Part 1
Sony Ericsson, its resources and its competencies
Multinational strategies had always featured in the telecom industry. Ericsson, based in the small Swedish market, established manufacturing operations in Russia and sales subsidiaries in China and Mexico as early as the 1890s. Around one-third of Ericsson’s total production was manufactured in eleven factories outside Sweden in the 1930s. By 1990 it only operated telephones in Argentina. By that year Ericsson was the fourth largest telecom manufacturer, holding around 7 percent of the world market, and having 70 000 employees ( 2005). In the 1980s the industry underwent a major change with the development of cellular or mobile telephony. The mobile phone industry had two components: mobile communication infrastructure and mobile handsets. The early mobile networks were for the most part incompatible between countries. In the United States, several competing systems and standards evolved in different parts of the nation. Subsequently second generation systems, which used digital rather than analog technology, were introduced. A pan-European system known as global system for mobile (GSM) communication was launched in 1990, and accounted for seven-tenths of the world’s subscribers by the new century. The remainder used two competing US standards or the Japanese standard ( 2005).
The market for telecom equipment came to be dominated by a small number of large multinationals. In 2000 Ericsson’s sales of over billion included nearly one-third of the world mobile infrastructure equipment market and 10 percent of the world cellular phone market; however competitive pressures led it to divest rather than further expand international manufacturing. During the 1990s it reduced the number of its production plants from seventy to less than ten worldwide. The residual plants either focused on the development and design of new products, or on standardized products. The latter were concentrated in a few low-cost sites ( 2005). A decision to concentrate on mobile telecom infrastructure led to the sale of many of its plants at the turn of the century and the outsourcing of its non-core manufacturing to contract electronic manufacturers. In 2000 Ericsson and Sony established a London-based joint venture, Sony Ericsson, to exploit the opportunities of third generation mobile systems, whose implementation had begun in Japan. Ericsson’s strategies were broadly emulated by its major competitors in the world telecom industry, including Nokia, the Canadian firm Nortel, the US firms Lucent, Cisco Systems, and Motorola, and Germany’s Siemens, all of whom had telecom equipment sales in excess of billion in 2000. These firms all moved, although at varying rates, to outsource production to contract manufacturers. They also progressively outsourced innovation to cheaper locations ( 2005). Sony Ericsson’s resources come from reliable suppliers and manufacturers. The materials used in creating the products have to agree with the company’s greenheart process wherein most part of the product should be recyclable or harmless to the environment. Sony Ericsson’s competences include its highly advanced product, competitive products and concept of sustainability. Sony Ericsson makes use of its competences to achieve continuous growth and development.
Sony Ericsson ethics and Social Responsibility
The process of globalization over the past decade has created unprecedented opportunities for global companies in trade, investment, services, and production. The fact that the rapid pace of growth of economic opportunity has not corresponded with the growth of leadership in business ethics and a sense of corporate responsibility has potentially threatening consequences for the reputation of free market economies and businesses. Public concern is accelerated by a wider use of electronic communications that is changing the nature of politics as much as that of business operations ( 2003). The leadership of a few progressive companies, the rise in consciousness of corporate responsibility as an essential feature to sustain global capitalism, and emerging evidence of partnership initiatives which hold the key to equitable development, are all encouraging pointers towards progress. Corporate responsibility is a pact for the mutual benefit between society that needs business for economic and social development, and business that needs a supportive business environment. It is also a pact between capital and management in modern companies, which has been as shaken up by some recent scandals where management disregarded the bond of transparency with shareholders ( 2003).
All too often professional managers and their advisers have been tempted to see the resources of public companies as their own property without the sense of stewardship that owner-managers once had. The balance can only be struck by combining professionalism with transparency. The international nature of the operations of business in trade, investment, and production brings a more complex dimension to business ethics and corporate responsibility in both the cultural aspect of doing business in environments with different norms and values, and in diversity of employees and stakeholders. While, until recently, some companies would argue that they should respect local values even if these are more tolerant of low standards and corruption, the prevailing ethos of the leading multinational enterprises and international institutions is that standards should be universal ( 1996). This is not without dilemmas in operating in different cultures, not least where preference is given to relationships along family, tribal, ethnic, and community lines. One of the fundamental problems of addressing ethics and corporate responsibility in an international setting is the existence of many governments that lack the capacity for proper market regulation, let alone the many states which are weak, corrupt, and in a few cases failed states engaged in internal conflict and civil war. Companies engaged in such locations have a compelling reason to engage in collective efforts to promote an enabling environment for corporate citizenship ( 1996). Sony Ericsson has and believes in corporate responsibility. The company makes sure that it follows all laws and regulations in every country they operate in. It has procedures and processes that make sure that corporate responsibility is implemented not only in internal environment but within its suppliers and trading partners. Sony Ericsson gives much importance to their personnel; the company makes sure that the welfare of the personnel is given appropriate attention.
Credit:ivythesis.typepad.com
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