Sony Strategy

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Evaluation of Sony Corporation ’ s strategy

Sony have successfully created an incredible brand name previously, however,

its legend seem to be falling apart recently. In fact, Sony’s net profit for the July-

September quarter for 2006 falling 94% to 1.7 billion Yen, compared to 28.5 billion

Yen for the same period last year (Benson, 8th Nov 2006). The major reasons for the

declining profit are affected by the critical strategic issues faced by Sony which

became a main drawback for them.

The first strategic issue faced by Sony was the inefficient manufacturing

structures which decrease Sony’s quality that badly affects their reputation and caused

a decline in product competitiveness. DeWit & Meyer (2004: p192) argue that “the

essence of most uniquely Japanese management practice will be they productivity

improvement, TQC (Total Quality Control) activities, QC (Quality Control) circles, or

labour relation – can be reduced to one word: Kaizen”. They also argue that “the

implication of TQC or CWQC (Company Wide Quality Control) in Japan have been

that these concepts have helped Japanese Companies generate a process-oriented way

of thinking and develop strategies that assure continuous improvement” (p192).

However, in the case of Sony, they did not make any improvement or perform well in

Kaizen or implement an efficient manufacturing structure that ensure high product

quality which affect their product quality and caused a massive damage to the

company. For example, there is the recall of 9.6 million Sony Laptop batteries which

were liable to overheat and potentially burst into flames where Sony even failed to

fully study the problem (Forbes.com, 2nd October 2006) and there are complaints

from Japan’s consumer about PS3’s new system (Wonova.com, 15th Nov 2006) which

will affect the compatibility and status of Sony badly.

The failure of Sony in effectively implements Kaizen or sustain an effective

manufacturing structure to ensure that they have high quality products had damage

their strong brand name and reputation which caused them to lose their product

competitiveness and competitive advantages in the market. As Johnson et al (2005:

p125) argue, “it is important to emphasize that if an organization seeks to build

competitive advantage it must meet the needs and expectations of its customer”. The

fact that Sony’s product qualities are unable to meet the needs and expectations of

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their customer had completely decreases the confident of the market and swipes away

its reputation. Finlay (2000: p295) also argue that “a good reputation is something

that all business would like to have but in some cases a good reputation is much more

valuable than in others”. Reputation is one of the significant intangible resources

(Collis & Montgomery, 1999) for Sony that differentiates themselves from the

competitors for them to charge a premium price for their excellent product and

quality, as Kotler & Keller (2006) argue, good reputation can create a positive

prejudice in the mind of the customer which make customer prefer the brand.

Therefore, the diminishing of Sony’s reputation will create a negative prejudice and

weaken their core competences which will directly affect their competitive advantages

and become a major threat for Sony.

Besides than quality and reputation issues, Sony are insufficient in responding

to the shift of market demand and losing of its competitive advantages. The delays for

the European launch of PS3 due to manufacturing problems (BBC.co.uk, 6th

September 2006) caused Sony to become incapable of fulfilling the increasing market

demands which increase the stake for Sony as there are other strong competitors such

as Microsoft and Nintendo to have a head start in gaining market share and enjoy first

mover advantages. Besides, Sony also responds slower than others in the increasing

demand of Plasma TVs and lost ground for key growing area. As Mintzberg et al

(1999: p96) suggest, “first mover may gain advantages in building distribution

channels, in typing up specialized suppliers or in gaining the attention of customer”

and “the first product of a class to engage in mass advertising tends to impress itself

more deeply in people’s minds than the second, third or fourth”. Therefore, Sony lost

its competitive advantages and large proportion of the market shares in the game and

electronic industry; they are also unable to benefit from the first mover advantages

which left them behind of their competitors.

Currently, Sony are implementing emergent strategies from both “inside out”

– Resources Based View (Hamel & Prahalad, 1990; Barney, 1991) and “outside in” –

Positioning view (Porter, 1980 and Mintzberg et al, 1998), or so called Market Based

View (Finlay, 2000) to secure its current position. Johnson et al (2005), Finlay

(2000), Lynch (2006) and Thompson & Strickland (2003) all suggested that an

integrated approach of the resources-based and positioning view can maximize the

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capabilities of organization and sustaining more competitive advantages. Penrose

(1959), Selznick (1957) and Hatch (1997) also suggested that competitive strategy

requires both the exploitation of existing internal and external firm-specific

capabilities and of developing new ones. In the changing business environment, Sony

needs to cope with the external changes and find the right ways to deal with it by their

own capabilities or resources. Markides (2004: p9) also agreed that “unless

organization take a holistic, big-picture approach in designing the activities of the

company, their efforts will backfire”.

