The Analysis of SONY Corporation - Research Paper Example

Research Paper: SONY Introduction about SONY The Sony Corporation which is most commonly referred to as SONY was founded in the year 1946 by Akio Morita and Masaru Ibuka. The company has its headquarters in Tokyo, Japan. The company has followed diversification strategy in its business operations though the business is majorly focused on electronics, financial services, games and entertainment sectors. The company through its innovative practices has turned to be the market leader in manufacturing electronic products for the professional as well as consumer market. In the Fortune Global List the company is ranked to be in the position 87th in the year 2012. The parent company and the electronic business unit of the Sony Group is SONY Corporation. The company is majorly operating in the entertainment and electronic products segment. The success and expansion in terms of market share has made the company one of the comprehensive companies in the entertainment sector. The Japanese based company focuses on products such as TV, computers, audio, gaming devices, movies and music. The company over the years has been witnessed to develop its in-house standards for various storage techniques and new recording measures. The company did not adopt nay of the standards that was set forth by other manufacturers or other organizations. The company either individually or in collaboration with other partners has developed many new forms of recording formats such as blue-ray disc, floppy disc and compact disc. The company has a wide range of products that it offers to the global markets and it has incorporated the best of technologies in its devices so that the company is at par with the competition. The company has established its position as the highest revenue generation company in Japan. In the year 2013 the overall revenue that was generated by the company was over ¥6.493 trillion and it maintains positive cash flow in the system. Corporate Social Responsibility The major objective of the corporate social responsibility activities of the company is to enhance its corporate value that it performs through sound practices in its business operations and innovation. The CSR activities of the company highlights the innovation through its services and products that excites as well as inspires, extending support so as to develop a sustainable as well as better society, and providing assistance to those communities in which they operate. The company believes that the activities that they perform enhances their corporate value and at the same time is beneficial for the society (Sony Corporation, 2014). The expectations of the society of the company constantly emerge with the product line diversification of customer lifestyles and markets, and also along with the changing concerns of the stakeholders in the industry. The strategy that has been adopted by the company aims at enabling strength for the business operations and also helps to achieve targets of the business (Sun, Stewart and Pollard, 2010).The CSR agenda of the company comprises of various bold initiatives that has helped the company to build a strong position in the society. The CSR agenda is given below- \ (Sony Corporation, 2014) The company believes that in order to develop a strong operating foundation it is essential to address the interests of its various shareholders. This activity that is undertaken by the company in relation to satisfying the interests has ensured sustainability in terms of business activities as well as business growth (Idowu and Louche, 2011) .The company in order to gain the level of trust of its shareholders undertakes a range of CSR initiatives. Customers The company takes proper measures so as to ensure that the products meet as well as exceeds the performance that is expected through functionality, quality and safety that is assuring to the consumer market. The group focuses on improvement of its products as well provides some of the added conveniences. The major goal of this initiative is to enhance the level of customer satisfaction. The company is committed towards improving upon the product quality and considers usability to be one of the most important aspects of its products by making its products to be easily used by its customers. Shareholders The principle goal of this initiative is to maintain swiftness as well as transparency in the system and even encourage on continuous escalation in terms of corporate value as well as finances. The company maintains strong relations with all its investors through announcements of earnings and organizing meetings based on a specific time interval so that the various issues of the shareholders can be properly addressed. Business Partners The major goal of this initiative is to ensure transparent, fair procurement practices, and to be appropriate in line with the code of conduct with the company. The goal can be further extended which encompasses that the procurement practices are aligned with the harmony of the society and environment. This would majorly include human rights, labor issues and various conflict minerals. The company in order to address the new lifestyles and age of advanced technology there are talented personnel who are hired from diverse background and culture and even take proper initiatives so that a positive workplace environment can be maintained. The company even has incorporated training and development programs so as to ensure that their specialized skills amongst the team members that are being developed so as to tailor the local needs (Sony Corporation, 2014). The company even has adopted initiatives to make the employees be properly aware of the social issues so that they are able to relate to it and take active participation in community projects, fundraising activities, etc. Employees The company has been able to extend their support to all the employees that are coming from diverse background or rather the company follows the principle for equal opportunities of employment. The company also incorporates promoting strong leadership who would be involved in driving the growth in the future. The company believes that employees who would possess the technical skills can encourage more improvements. The culture that is followed by the company facilitates two way communications through town hall meetings and employee surveys. The company even supports individual efforts in relation to career building. The company fosters the growth and development of talented employees and also undertakes hiring employees from diverse backgrounds ensuring that the employees would be able to learn from one another and develop a corporate climate that is rewarding by nature. Local Communities The company encourages various activities and even influences positively the local communities in relation to the area of expertise of Sony Group. The company even incorporates measures so as to provide relief in emergency situations and work in collaboration with the NPOs and NGOs so as to resolve issues that are presently facing the