Report on Sonys Case Study

Report on Sonys Case StudyMajor Question Outline evaluate Sonys strategic position at the end of the case study, including its perplexity change. What strategic changes (if any) would you now recommend to Sonys direction?Minor Question Analyse Sonys resources, Capabilities Competencies as depicted in the case, explain wherefore it has grown success amply in the competitive consumer electronics industry. As an a classifiable Nipponese stack, Comment in the role played by Sonys corporate Culture?Introduction.This propound is based on Sony Corporation. The report below is structured tensenessing on the issues provided as question for the Case study in the seminar group. There is a brief History Culture followed by the wad Analysis Financial Analysis, followed by the management change at Sony. Finally there are a a few(prenominal) recommendation followed up with conclusion references. This case study was Robin John, from London South Bank University.2. AcknowledgementWe as a group would like to give thanks Robin John Dr. Leslie Gadman for their support and providing excellent knowledge about the topic, the case study and presentation feedback which has enabled us to deliver this report in acceptable form.3. chronicle CULTURE.The Sony Corporation is now a $ 124 billion (2009) Company with approximately 180,500 employees (2008). Sony was formed in 1946 by Masaru Ibuka Akio Morita. It was initially know as Tokyo Tsushin Kogyo in English language Tokyo Telecommunications Engineering Company. The name Sony was chosen as a dodging which would help them to Globalise as the Co-Fo beneath Morita had the vision to see early that there was a world rather than pure Japanese market for their Innovations. The first Sony- spoted product, the TR-55 transistor radio, appeared in 1955 only the club name didnt change to Sony until January 1958.The current Sony Corporation has a unique culture which is firmly rooted in its history especially in relationship t o its two founders, Ibuka and Morita. They both were geniuses above their business talents. twain gave insights and visions in what the company should make and how it should be made. Ibuka, especially, gave constant advice and suggestions to the engineers involved in projects from the earlier on transistor radios to Walkmans. This maked the umbrella strategy in which Sony operates under, where the top management gives the general direction in which the lower engineers actively learns, develops and improves on the vision/idea. Therefore, although there is a planned direction, the actual product development through institution is emergent with great flexibility.Although the research and development section of Sony differs greatly from other companies with its great flexibility, Sony, in its essence is still a traditional Japanese company in umteen ways. There is life-time employment, with unafraid norms and values which in turn create strategies through their actions. Status is g iven (the crystal award) quite of bonuses (not signifi can buoyt amount) for relentless-ribbon(prenominal) achievement. There is similarly the strong seniority system such as the mentor and apprentice relationship that is typical of a Japanese firm. All this can be classified as the cultural school in which strategy formation is of collective behaviour. Collective vision and stress on human resource, which is typical of many Japanese, can be clearly seen in the mission statement Management Policies.Sony Corp has retained rock-steady things of Japanese Culture hasnt been reluctant to accept culture which is not atypical Japanese in nature, which has resulted in building these huge electronic giant sustain it for more than than five decades, looks for a succeeding(a) which is very bright.4. SONYS CAPABILITIES, COMPETENCIES RESOURCESSony Corporation is considered one of the worlds most successful companies, operating in the electronics, plot of grounds, music, films and f iscal services industry (Hanson et al, 2001). Sony is known for creating products that stimulate the senses and refresh the spirit (Sony, 2007). efficaciously managing a combination of its resources, capabilities and core competencies, has allowed Sony to create a strong sustainable competitive advantage.Assessment of Sony Corporations Resources and CapabilitiesSony Corporation is committed on its efforts to continuously develop master technology that generates a high appeal to the general public due to its quality and cost effectiveness. Over the years, Sony Corporation has been able to build a unquestionable base meant to boost the companys designing and manufacturing capabilities. This enables the company to bring to markets truly original and more importantly mobile devices that are reasonably priced. The research and development team of Sony Corporation also plays a all important(p) role in the achievement of this feat. The company also believes that making a positive impac t in the troupe through their quality products is the very essence of being a manufacturer.Sony Corporations Competitive AdvantageEconomies of Scale and Scope in manufacturing and research and development arising from its numerous facilities locate in Japan, the United States and other countries worldwide.Unique Quality Technology owing to heavy emphasis on researchSony Corporations commitment to research development activities has of all time been one of its top strategies to remain competitive in the market.Differentiated ProductsThrough the production and marketing of identify products originating from their research and development activities, Sony Corporation is able to create its own firm-specific advantages. The 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 Corporati