As for “inside out”, also called the competence-based view (Hodgson, 1998),

Sony has been green-lighting asset sales to free up cash so they can rebuild the

company around a tighter core of businesses. In December, Sony sold part of its 49%

stake in retailer StyleLife Holdings to a group of investors (Hall, 30th January 2007).

This managing for value strategy which “concerned with maximising long-term cash-

generating of an organization” (Johnson et al, 2005: p468) by disposal of assets to get

more funds and reinvest back into different business units such as R&D, production

and others can help Sony to strengthen its core competencies. As DeWit & Meyer

(2004: p326) suggest, “the real sources of advantage are to be found in managements

ability to consolidate corporate-wide technologies and production skills into

competencies that empower individual businesses to adapt quickly to changing

opportunities”.

Another strategy that Sony implement to boost its core competence is

miniaturization (DeWit & Meyer, 2004). To bring miniaturization to its product, Sony

must ensure that technologists, engineers, and marketers have a shared understanding

of customer needs and of technological possibilities in order to become more

customer-orientated with the aim to increase competitive advantage, as well as create

more value added activities. Sony also implement a related diversification stategy

which involve adding businesses whose value chains possess competitively valuable

strategic fits with the value chain of the company’s present business. Related

diversification among the different businesses provides Sony with sharper focus for

managing diversification and is a useful degree of strategic unity across the

company’s various business activities (Thompson & Strickland, 2003). Lynch (2000:

p71) also argue that “it is the combination of resources that delivers competitive

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advantage, because such a combination takes years to develop and is therefore

difficult for others to copy”.

Besides, in order to regain Sony’s competitive advantages, they appoint the

first foreign chairman, Howard Stringer to head the company with the aim to secure

Sony’s main ground and hope that an outsider will assist Sony to think outside the

box. As Hamel & Prahalad (1994) suggest, intellectual leadership are essential to

develop industry foresight, anticipating which trends are likely to emerge, so it is

important to build Sony’s new core competence to shape the industry.

However, Priem and Butler (2001) have shown that the Resources Based

View, as currently constituted, contains a theory of sustainability but not a theory of

competitive advantage (i.e., value creation).They argue that “simply advising

practitioners to obtain rare and valuable resources in order to achieve competitive

advantages and, further that those resources should be hard to imitate and non-

substitutable is not very helpful in providing practical help” (Johnson et al, 2005:

p155).

On the other hand, as for “outside in” which is the Positioning view,

Mintzberg et al (1998) argue that positioning is important and had develop the

Positioning School. Sony also believes that the external business environment will

shift the strategy of the organization. Finlay (2000; p11) suggest that “organization

alter itself and the products and services it offers in order to match the needs of

customers in its chosen marketplace which is a market-based approach, so called

because the organization looks to the marketplace to see how it should act and how it

should evolve”. Besides, based on the environmental factors, Mintzberg et al (1998)

developed the environmental school which argue people in strategic management

must consider the range of decisional powers available, given the forces and demands

of the external context. Sony insufficient in responding to the external market had

caused them to lost ground in key growing areas and their strategy must be able to

cope with the external environment.

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Moreover, Porter (1991) strongly believe that making choices about how

organization position their company in its competitive environment is what strategy is

all about and emphasize on the importance of positioning view. He argues that

organization can sustain competitive advantages by implementing the generic

strategies by position themselves either being cost-leadership, differentiation or focus

(Porter, 1985). Sony had positioned themselves with a differentiation strategy which

seeks to provide products or services that offer benefit different from those

competitors and that are widely valued by buyers (Johnson et al, 2005). Sony are

rewarded with a premium price with its uniqueness (DeWit & Meyer, 2004) that help

them to gain greater competitive advantages.

However, Bowman & Asch (1996: p36) critics that “a final criticism of

Porter’s approach stems from our experience of trying to use these concepts with top

management teams wrestling with the strategies of their organization. In addition to

the lack of clarity surrounding the generic strategies, the generic strategies present an

essentially static approach to competition”. Hamel & Prahalad (1994) also argue that

“the traditional competitive strategy paradigm (e.g. Porter, 1980) with its focus on

product-market positioning, focuses only on the last few hundred yards of what may

be a skill-building marathon.”

(Removed)

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Finally, Sony is still in a critical position where they need to be extra caution

about all the potential crisis that they will be facing in the future. Finlay (2000: p451)

argue that “crisis control relies on both pro-active and reactive control. It is pro-active

in that, although the precise form of the crisis will be unknown, broad elements of

many crisis situations will be, and these can be planned for through risk management

and particularly contingency planning. Crisis control is also reactive in that the

specifics of the situations must be dealt with as they unfold”. Thus, risk management

and crisis control are also essential for Sony to implement in order to stay alert and

increase their awareness to potential threats.