society. The company implements various community engagement activities in the field and in the fiscal year 2012 it has spend a total amount of 3.3 billion yen. The company undertakes a wide range of educational programs, has set up a musical foundation where it nurtures talented children having interest towards music, takes initiatives to protect biodiversity and works along with WWF, Japan, organizes photography events for children with UNICEF and also forms collaboration in sports events, and extends help in crisis or disasters such as earthquakes in Japan (Sony Corporation, 2014).The company through capitalizing on its superior technologies strives to reduce the overall environmental impact that is caused through its business activities and even delivers services and products that are environmental conscious and enrich the lives of the customers. Global Environment The company takes steps to reduce the environmental footprint of its business activities and life cycle of the goods to zero. The company adopts measures so as to reduce the overall carbon dioxide emissions of its business activities. The company maximizes the utilization of resources that can be recycled, it implements water conservation, and promotes recycling and collection of end-of-life goods (Idowu and Filho, 2008). The company prevents the rate of pollution by avoiding the use of chemical substances, promotes restoration and conservation of biodiversity and facilitates use of biodiversity friendly products. NGOs, NPOs and other organizations The company works in collaboration with the NGOs and NPOs so as to resolve any form of social issues. Sony takes active participation in CSR related projects as well as organizations and even in global frameworks. Globalization of Markets and the Internationalization of the Firm The PEST analysis comprises of various forces such as political, economical, social and technological that helps to outline whether the business operations of SONY is worthwhile to enter into new countries and emerging markets. The major political factor comprises of reduction in the tariff rates in the European countries. This factor would majorly affect the export and import practices of the Sony Corporation and due to such policy prices would be modified. The emerging markets comprises of political factors that are unfavorable ad even affects the business operations such as political instability, regulatory and unforeseen legal changes such as that of foreign exchange, export and import controls, and the potential conflicts that prevails amongst the developing nations (Thompson and Martin, 2010). The economic factors comprises of various dimensions such as people in developing countries who has minimum wages cannot afford Sony’s products as they are very expensive. There even exists uncertainty in the economic situation of the developing countries that would have an effect on the future earnings of the company. There even prevails fluctuations in the foreign exchange that can have an impact on the financial results of the company as large portions of the assets and sales of the company are denominated in other currencies except for yen (Sadler, 2001).The social factor states that in some of the markets the preferences and needs of the customers tends to similar and since the electronic goods are standardized in nature culture do not has a great impact on such products. This in turn facilitates chances for such standardized products to be sold across the globe. The technological factor states that to possess advanced technology so as to be competitive in the market place is the major issue and in order to produce innovative products which cannot be imitated by other competitors easily the company needs to invest on a continuous basis and even enhance further improvement of its R&D department (Cole, 2003). Global Sourcing Sony Corporation is a Japanese multinational company headquartered at Tokyo in Japan. The company generally produces electronic items, computer hardware, video games, telecom equipments etc. Now the Sony Global Solution Inc., a subsidiary part of Sony Corporation has signed an agreement with Accenture for providing maintenance services and information system operations. These two companies have agreed to establish a joint venture in the month of April, 2014 to provide such kind of services. Accenture gave commitment that they will try to provide such kind of services in more reliable and efficient way. The name of the joint venture has not been determined yet. Number of employees involved in this joint venture are 200 (Saxena and Bharadwaj, 2009). The share holding percentages are as follows: Accenture 80% and Sony 20%. Accenture is an outsourcing company which is also providing technology services and management accounting. This joint venture will be very much helpful in case of business activities of these two companies. Both the companies will be capable to meet their profitable client demand through this joint venture. They will exchange their resources and skills for holding the leadership in the market. If there will be any lack of interest from both sides then reputation will be hampered and liabilities will be increased in both companies. So they will be concerned about their customer satisfaction and reputation. No one can breach the contract as they are liable to protect the interest of both company’s customers. This is a process to expand the business activities. If they will not take any kind of steps to expand their business activities then result of operation will be negatively affected. They can be able to fix the sufficient pricing level to get maximum profitability. They will also be able to provide that facilities which are given by new entrants in the market due the change of technology (Jacques, 2006). Sony Corporation also plans to outsource the production of its LCD TVs for American market. This outsource strategy will help to reduce the cost of production and to focus on the research, development and design activities. For this reason they did a contract with Hon Hai Precision Industry. This company is Taiwanese contract manufacturer and operates their trade under the name of Foxconn. The production turnover of Sony will be increased if they will start to outsource their LCD TV under the popular brand name ‘Bravia’. Hon Hai is one of the world’s largest contract electronic manufacturers and already manufactures play station and other devices for Sony (Nystedt, 2009). They are also making gadgets like iPhone and iPod for Apple, personal computers for Dell etc. in such case Hon Hai will buy 90% stakes whereas Sony holds only 10% shares. Through this external manufacturing resource Sony will be able to reduce the fixed cost of production, achieve business expansion in the region of America, enhance profitability and make the product differentiation. Sony is currently 3rd largest manufacturer in the world for producing LCD TVs after Samsung and LG and through this above mentioned outsource strategy the company expects to sell 25 million LCD TVs in the global market (Davis and Davis, 