Figure 2. Porter’s Generic Strategies.
Sony Corporation is making an effort to increase awareness of its various Mobile Workforce solutions. These are actually solutions for people who rely on carrying computers around as part of their jobs. The first part of this initiative revolves around the concept of sales in the mobile field.
The purpose of Sony Corporation in this effort is to show how they can help their customers and clients incorporate their Sony devices into their sales force automation strategy ( 1997).
The term automation of sales force may seem to imply that a person can automatically make sales, which is very far from the truth. More precisely, what the automation of sales force does is to automate the aspects of the processes involved in sales. Definitely, this would make it easier for the clients to keep track of the person to call, how and when to follow-up as well as the value of prospects.
Sales force automation is a good initiative to getting the difficult part away from these tasks. This would mean finding the appropriate software tools that would help the client organize his / her contacts and phone calls as well as remind him / her once in a while of meetings and missed calls. There have been existing solutions that enable sales professionals to track order history and status.
What is amazing is that some of the best sales personnel have been keeping on using paper DayTimers. True, they’re portable, but far less portable than Sony organizers. With these little Sony organizers, there’s no longer a need to bring along laptops or endlessly erase and write in paper planners.
There is no doubt that serious salespersons need a Sony device to help them to do their jobs efficiently. It’s so sleek that it can be slipped into a pocket or briefcase. Also, it can be easily carried anywhere and takes up little space that it can be easily hidden.
Therefore, the valuable information that sales people collect can now be synchronized with the pertinent information in the servers of companies. The organization will have access to important information about their customers and the sales staff in turn also will have access to the information that will help them sell easily.
GAP ANALYSIS and GLOBALIZATION
One of the keys to success of a company lies on the consistency of its business strategies with requirements of the industry environment (external consistency). Also, the company’s capabilities need to be in line with the business strategies being pursued (internal consistency). Therefore, in the process of undertaking these processes, it is expected that some gaps will exist. The gaps, though, provide the opportunity for the company to assess the appropriate and feasible strategic options needed to improve the overall competitiveness of the company.
A. Environment-Strategy Gaps
Both the macro-environment as well as industry environment shall be considered. But it important first to start with the analysis on how Sony Corporation’s strategies fit with the major trends of globalization within the industry, after which the possible gaps that may exist will be identified.
Macro-Environment-Strategy Gaps
Political Trends
The possibility of the occurrence of political and electoral crises within regions where Sony Corporation has operations will not be helpful at all to its strategy to solidify its top position in the electronic consumer goods industry. While the implementation of AFTA promotes common tariffs among countries, other countries will have no choice but to follow the individual national tariffs imposed on their products. Nevertheless, Sony Corporation should view the globalization of the supply chains of the electronic consumer goods industry as an opportunity rather than threat as the earlier issues have identified.
Economic Trends
The possibility of the occurrence of global recessions brought about by companies closing down and the loss of jobs due to the globalization of supply chains may have a direct impact on Sony Corporation’s strategy of dominating the world market. Also, there are huge differences in terms of the GDP per capita earnings among countries. This situation should make Sony Corporation ponder about its positioning strategies in certain countries where it has operations.
Social/Cultural Trends
With the rise in the middle to upper-middle class households in certain countries, there exists a strategy mismatch for not considering the potential for consumer market.
Technological Trends
There is a need for Sony Corporation’s business strategy to be aligned to any revolutionary technological changes impacting the electronic consumer goods industry.
Legal Trends
The company has to be aware of any changes in terms of government legislations within the countries where it has operations.
Industry Environment-Strategy Gaps
Industry Rivalry
There is high level of rivalry that occurs in the consumer electronics industry. This certainly may have a grave impact on the overall consumer electronics industry profitability, and pose a threat to Sony Corporation. The only gap that could possibly arise is the financial resources of Sony Corporation compared to its competitors.
Buyers
Since the bargaining power of buyers is high, it offers both opportunities and threats. It also has a deep impact on the consumer electronics industry profitability. Thus, gaps exist in the form of customer segmentation, in which Sony Corporation may also consider positioning itself.
Suppliers
Suppliers have only average bargaining powers resulting in lower profitability for the consumer electronics industry. Sony Corporation could capitalize on this situation by forming strategic alliances with other electronics companies or even acquisitions.
Substitutes & New Entrants
Both of these industry elements pose very little threat to the consumer electronics industry, much less on the industry’s profitability. The only issue that may have a major impact on Sony Corporation’s strategy could be the technological changes that produce substitutes which may threaten the industry.
