Global Organisational Environment


Global Organisational Environment
Portfolio: Sony Ericsson
Abdul Latif Sultan : s1010402 1/24/2011
Word Count: 3200 Standard APA Referencing Style

This report has been submitted in partial fulfillment of the Masters in Business Administration course module Global Organisational Environment. The report aims to introduce the organisation, its purpose and present an analysis of the organisation s external environment by using various tools of external analysis. The report includes bringing forward the key factors affecting Sony Ericsson, its market position and segmentation strategy employed by Sony Ericsson.

9 Market Share and Segmentation 10 Opportunities and Threats 11 ... .. 6 ... .2 Global Organisational Environment Table of Contents Introduction . .. 4 Global activities of Sony Ericsson The Organisational Structure and Governance Corporate Governance and Financial Risk Management Stakeholder Analysis 5 External Environment Analysis PESTEL Analysis for Sony Ericsson Porter s five forces analysis .. 4 .6 . 3 3 .....

. 2. while Ericsson is known for being highly competent in telecommunication technologies. is Sony Ericsson¶s primary and only in-house manufacturing facility [2]. accessories and providing content and application services in key areas of imaging. that this as a significant step in the telecom world [1] Another news article reports how Sony and Ericsson have replaced older successful research laboratories by researching on new technology such as the Bluetooth technology. US The production facility at Beijing . Sony Ericsson Mobile Communications established today. (2001).3 Global Organisational Environment Introduction to Sony Ericsson Sony Ericsson is a jointly owned venture of Japanese consumer electronics giant. standard and how this is an evolution in R&D [3]. RCR Wireless News. Beijing SE Potevio Mobile Communications Co. References: 1. (2003). Sony Ericsson phone marriage starts Oct. china Tokyo. Both companies ceased production of individual handsets. S. movies. 2001 with its global head quarter in Hammersmith (London). Sony¶s wide portfolio includes entertainment that encompasses of music. Retrieved from Business Source Complete database. games etc. After its incorporation in October. Sweden Beijing. which in their official documents is stated as ³to be the Communication Entertainment brand. Sony Ericsson has been working at high costs towards its vision.a marriage rather than just a joint venture and argues. 1. the corporation¶s presence can be felt almost all around the world and in most of the major markets [1][2]. Middle East and North Africa Asia Pacific China Japan Americas Their Research and development sites are located in: y y y y Lund. Cisionwire retrieved. Omatseye. design and other multimedia features to its users. music. enabling people to create and participate in new experiences which blur the line between communication and entertainment´ [2]. Ericsson maintains a good relationship with a number of telecom service providers [2][3]. Ltd. Sony Ericsson Mobile Communications AB SWOT Analysis. 1-8. 3.. Sony Corporation and Swedish Telecom player Telefonaktiebolaget LM Ericsson. (2001). Drawing on the strengths of its parents Sony Ericsson is involved in manufacturing mobile phones. Omatseye in an article calls this joint venture. Retrieved from Business Source Complete database. 1. Global Activities of Sony Ericsson: Sales and marketing activities of Sony Ericsson are concentrated all across the globe and divided in these following market areas: y y y y y y Western areas Central & Eastern Europe. Both of them hold equal stake in Sony Ericsson (50:50). Japan California. Sony Ericsson Mobile Communications AB SWOT Analysis. 20(18).

