Professional Documents
Culture Documents
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A Research Analysis
By: Sheeza Ashraf
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NeelamAfroz
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2 Introduction 2
2 Current performance 2
3 Strategic posture 2
3 2ission 2
3 2Objectives 2
3 3Strategies 2
4 Strategic mangers 3
4 2Board of directors 3
4 2Executive managers 5
5 PEST analysis 5
7 2 Restructuring 8
8 Recommended strategy 9
9 References 22
Appendix 22
Table 2IFAS 22
Table 2EFAS 28
Table 3SAFS 22
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The first thing that comes to people·s minds of the company and products of Sony is its
hightechnologyfilledwithgadgets electronic goods and innovation It was also this
innovation that makes Sony the greatest company that started in postwar Japan Sony has
used its innovation in building markets out of thin air and created a multibillion,
multinational electronic empire Sony·s major products are Audio and Video Electronics,
Televisions, Information and Communication, Semiconductors, and Electronic
Components Sony·s major competitors are Panasonic, Philips, Sanyo, and Visio
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Sony has its wide service footprint in about 2 counties, worldwide During the first
half of 29, Sony Computer Entertainment Inc (SCEI) launched PSP (PlayStation
Portable) go (PSPN2), an advanced generation of PSP handheld entertainment
system This is targeted at the consumers, who download content on the go The
company reported revenues of (Yen) JPY 7,729,993 million during the fiscal year
ended arch 29, a decrease of 22 87% from 28 The operating loss of the company
was JPY 232,22 million during the fiscal year 29, as against an operating income of
JPY 462,222 million during 28 The net loss of the company was JPY 98,938
million during the fiscal year 29, as against a net profit of JPY 369,435 million
during 28
3 2 ission:
V
3 2 Objectives:
Sony today presented a series of new initiatives designed to build on its previous three
year revitalization plan and to position the company as the leading global provider of
networked consumer electronics and entertainment In particular, the company will
focus on strengthening core businesses, enhancing network initiatives and leveraging
international growth opportunities
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Strengthening core businesses: Sony will focus on expanding its PC, Bluray Disc
related products, and component/semiconductor businesses by the end of FY22 At
the same time, it expects to improve the operations of TV business significantly and
implement a variety of cost reduction measures to restore that business to profitability
in the fiscal year ending arch 32, 29, and strive for the global No 2 position in LCD
TVs by FY22 Of the planned 2 8 trillion yen investment over the next three years,
approximately 9 billion yen will be allocated towards strengthening core focus areas
within components and semiconductors, such as image sensors, batteries, display
devices and Bluray Discrelated components
Enhancing network initiatives: Sony will increase network and wireless connectivity
across its family of devices and build a service platform to provide a seamless user
experience across key hardware devices and content It is planning to expand services
that will enable customers to enjoy content such as motion pictures and television
programming through the network on a variety of Sony products such as BRAVIAT
LCD TVs, PS3, PSP® (PlayStation®Portable) and Walkman® video music players
Leveraging international growth opportunities: Sony believes that the largest growth
opportunities exist outside its traditional markets of Japan, North America and Europe
hence, expanding Sony·s business into new markets is a key area of focus New markets
in regions including the BRIC countries ² Brazil, Russia, India and China ² are
developing quickly, and Sony·s business in these countries is growing rapidly Going
forward, Sony plans to accelerate business expansion through collaboration and
integration, not just within each of the Electronics, Game and Pictures segments, but
across the entire Sony Group
4 2 Board of director
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They determine the fundamental management policies of the Sony Group, oversee the
management of Sony Group·s business operations, appoint and remove the statutory
committee members and appoint and remove Corporate Executive Officers and
representative Corporate Executive Officers
i Yotaro Kobayashi: Chairman of the Board, also Former Chairman of the Board,
Fuji Xerox Co , Ltd
ii Sir Howard Stringer: Sony Corporation Representative Corporate Executive
Officer, Chairman, Chief Executive Officer and President
iii RyojiChubachi: Sony Corporation Representative Corporate Executive Officer,
Vice Chairman
iv Yoshiaki Yamauchi: Former Director, Sumitomo itsui Financial Group, Inc
v Sir Peter Bonfield: Chairman of the Supervisory Board, NXP B V
vi Fujio Cho : Chairman of the Board, Toyota otor Corporation
vii Ryuji Yasuda: Professor, Graduate School of International Corporate Strategy,
Hitotsubashi University
viii YukakoUchinaga: Director and Executive Vice President, Benesse Holdings, Inc
Chairman of the Board, Chief Executive Officer and President, Berlitz
International, Inc
ix itsuaki Yahagi: Chairman of the Board, The Japan Research Institute Limited
x TsunYan Hsieh: Director Emeritus, cKinsey & Company
xi Roland A Hernandez: Retired Chairman and Chief Executive Officer,
Telemundo Group, Inc
xii KanemitsuAnraku: Director, izuho Financial Group, Inc
xiii Yorihiko Kojima: ember of the Board, President, Chief Executive Officer,
itsubishi Corporation
xiv Osamu Nagayama: Chairman of the Board, President and Chief Executive
Officer, Chugai Pharmaceutical Co , Ltd
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4 2 Corporate Executives:
They make decisions regarding the execution of Sony Group business activities within
the scope of the authority delegated to them by the Board of Directors They also carry
out business operations within designated areas, including business units, headquarters
functions, and/or research and development, in accordance with the fundamental
policies determined by the Board of Directors