B. Strategy-Capabilities Gaps
Sony Corporation’s technical expertise in the manufacturing processes and its continuous pursuit of research and development activities may become a stumbling block with changes in the technological trends. There is an impending need to have better market insights. Sound marketing strategies and the access to distribution channels are not enough to guarantee success for Sony Corporation. The financial resources of Sony Corporation are way ahead compared to leading players like Microsoft and Compaq.
STRATEGIC OPTIONS for GLOBALIZATION
Deriving from the gap analysis between the environment, strategy and capabilities, many strategic options would become imperative. It is therefore essential to evaluate these strategic options as to whether they are appropriate to the issues addressed, whether they are feasible enough to be implemented and their acceptability to key stakeholders.
A. Business Level Strategy
There is definitely a need to reconcile both the inside-out and outside-in capabilities. While Sony Corporation’s business strategy involves focusing on its core competencies with market position following its resource base, the company will be put into a disadvantageous position should it choose to neglect both the macro as well as industry environment. Therefore, Sony Corporation has to be aware of the latest technological changes, as well as changes in political, economic, legal and even demographic trends in order to develop the outside-in capabilities, such as market sensing, customer linking, channel bonding and technology monitoring.
The advantages enjoyed by the company may come in the form of increased revenues. Knowing what the market demands and the latest trends could help Sony Corporation fully exploit its research and development capabilities to come out with globalization strategies which are not only cost-effective but also high in quality. The strategic option can even be used as marketing tool where the focus is on staying close to your customers and listening to their feedbacks. On the flip side of the coin, there will be huge mobilization of resources involved, and the associated risks bestowed on the company.
Nevertheless, the mentioned strategic option seems the most practical in the wake of globalization, since there is a sudden shift towards a more integrated and independent world economy. The key stakeholders too should not have any objections so long the company’s core business is not threatened. By virtue of Sony Corporation’s centralized control of its subsidiaries, it is being expected that major barriers should not exist in carrying out such an option except additional time may be required given the scope and span of its operations.
Corporate Advantage from Supply Chain Analysis
The product differentiation strategy of Sony Corporation will definitely be advantageous on any part of the supply chain analysis. For instance, Sony Corporation’s efforts to gather primary information that are unique and unavailable to most of its competitors have successfully initiated differentiation. The product differentiation strategy of Sony Corporation comes from its uniqueness. The differentiation advantage of Sony Corporation is achieved either by changing their individual value chain activities in order to increase the level of uniqueness of the final Sony product or by reconfiguring the supply chain.
B. Corporate Level Strategy
Understanding the strategic importance of the impacts of globalization of the supply chain in the consumer electronics industry is something Sony Corporation has to be familiar with. Sony Corporation normally practices a centralized and globally scaled configuration of assets and capabilities among its subsidiaries. This allows information dissemination to be retained at the corporate headquarters of Sony Corporation.
C. Network Level Strategy
There are various strategic options available for Sony Corporation. These are enumerated as follows:
· Tie up with various local electronics company
· Collaborate with either Microsoft or Compaq
· Alliances with leading players in technology such as suppliers
RECOMMENDATIONS
A tie-up or merger with various local electronics company offers tremendous benefits in terms of access to the company’s subscribers, infrastructure and even its resources. However, Sony Corporation must not lose sight of its core competencies while pursuing these tie-ups. Otherwise, the image of Sony Corporation might be put in jeopardy.
Meanwhile, the collaboration of Sony Corporation with its major competitors can be seen as a ridiculous move at first. However, upon close examination, this move could pave the way for Sony Corporation to increase even more its market shares and revenues. The bottom line is both sides would be able significantly gain financially in such an alliance. Sony Corporation’s strengths in product development combined with the financial capabilities of either Compaq or Microsoft can transform them suddenly into an unbeatable force to reckon with. One possible setback, however, is the differences in the cultures of the companies involved. Another possible setback could be whether any of Sony Corporation’s competitors has the need to form alliances.
The third option also focuses on alliances, but this time with either one of the suppliers specializing in manufacturing of electronic products or the product’s operating system. The benefits of these alliances should outweigh the costs in the long run.
