1.

Identify and analyze the reasons, why there was a declining trend in the profit
performance of Sony?

Answer:
Sony Inc. one of the largest renowned company whole over the world but if we see last few
years Sony performance not well as like previous. Last ten years profit are declining one of the
main reason its consumer electronics division. Like other division Sony consumer electronics
division performance wasn’t sustainable. The main product which produce loss in consumer
electronics division is Walkman and Sony WEGA TV model television. This two product create
competitive threat for Sony because other competitor produce Walkman in low price due to low
labor wages and WEGA TV was CRT TV which is not updated TV technology like LCD, at that time
other competitor of Sony like Sharp, Samsung are start produce LCD TV. Another electronics
product Laptop name is VAIO which screen display was excellent but due to high price Sony
cannot compete with lower production cost laptop like HP, Dell computers. So if we summarize
the declining trend in the profit performance of Sony we can find below reasons:

1. Shift away from innovative product:

For many years Sony cannot produce innovative product like past years. In past Sony
produce many of innovative which was profitable but after 1990 Sony cannot produce
innovative product where Sony rival or competitor produce lots of innovative product in low
cost.
2. Involve in Unprofitable Business:
Sony involve unprofitable business like TV, CD player which is facing heavy competition due
to lower cost of other competitor. Sony maximum employee from japan where labor wages
is high but competitor are producing their product in low wages country so their product
price is low and profit also high.

3. Large Size and conflict of interest :

Sony is a huge multinational company and its number of employee also huge So conflict of
interest between employee of the company are regular incident. So conflict of interest
between companies was one of the main reason for declining profit.