on is able to market their products worldwide, which enables them in turn to maximize the returns on research and development expenditures. Sony Corporations competitive advantages could be sustained provided the company would continue to focus on its core competencies. However, the company also has to be aware of the latest technological.Sony Corporations Resources Resources refer to factors that a company owns controls and uses for the purpose of creating value (Hill et al, 2007). Sonys numerous tangible and intangible resources help to determine its distinctive competency, thus leading to maintaining a competitive advantage.When identifying Sonys resources, both its tangible and intangible assets are included. Tangible resources include assets that are financial in nature, or have physical properties (Hill et al, 2007). In 2007, Sony recorded a sales and operating cash flow of $70,303 million, an increase of 10.5 percent from 2006 (Sony United, 2007), as department of its financ ial resources. Land, buildings, machinery, and equipment are also part of Sonys tangible resources, and are worth approximately $14 million (Sony United, 2007).Intangible resources include those non-physical assets that the company uses to produce goods or provide services, or expects to generate future productive benefits (Hill et al, 2007). The Sony brand is considered one of the worlds most recognisable and trusted brands and was ranked 21st in the Business week/Interbred list of the Worlds 100 Most Valuable Brands with an estimated value of US$14 billion (Singh et al, 2005). The Sony brand is associated with superior quality, innovation and style (Sony United, 2007), in the minds of its customers.5. Sonys SWOT Analysis.Opportunities growth of new technologyGrowing trend customer base (Focus on BRIC Nations)Target consistent profitability in core hardware businesses (TV, game and digital imaging)Diversify in game producing for its hardware.Listen to Voice of customer.Easy to use products.ThreatsNew substitute products emergingPrice competition.Economic pressure.Losing the dominance in key product categories.(TV, P.S, D.I)Due to poor financial performance could have less money for RD.StrengthStrong sales marketing capabilitiesBusiness post or product exclusivityHigh quality productExcellent customer serviceCost advantage (Discount)Good distribution network worn outnessWeak financial performance (Low Profitability Low ROCE)Lacking a customer viewpointProducts with many feature but difficult to use.Lack of hit productsDevelopment of similar productsPatent fuss in the whole Industry.Particular1997Millions of Yen2009Millions of Yen make sense Electronically Business3,930,292 (69.4%)5,032,920 (65.1%)Music570,119 (10.1%)50,541 (0.6%)Picture438,551(7.7%)717,513 (9.3%)Insurance227,920(4%)523,307 (6.8%)Games408,335(7.2%)984,855 (12.7%)Others87,917(1.6%)471,398 (5.5%)Total Revenue5,658,2537,729,993 (+136.62%)6. Comparing Sales Revenue by BusinessArea for 1997 2009.FINANCIAL PERFORMANCE.Particular20082009Sales8,871,4147,729,993 (-12.87%)R D Expenses520,568497,297 (-4.47%)Employees180,500171,300 (-5.1%)Profit Margin4.2%-1.3%R D to Sales5.9%6.4%Current Ratio1.25 time0.95 timeGearing Ratio21.04%22.27%Return on Equity16.4%-5.9%Roce6.65%-2.13%6.2 FINANCIAL ANALYSIS.Sonys financial condition is good but necessitate to be better for a matured Company like Sony which is in existence since 1946 more than 6 decades. It is acceptable but should be a top priority for the Management to make it better. Below mentioned are few observationsMajority of its earning in electronic Industry.Earning from music has reduced considerably could be because of piracy issues or Late M.Js bad public city.The best diversified product is gaming, so should look to diversify more in this area. (Game MFG.)Major problem with SONY is its low profitability.Gearing ratio is 22.27% which is good as has a scope for future borrowing if required.RD has just reduced by 4%ROCE Return for section holders are major concern for SONY.7. Style of leadership and managementThe leadership style of Akio Morita the co-founder of Sony Corporation included the ability to imagine, design, implement and develop new products, marketing, brand management strategies and human resources skill as well. Akio Morita resigned from the post of the Chairman, during which he positioned Sony as the worlds most successful consumer electronics company. Sony was ranked 37 on the Fortune 500 orbiculate list. Under Moritas leadership, Sony developed many new products and technologies. One of the other key success factors of Sony was Moritas people skills and his trust in his employees. Sony continued its tradition of offering modern products after Moritas death in 1999. Sony has been a modern Japanese company as they have promoted young Idei to President of Sony when he was 57 years lessened according to Japanese standard. It was under his leadership that they have recovered from t he 1995 crisis have posted the highest ever profit. Idei also launched Transformation 60 which was not of a frequently success. The main purposes of Transformation 60 wereReduce cost by 300 Billion Yen.Decrease workforce by 20000.Achieve profit margin of 10% march 06.By the early 21st century, Sony was facing several problems due to the slowdown in the global economy, but then they recovered well under the leadership of Sir Howard Stringer who was made the CEO Chairman of the Sony Corporation. A Non Japanese to senior management position was not a typical Japanese culture but has given them the desired result.So as a whole Sony Corporation has always been under a good senior management for all the years.8. passBuilding of Strategy Sony as a much international company with major branches