Executive Biographies.pdf Sony Ericsson. (2009). . The President keeps the board and the parent companies updated regularly on new 5. References: 4. liquidity etc.com Corporate Governance and Financial Risk Management: The Board of directors are responsible for the organization and operations of the firm. Each department follows its own chain of command within. from sonyericsson. Retrieved November 22.com/cws/download/1/823/52 8/1280492941/SE_Sustainability_Report_2009.1 Fig. http://www. Sony Ericsson. The structure is based on its functional divisions. The management of risks is executed by a centralised treasury function and its principal role is to ensure appropriate financing. manage the liquidity. The portfolio for the chief financial officer is held by William A. Glaser Jr. secure effective cash-management and conduct effective management of accounts receivables. Sony follows a policy for managing its financial risks. The post of executive vice president is shared by two competent persons. (2010). 2010. Rikko Sagakuchi and Kristian Tear. Bert Nodberg at the top level plays multiple roles as the Chief executive officer and the chairman of Sony Ericsson. developments.sonyericsson. Sustainability Report. Sony Ericsson s financial risk management is governed by a policy approved by the Sony Ericsson Board. The President. United Kingdom: Sony Ericsson.4 Global Organisational Environment The Organisational Structure and Governance: Figure 1. 1. The centralised treasury also manages and controls financial risk exposures in a manner consistent with underlying business risk and financial policy [4]. where different functions of the organization have been departmentalized. position of the organization.1 [4] shows the organisational structure at Sony Ericsson.

3-5. Board of Directors Figure 2. One of the few ways of stakeholder analysis is using the power/interest matrix. 8. Proceedings of the second internaitonal conference on Information Systems. 6. Corporate Social Responsibility Report. Based on his matrix we can map stakeholders on different quadrants. (1991). Stakeholders power analysis. In one of its CSR documents. 8. Mendelow. 2. Business Partners Local Communities High Government Shareholders. (2005). Sony Ericsson is known for its sound corporate social responsibility (CSR) practices. 7.1 . Suppliers.5 Global Organisational Environment Stakeholder Analysis Stakeholders are those who have rights or interests in a system [6]. Employees. Shareholders and parent companies Board of Directors Customers Suppliers Employees Other organizations Business Partners Local Communities Government The Mendelow¶s Power/Interest matrix indicates the type of relationship which organizations typically might establish with stakeholder groups in the different quadrants [8]. (2005). References: 6. J. Level of Interest Low Power Low 7.. Japan: Global reporting. Other Organisations. 4. 9. Mayers. 3. Stakeholder analysis is used to analyse the level of interest each group of stakeholder would generally show and the power they yield that affect the organisation in one or more ways. With more Research one can identify them as follows [7]: 1. A. Power-tools . Cambridge: MA. Sony Corporation identifies the potential stakeholders of Sony Ericsson. Parent co. Sony Corporation. High Customers. 5.

1 [9] maps the various stakeholders of Sony Ericsson according to Mendelow¶s Power/Interest Matrix. and by seeking to provide better value for money [11]. Proceedings of the second internaitonal conference on Information Systems. To analyse these factors they can be categorised using the PESTEL model. competitors. employees. Wood. The External Environment. competitive forces that are largely outside the control and influence of a business and that can potentially have both a positive and a negative impact on the business [10]. (2009). product suppliers. The External Environment of Sony Ericsson can be much better analysed using 2 popular and highly useful analyzing tools. Shareholders & the Parent companies (Sony & Ericsson) would be considered as the key players of the organisation as they yield high power to change strategies and their level of interest in Sony Ericsson is high. economic.co. References: 9. The government would be an entity which yields high power because of its ability to introduce or change laws for instance but they have a relatively low interest towards how the company fares & they have to be kept satisfied at always. from The Times 100 Website: http://www.6 Global Organisational Environment Fig 2. Mendelow. Managing Complexity. legal. 10. government regulations. tax etc. environmental. Local Communities would be considered as an entity with low power and low interest towards the Organisation because of the minimal effort they make. A. (1991). PESTEL ANALYSIS and PORTERS FIVE FORCES MODEL. because competitors will continually seek to gain an advantage over each other. partners are entities that would look forward to be informed about the business and have relatively low power but have a high interest in the organisation and its policies. 11. social.uk/theory/theory--theexternal-environment--236. SonyEricsson¶s customers. technological. R. (2000). PESTEL Analysis for Sony Ericsson: There are many factors in the external environment that would affect the decisions made by the management at Sony Ericsson. Retrieved 1 2010. Cambridge: MA. policies. Sony Ericsson would be affected by its competitors because their actions affect the ability of the business to make profits. Changes in law. The Board of Directors.php . standards. External Environment Analysis Business environment is a set of political. by differentiating their product and service. are examples of factors that would affect the organisation externally. The Economist books.thetimes100.