In conclusion, Sony must learn from their mistake and implement more

effective and efficient strategies if they want to get out from this current unfavarable

situation. Besides than their current strategies, alternatives strategies suggested above

should become another major concern for Sony to ensure that they can effectively

rebuilt their poor reputation and regain more market share in the future.

(2177 words)

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References

Textbooks

Bowman, C. & Asch, D. (1996), “Managing Strategy”, MacMillan.

DeWit, B. & Meyer, R. (2004), “Strategy: Process, Content, Context”,3rd

Edition, Thomson International Business Press.

Finlay, P. (2000), “Strategic Management: An introduction to business and corporate strategy”, Prentice Hall.

Hamel, G. & Prahalad, C.K. (1994), “Competing for future”, Harvard Business School Press.

Hatch, M.J. (1997), “Organization Theory: Modern Symbolic and Postmodern Perspectives”, Oxford University Press.

“Harvard Business Review on Corporate Strategy” (1999), Harvard Business School Press.

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Johnson, G. et al (2005), “Exploring Corporat Strategy: Text and Cases”, 7th

Edition, Prentice Hall.

Kotler P. and Keller K.L. (2006), Marketing Management, 12th Edition, Prentice Hall.

Lynch, R. (2000), “Corporate Strategy”, 2nd Edition, Prentice Hall.

Lynch, R. (2006), “Corporate Strategy”, 4th Edition, Prentice Hall.

Mintzberg, H. et al (1998), “Strategy Safari: The complete guide through the wilds of strategic management”, Prentice Hall.

Mintzberg, H. et al (1999), “The Strategy Process”, Revised European Edition, Prentice Hall.

Porter, M. E. (1980), “Competitive Strategy: Techniques for Analyzing Industries and Competitors”, New York Free Press.

Thompson, Jr. & Strickland, A.J. (2003), “Strategic Management: Concepts and Cases”, 13th Edition, McGraw-Hill Irwin.

Journal Articles and Newspaper Articles

Barney, J. B. (1991), “Firm resources and sustained competitive advantage”, Journal of Management, Vol. 17, No. 1, p99-120.

Barney, J. B. (2001), “Is the resource-based "view" a useful perspective for strategic management research? Yes”, Academy of Management Review, Vol. 26, No. 1, p41-56.

Hamel, G. & Prahalad, C.K. (1990), “Capabilities-Based Competition”, Harvard Business Review, Vol. 70, No. 3.

Hamel, G. & Prahalad, C.K. (1990), “The core competence of the corporation”, Harvard Business Review, Vol. 68, No. 3, p79-91.

Hodgson, G.M. (1998), “Evolutionary and competence-based theories of the firm”, Journal of Economic Studies, Vol. 25, No, 1, p25-56.

Markides, C. (2004), “What is strategy and how do you know if you have one?”, Business Strategy Review, Vol. 15, No. 2, p5-12.

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Porter, M. E. (1991), “Know Your Place: How to access the attractiveness of your industry and your company’s position on it”, Business Sources Premier, Vol.13, No. 9.

Priem, R. L., & Butler, J. E. (2001), “Is the resource-based "view" a useful perspective for strategic management research?”, Academy of Management Review, Vol. 26, No. 1, p22-40.

Priem, R. L., & Butler, J. E. (2001), “Tautology in the resource-based view and the implications of externally determined resource value: Further comments”, Academy of Management Review, Vol. 26, No. 1, p57-66.

Wernertelt, B. (1984), “A resource-based view of the firm”, Strategic Management Journal, Vol. 5, No. 2, p171-180.

“Sony: death or glory?: Can blue chip giant regain its luster?” (2006), Strategic Direction, Vol. 22, Issue. 4, p14-16.

Internet Resources

Benson, M. (8th November 2006), “Has the sun set on Sony? - [Available at http://www.wonova.com/11/2006/has-the-sun-set-on-sony/ ]

Hall, K. & Edwards, C. (26th October 2006), “Sony's Singed Reputation” - [Available at http://www.businessweek.com/globalbiz/content/oct2006/gb20061026_545666.htm?chan=search ]

Hall, K. (30th January 2007), “Sony Financial Arm Bent On an IPO” - [Available at http://www.businessweek.com/globalbiz/content/jan2007/gb20070130_957918.htm?chan=search ]

Rowley, I. (2nd October 2006), “Sony's Battery Exchange: A Huge Price Tag” - [Available at http://www.businessweek.com/globalbiz/content/oct2006/gb20061002_176559.htm?chan=search ]

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http://www.businessweek.com/globalbiz/content/oct2006/gb20061002_176559.htm?chan=search


http://www.businessweek.com/globalbiz/content/jan2007/gb20070130_957918.htm?chan=search

http://www.businessweek.com/globalbiz/content/jan2007/gb20070130_957918.htm?chan=search



http://www.wonova.com/11/2006/has-the-sun-set-on-sony/


Simmons, D. (17th November 2006), “Sony's rough ride through 2006” - [Available at http://news.bbc.co.uk/1/hi/programmes/click_online/6157430.stm ]

