international business of sony

INTERNATIONAL BUSINESS

SALONI NANDA BBA 4519/09SHUBHI SINGH BBA 4530/09

Founded : May 7, 1946

Headquarters : Konan, Minato-ku, Tokyo, Japan

Chairman, CEO and President : Howard Stringer

Vice Chairman : Ryoji Chubachi

Employees : 167,900 (as of March 2011)

COMPANY AT A GLANCE

•Multinational conglomerate corporation headquartered in Mintao (Japan)

•One of leading manufacturers of electronics, video, communications, video game consoles and information technology products for the consumer and proffesional markets;

•Sony is among the Worldwide Top 20 Semiconductor Sales Leaders

FACTS ABOUT SONY

Areas of Operation

SONY OPERATIONS WORLDWIDE

Affiliated Companies (Japan)

Sony Bank Inc.

Sony Broadband Solutions Corporation

Sony Broadcast Media Co., Ltd

Sony Chemical & Information Device Corporation

Sony Computer Entertainment Inc.

Sony Computer Science Laboratories, Inc.,

Sony Digital Network Applications Inc.

Sony Disc & Digital Solutions Inc.

Sony Music Entertainment (Japan) Inc.

Affiliated Companies (Outside Japan)

Sony de Mexico S.A. de C.V.

Sony Deutschland G.m.b.H.

Sony Device Technology (Thailand) Co., Ltd.

Sony Electronics Asia Pacific Pte Ltd.

Sony Electronics Inc.

Sony Electronics (Singapore) Pte. Ltd.

Sony Korea Corporation

Sony Latin America Inc.

Sony Magnetic Products Inc. of America

Sony Malaysia Sdn. Bhd.

Sony Corporation of Hong Kong Ltd.

Sony Corporation of Panama, S. A.

Sony (China) Limited

Sony Corporation of Hong Kong Ltd.

MOST POPULAR SONY PRODUCTS

Evolution of Famous SONY Products (Television)

Evolution of Famous SONY Products (Personal Audio)

Number Acquisition date Company Business Country Value (USD) Used as / Integrated with

21 March 2, 2010 Media Molecule Video Game UK   Sony Computer Entertainment

20February 10, 2010

iCyt Mission Technology

flow cytometers

USA    

19 January 28, 2010 Convergent Media Systems Corporation

Video Integration USA    

18 July 2, 2008 Gracenote Media Management

USA U$260,000,000  

17September 20, 2007

Bigbig Studios Video Game UK   Sony Computer Entertainment

16September 20, 2007

Evolution Studios Video Game UK   Sony Computer Entertainment

15 May 15, 2007 Sigil Games Online Inc Video Game USA   Sony Online Entertainment

14 May 30, 2007 Famous Music Music publishing USA U$370,000,000 Sony/ATV

13 August 23, 2006 Grouper Networks Video On Demand USA U$65,000,000 Crackle

12 January 25, 2006 Zipper Interactive Video Game USA   Sony Computer Entertainment

List Of Acquisition by SONY Corporation

CONTINUED…..

11December 7, 2005

Guerrilla Games Video Game  NED   Sony Computer Entertainment

10September 27, 2002

Aiwa Electronics  JPN   Sony Electronics

9 August 7, 2002 Incognito Entertainment Video Games  USA   Sony Computer Entertainment

8 July 9, 2002 Acuff Rose Music Publishing  USA U$157,000,000 Sony/ATV

7January 22, 2001

Naughty Dog Video Game  USA   Sony Computer Entertainment

6 ? 2000 Eidetic Games Video Game  USA   Sony Bend

5 May 21, 1993 Psygnosis Limited Video Game  USA   SCE Studio Liverpool

4September 29, 1989

Guber-Peters Entertainment Company

Movies/Television  USA U$200,000,000 Sony Pictures Entertainment

3September 28, 1989

Columbia Pictures Entertainment

Movies/Television  USA U$3,400,000,000 Sony Pictures Entertainment

2November 19, 1987

CBS Record Group Music  USA U$2,000,000,000 Sony Music Entertainment

1February 4, 1982

Music Center Incorporated

Professional audio

 USA N/A Sony Professional Products

SONY’S TRIPOD FOR SUCCESS

PLANNING STRATEGIES

• Step by step methodological approaches

• Find out potential capabilities & local distribution channels

• Brand name is a key factor in the international market

• Learning the cultures and attitudes of the intended market segment

ORGANIZING STRATEGIES

• A dedicated department formed to handle the affairs on international development

• Adaptability to the culture, styles, origins are vital to the growth of the company

• To identify the most appropriate individual for each task, when allocating human resources

• Proper training at the domestic markets

LEADING STRATEGIES

• Diagnosing, or gaining insight into the situation a manager is trying to influence

• Adapting individual behavior and resources to meet the needs of the situation

• Communicating in a way which others can understand and accept

CONTROLLING STRATEGIES

• Control over every stage of the process that is before, during and after

• Employees are trained to provide feedback to the mother company regularly

• Employees are trained to send their feedback to the company even though sometimes it is limited to one way communications

PESTLE ANALYSIS

A. POLITICAL FACTORS

• Japan’s current transition from single to double party system abstracts resulting implications for Japan-based multinational corporations

B. ECONOMIC FACTORS

• Reduction in disposable income

• Japan faces global pressure to cut public debt

• The effect of changes in currency exchange rates has been unfavorable for Sony

C. SOCIAL FACTORS

• Japan which accounts for 43% of sales ,it is an ageing population, with a median age of 44.8 years

• Loss of trust from customers following security attack & failure to notify immediately has tarnished Sony s brand image

D. TECHNOLOGICAL FACTORS

• Consumers are moving toward multi-functional devices

• The market for 3D related technologies is growing rapidly

• Industry-wide movement toward networked products & services and cloud computing.