In terms of appropriateness, all three options are able to directly address the current issues mentioned. However, the question remains whether Sony Corporation could be able to implement any of these options, and whether these options can be acceptable to the key stakeholders. Any merger or alliances may also involve the sharing of expertise. Sony Corporation has traditionally relied on the inside-out approach. It is important to note that any merger transactions would have many implications on the company’s values and culture as well as the resources. The key stakeholders definitely would be concerned with such options and need to be convinced of the positive aspects. Somehow, Sony Corporation will be able to overcome this barrier in managing strategic changes in the process of implementing any of the above mentioned strategic options.
CONCLUSION
The results of the analysis carried out on the macro-environment indicated very significant effects for the consumer electronics industry, even amidst the threats of political unrest. Therefore, we could conclude that the consumer electronics industry could still be expected to grow faster than average. A detailed Porter’s Five Forces analysis verified an above average current profitability for the industry as a whole.
The review of Sony Corporation’s capabilities and resources revealed very little inconsistencies regarding the company’s strategies for globalization of the supply chain. This is coherent with Sony Corporation’s traditional inside-out approach. However, the need to reconcile both the inside-out and outside-in approaches becomes imperative now for Sony Corporation.
The gap analysis among the environment, strategy and capabilities of Sony Corporation revealed certain gaps, most of which are biased towards the environment. However, these gaps paved the way towards determining a number of recommended strategic options to secure Sony Corporation’s international competitiveness.
Also, Sony Corporation has to find a balance between adherence to internal forces within the company and to the changing forces of the environment in order to implement such strategic options.
APPENDICES
Appendix 1: Detailed Analysis of the Macro-Environment
Political Trends
The consumer electronics industry has at least four political trends. These are: (a) the cry for democracy and reforms; (b) increased popular and local-level assertiveness; (c) greater public accountability; (d) re-definition of the concepts of power and politics. Also, the forms of political economies have slowly shifted from a bipolar (big government-big business) to a tri-polar structure (authorities – private sector – civil society).
The implementation of the Free Trade Area, or FTA, which laid out a comprehensive program of regional tariff reduction in the consumer electronics industry, will be continuously implemented in phases through the year 2008. Over the course of the next several years, the programs in tariff reductions were made broader. Efforts to eliminate non-tariff barriers and develop common product certification standards were initiated. In addition, ASEAN nations also were able to formulate framework agreements for the intra-regional liberalization of trade in services. Industrial complementation schemes meant to encourage intra-regional investment were also approved.
Economic Trends
Despite the adverse economic trends in the first half of the year, the consumer electronics industry as a whole experienced relatively robust economic growth. It is estimated that the industry, taken together, posted a better-than-expected GDP growth of 4.5% last year, slightly higher than the 4.1% growth that they achieved in 2002. Many countries have also seen the risk-weighted capital adequacy ratios of their banking systems improve due to government-sponsored bank recapitalization programs, continued progress in financial restructuring, and improvements in financial risk management. The capital adequacy ratio of commercial banks in these countries is now far higher than the 8% Basle norm. It ranges from about 14% in Malaysia and Thailand to about 20% in Indonesia, with the Philippine commercial banks reporting an average capital adequacy ratio of about 18%.
Table 1. Trends in ASEAN GDP Growth Rates
ASEAN GDP Growth Rates
% growth, 1995 – 2005
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005*
Cambodia
6.7
5.5
3.7
1.8
5
5.4
5.3
5.5
5.2
6.0 (e)
2.4
Indonesia
8.2
7.8
4.7
-13.1
0.8
4.8
3.3
3.7
4.5
5.1
5.4
Laos
7
6.9
6.9
4
5.2
5.9
5.5
5.9
5.3
6.5 (e)
7.0
Malaysia
9.8
10
7.3
-7.4
5.8
8.3
0.4
4.2
5.3
7.1
6.0
Myanmar
6.9
6.4
5.7
5.8
10.9
6.2
-
-
-
-
-
Philippines
4.7
5.8
5.2
-0.6
3.3
4.0
3.4
4.4
4.7
6.1
4.5
Singapore
8
7.5
8.5
0.1
5.9
10.3
-2.0
2.2
1.1
8.4
4.5
Thailand
9.3
5.9
-1.4
-10.8
4.2
4.6
1.8
5.2
6.8
6.1
5.8
Vietnam
9.5
9.3
8.2
4.4
4.7
6.1
5.8
7.0
7.2
7.5
7.5
ASEAN
8.4
7.4
3.5
-9
3.1
5.9
1.9
4.8
5.3
5.8
5.5
Source: Asian Development Bank, World Bank and other sources
Social / Cultural Trends
There have also been social and cultural trends that have been evident over the last 12 months in the consumer electronics industry. These include: (a) the irreversible rise of civil society among countries; (b) the rise of civil society blends perfectly with a tri-polar structure of political economy; (c) the increase in the roles of intellectuals; and (d) the beginning of a period of introspection.