Veiga, A. (21st December 2006), “Sony to pay millions for damaging software” - [Available at http://www.msnbc.msn.com/id/16314555/wid/11915829 ]

“Sony Hits More Problems In Japan With The Launch Of The PS3” (15th

November 2006) - [Available at http://www.wonova.com/11/2006/sony-hits-more-problems-in-japan-with-the-launch-of-the-ps3/ ]

“Sony suffers 94% loss on battery recall in 2Q” (26th October 2006) - [Available at http://news.xinhuanet.com/english/2006-10/26/content_5253924.htm ]

“Sony boss 'to put consumer first” (24th March 2005) - [Available at http://news.bbc.co.uk/1/hi/business/4378665.stm ]

“Fire-risk laptops hit Sony shares” (16th August 2006) - [Available at http://news.bbc.co.uk/1/hi/business/4797073.stm ]

“PlayStation 3 Euro launch delayed” (6th September 2006) - [Available at http://news.bbc.co.uk/1/hi/technology/5319190.stm ]

“Sony failed to fully study battery problem” (2nd October 2006) - [Available at http://www.forbes.com/business/feeds/afx/2006/10/02/afx3061270.html ]

http://channel.hexus.net/content/item.php?item=14064

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 our key hardware devices and content. We are planning to expand services that will enable our customers to enjoy content such as motion pictures and television programming through the network on a variety of Sony products such as BRAVIATM LCD TVs, PS3, PSP® (PlayStation®Portable) and Walkman® video music players.

Sony’s unique position in electronics and entertainment allows us to offer compelling network services. As an example of our potential, this November, Sony Pictures Entertainment will offer one of the most highly anticipated films of the summer, “Hancock”, exclusively to all internet connected BRAVIA LCD TVs in the U.S. before it is available on DVD. This film will be distributed to Sony customers directly to their televisions outside conventional distributors and without the need for any set-top box. This is an industry first.

Capitalize on Growth in BRIC Countries and Other Emerging Markets

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http://www.forbes.com/business/feeds/afx/2006/10/02/afx3061270.html

http://news.bbc.co.uk/1/hi/technology/5319190.stm

http://news.bbc.co.uk/1/hi/business/4797073.stm

http://news.bbc.co.uk/1/hi/business/4378665.stm

http://news.xinhuanet.com/english/2006-10/26/content_5253924.htm

http://www.wonova.com/11/2006/sony-hits-more-problems-in-japan-with-the-launch-of-the-ps3/



http://www.msnbc.msn.com/id/16314555/wid/11915829

http://news.bbc.co.uk/1/hi/programmes/click_online/6157430.stm


Because Sony believes that the largest growth opportunities exist outside its traditional markets of Japan, North America and Europe, expanding Sony’s business into new markets is a key area of focus. New markets in regions including the BRIC countries – Brazil, Russia, India and China – 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.

Sony will target annual sales of 2 trillion yen in the BRIC countries (including revenues from Sony Ericsson Mobile Communications and SONY BMG) by FY2010, doubling FY2007 sales with annual Electronics segment sales alone slated to grow from 600 billion yen to 1.2 trillion yen during this period.

Environmental Initiatives - Green Management 2010

“Green Management 2010” is a series of mid-term environmental targets that are guiding the Sony Group in its efforts to help prevent global warming, recycle resources, ensure appropriate management of chemical substances and address a broad range of other environmental issues.

Through these initiatives, Sony is striving to achieve an absolute reduction in greenhouse gas emissions, specifically a 7% or greater reduction in CO2 emissions by FY2010 compared to the level of FY2000.

Financial Strategies for the Mid-Term

In order to generate funds to continue to grow and innovate, Sony has identified a 5 percent operating margin as a baseline of profitability. Sony is also establishing return on investment capital as a fundamental framework for evaluating capital investments and potential acquisitions across the Sony Group to ensure the optimum use of resources. Our targeted investment (an aggregate of 1.8 trillion yen by the end of FY2010) will put Sony in a position to drive further growth and innovation over the next three years and beyond. Sony will also target an annual return on equity of 10% by FY2010. Going forward, we will work to deliver a stable, high level of profitability while enhancing shareholder value.