2010). Sony outsources information technology services and its development from India and did tie up with Indian based company Satyam Computer Services. They are providing IT development function, SAP application development, testing services, enterprise application integration etc. to Sony. Satyam also handle the IT development in case of sales, distribution, finance, business intelligence system and warehouse management. This contract will be helpful for Sony Infrastructure Services Limited to focus on the company’s core activities such as innovation of new design, optimization of resources and enhancement of the platform (Meyer, 2006). Foreign Direct Investment During the year 1953, Sony Corporation took decision to shift their domestic business in the international market. Foreign direct investment can be defined as the ownership of at least 10% of a foreign company’s capital which is owned by any individual or business. There were so many beneficial plans before taking decision for foreign direct investment by Sony. The primary objective was to allow the usage of money in flexible way wherever the business will get the advantages of growth. Generally investors will aggressively seek the best return of their invested money with low risk. Again this strategy will give competitive advantage to the company (Garrahan and Ritchie, 2013). The owner of the company can also diversify the risk associate with the business by holding the market outside of a specific country (Froot, 2008). In the month of February, 1960 Sony started its business in US and launched world’s first portable direct view TV. In the year 1968, they established their business at Zurich in Switzerland. In the year 1996, the company expanded its business in China. Till the year 2012, company’s main foreign direct investment sources were Hong Kong, New York and China. In China, the company expanded their business for comparatively lower cost of production and to minimize the financial risks. In United Kingdom, they returned back their profitability status in case of selling television products. They are also getting profitability in their core business products which were game, mobile, imaging etc. The company was reinforced for new business such as security; medical etc. to deliver significant growth in the business. There were a lot of scopes for growth in US market especially for the product of personal computer. So the expansion of business and foreign direct investment in US was a profitable decision (Cullen and Parboteeah, 2009). In 2012 they finally started the foreign direct investment policy in India. Here they provided a superior retail experience, improve the margin of profitability and break the various layers of distribution. The government of India gave them a condition and this condition was if the company will follow the 30% local sourcing norms then they will get permission about the 100% foreign investment in single brand retail. There is multi of scopes to win market share in India through the company owned stores. Whenever the FDI policy will be changed the company will review the related business plan. This will help the company to control the distribution of product and convince the customers about the technology used and the usage benefits of Sony products. India also allowed them for 100% foreign investment and the company also sourced 30% of materials from medium and small enterprises of this country (Ito and Krueger, 2007). Labor displacement is another reason for giving permission to Sony by the Indian Government. Sony is the 1st consumer electronics company in India and 3rd foreign company after IKEA and Pavers. As the company has not any manufacturing plant in India so 30% local sourcing norm was a big challenge to them. They were also unable to purchase any significant component and raw materials from Indian market. Presently they are importing products from Japan, China, Thailand and Malaysia. The company has more than 250 retail center under the brand name which is ‘Sony Center’ across all over India. These stores are managed and owned by the franchisee partners. The company believes that strong retail store network concept is very much important to win customers from competitor brands (Nathan, 2001). Conclusion At the part of conclusion this can be said that many external influences felt an impact on the technological changes of the company and its products. The company always takes proactive action during the time of changes rather to react against the changes. They expand their market not only in the domestic field but also in the international market through the continuous development of products and innovative research. The technological advantages of products give the company a strong and stable position in the present market. The company also takes proactive part in the section of corporate social responsibilities. Sony always maintains strategic relationship with Microsoft, Yahoo, Phillips, Intel and other major companies in the world market. It has established its subsidiaries all over the world mainly in US, UK, China and India. Manufacturing, designing, selling and distributing products, marketing, customer services these are the major activities of the company. It is also leading motion picture and television Production Company in US and worldwide. Electronic goods such as computer, television, web cams, radio, play station, various games etc are produced by the company. The company is also dedicated to protect the environmental affairs, reduce pollution and conserving natural resources. In the year 1991, company adopted such policies regarding environment. They help financially to many NGOs. This company always keeps in mind about the satisfaction of customers and trying to fulfill their demands by providing quality products and services. It also creates several opportunities for employment and provides healthy working environment and financial satisfaction to its employees. The company also gives full concentration regarding the political, social, technological and economic factors in case of globalization of markets. Threat of tariffs for entering any new market, foreign exchange policy, customer’s preference and requirement of advanced technologies are required in such case. References Cole, G.A. (2003). Strategic Management. Singapore: Cengage Learning EMEA. Cullen, J. and Parboteeah, K. (2009). International Business: Strategy and the Multinational Company. New York: Routledge. Davis, C. and Davis, E. (2010). Managerial Accounting for Strategic Decision Making, Preliminary Edition. New Jersey: John Wiley & Sons. Froot, K. (2008). Foreign Direct Investment. Chicago: University of Chicago Press. Garrahan, P. and Ritchie, J. (2013). East Asian Direct Investment in Britain. New York: Routledge. Idowu, S. A., and Filho, W. L. (2008). Global practices of Corporate Social Responsibility. Germany : Springer Idowu, S. A., and Louche, C. (2011). Theory and practice of Corporate Social Responsibility. Belgium: Springer Ito, T. and Krueger, A. (2007). 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