2 Political/legal
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The Governments hold the power to change any policies and regulations which may
affect Sony at the time They affect Sony Corporation It is attributed mainly to their
new business and tariff international policies European Governments have
changed policies by imposing trade barriers which hinder Sony from accessing
easily the European market As a result, adequate priority should be attached to
them, which would enable Sony to weather major global changes Î
2 Economic
Currently the state of world economy is not in a good position The economic
growth has shrunk which means that the growth of the economy is negative
Economically, due to this many changes can occur such as the interest and
exchanges rates The exchange rate of Yen has dropped which adversely affected
the revenue Since Sony is an international company the exchange rates can be
different to whichever country they trade with If the exchange rates in different
countries have changed, Sony would need to work out what prices are their
products being sold at and whether it would be worth it
Rising taxes in Japan, which stem from inflation, have, led to an increase in the
price of the products and hence the exports have become expensive Î
3 Social
Sony has competitors which have impact on it like icrosoft and Apple Sony must
ensure that they stay ahead of technology They must be able to create
revolutionary equipment for people because that·s what their company would rely
on to stay alive Î
People have trends which Sony must learn so that they may create products which
can relate towards them For example, many young adults tend to listen to music;
therefore Sony would create products which may allow people to listen to music
anywhere at any time People will have different tastes of style, trends, activities
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etc Sony must also improve their work of ideas so that they can still please their
customers and that they have adapted with the ageing of the company Î
4 Technological
Technological factors for Sony Corporation are very important to study Sony
Corporation works around the use of technology every day such as recent launch of
3D World and electronic book It depends on technology so that it may provide
efficient productivity of work internationally Sony must use upgraded and new
technology to increase its productivity level and to stay ahead of its competitors It
also needs to use new technology to conduct its research and development which
would help the business create new products using customer information and also
by conducting market research Î
2!"
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Expansion can be a recommended strategy for Sony considering its financial position
and current business portfolio Since Sony has huge amount of reserves on the basis of
which it is surviving in the current recession, so it can utilize these to diversify into
healthcare and education; especially in a country like India where healthcare industry is
at boom Further, it can initiate educational programs which aim at increasing schools·
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By investing in the healthcare sector in countries where its demand is at peak, Sony will
be able to add favorably to its revenue By having collaboration with top technological
institutes, Sony will not only be able to gain reputation/ goodwill but also have direct
access to highly qualified engineers which is most important asset for Sony Further, by
doing so Sony will be in a position to withstand competition against companies like
icrosoft, Samsung etc
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Unrelated diversification will not only call for large amount fund but also diverse
competencies and thus it requires better management and integration of the business
into the corporate structure
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The Primary disadvantages of Sony·s corporate restructuring relate to both internal and
external factors Sony runs the risk of losing consumer loyalty because consumers may
begin to question the strength, reliability, and dependability of the company during this
time of corporate crisis Corporate restructuring is very expensive; therefore, such an
initiative is a huge risk for a company already suffering the consequences of economic
downturn Job cuts will have a negative effect on unemployment rates
Sony Corporation should aim at restructuring its businesses to minimize the operating
losses and enhance its profitability
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suppliers Hence, it will reduce the annual procurement cost and also result in
well managed inventory
iii It should focus on cost reduction through various actions such as:
Early retirement: early retirement program should be promoted by Sony because
the older employees contribute less to the organization as compared to the
benefits they achieve from the Company This is due to their long term service
they have been providing to the Company that they become deserving for it This
will also provide the older employees to seek opportunities elsewhere; beyond
Sony group Further, youth can provide better creative ideas which may be
beneficial for the Company
Lower remuneration: In order to cut down costs the company can also reduce the
amount of bonuses, benefits, or dearness allowances to bring back the
profitability position of the company, with a promise to distribute even higher
bonuses once the company has recovered
Job cut: Unnecessary job positions should be removed from the organizational
structure
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Table 2: IFAS
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2 Quality:
Sony established the Product Quality Information Channel in 23, to gather product
qualityrelated information, including reports of problems, as well as opinions from
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Sony Group employees Employees can send messages to the Product Quality
Information Channel website
As of arch 28, Sony had received more than 2,2 reports since the establishment of
the Channel The diverse range of information received included proposals to make