The business environment in which Sony operates is changing rapidly and, with the advance in digital technology and broadband networks, technological innovation is moving at a pace never experienced before. In order to be a leading company in the digital age, Sony aims to leverage its unique advantage of producing both hardware and content, continuing to offer cutting-edge products together with superior content and services to meet the needs and expectations of our customers.

http://www.zdnet.com/blog/btl/sonys-latest-e-readers-understanding-the-trade-offs-and-global-strategy/38626

Sony's latest e-readers: Understanding the trade-offs and global strategy

Sony’s new e-readers are a vast improvement over its previous versions. The latest Sony Readers are lighter, show off touch navigation on an E-Ink screen and could be

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worthy choices in the e-reader wars vs. Amazon and Barnes & Noble. But there are trade-offs in the devices that could pay off—or blow up—for Sony.

Understanding the Sony Reader trade-offs requires you to zoom out. From a U.S. perspective Sony’s moves may be confusing. On a global scale, Sony looks quite logical.

The biggest trade-off here—at least for connected U.S. consumers—is the touch vs. connectivity choice. For instance, Sony gives you touch navigation, but its Pocket and Touch readers don’t off Wi-Fi or 3G connectivity. Steve Haber, president of Sony’s digital reading division, says that the company’s research shows that most customers tether their devices. When I asked Haber whether Sony was risking a confirmation

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bias—customers are tethering because that’s the only way to connect—and he acknowledged that there’s a risk.

When Sony set out to make its e-readers, it had an interesting mix of features to balance. For starters, Sony has the only e-reader among the big three that have real touch. Barnes & Noble’s Nook has touch navigation on a little strip, but Sony’s e-readers allow you to swipe to turn the page.

Also: Sony launches new e-readers; Will pricing matter?

When I took Amazon’s latest Kindle for a spin, I was told that there were too many compromises with touch navigation. In a nutshell, touch had latency because the signal sent by your fingers had to go through two planes—glass and the E-ink. Sony, however, eliminated the need for an overlay screen. Now touch is much more intuitive and works well.

Sony’s E-Ink touch navigation is a real difference maker. It took some getting used to, but worked well overall.

But Sony doesn’t quite close the deal. Why? Its touch readers don’t do Wi-Fi. And then Sony has higher price points. Sony’s highest end reader has a 7-inch screen, 3G and Wi-Fi, but will set you back $299. The mid-range Touch, which Haber is betting will be its most popular unit, goes for $229. The Sony Pocket Reader will run you $179. It has touch navigation and a 5-inch screen. Of course, you have to tether.

Add it up and you have these moving parts:

Amazon will give you the 3G and Wi-Fi with its $189 Kindle. However, there’s no touch. A Wi-Fi Kindle is $139.

Barnes & Noble has a Wi-Fi Nook for $149. Barnes & Noble gives you some touch navigation, but there is a latency issue with its Android implementation.

Sony gives you touch navigation has higher price points, but you have to tether. Instead of plastic casing you get brushed aluminum in various colors.

Simply put, if you’re shopping for an e-reader Sony’s devices will largely win or lose based on how you weigh touch vs. connectivity. I’m assuming that Sony’s Daily Reader won’t be a huge win at $299.

Haber acknowledges the risks, but says Sony was giving the best device at a good price. He says that a Wi-Fi, 3G chip would have bumped up the prices for the Touch and Pocket readers. “Wi-Fi would have raised the cost when 99 percent of the time spent with an e-reader is focused on just reading,” says Haber. “We invested in the best possible screen experience. That’s where we put our dollars/yen.”

Now Sony could be wrong with its trade-off guesses. Haber notes that Sony has a habit of being 5-years too early on trends—a comical reference to the launch of e-readers in 2003.

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http://www.zdnet.com/blog/btl/review-my-20-minutes-with-amazons-latest-kindle/37252

http://blogs.zdnet.com/BTL/?p=38624


Playing for the globe

Why would Sony make such trade-offs between touch and connectivity? Sony is playing a global game and perhaps 3G and Wi-Fi just doesn’t matter as much in Spain, Japan and China. Haber in Sony’s statement reveals the company’s strategy.

Haber said that Sony is launching in “the countries we already serve” but also expanding into “previously untapped markets.” He added that Sony takes “a thoughtful approach to country expansion, including Italy, Spain, Australia, Japan and China, working with local bookstores to ensure content is compatible, relevant and in the appropriate language for each market.”

In the U.S. it won’t be hard to find techies to pan the Sony Reader trade-offs. How can a reader not have Wi-Fi?

However, there’s a big picture here—and its global. In our 75 minute conversation, Haber mentioned global reach a bunch of times. The Reader carries global dictionaries in various languages. Sony is plotting China, Europe and a bevy of emerging markets for its Reader.

Sony, widely assumed to be No. 2 in the e-reader market behind Amazon, could be playing to be Nokia. Nokia is big everywhere around the globe except the U.S.

Sony’s situation won’t be that dire. Sony will be a player in the U.S., but the real win will be in places like Russia, Brazil and China. Why? Sony’s brand carries a lot of weight. And Sony has the retail partnerships that wrap around the globe.