for example. Sony Ericsson has had to formulate new strategies in 2010 with respect to segmentation and to work out the new prices of products being launched in different markets because of the changes in these exchange rates.oup. References: 12. exchange rates. demand for sheltered accommodation and medicines have increased whereas demand for toys is falling. Due to the changing social scenarios and realizing that businesses play an important part in the global community. Political stability of existing or potential markets affects the decisions made by the management at Sony Ericsson. Oxford University Press Website: http://www. Gilespie. According to Gillespie ³this also has an impact on the availability and willingness of individuals to work. government priorities etc. The Rate of borrowing in the UK where the co. Due to the credit crunchy and the ongoing recession most countries have been facing. rate of borrowings. is originally based in is very low is significantly high in 2010 which would affect their plans for expansion.htm . Social Factors: Changes in taste.pdf 13. United Kingdom: Sony Ericsson. Sony Ericsson. It has to do with the economic scenario of the country(ies) it carries out operations in. there have been significant changes in exchange rates in 2010 which affects imports and exports made by Sony Ericsson worldwide. Government decisions can affect Sony Ericsson up to a high extent. Sustainability Report. indirect interventions by the government. Low growth in the National income of most of the countries has been resulted in low demand of the firm¶s products. The ageing population also has impact on demand: for example. The Economic conditions in the UK and other western countries are not very good with huge economic trade deficits. trends of people affect the organisation too. (2007) Foundations of Economics. http://www. Inflation has been provoking higher wage demands from employees. It also has an impact on the demand of the firm¶s products. the population has been ageing. It also means some firms such as Asda have started to recruit older employees to tap into this growing labour pool. Sony Ericsson has been having drives to work towards the benefits of the society and employee welfare. Sony Ericsson protects the human rights of all its employees and complies with all the local and international regulation policies with respect to Human resources. Other components of these factors include using Ethical business practices and employee welfare. Economic status prevailing in different countries and especially the United Kingdom would affect Sony Ericsson significantly. Because of these increasing costs and problems Sony Ericsson has had to reduce the size of its organisation in terms of its In 2010.com/uk/orc/bin/9780199296378/01stu dent/additional/page_12. [13]´.7 Global Organisational Environment Political Factors: These factors include all the policies or other direct. (2009).sonyericsson. In the UK. Sony Ericsson is present in a number of different countries worldwide and the political scenario in each one of them would affect them in one way or the other. Sony Ericsson has also been involved in other causes and fund raising programs [12].com/cws/download/1/823/52 8/1280492941/SE_Sustainability_Report_2009. the uncertain global economic climate has had a negative effect on Sony Ericsson and as a direct result of this it was necessary to remould and reduce the size of the organisation around the world. Economics Factors: These factors include more of macro-economic changes such changes in tax rates. Without these reductions it would have been impossible for Sony Ericsson to remain competitive and to continue to operate effectively [12]. This has increased the costs for firms who are committed to pension payments for their employees because their staff are living longer.