products and manuals more userfriendly, and has led to more than 75 improvements
Sony·s completely new lineup of BRAVIA LCD televisions with LED backlight
technology and new onolithic Design is a clear example of how Sony will continue to
own the living room by creating products that deliver on Sony·s promise of exceptional
TV quality and performance³continuing with the upcoming launch of 3D televisions
VAIO PCs continue to impress with its strong combination of innovation, entertainment
and elegant design One particularly exciting model in the lineup is the Z series
Weighing in at just three pounds and featuring cuttingedge graphics, it is a wonderful
example of ultramobile engineering expertise
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Sony R&D aims to create new value based on the linked concepts of "inspiration" and
"shared experience" and thus to strengthen products and applications After identifying
the key technological fields and R & D themes with potential to deliver growth, Sony
manages its R & D activities strategically to differentiate and increase the valueadded
components of its products and services While Sony naturally directs efforts towards
technologies that sustain and develop its current businesses, it also examines
technologies that will create new markets and give consumers fresh lifestyle ideas
7 Easy access to funds:
Sony has enormous amount of reserves due to which it is able to spend huge amount of
funds on reengineering and restructuring the organizational process (annual report
29)
8 Intellectual property:
Sony has the technical knowhow as well as the ability to create miniatures which
cannot be copied by others easily
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2 Lower returns:
Sales and revenue were decreased BY 22 9% for the fiscal year 29 compared to the
previous fiscal year These losses were recorded due to the slowdown of the global
economy, the appreciation of Japanese Yen and the decline of the Japanese stock
market
3 Loss of agility:
Sony is facing difficulties in managing its diversified businesses due to loss of direction
and coordination Hence, it can wind up certain businesses such as old television
models including LCD and focus primarily on LED and 3D World technology
4 Diseconomies of scale:
Due to diversified business portfolio, Sony is no longer able to take advantage of large
scale operation since its size has reached such high level that ts cost per unit has started
increasing
5 Demotivation for employees:
Owing to the economic down fall, the loss of employees· purchasing power over the
years has left them demotivated Further, their bonuses are trimmed as the company
attempts to stem losses
Table 2: EFAS
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2 Electronic book market:
The burgeoning electronic book (eBook) market is a significant business opportunity for
Sony It has launched a broad lineup of Reader digital books that support open
formats and contain features consumers want³including wireless access to books and
Periodicals³at prices they can afford Sony·s Reader digital reading device enables
users to take dozens of their favorite books when they travel for pleasure or business
2 3D World :
Sony·s technology in television and visual expression has marked 22 as the first year
of 3D entertainment at home Beginning in June 22, Sony has released 3Dcompatible
BRAVIA LCD televisions, followed by Bluray Disc players and home theater
systems Other 3Dcompatible products including VAIO PCs and digital cameras are
now also launched New offerings such as these will play an important role in the
realization of enjoying 3D at home
Sony is also focusing on the move to 3D sports broadcasting as this important content is
well suited to the dynamic nature of 3D television Through an alliance with ESPN,
thelargest sports network in the United States, Sony has participated in the production
of 3D coverage of such events as the X Games and U S college football, allowing
viewers to enjoy the full impact of 3D sports broadcasting Sony is also driving the
growth of 3D in the broadcasting of soccer and golf through previously announced
agreements with FIFA (FédérationInternationale de Football Association) and the PGA
Tour, Inc
3 Global reach:
Sony believes that the largest growth opportunities exist outside its traditional markets
of Japan, North America and Europe hence, expanding Sony·s business into new
markets is a key area of focus New markets in regions including the BRIC countries ²
Brazil, Russia, India and China ² are developing quickly, and Sony·s business in these
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2 Competition:
A common threat facing any company in sales is competition Sony·s Vaio is its newest
innovation in notebook computers The various models range in price from $845
$23 However, Dell has a great reputation when it comes to laptops similar to the
Vaio and has a broader range of notebooks to choose from, not to mention that Dell has
also been a top seller when it comes to desktop computers Additionally, the cost of a
Dell notebook computer seems to have a lower price tag than many of Sony·s Vaio
models
Sony·s top competitors in the gaming industry are Nintendo and icrosoft The
PlayStation 3 sales have fallen behind recently In 27, 82, PS3s have sold and
36, Nintendo Wiis
In the LCD television market, Sony excels but still faces some strong competition,
including Samsung, Sharp, Panasonic and more any of these same brands appear in
the DVD player market that Sony has to compete with
@ Piracy and duplication:
ost of Sony·s products are forged and sold as fake which effects their reputation
Rising taxes:
The rising taxes in recent years have led to the reduction in the purchasing power of
individuals living in UK and USA For example, people earning more than 25,
pounds have to pay 5% tax on their income The employers have also reduced the
number of benefits given to employees such as tuition fees for children
Entry barriers:
Table 3: SAFS
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Weight
Rating
Weighted Score
(Appendix2 & 2) n
Short
Intermediat
Long
S6 quality 2 5 5 X Sony·s key to success
S3 Human capital 7 3 22 X Expertise and
knowledge of Sony·s
engineers are its
backbone
S5 Research and 9 4 36 X Provides an edge in
development the market