Meanwhile, Amazon and Barnes & Noble will be hard-pressed to replicate Sony’s global reach. If the global trend is to move away from paper to bits of data the e-reader market worldwide is just beginning. Sony can be everywhere its primary rivals can’t. Meanwhile, Sony’s real rivals—companies like Samsung—don’t have e-readers or the content that needs to ride shotgun. Sony’s store is comparable to the others and has seen its 10 millionth book download.

So let’s sum up:

Sony has distribution; Credible and improving e-readers; And a truly global brand.

Sony won’t downplay the U.S. market totally, but it’s clear the company is eyeing a larger e-reader stage—the globe.

http://www.sony.net/SonyInfo/IR/info/strategy/message.html

Sony’s Transformation

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We entered fiscal year 2009 (the year ended March 31, 2010) with the daunting challenge of restoring Sony to profitability following the prior year’s substantial operating loss, and bringing about change that would not only sustain consistent profitability, but would deliver growth opportunities and new user experiences to customers in order to further enhance Sony and its brand. Much has changed over the past year, brought about by the efforts and perseverance of the management team and the entire Sony Group, unified in common purpose, in the face of the most challenging global business environment in a generation. The year began with the implementation of fundamental changes in our organizational structure and processes. Our core electronics and game businesses were reorganized in order to better respond to both the increasingly competitive market landscape, as well as our increasingly savvy customers.

The Consumer Products & Devices Group brings together our traditional and vital hardware, including televisions, digital cameras and video cameras, as well as our key devices including image sensors and batteries. This group was established to enhance product competitiveness and improve operations in order to generate and sustain profitable growth. The Networked Products & Services Group is comprised of our game business, VAIO™ personal computers, other networked mobile products and our network services. The mandate of this group is to accelerate innovation of our networked products and services to deliver new and exciting user experiences to our customers. Key to our new structure are three horizontal platforms-the Global Sales and Marketing Platform, the Manufacturing, Logistics, Procurement and CS (Customer Service) Platform, and the R&D and Common Software Platform-which have enabled us to streamline operations, accelerate decision making, boost efficiency and reduce costs. These changes were designed to transform Sony into a more agile, competitive and successful company, one that is in tune with the needs and desires of today’s global, digitally savvy and interconnected consumers. They were also intended to enhance our ability to pursue opportunities in new markets aggressively and to integrate content, software and services with our hardware successfully, to deliver rich and seamless entertainment experiences that differentiate us from competitors. While our reorganization is a vital part of our transformation going forward, we also needed to attack our cost structure immediately and urgently and secure a better financial footing. Our swift and wide-ranging actions will help enable us to fund the innovation required to drive our future growth. Specifically, we undertook the difficult but necessary task of reducing headcount and closing or consolidating eleven manufacturing sites worldwide*1, and we have announced plans for further reductions. With the new management team driving quick decisions in these and other areas, I am pleased to report that we beat our target and achieved more than ¥330 billion of Groupwide cost reductions in fiscal year 2009.*1 Closed or consolidated between December 2008 and March 2010

In addition, we have-for the first time in the company’s history-consolidated the purchasing power of all of our electronics and game component purchases. By doing this, we were able to substantially reduce our number of suppliers, and we are well ahead of schedule to achieve our target of reducing this number by half by March

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2011. We have also almost achieved our target of a 20%-or nearly ¥500 billion-reduction in our annual procurement costs. Finally, we aggressively managed inventory and accounts receivable and payable, which resulted in an improvement in our cash flow and financial positioning, which enables us to pursue strategic initiatives more effectively. Our marketing initiatives are another important part of our transformation. Given today’s competitive business landscape, we must introduce our product lineup to consumers more dynamically and directly. To this end, our new Global Sales and Marketing Platform is reaching new customers in new geographies by reinventing our retail strategy on a global basis, entering new markets, and penetrating existing markets more deeply. The greatest tool that will allow us to accomplish all of this is the Sony brand. To help guide Sony and its brand through our ongoing transformation, we have launched a unified brand message, “make.believe”, for the Sony Group and delivered a global launching campaign. “make.believe” reflects Sony’s ability to turn ideas into reality and, more importantly, to help consumers turn their own ideas into reality-as we believe that anything you can imagine, you can make real. Sony aims to inspire consumers around the world with innovation and fun through our unique combination of technology and entertainment based on our electronics, game, motion picture, music, mobile phone and network services businesses. I want to assure you that our process of transformation is continuous-we are always looking for opportunities to be faster, more efficient, more creative and more aggressive. We continue to drive costs out of the company, to rightsize it for the competitive environment in which we operate, and to improve our ability to generate sufficient returns on our investments for our shareholders.