in Europe and the United States and stocks listed in 23 stock exchanges, the Japanese cultural school strategy is not sufficient. Becoming a mature company, the strategy should also change to mor e profit orientated. There should also be greater emphasis on market share, especially in Japan where Sonys market is shrinking. Strategy should be aimed at greater control and communication amid manager and workers, especially the engineers in the RD Department.Diversification One direction which is possible is concentrating more on electronic know how in non-consumer business. Currently, the buyer has much more choosing power and competition is fierce. The competitors are also able to copy the product in a much shorter time. To create larger profit margins, Sony should concentrate on the business sector and industries, supplying high technology equipment and parts. This would make full use of the RD Department. Although the Sony name is often related to expensive, high-profit end of the market, the organization should also unfold its product range by offering lower priced, simpler featured products that would compete head on with others. With the lower priced line, Sony can also increase its market shares in both overseas and Japanese markets.Alliance and Cooperation Sony should try to become a leader instead of a maverick. The difference is great, the leader, besides a great innovator, should also be a great coordinator. Internally, the different RD groups should cooperate more. The product line should also be made more compatible with one another, i.e. no more secret projects. Products should be made with higher added value and enormouser life rather than making frequent model changes. This is also a shift from a manufacturer-orientated mentality to a consumer-orientated mentality, which is a way to save natural resources. The brand-line compatibility also builds brand loyalty for consumers.Cost Cutting Cost cutting is important because RD plays an inherent part in the success of Sony and cannot be cut drastically although it gobbles up 10% of sales. Therefore, the only way to improve profit margins is to cut cost. Sony is not fully making use of other lower cost areas in the world, especially Asian countries such as Malaysia, Thailand and the Philippines etc. By setting up factories in these countries, Sony can take advantage of their cheap labour and also get a head start in their budding consumer markets.Products should be refined instead of reinvented so that there would be less set up cost and greater automation could be achieved. This could also be seen as a long term strategy.Integration of production, design and marketing In many ways, designing and developing of a product is separate from the production and marketing. RD should listen more to what the consumer needs and then innovate instead of always creating new product for markets. With great freedom, the designing team should also take on greater state in making the product fit to the current production pattern and marketing aims. They should also be made more responsible to the profit and loss of the particular(a) product. Empowering these three separate groups cr eates conflict, but it also brings these separate efficient groups unneurotic achieving synergy.Implementation Internally, strategy should be reviewed beginning with renewing the corporate goals. It should integrate together both the Japanese work ethic and its western counterparts. This is possible, because Sony is a multinational corporation with employees and customers in many different countries. This involves writing the importance of profits and its responsibility to shareholders in the statement. Integration of the company, the designing, production and marketing should be encouraged, with increased communication between each group and the management acting as liaison and guidance. The management should be providing the organization with specific goals and strategies for the short and long term. These changes are intended to balance business Vs engineering. Setting up alliances with fellow electronic manufacturers / competitor is crucial to mutual benefit so should be pursue d as soon as possible.9. Conclusion.The reputed brand name is one the Sonys strength, but on the other hand, many competitors start to see Sony as their target and main competitor, which will inflict various threats against Sony. Sony also needs to concentrates on improving itself. They collect Voice of Customer (VOC), which directly reflect the responses, expectations or suggestions from end-users. It could be observed that Sony is positively dealing with its competitors, through learning from failure and looking for room to further improve. Such strategy helps minimize the probabilities that their customers would turn to other competitors. It aims at retaining its present customers and keeping their Number 1 market position.Sony made full efforts to support the environment from 1989. Sony is using blue ocean strategy on the business. Toward this end, Sony has sponsored many package redesign projects and committed to considering the environment, not only to create environmentally-f riendly design but also to reduce genuine use. Due to this heartfelt customer service, high-quality, reliable products that Sonys customers can use with confidence. At the end of this case study Sony is not in a very strong strategic position but it is also not in a very bad strategic position. The position of Sony is in between.The conclusion is that change is compulsory in Sony. However, even with strategically and structure change, the Sony spirit of Technovation(technological Innovation) should remain intact because that is what made Sony grow and would make it stay strong.