Technological Trends
It is a common knowledge that the consumer electronics industry is still a relatively new industry and is still in its early stages of development. However, it has shown signs of rapid growth and it is being estimated that there will be more than a million mobile and electronic devices that will be shipped within the year. And it is further being expected that within the next years the tremendous growth and technological advancements will continue in the mobile world. Mobile commerce and multimedia terminals are just some of the technological advancements already being expected. Therefore, the continued growth and development will also make it imperative for globalization to occur in the consumer electronics industry in the years to come (1993).
Legal Trends
Intellectual property (IP) and IP Rights (IPR) creation, commercialization, and protection have been a significant source of comparative advantage of enterprises and economies and a major driver of their competitive strategies. Indeed, most countries nowadays are fully aware of the pressing need for a long-term policy commitment to collectively transform their nations into one which is largely based on knowledge, driven by innovation and sustained by life-long learning ( 2002).
Countries have pledged to work together to help accelerate the pace and scope of IP asset creation, commercialization and protection; to improve the regional framework of policies and institutions relating to IP and IPRs, including the development and harmonization of enabling IPR registration systems; to promote IP cooperation and dialogues within the region as well with the region’s Dialogue Partners and organizations; to strengthen IP-related human and institutional capabilities in the region, including fostering greater public awareness of issues and implications, relating to IP and IPRs. The new action plan on IPRs for 2004-2010 would cover all these aspects.
Appendix 2: Detailed Analysis of the Industry Environment
The assessment of the industry attractiveness is performed using the Porter’s Five Forces Model.
Five Forces Analysis
Figure 1. Porter’s Five Forces used in the Assessment of Sony Corporation’s Strategic Environment
A. Intensity of Industry Rivalry
Sony Corporation is the world’s leading producer of electronic devices. Interestingly enough, Sony Corporation has an even larger share in the market for hand-held computer operating systems. Around eighty (80) percent of hand-held computers in the United States operate on a Sony operating system. Microsoft is the only major competitor with a share of sixteen (16) percent. The hardware market gives Sony Corporation a market share of sixty (60) % (2002). Of the major competitors, Handspring is using Sony’s operating system, and hold about 7% and 14% market shares respectively. Other competitors, such as Compaq and H-P, use Microsoft’s operating system, but both companies have below 10% market share. Sony Corporation has had so much success in the consumer market, but the future goals include selling more products to corporations ( 2002)
Table 2. Sony Corporation’s Market Status (Electronic Devices)
COMPANY
MARKET SHARES
Sony Corporation
80%
Microsoft Corporation
16%
Other IT Companies
4%
Table 3. Sony Corporation’s Market Status (Hardware Market)
COMPANY
MARKET SHARES
Sony Corporation
60%
Handspring
14%
Compaq
10%
H-P
9%
Others
7%
B. Threat of New Entrants
New entrants in the consumer electronics industry will have to deal with high costs of entry for their latest technologies. Most of Sony Corporation’s major competitors have yet to establish strong distribution channels. This will severely hamper their plans to retaliate with their technological developments as without distribution channels, their products would never be seriously considered in the market by customers. Sony Corporation must worry though about certain government laws in most countries that might weaken its competitive position.
C. Bargaining Power of Suppliers
Suppliers of electronics products other than Sony Corporation have relatively lower bargaining power because their products have yet to establish consistency in the market. This is in contrary to Sony brands where these products have been able to secure the confidence of its customers worldwide.
D. Bargaining Power of Buyers
A majority of Sony customers are professionals who rely on mobile gadgets and expect seamless handoffs every time they make calls. For instance, a customer phones in a service request from the New York airport while boarding a plane bound to Paris the same day. The technical people of Sony Corporation in New York will immediately work on the service ticket of the client. And when that client arrives in Paris, he / she would be able to call the New York service center and pick up exactly where he / she left off ( 1999).The bargaining power of buyers in the mobile computing industry is relatively high because aside from Sony Corporation, there are only few, large players in their industry.
E. Threat of Substitutes
There are very little threats that could emerge from possible substitutes such as electronic devices and handheld computers. This is because product-for-product substitution could not possibly happen especially with Sony products. Other products cannot simply replace the ingenuity of the established Sony products in the market. Also, the millions of users of Sony products surely would find it too uncomfortable using other mobile products other than Sony products.