Closing

With these initiatives and many more, Sony has taken decisive steps to fulfill the promise of the

Sony total experience-differentiating, as well as connecting, our products with stunning design and

cutting-edge technology, providing unique network services and content, and embracing open

platforms. We aim to establish a more intimate and rich relationship with the consumer, thus

increasing the value and desirability of Sony products, as well as that of the Sony brand overall.

Sony is also fully committed to putting its innovative spirit and technological expertise to use to

help solve environmental challenges, from our long history with the development of superior

rechargeable battery technology, to our highly successful program to take back our own products

for recycling, all to provide our customers with the environmentally conscious products that they

are asking for. Sony has also recently announced a new set of Green Targets, where we will strive

to lower every product’s power consumption by 30 percent versus 2008 levels, with a long-term

goal of achieving a “Zero Environmental Footprint”.

We know what we must do. We must develop the game-changing products, technologies and

services that will excite our customers and deliver entirely new entertainment experiences. We

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must increase our speed to market with desirable and competitively priced products and services.

And we must meet the aggressive financial targets we have set across all of our businesses, while

maintaining integrity in everything we do, and conducting our business honestly and responsibly.

Collaboration across the Sony Group is stronger than ever, and our drive to transform this

company is real and already delivering results. With Sony’s ability to turn ideas into reality, and

belief that anything we can imagine we can make real, I am confident that Sony will succeed and

bring value to our shareholders. On behalf of the management team and all of the employees at

Sony, I thank you for your continued support

http://ivythesis.typepad.com/term_paper_topics/2009/04/marketing-strategy-of-sony-corporation.html

Marketing Strategy of Sony Corporation

Background of the company

Sony Corporation is a Japanese electronics manufacturer, with headquarters in Tokyo. Sony designs, manufactures, and sells electronic equipment. It is a leader in the development of consumer electronics goods, such as videocassette recorders, cellular and cordless telephones, compact disc equipment, and television systems. Sony also manufactures computers and related devices ( 2003). Sony actively encourages innovation by its employees. Design engineers are given budgets and time for innovation and experimentation. The company holds an annual contest in which engineers show off their prototypes; bonuses are awarded to those whose prototypes are selected for eventual manufacture and marketing. Sony continually makes and offers new products, most of which are tested in the Japanese market. Sony has been particularly successful in the United States market; however, it is outsold in Japan and elsewhere by Matsushita, another Japanese electronics giant ( 2003, ).

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Body of the content

Management of a firm needs strategy, to make sure that everything goes well in the company, through the use of strategic management everything done in the company is well organized and no detail is being left out. The company needs strategic management to make sure that the company is doing well internally. The term strategic management originates from the Greek language, where the word means the art of a general. The person who makes strategies is the strategist who is the leader of an army ( 1991).Strategic management decisions have multifunctional and multi-business consequences, this kind of decision require broad consideration of the firm's external and internal environments, and it may affect the firm’s chance of prosperity. It is important to know what strategy is about, what can it do help the company prosper, what will happen if not used properly, what are the advantages and disadvantages of having a strategy. Strategy is a plan that assimilates the company’s major target; policies and rules; decisions and sequences of action into organized whole. It can apply at all levels of organization and pertain to any of the functional areas of management ( 2000). Strategy is plagued by a stigma of unsystematic reasoning (1988). It is incomplete search for strategic alternatives, and bounded rationality ( 1960) influenced this perception. Strategy is a combination of the company’s objectives, policies and decisions to be done in unison or contingent upon each other. Marketing strategy thus refers to how a company’s products or services its trade is presented to consumers in an effective manner as to gain loyal costumers. Strategy can be used in different ways, one of which is through marketing. Using strategy in marketing makes it more convincing and effective. Strategy makes sure that nothing wrong happens in the marketing process in the company. Marketing strategy is a way to capture a niche in the consumer market. Businesses utilize it to gain following and exploit their maximum and/or optimal profit capabilities. Strategic marketing is the way company sells the product it has with less difficulty and more readiness to face competitors. Strategic marketing makes sure that the company uses all of its resources to counter its competitors. Strategic marketing planning is a procedure wherein the strategies used to sell product is carefully studied and analyzed so that the company can compete well and have advantage with rivals.

