Sony Incorporation Issues - Case Study Example

Sony incorporation case study Introduction Sony Corporation was founded by two partners namely Akio Morita and Masaru Ibuka in the year 1946 as Tokyo Tsushin Kogyo (TKK), a start-up electronics company which emerged from scratch in Tokyo. Sony’s earliest products were tape recorders and audio tapes. The name of the company was changed to Sony in the year 1958 to make it easier name for the westerners to pronounce it. The name Sony combined the Latin word for sound, sonus, and the English language term of endearment, sonny. The company introduced the first transistor television in 1959, and then followed by the first solid state video tape recorder. The company employs approximately 168, 000 around the globe. Sony Corporation designed and manufactured electronic and audio products in Japan during the 1950s and 1990s for exports. Due to the fact that labor costs were much higher in the USA than in Japan, the company decided to manufacture their goods at home and pursued export strategy. More than a half of Sony sales were done outside Japan by the year 1960 with USA playing a bigger role. Sony became the first Japanese company to be listed on the New York Stock Exchange during the years 1970 after establishing their sales office in 1960 in the USA. Sony introduced a breakthrough color television with superior technology in the year 1960, known as Trinitron; this achievement established the company’s reputation. Sony corporation strategic management: Sony corporation business goals The company has been understood by most scholars to mean a nationally based company with overseas operations. The transnational company is market driven, where the allocation of resources is predicted on economics goals and efficiencies with little regard to national boundaries (Gaspar 2010). Now Sony is embarking on its logical step by trying to develop a super microprocessor that would integrate its audiovisual and broadband networks more closely with it hardware and software business. The challenge that Sony faces as it moves to the future is trying to straddle the consumer electronics, software, and media sectors against competition from other giants like Samsung, Time Warner, and Microsoft. Sony corporation mission statement strategy Sony is global company that operates in over 204 countries worldwide. According to Howard Stringer (CEO of Sony), Sony, mission for the future is to become a leading global provider in the sector of network consumer electronics, entertainment and services. Sony wants to challenge its designers, producers and designers to improve their hardware as well software in terms of innovation in order to further the differentiation process towards its competition (Tribe 2004). The purpose of this report is to analyze Sony’s current situation within the electronics industry by assessing its macro and micro-environment factors in order to offer future strategic recommendations for the corporation. Sony corporation vision strategy A vision is a more than a dream. It is an ambitious view of the future that everyone involved can believe in, one that can be realistically be achieved, yet one that offers a future that is better in important ways than what now exists (Daft 2008). By the year 1950s, Sony Corporation wanted to become the company most known for changing the worldwide poor-quality image of Japanese products. Since that time, Japanese companies have become known for quality, but unlike in the past when this was a highly ambitious goal that fired people’s imaginations and sense of national pride. Sony corporation business strategy environment A company needs to vigilantly consider the parties that create, provide and deliver products and services in its business and related business areas. Looking at what the company’s network of business is doing and planning to do keep the management of the Sony Corporation aware and alert, continuously seeking and reviewing intelligence on global business operations. By communicating knowledge throughout the company, management keeps all efforts geared towards acting with an informed and coordinated whole-word perspective. By exploring the sources of information and the dynamics of multinational business relationships, management can exploit the company’s sphere of intelligence to better prepare their company to do business globally. Sony corporation’s business environment is one that can be described as exploding with new technologies and experiencing industry convergence i.e. information and communications, global restructuring and transformation of customer needs (Daniels & Daniels 1993). The fast growing customer requirements for seamless global communications networks is driving the structure of Sony corporations’ electronics industry. Clients simply do not want the hassle of trying to coordinate the activities of dozens of different national supply. What they want is the supplier who can design and manage their networks for them, wherever they need to go. Sony has a widened the scope of its activities from being the business of providing consumer electronics products to being in the business of helping people communicate, be better informed , and be entertained; ‘’changing the way we see the world.’’ And this is the new definition of its sphere of influence which allows the company to expand its horizons ahead of competitors. By employing the scanning of the global environment for developments in entertaining, communicating and informing, Sony is creating global strategic initiatives to serve customers in new ways. The company is positioning itself to satisfy the demands of future customers by assembling a powerful array of hardware and software capabilities from different corners of the world to offer integrated customer products and services. The company is attempting to draw upon the best resource in the globe to provide for its customers (Birkinshaw & Hood). The acquisition of Columbia pictures and CBS records indicates that Sony is moving towards a highly integrated global business vision. The mangers in the Unite States felt safer for several years from the strong competition of the Japanese companies offered in other electronics sectors such as semiconductors, machine tools and consumer electronics. But this feeling safe attitude isolated the companies from reality, supporting narrow-sighted actions, and stopped them from scanning the global environment for important information. As Sony becomes more transnational in its planning and operations, the ability to maintain a family-like orientation may prove difficult, if not impossible, to achieve. The vast majority of its worldwide employees are not Japanese. They have not been part of the company’s cultural fabric history. There is a clear recognition among international managers and workers alike that opportunities for professional advancement are somewhat limited by the fact that they are not Japanese. To that end, Sony officials recognize that in order to be more globally competitive, the company will need to promote greater responsibility and autonomy in the field. The promotion of Michael Schulof as senior vice president of Sony America and Jacob Schmukli of Sony Europe presented significant steps in this direction. Both Schmukli and Schulof were the highest ranking non-Japanese executives in the Sony Corporation. Since then, Schulof has left the company. Sony is more transnational in is approach to management than are some Japanese companies. However, in the end, final decision making clearly rests in the hands of senior management in Tokyo. Sony corporation products and services and their Markets Sony Corporation is an organization which is both represented and represents itself as the paradigm of a ‘design-led’ corporation. The design at Sony is often claimed to be organized in a way which enables the company to make products which both create and respond to consumer ‘needs’ in a highly flexible way. Sony is the leading manufacturer of video, audio, communications and information technology for consumer and professional markets all over the world. Sony’s sales expanded in the United States and color televisions, audio equipments and magnetic tapes were lines of business where Sony enjoyed a competitive superiority and with products such as televisions, the firm transferred its product technology and manufacturing process technology to the USA, where it combined these resources either other locally sourced resources. The below list highlights some of the Sony products and services and their market segments: Electronics Product categories Televisions HDTV-related equipments, projector systems, color televisions and monitors, satellite broadcast reception systems, large screen display systems and professional use displays. Audio equipment DAT recorders, radio cassette tape recorders, CD players, tape recorders, the MD systems, radio car stereos, transmission receivers, audio tapes, car navigation systems, and professional use audio equipment. Video equipment Video equipment for broadcast and professional use, still image, Home-use VTRs, HDTV and related equipment, and large screen display systems. Other equipments Electronic components, telephones, optical pickups, floppy disk drives, and information-related equipments. Entertainment Product categories Music group This music group is represented by Sony Music Entertainment Inc. (SMEI) which consists of the below recording labels: Epic, Columbia, Epic Associated, CHAOS recording, Sony Wonder, Epic Soundtrax, Sony Classical, Tri-Star Musical Group, and Soho Square. Pictures group These includes all of the film and television products presented by Sony pictures Entertainment inc. which consists of the below stated studios; TriStar Pictures, Columbia Pictures, Sony pictures Classics, Sony pictures studios, Columbia TriStar Film Distributers, Triumph Releasing, and Theatre Management corp. Fig: 1.0. Sony Products and services and their markets Sony’s environmental scanning: The internal environment consists of the trends and events within an organization that affect the management, employee, and organizational culture (Williams 2010). Internal environments are important because they affect what people feel, think and do at work. The new innovative products such as the iPhone, Xbox 360, IPod, as well as aggressive cost-cutting in the booming market for high definition TVs (i.e., Sony’s external environment), had further hurt Sony’s market share and profitability, Sony’s problems, however , were directly linked to its hypercompetitive culture where people in different parts of the company did not communicate with each other and, where designing innovative, high-priced products no matter the cost was seen as the most important combination to the company (Bruner 2004). Now thanks to programs such as ‘’Sony United,” which encourage Sony employees in different divisions and locations to work with each other because Sony organizational culture has began to change. An example of that change is Sony’s Webbie HD, a basic high-definition digital camcorder video to post and the internet. In the contrary, to its old culture where the Webbie would have been designed by Tokyo engineers and produced in Sony factories, the idea for the Webbie came from Sony’s American marketing team and is produced by a contract manufacturer in china. Likewise, Sony’s New Mexican engineers worked with U.S. marketing team to design Sony’s new, inexpensive Bravia high-definition TV for the cost-competitive U.S. market. The Bravia sold well at Wal-Mart that best buy asked for Bravia in its stores (Gerson 2009). The key component in international environments is organizational culture, or the set of key value, beliefs, and attitudes shared by members of the organization. Sony SWOT analysis The aim of strategic assessment is to draw a profile of the strengths, weaknesses, opportunities, and threats of the business. The table below presents the SWOT analysis of