For E. Technology helps Sony Ericsson reduce costs. Environmental Factors: Environmental factors involve contributing towards avoiding weather and climate change and being sustainable towards the environment. Legal changes can affect a firm's costs (e. In order to stay ahead of its competitors they have to stay updated at all times and regularly research and develop.sonyericsson.htm 15. and lead to innovation and new developments. Oxford University Press Website: http://www. http://www. Legal Factors: It refers to the legal and regulatory environment Sony Ericsson operates in locally or internationally.g. The Walkman series.g. All this was done because of the changing environmental guidelines and more awareness because of environmental problems [15].g. reducing mobile charging and power consumptions.com/cws/download/1/823/52 8/1280492941/SE_Sustainability_Report_2009. this was all possible due to the technological advances. an increase in the minimum wage and greater requirements for firms to recycle are examples of relatively recent laws that affect an organisation's actions [14]. The introduction of age discrimination and disability discrimination legislation.com/uk/orc/bin/9780199296378/01stu dent/additional/page_12. trade restrictions enforced on many countries for e. Sustainability Report.. Syria References: 14. improve quality. (2009). Gilespie. they strive to reduce emissions in their product lifecycle. Cybershot high definition cameras embedded in cellphones etc. Sony Ericsson works around technology. These products benefit the company as well as its customers. The general move towards more environmentally friendly products and processes is affecting demand patterns and creating business opportunities [14].8 Global Organisational Environment Technological Factors: With new technology Sony can create or innovate products for e. Other factors that have affected Sony Ericsson recently are changes in International policies and environmental acts. import of Chinese products in some countries e. use more of renewable resources of energy. United Kingdom: Sony Ericsson. if the law affects the likelihood of customers buying the good or using the service). With major climate changes occurring due to global warming and with greater environmental awareness this external factor is becoming a significant issue for Sony Ericsson and other firms to consider. it has reduced its carbon footprints significantly by 2009 and aim to reduce it by 20 percent by 2015.oup.g. Due to the recent environmental issues and new guidelines towards sustainability. (2007) Foundations of Economics.g. Sony Ericsson has had to take initiatives towards being sustainable.pdf . Sony Ericsson. In 2009 and 2010 there have been there have been many significant legal changes that have affected Sony Ericsson. committing to recycling.g. if new systems and procedures have to be developed) and demand (e.

9 Global Organisational Environment Porter s five forces analysis: The Five Forces model of Porter is an outside-in business unit strategy tool that is used to make an analysis of the attractiveness (value. LG. high investment might be a barrier for new players. 5.. M.. References: 16. 3.E. but it is not very difficult for new entrants to setup.g. For e. Threat of substitutes: The degree of threat is relatively high and depends on the product and its features. the power of buyers in Asia is relatively higher than the west. Rivalry among existing players: There is very strong competition in this industry. There are a large no. and Samsung. For e. Bargaining power of suppliers: Suppliers aren¶t very strong in case of Sony Ericsson. Harvard business Review. Although a few telecom regulations. Porter. Power of buyers: The power of buyers in some markets is very high and some its very low. Nokia is the strongest competitor and the company that is dominant. The Competitive Forces analysis is made by the identification of 5 fundamental competitive forces [16]. Sony is affected by the power of buyers around the globe. 2. cheap tablet android computers. Other competitors that SE faces threat from are Blackberry. Suppliers do not have a very high power. There are a number of big and small players that affect SE. March/April 1979 . Sony Ericsson has had to introduce cheap multimedia phones to avoid customers from shifting to other multiple cheap substitutes like Mp3 players. 1. of suppliers that can meet the requirements of the firm. Entry of Competitors: It is not very difficult for new entrants to enter the telecommunication and multimedia market.) of an industry structure. (1979) How Competitive Forces Shape Strategy. 4.g. the launch of 3 new mobile phone companies in India offering cheap mobile phones has had a negative impact on Sony Ericsson and similarly in other countries.

