External Environment Analysis of Sony Corporation - Case Study Example

Sony Corporation Name Institution Date 1. Diversification Diversification refers to a strategy which a corporate utilizes with the aim of entering a new industry or market which a given firm is not presently in. At the same time, when a business enters a new market or industry due to its diversification, it tends to develop new products for the particular new industry or market (Patrick, 2012). Sony Corporation has a history of being highly diversified which has at times even resulted in the losses that they were incurring at one point in time (Dheeman, Schildwachter, and Harrison, 2012). Enhancing the corporation’s image is one benefit that diversification has caused for the company. On the other hand, the disadvantage of diversification has proven to be disadvantageous to the corporation in that it has also resulted in slow growth (Dheeman, Schildwachter, and Harrison, 2012). Constrained/Constraints/Related Constrained/Constraints refers to the fiscal limitations, the time limitations, physical limitations, among other kinds of limitations which impacts the realization or achievement of the goal of a business (Şimşit, Günay, and Vayvay, 2014). Related refers to the connections which are present between the various business units and entities in a given business process. These connections are usually formed between the different stakeholders, units, business partners, among other business entities (Grayson, 2007). The business units that are related-constrained are the Electronics business unit and the Sony Broadcast Media Co. Ltd. The business units share the supplies but the product, and distribution is not related. For example, the Broadcast company supplies primarily for the businesses in Japan while the electronics’ main focus is basically on the global scale (Daub and Scherrer, 2009). The products from these business units are also evidently not linked as one is concerned with satellites and broadcasts while the other is concerned with electronics only. Related/Unrelated Business Units Sony has various business units including the Sony Life Insurance Co. Ltd, Sony Broadcast Media, and Sony Electronics. The Sony Electronics business unit accounted for approximately 66% of the revenues in the year 2002, insurance business represented 6%, while broadcast media about 2% (Daub and Scherrer, 2009). The Related Business Units that are related in relation include the Electronic business unit and Sony Picture and Television entertainment. This is because they tend to share similar distribution, product, and technological linkages with the dominant business which is the electronic business unit (Daub and Scherrer, 2009). The electronic business unit entails some products like the video, audio, and televisions which are the same products in the Sony Broadcast Media. They also shared the technological linkages in producing these products and operating these units while the distribution channels were also similar because of the similarity in products (Daub and Scherrer, 2009). The unrelated Business Units are the Electronics business and the Sony Life Insurance Company. There are no common relationships between these two business units because the insurance company deals with the insurance-related underwriting processes which have its main focus on providing individual automobile insurance and the individual life insurance (Daub and Scherrer, 2009). The electronic business unit deals with providing video/audio equipment, communication equipment, and the information equipment, among others. Therefore, there are no related links regarding distribution, technological, and products hence are unrelated business units. 2. External Environment Analysis Operating Environment The operating environment is defined as the individual or particular external stakeholders that a business interacts with while conducting its usual business activities. The operating environment consists of the stakeholders who are external and yet have a direct effect on its operation (Patrick, 2012). Political The political impacts include the policies and rules of a given government in which the corporations and business operate in (Rothaermel, 2015). Politically, in Electronics Sony Picture and Television Business Units there has been an enhanced government support for Sony’s online business regarding selling its electronics on an online platform. Precisely, the government has supported its online business in that it has given the business the opportunity to expand its particular online services concerning electronic products (Velez-Castrillon and Angert, 2015). One political factor that impacts the Sony Broadcast Media was the political stability in some of the biggest markets including Japan, Columbia, and the United States. The political stability corresponded to the reduction of the political barriers in these different markets and more so in the remote environment (Baum, Hackstein, and Mehling, 2012). Economic These include the economic factors like the prices, the exchange rate, the GDP, as well as the economic growth that impacts the business performance or operation in different measures (Rothaermel, 2015). The in Electronics Sony Picture and Television Business Unit