Sony Corporation. It shows the important areas of the strategic fit of the company. SWOT analysis is very useful for preparing negotiators, due diligence researchers, deal designers and integration planners. Strength of position is also correlated with investment returns; the stronger the position, the higher the returns. It is not only one’s own share of market that that matters, but also the distribution of shares among other players. In the abstract, a stronger competitive position should result in higher returns to investors. This is what the researcher’s fond out in the analysis of returns on investment by market share (Bruner 2004). Fig: 1.1. Sony SWOT analysis Changes and challenges The case of Sony also makes it clear that impediments change over the course of discrete loops. In functional migration in televisions, for example, at first the challenges were mainly technical. They involved the replication of assembly layouts, the transfer of process know-how, and effective training of local employees (Furht 2009). Later on as Sony sought to localize more functions in the USA, the most severe impediments involve vendor development, an added complexity because this step necessitated working with external utilities. As a product design and business planning functions were shifted to the USA, the strongest impediments were political, raising a new level of complexity and sensitivity (McKer 2003). During the initial stages when Sony was being formed, all of the top officials were Japanese, and strategic decision-making process occurred from the company’s Tokyo headquarters. There was a sense of family and missionary zeal that was uniquely Japanese in approach. The most important mission for a Japanese manager was to develop a healthy relationship with his employees, to create a family-like feeling with the corporation, a feeling that employees and managers shared the same fate. Today, Sony is no longer the same company. The challenges of staying globally competitive had profound effect on Sony’s organizational cultures. The vast majority of Sony’s world wide employees are not Japanese. They have not been part of the company’s cultural network and history. The new Sony has steadily transformed itself into a transnational media corporation where more and more emphasis is being given to the value of local management means finding the best person regardless of nationality (Gershon 2009). Since the promotion of the British national Howard Stringer to the position of president of Sony’s US operations as the first foreign chief executive, he has been slammed by Japanese by Japanese financial analysts and Sony employees for being disconnected from the company’s daily operations, especially during big crises. However, investors in the US have been keeping him under constant pressure to fix the company’s financial and technological problems more quickly. He has consistently received conflicting advice from both sides. With two different worlds, in this country (Japan), you can’t lay people off very easily. Fixing this iconic Japanese company represents a major challenge, regardless of who is in charge. Stingers dilemma is that he is caught between different management styles and cultures (Steers et al 2010). Recommendations and conclusions This report has far given an overview of the Sony corporations’ business outlook, management strategies, success, weaknesses and the legal problems accompanied by the ever-changing economic situation and corporate statutes both in Japan and USA. A significant amount of individual legal problems still need discussion and resolution. Radio Frequency Identification Technology (RFID) is also a potential system which may be able to enhance the ability of Sony to view its corporate process with more transparency and a better understanding of the supply and demand chain. There are many advantages associated with the use of RFID technology, including the ability to efficiently monitor inventory, shipping and storage logistics understanding consumer trends, and can as well help the Sony suppliers by providing them live information on the level of demands required for certain products. They should analyze technology to determine whether they may give it a competitive edge through enhanced information with its operations (Murphy& Willmott 2010). This technology will allow their management to apply more scrutiny within their manufacturing process and storage to allow a more up-to-date and live information stream to allow faster tracking of trends which may eventually allow the company to respond to certain factors affecting their sales faster than its competitors. The other recommendation is to further collaborate with innovative partners to enhance the competitive e advantage of their organization. The stiffer competitions emerging for the electronics market and the intellectual property will be required from the Sony’s administration to set itself apart from its competitors. With the 3D technology with us, it’s significant for Sony to develop products that are of high quality and functional to retain market shares, and to ensure that its loss to the Samsungs flat screen TV’s, Apple iPod, and VHS formatting will not be repeated with their future products. References Birkinshaw, J. & Hood N. 2008 Multinational corporate evolution and subsidiary development, Macmillan Press LTD, London, Great Britain. Daniels, JL. & Daniels, C. 1993 Global vision: building new models for the corporation of the future, McGraw-Hill, Inc. USA. Gay, PD. 2003 Doing cultural studies: the story of the Sony Walkman, Sage publications Ltd, 6 Bonhill Street-London. Bruner, RF. 2004 Applied mergers and acquisitions, John Wiley & Sons, Inc. Hoboken, New Jersey, UsA. Stadtler, R. 2010 Strategy Coursework-Sony Corporation, Druck und Bindung: Books on demand GmbH, Norderstedt Germany. Gershon, RA. 2009 Telecommunications and business strategy, Roulage, Madison Ave, New York, USA. 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