Retrieved November 20. (2010. "It's all about making the devices appealing enough so that they can compete with the likes of the iPod and people will spend the extra money on that rather than on an iPod. Sony Ericsson. (2006. H. October 15). September 20).008 units in 2010 out of 325.com/cws/corporate/press/pr essreleases/pressreleasedetails/q32010semcfinancialsp ressrelease-20101015?cc=global&lc=en 18." he said. Both demand and technology for handsets with wireless internet. Tech News World . Robin.10 Global Organisational Environment Market share and segmentation The market share of Sony Ericsson by the end of 2010 was better than before. mobile social networking SE aims to capture a share of the teenage market. With the introduction of its Satio series it aims at the the other age groups and class of people. 2010. This has influenced Sony Ericsson to mould its strategies to fit into the current scenario. . Q3 Financial Press Release.5% and the value market share has been somewhere around 6%. better storage. Introducing phones with multimedia features and more options like music.473 units [17]. Its sales accounted for around 11. of market segmentation policies in the past.g. Sony Ericsson to Launch M-Buzz Music Service. cameras and music capabilities are increasing. But its segmentation in 2010 has been introducing more of business and high end phones with high features for e.sonyericsson. It was around 3. According to Robin Hohman from Technews world Devices like Sony's PSP and other multimedia gaming terminals and portable media players like the iPod have shown that if kids want something they can definitely find the resources to buy it. Nokia being the biggest player managed to sell 111. Sony Ericsson has employed a no.556 that were sold totally. Innovation in its Walkman series is also one of its segmentation. the Xperia series. [18] References: 17. games. from Sony Ericsson Website: http://www.

Retrieved from EBSCOhost. as the mobile content services market is forecast to cross $130 billion by 2015. the first phone in a family of phones with a new user experience (UX) platform. which enables users to listen to the music by plugging in two earphones and pause by removing one earphone.11 Global Organisational Environment Opportunities and threats facing SE in 2010 Opportunities ‡ Expanding content service business New product launches Growth of Smartphones Threat ‡ Intense competition Environmental Regulations Sony Ericsson to ensure its devices include the most desirable applications and features for consumers. The UX platform. This strategy allows . The company also offers smartphones to its customers as part of its portfolio. ‡ ‡ ‡ According to Data Monitor Reports and research the opportunities and threats in 2010 for SE can be stated as follows. Additionally. Sony Ericsson announced. the company launched Sony Ericsson Vivaz. C901 GreenHeart and Naite. X10 mini and X10 mini pro smartphones. Growth of smart Phones: The global smartphone market is expected to grow in the coming years. in addition to music and game downloads. It also launched the world¶s first motion activated headphones. In November 2009. In addition. integration of social media services and graphical user interface. In December 2009. The company's expanding content services business will allow it to record steady revenue from these services in coming years. in June 2010. Also. The company's increasing new product portfolio will help it to gain market share and revenues in coming years. the Sony Ericsson Hazel phone and the Bluetooth Noise Shield Handsfree VH700 to its GreenHeart portfolio. in September 2009. [19] References: 19. In addition. including China and India. and Central and Latin American states. The company also has content licensing deal with Sony Music Entertainment. According to the industry sources. In June 2009. it has expanded PlayNow to offer movies and an application store. PlayNow is Sony Ericsson's content delivery platform. which aims to broaden and unite entertainment experiences into a single offering. In addition. Sony Ericsson launched Xperia X10. MH907. In recent times. compared to 14% in 2009. the smart phones are expected to represent 26% of all handsets in 2014. the company added the Sony Ericsson Elm phone. 1-9. Sony Ericsson Mobile Communications AB SWOT Analysis. in 2009. Growth of smart phones presents an opportunity for the company to enhance its revenues in the coming years. More than 50% of this growth in handsets is forecast to come from the developing markets of AsiaPacific. Opportunities: Expanding Content Service Business: The company has been expanding its content services portfolio in recent times. its 'Communication Entertainment' strategy. the company launched the Xperia X10. DATAMONITOR: Sony Ericsson Mobile Communications AB. the company introduced its first mobiles as part of GreenHeart portfolio strategy. creates user experience by combining entertainment features with signature applications. New Product Launches: Sony Ericsson has been launching new products in recent times. the company introduced VH110 and VH410. the smartphones are forecast to grow at an annual rate of 32% between 2010 and 2014. built on the Open OS. new Bluetooth headsets in June 2010. the second installment in a new family of communication entertainment phones and also with HD video capabilities in January 2010. (2010).