Appendix 3: Sony Corporation’s Corporate Government
The Sony Corporation Board of Directors and management believe that sound principles of corporate governance are critical to obtaining and retaining the trust and respect of stockholders, employees, other stakeholders and the public. The Sony Corporation board serves at the discretion of Sony Corporation stockholders and works to represent their interests by enhancing business strategies and practices for the creation of long term stockholder value.
Governance Summary
- The board consists of three standing committees: Audit Committee, Compensation Committee and the Nominating and Governance Committee;
- A majority of board members are independent of the company and its management;
- The Audit Committee of the board has established policies consistent with the newly enacted corporate reform laws for auditor independence;
- The independent members of the board meet regularly without the presence of management;
- The charters of our board committees clearly establish their respective roles and responsibilities;
- The company has a clear code of ethics and all employees must affirm their acceptance of this code. The code of ethics includes a conflict of interest policy to ensure that key corporate decisions are made by individuals who do not have a financial interest in the outcome separate from their interest as company officials;
- The company actively monitors compliance with the law and the global financial policies and practices over critical areas. These areas include internal controls, financial accounting and reporting, fiduciary accountability and safeguarding of our corporate assets.
SONY CORPORATION SWOT Analysis
Strengths:
- Sony Corporation has products that boast of a very powerful retail. This includes a reputation for value of money, convenience and a wide variety of products
- Sony Corporation has grown significantly over the years, and has experienced global expansion.
- Sony Corporation’s main competence lies on the use of information technology (IT) to fully support its international logistics system. Therefore, Sony Corporation can see how their individual products perform within Japan, or even at stores at a glance. IT also supports Sony Corporation’s efficient procurement.
- Sony Corporation is able to deliver good customer care, as the limited amount of work would mean plenty of time to devote to customers.
- Sony Corporation’s lead consultants have established a strong reputation within the market.
- Sony Corporation can afford to change direction quickly if its management finds that the company’s marketing strategy is not effective.
- Sony Corporation has little deficits and overheads. Therefore the company can offer good value to customers on a consistent basis.
Weaknesses:
- Sony Corporation is one of the world’s largest company in electronics and but has a weak control of its empire, despite its IT advantages. This could lead to a decrease in productivity in some areas where they have the least control of.
- Since Sony Corporation sell products across many sectors, the company may lack the flexibility that some of its more focused competitors possess.
- Sony Corporation operates globally, but its presence is located in only relatively few countries worldwide.
- Some of the company’s weaker branches lack market presence or reputation
- Some of the company’s personnel still lack the essential skills base in many areas.
- The company is still vulnerable to the temporary losses of its vital staff (e.g. being sick, leaving).
- The company’s cash flow is unreliable especially in the early stages of a new product development.
Opportunities:
- Taking over, merging, or forming strategic alliances with other electronics companies while focusing on strong markets like Europe or the Greater China Region.
- The branches of Sony Corporation operate only on trade in a relatively small number of countries all over the world. Thus, this would open the opportunities for future businesses in expanding various consumer markets, such as those in China and India.
- The opening of new locations and branches offer Sony Corporation the opportunities to exploit market development. This could lead to the diversification of the company’s branches from large super centers to local-based sites.
- Opportunities exist for Sony Corporation to continue with its current strategy of establishing large branches worldwide.
- Sony Corporation is continuously expanding, with plenty of future opportunities to exploit for success.
- The local councils of Sony Corporation are in the process of encouraging local businesses with work whenever possible.
- The competitors of Sony Corporation may be slow to adapt to new technologies especially the ones that Sony Corporation releases.
Threats:
- Being number one means that Sony Corporation is the target of competition, the company to beat, both locally and globally.
- Being a global retailer means that Sony Corporation might be exposed to political problems in the countries where the company has operations.
- The production costs of most consumer products have the tendency to fall because of lower manufacturing costs. Manufacturing costs fall because of outsourcing to low-cost regions around the globe. This phenomenon could lead to competition in prices, which in turn would result in the deflation of prices in various ranges. Intense price competition must definitely be considered a threat.
- The latest developments in information technology which could possibly change the markets might challenge the company’s ability to adapt to these changes
- A slight shift in focus of a large competitor might wipe out any market position that Sony Corporation has achieved over the years. This could force the company to specialize in rapid response but good value services to local businesses. This would put so much pressure on the company’s consultancy staff to keep informed with the latest changes in technology where possible.
Credit:ivythesis.typepad.com
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