E. Legal Factors

• Age and content restrictions from international regulatory bodies

• EU warnings over privacy issues following security breach on PSN network & Sony Online Entertainment properties

• US parties press for legislation of uniform national security and data breach standards for notification

F. Environmental Factors

• Some of Sony’s manufacturing activities were suspended after recent tsunami , resulting in share price drop of 9%

• Regulations on the impact of electronic trash by Restriction of Hazardous Substances and Waste Electrical and Electronic Directive

CORE COMPETENCIES

• Economies of Scale and Scope in manufacturing and research and development arising from its numerous facilities situated in Japan, the United States and other countries worldwide.

• Unique Quality Technology owing to heavy emphasis on research Sony Corporation’s commitment to research & development activities has always been one of its top strategies to remain competitive in the market.        

• Differentiated ProductsThe continuous pursuit of research and development processes enables Sony Corporation to produce a steady stream of originally differentiated products which makes it difficult for competitors to find substitutes. Because of this differentiated approach, Sony Corporation is able to market their products worldwide, which enables them in turn to maximize the returns on research and development expenditures.

PORTER’S FIVE FORCE ANALYSIS CONSUMER ELECTRONICS INDUSTRY

THREAT OF NEW ENTRANTS - LOW

Economies of Scale

Product Differentiation

Capital Requirements

Switching Costs

Technology, Know-how and Innovation

Government Policy

BARGAINING POWER OF BUYERS -HIGH

• Products are fairly undifferentiated

• Buyers face few switching costs

• Online shopping has increased the bargaining power of buyers

• Buyers are price sensitive and demand high quality

BARGAINING POWER OF SUPPLIERS - LOW

• Big global supply chain management

(Suppliers are not concentrated)

• Suppliers are forced to cut their prices or go out of business

• Direct negotiation with suppliers in order to encourage:

• Reliable supply

• Faster delivery

• Lower prices

• Many OEMs start to produce their own components in-house

RIVALRY AMONG EXISTING COMETITORS - HIGH

Numerous and rather equally balanced competitors.

Short product life-cycle

High R & D costs

Lack of differentiation or switching costs

Imitation of technology

Counterfeit products

Low profit margins

High exit barriers

THREAT OF SUBSTITUTE PRODUCTS

• There are few substitutes from other industries, if any.

• Most of them seem to be obsolete or have one foot out of door.

For example:• Digital Camera in the place of Film Camera

• Fax machines in place of overnight mail delivery

BCG MATRIX OF SONY SUBSIDIARIES

Strengths 1. valuable physical assets2. a clear market advantage3. priceless organizational assets4. low production costs5. resources6. diversification  Weaknesses1. weak financial sheets2. specific weak product launch 

Opportunities1. software capabilities2. upcoming festive season3. joint venture with Blockbuster 

Threats1.industry sales drop2. competitors3. necessity for expensive technology 

SWOT ANALYSIS

CASE STUDY :

RESTUCTURING OF SONY

SONY’S 1st LOSS• First signs began in early 1990s

• Experienced a loss of ¥ 293.36b in 1995

REASONS:• Unrelated diversification• Innovation dearth• Lack of brand evolution

RESTRUCTURING EFFORTS• 8 restructuring efforts in 13 years• Faced heavy restructuring costs adding to the fixed overheads• These efforts failed to achieve the desired results & outcomes

FIRST EFFORT -1994Designed a 8 company structure

GOALS• Creating a market-responsive company• To clarify the scalar chains of the company

RESULT• Loss of ¥ 293.36b in 1995

SECOND EFFORT -1996

• Designed a Ten-company structure• Goal was to bring the company back to Profits

RESULT• Net Income decreased by 19.4%

REASON• Heavy decentralization• Board room minimally involved in product decisions• Unrelated diversifications

THIRD EFFORT-1999

• Internet based products were given priority

RESULT• In 1999-2000, Net Income fell to ¥121.83b

REASON• Lack of consolidation of business groups

FOURTH EFFORT -2000

• Revamp of Top management

RESULT• Net Income dropped to ¥16.75b from ¥121.83b

REASON• Dot com burst

FIFTH EFFORT-2001• Transform SONY into Broadband Network solution company

RESULT• Operating Profit declined by 40.3% in 2001-02

REASON• Major and sudden shift in BUSINESS FOCUS

SIXTH EFFORT -2003• TRANSFORMATION 60 introduced in Oct 2003• Cost of Restructuring $3.1b

GOALS• Achieve Profit margin of 10%• Reducing annual Fixed Costs by ¥ 330b• Component Outsourcing

RESULT• Net loss of ¥6.8b during 2004 in Elec. Dev.• Drop in Operating Income of Games Division by 48.67%• Company Operating Income drop by 13%

REASON

• Drop in PS2 sales• Drop in sales of VAIO• Drop in sales of CRT Television Sets.

SEVENTH EFFORT -2005

GOALS• Identify the 5 main challenges facing the company• Organizational Structure re-design

RESULT• Net Profit increased to ¥ 123b

REASON• Sony BRAVIA sales• Reduction in Product & Design redundancies• Focus on core competency

EIGTH EFFORT-2007• Organizational Structure re-design• Establishment of B2B Solutions Group

RESULT• Estimated 6-fold increase in profits• SONY shares rose to 5 year high• Sales increased by 13%• Operation Income of ED increased by 77%

REASONS• Sony BRAVIA sales• JV with SAMSUNG• New Product design and introduction

NINTH EFFORT-2009

• Focus on Electronics & Games business groups• Forming 2 new business groups• Consolidation of Operations in Japan

• MEASURES• Infusing young blood into Top-management• Reducing the number of suppliers from 2500 to 1200• Increasing R&D spending