waste management. among others. RIM. the company has been facing competition from South Korean mobile device companies such as LG and Samsung. HP and Samsung. In the low end mobile devices segment. including laws and regulations relating to air pollution. Some public interest organizations are advocating for strengthening of the RoHS directive by imposing restrictions on all BFR as well as polyvinyl chloride (PVC) in electronics put on the market. Similar regulations are being formulated in other parts of the world. . the management. the company is required to comply with a number of environmental regulations enacted by the European Union such as the Restriction of Hazardous Substances (RoHS) Directive. elimination or reduction of the use of hazardous substances. Additionally. while it continues to compete with Nokia and Motorola. Intense competition will continue to affect the company's operating performance and market share in coming years. water pollution. including China and South American countries. Non compliance with these regulations may result in penalties or suspension of the company¶s operations thereby adversely affecting its brand image. HTC.12 Global Organisational Environment Threats: Intense Competition: The company faces severe competition in the mobile phones market. Nokia. decreases in the level of standby power of certain products. it is also facing competition from mobile network operators offering mobile phones under their own brand. In the high end mobile devices/smartphones segment. The company may incur substantial costs in complying with the above-mentioned regulations and other similar programs that might be enacted in the future. the company is facing intense competition from Apple. batteries and packaging materials. and recycling of products. The company's market share and revenues have been significantly affected by intense competition in recent times. For instance. restricts some heavy metals and two types of brominated flame retardants (BFR). Environmental Regulations: Sony Ericsson is subject to a broad range of environmental.

Retrieved 1 2010.php . The External Environment. Sony Ericsson. 4.htm 13. http://www. (2005). Oxford University Press Website: http://www. Retrieved November 20. A. Sony Ericsson.sonyericsson. 2010. Retrieved November 22.com/cws/corporate/press/ pressreleases/pressreleasedetails/q32010semcfinanc ialspressrelease-20101015?cc=global&lc=en 3.thetimes100. 1. Retrieved from Business Source Complete database. (2001). September 20). 20(18). Sony Ericsson. Managing Complexity. (2010. Sony Corporation. from sonyericsson. Proceedings of the second internaitonal conference on Information Systems. (2009). 5. A. M. 1-9. Robin. Proceedings of the second internaitonal conference on Information Systems. October 15). (2003). Sony Ericsson Mobile Communications AB SWOT Analysis. 10.sonyericsson. Sony Ericsson Mobile Communications AB SWOT Analysis. R. Mendelow.com/uk/orc/bin/9780199296378/01s tudent/additional/page_12.co. Omatseye. Sony Ericsson Mobile Communications AB SWOT Analysis. Wood. 8.13 Global Organisational Environment BIBLIOGRAGHY 1. (2000). (1979) How Competitive Forces Shape Strategy. Q3 Financial Press Release. Retrieved from EBSCOhost. (1991). Tech News World .oup. 12. Harvard business Review. 2010. (2001). Sony Ericsson phone marriage starts Oct. (2009). DATAMONITOR: Sony Ericsson Mobile Communications AB. S. Japan: Global reporting. Mendelow. Stakeholders power analysis. (1991). 7. (2007) Foundations of Economics. Retrieved from Business Source Complete database. RCR Wireless News. J. Executive Biographies. Power-tools . 16. 1-8. Sony Ericsson to Launch M-Buzz Music Service. from The Times 100 Website: http://www.E. 9. (2006. (2010). (2010).com/cws/download/1/823/ 528/1280492941/SE_Sustainability_Report_2009. Sony Ericsson Mobile Communications established today.uk/theory/theory--theexternal-environment--236. March/April 1979 2. 11. The Economist books. Cambridge: MA.com 6.p df 15. Cisionwire retrieved. (2005). from Sony Ericsson Website: http://www. Porter. Gilespie. Corporate Social Responsibility Report. 3-5. H. Mayers. 14. Cambridge: MA. United Kingdom: Sony Ericsson. 1. Sustainability Report.

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