has experienced a high growth more so in the developing markets. Regarding its electronics, Sony has significant opportunity to experience growth following the economic growth that is experienced in the developing markets which have resulted in the boosting of the company’s revenues (Velez-Castrillon and Angert, 2015). The economic factor which impacted the Sony Broadcast Media business unit is the economic stability, especially in the developed markets. This external economic factor presented Sony with the opportunity to improve its operations and at the same time experienced very few market-based risks (Baum, Hackstein, and Mehling, 2012). Social This refers to the factors which entail the technological trends of a given society or market. These social factors also determine the way in which the people in a given society may respond to the corporate’s products and services (Rothaermel, 2015). in Electronics Sony Picture and Television Business Units, Sony has experienced an increased societal adoption of the online gaming which presented the opportunity for the company increasing its revenue from the increased sales of the electronic products (Velez-Castrillon and Angert, 2015). The social factor that affected the Sony Broadcast Media business unit is its increased innovation in this sector. In this light, Sony has embraced its technological trends and has tried to be in line with the current societal trends so that it may become relevant and marketable in the society (Baum, Hackstein, and Mehling, 2012). Technological The technological factors entail the technologies which a business utilizes and in the end facilitates the consumption or the use of its products (Rothaermel, 2015). In producing its electronics, Sony has had an enhanced dependence on the digitalized technologies which impacted its outcome in Electronics Sony Picture and Television Business Unit. This dependence on the digital technology typically reflects on the organizational and individual demand for the enhanced digital technologies (Velez-Castrillon and Angert, 2015). In this Sony Broadcast Media business unit, Sony embraced high levels of research and development activities. This presented the opportunity for Sony to grow this business unit so that it could develop a high competitive advantage with the aim of supporting the generic strategy differentiation (Baum, Hackstein, and Mehling, 2012). Environmental This refers to the specific factors which entail the different global environment safety standards (Rothaermel, 2015). In its business operations in the economic business unit, the core aim of Sony was to strengthen its sustainability of activities. It has done this through enhancing its efforts of sustainability through developing products that are environmentally friendly and, in turn, has attracted more customers and consequent revenues (Velez-Castrillon and Angert, 2015). Increased business sustainability has continued to be emphasized in the Sony Broadcast Media business unit as well like the other business units. Legal This refers to the legalities of a given region that a firm needs to consider so that it maintains its success over time, more so following the highly competitive business environment (Rothaermel, 2015). In the in Electronics Sony Picture and Television Business Unit, Sony has considered the enhancement of its patent protection. This factor has presented the company with the opportunity to grow this particular business unit while at the same time anticipating few challenges when it comes to the protection of its proprietary designs and information (Velez-Castrillon and Angert, 2015). In Sony Broadcast Media unit, since Sony is in a very competitive global environment, it ensures that it upholds all the legalities of a given region following its operation. Since this is a financial service, consumers tend to be very vigilant regarding the legal aspects of the processes which the Corporation has strived to uphold to increase the loyal customer base and increased integrity (Daub and Scherrer, 2009). References Baum, M., Hackstein, M. and Mehling, M 2012, Strategic Marketing. GRIN Publishing, New York. Daub, C.H. and Scherrer, Y.M 2009, Doing the right thing right: the role of sociological research and consulting for corporate engagement in development cooperation. Journal of business ethics, vol. 85, pp.573-584. Dheeman, C., Schildwachter, H. and Harrison, J.S 2012, Sony Corporation: Reinventing Itself to Rediscover the Technological Edge. Retrieved 8th May 2017 from http://scholarship.richmond.edu/cgi/viewcontent.cgi?article=1009&context=robins-case-network Grayson, K 2007, Friendship versus business in marketing relationships. Journal of Marketing, 71(4), pp.121-139. Patrick, O 2012, Product Diversification and Performance of Manufacturing Firms in Nigeria. European Journal of Business and Management, 4(7), pp.226-233. Rothaermel, F.T 2015, Strategic management, McGraw-Hill, New York. Şimşit, Z.T., Günay, N.S. and Vayvay, Ö 2014. Theory of constraints: A literature review. Procedia-Social and Behavioral Sciences, vol. 150, pp. 930-936. Velez-Castrillon, S. and Angert, C 2015, How Sony Got its Groove Back: A Case Study in Turnaround Management. Business Education Innovation Journal, 7(2), pp. 144-146. Read More