Global Operations of Sony - Research Paper Example

? Global Operations and Policies The report is about choosing a transnational company and to analyze its global operations and political activities. In this context Sony Corporation has been chosen as the organization for accomplishing the study. The report will mainly highlight on the global operation of Sony and it will also emphasize on the political activities of the company. Apart from this the report will also underline the strategies adopted by the company for its global operation. It will also shed light on the networking factors of the company and will try to reveal whether the company outsources its operation or they are vertically integrated. Table of Contents Introduction 4 Sony: A brief overview 5 Global Operations of Sony 6 Political activity 7 Strategies of Sony 8 References 10 Introduction With the sluggish growth of economy, international expansion of business and investment in foreign soil has become the most essential strategy for the survival and growth of a company. There are many companies that have witnessed faster growth in the international market. However for most of the companies international presence acts as the value accelerator for the company. The brand name and brand value of a company gets hugely augmented. Some of the other benefits of international presence are overall rapid growth, diversification of the income stream, higher return on investment and also the reinvestment rate gets increased. The companies with international presence can be segmented into 4 groups. They are International companies, Multinational companies, Global companies, transnational companies. However in the context of the project only the company which belongs to transnational segment will be chosen. Among the mentioned category Sony has been chosen as the organization. Sony has all the characteristics of a transnational corporation and also has a global presence. Now in order to begin the project a brief introduction of Sony is presented below. Sony: A brief overview The origin of Sony dates back to 1946 when Masaru Ibuka started the first electronics outlet in a damaged departmental store in Tokyo. Sony Corporation or what is commonly known as Sony is a Japanese electronics company which was renamed in the year 1958 (Yahoo Finance, n.d.). The company is presently headquartered at Konan Minato, Tokyo, Japan. The company was founded by Masaru Ibuka Akio Morita in the year 1946. Sony Corporation is indulged in the electronics segment and also the parent company of the Sony group. The group has four main operating groups namely Sony music, Sony pictures, Sony electronics, online business and other financial services (Bloomberg, n.d.). However each of the individual group focuses on different products and services. For example the electronic segment mainly focuses on the products which are related to audio-video outputs, and also products related to information technology. However the most important products of the company include video games (play station), semiconductors, consumer electronics (sound box, television, and music system), computer hardware (DVD writer), telecom equipment and media and entertainment (Company Database, n.d.). Apart from this some of the visible brands of the company are Sony VAIO, Sony Cyber shot, Sony BRAVIA, Sony Play Station and various other brands. From the time of its incorporation the company has successfully achieved new heights in the business market. The company is presently ranked at 73rd position in the global fortune 500 edition of 2011. Currently the company has an overall turnover of $ 6.39 trillion. The global slogan of the company is ‘Like no other’. And ‘Make Believe’. The company mainly faces competition from the established players of the market. Hence the major competitors of the company are LG, Samsung, Sharp, Philips, Mutsushita and some other local established player. However the competitors can also be classified according to the business category. The next half of the project will highlight on the global operation of the company. It will also emphasize the distribution techniques and international expansion strategy of the company. Global Operations of Sony Sony is one of the largest and diversified companies of the world. Most of the subsidiaries of the company also have a global presence and while most of them are headquartered in Japan. While on the other hand Sony pictures entertainment are headquartered at Los Angeles. Apart from this the subsidiaries also have their headquarters at London and other parts of the world. The company mainly operates with joined venture mode. The distribution of the company takes place with the help of retailing. The company has its presence in more than 100 countries of the world. The manufacturing units are spread across USA, Thailand, UK, China, Japan and Malaysia. The company operates with its product such as consumer electronics, video and music segment and other divisions in the global market. Sony also uses a globalised strategy to offer standardized product in all the countries of its operation. Earlier Sony adopted various modes of international expansion which includes joint ventures, export, establishment of subsidiary etc. However the company presently prefers joint ventures to enter a new country. Since Sony position itself as the seller of durable and high end products, it mainly operates through selective distribution channel. The selective distributions are mainly Sony world and some other selective outlets. Apart from this there are also grey markets where the company uses intensive market coverage. However in these markets some of the features and benefits are not provided. Also the company operates through various channels, such as zero level. One level and two level channel. However in the global scenario the company distributes the products to the retailers and then the retailers in turn sells it to the end customers. Also Sony operates via its own website and other third party websites where the company sells its products online. One of the interesting applications of Sony recently launched by Sony is store locater, where the users have to enter their location and the software will automatically display the nearest stores in the adjoining area. Political activity In order to conduct business in the home country or in other countries the government policies plays an important role. Sony is also not the exception, it also has to follow certain rules and regulations and also other governmental policies so as to carry out their operations. In the early 1990’s globally there was a huge increase in deregulation and privatization of the technology sector and the consumer electronics sector. It was visible that many countries tried to open up the international trade and hugely minimized the foreign trade restrictions. For example a number of countries formulated ‘open trade agreement’ and some countries reduced the barriers for foreign direct investment. However during the mid half of the decade intervention and directives of the government remained extensive. In the context of Sony, being a company of Japan the company was not permitted to establish its broadcasting networks in the US market as it was against the policies of the government. Apart from this there are also political aspects which has caused the company to incur huge losses. For instance in countries like Russia, Ukraine, Brazil, China etc. the respective government could not control the piracy rate and hence the music and movie division i.e. Sony Pictures and Sony Music incurred loss of billion dollars. Even in the present due to unstable and weak political interventions the company is facing huge financial downturns for the principal reasons like piracy, unauthorized distribution and other malpractices. Strategies of Sony Sony is considered as the organization which uses the most creative marketing strategies apart from other giants like Apple and LG, Samsung etc. The principal strategy of Sony is to offer the customers with high quality products and services. Along with this the company also hopes to present a range of products from where the customers can pick according to their need and choice. This is mainly to ensure that the company meets the diversified needs of the consumers. Globally Sony uses related link diversification strategy. The products are found to be hugely related to each other in some ways. Sony uses this strategy to develop a core competency among the business units and to exploit the economies of scope. The company also focuses on networked products and services. It mainly targets the markets that are rapidly growing. Sony also undertakes Joint venture strategies in order to gain profit out of it. For example Sony Ericson mobile communication and Sony BMG music entertainment helped the company to earn higher revenues. However the planning strategy of the company also helped to tap the foreign market in a more inclusive way. Prior to initiate business operation in a country the company plans and organizes business trips in order to gauge the market potentiality and the capability of the local distribution channel. Vertical Integration of Sony Sony owns a number of subsidiary companies to its name. In the context of its Music department the company holds the music rights who are in contract. Sony also sells the music via CD’s and thorough legal music downloading portals. Also in the games category the company can easily use its own music. However the vertical strategy of the company was first addressed way back in 2002. Also Sony pictures entertainment and restructuring of Sony Television can be cited as an example of Sony’s vertical integration strategy. Hence it can be concluded that the company is vertically integrated. References Bloomberg. (No Date). Sony Corp. Retrieved from http://www.bloomberg.com/quote/6758:JP/profile. Company Database. (No Date). Sony Corporation. Retrieved from http://companydatabase.org/c/radio-tv-broadcasting-communications-equipment/broadcasting-equipment-manufacturers/video-distribution/device-manufacturing/broadcasting-segment/sells-electronic/broadcasting-music/markets-distributes/sony-corporation/sony-corporation.html. Yahoo Finance. (No Date). Sony Corporation (SNE): Profile. Retrieved from http://in.finance.yahoo.com/q/pr?s=SNE. Read More