The Quest for Competitive Advantage-Concepts and Cases.17th Ed. New York: McGraw Hill.

Pages 45-72

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