Corporate vs. competitors

All firms have strategic windows and some of these windows open out on to markets that are shared with other firms. Where windows share views over the same market, competition exists. It is important to understand how different firms view the same market since their perceived and actual windows of opportunity will not all be the same. The nature of competition and the factors which influence it are explored along with how firms identify competitors and how they use product positioning to obtain a competitive advantage. Attention is paid to how firms define their marketing strategies and analyze the competitive positions of rivals ( 2000).Consideration is given to the various sources of information available to firms that enable them to gauge competitors’ strengths and weaknesses. Success in the market place depends not only on an ability to identify customer wants and needs but also upon an ability to be able to satisfy those wants and needs better than competitors are able to do. This implies that organizations need to look for ways of achieving a differential advantage

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in the eyes of the customer. The differential advantage is often achieved through the product or service itself but sometimes it may be achieved through other elements of the marketing mix (2000). An important thing the company should be wary of is to understand competitors. Gaining knowledge against competitors helps in creating measures to gain advantage against competitors. To know and have an in depth knowledge of the competitors the company can use different kinds of strategy such as porter’s generic strategy. Determining and having added knowledge about the competitors help in planning marketing activities through distinguishing and forecasting what activities rivals may use and what strategy they might implement. Having added knowledge creates a way for the company to prepare for anything competitors might do and it helps in planning marketing activities that focus on having contingency measures against competitors.

Sony although already a well known and successful company still uses strategic marketing planning that keeps the company alive in its industry. This strategic marketing planning keeps Sony alive against its competitors. Sony should still know and acquire all information they can with regards their competitors. The competitor’s activities, background and actions should be known by the company so that in planning marketing activities they know which things will be done by the competitors, what kind of actions the competitors will do in certain situations, and what future things the competitors might do. Sony should not be complacent with the things they know about the competitors. They should strive to find out things about the competitors that cannot be visibly noticed. Through the use of certain strategies like porter’s generic strategy the company might be able to know more about competitors and through such information they can plan strategies to conquer this competitors.

http://tortora.wordpress.com/2010/04/07/sony-group-corporate-strategy-update-tokyo-japan/

Sony Group Corporate Strategy Update- Tokyo JapanPosted on April 7, 2010 by tortora| Leave a comment Sony, the leading global provider of networked consumer electronics and entertainment, provided several new initiatives to build on its previous three year plan. Sony will focus on strengthening the core business, enhance network initiatives, and leveraging international growth opportunities to build for the future and drive further growth and profits. Sony already has four “trillion yen businesses” focusing on televisions, digital imaging, games, and mobile phones. The company has every intention to expand their other lines of technology including personal computers and Blu-ray Disc. These related products contribute to the goal of trillion yen in the fiscal year of 2010. Another strategy is using open innovation by looking outside of the company for new and different technologies. This will allow the always changing

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customer needs to have new experiences, strengthen business, be more innovative, and have profitable growth.

A market strategy that Sony has is to take advantage of growth outside traditional markets. Brazil, Russia, India, and China are growing and so is the Sony business. Their goal for annual sales is two trillion yen. Sony’s financial goal is to have accomplished a five percent margin regarding profitability.

Sony’s strategies seem reasonable and profitable. Allowing outside information regarding technological advances will benefit the company with the best innovative products. Expanding the market will create better opportunities for profit.

http://www.ehomeupgrade.com/2008/06/26/sony-group-corporate-strategy-update-fy2008-fy2010-to-be-the-leading-global-provider-of-networked-consumer-electronics-and-entertainment/

Sony Group Corporate Strategy Update FY2008–FY2010: To Be the Leading Global Provider of Networked Consumer Electronics and Entertainment

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 to build for the future and drive

further growth and profits. In addition, Sony announced the following

key mid-term goals:

Expand our PC, Blu-ray Disc™-related products and

component/semiconductor businesses into “trillion yen businesses**,”

joining LCD TVs, digital imaging (digital cameras and camcorders),

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game and mobile phones and raising the total number of “trillion yen

businesses” to seven.

Ensure that 90% of our electronics product categories are network-

enabled and wireless-capable by the fiscal year ending March 31,

2011 (“FY2010”).

Roll out video services across key Sony products by FY2010, starting

with the summer 2008 launch on the PLAYSTATION®Network.

Double annual revenue from BRIC (Brazil, Russia, India, China)

countries to 2 trillion yen*** by FY2010.

* Three-year period ending March 31, 2011

** Businesses each generating 1 trillion yen or more of annual sales to

outside customers, except for Blu-ray Disc related business which

includes intersegment sales

*** Includes Sony Ericsson Mobile Communications and SONY BMG

MUSIC ENTERTAINMENT as allocated

Sony has identified a 5% operating margin as a baseline of

profitability to generate cash to continue to lead and innovate.

Furthermore we will target an annual return on equity of 10% by

FY2010. Sony is also planning to allocate a total of 1.8 trillion yen to

invest in and build key businesses and technologies over the next

three years.

Highlights are as follows:

Further Strengthen Our Core Businesses

Sony intends to maintain a leading position in its “trillion yen

businesses” (LCD TVs, digital imaging, game and mobile phones) and

will focus on expanding its PC, Blu-ray Disc-related products, and

component/semiconductor businesses into “trillion yen businesses” by

the end of FY2010. At the same time, we expect to improve the

operations of our TV business significantly and implement a variety of

cost reduction measures to restore that business to profitability in the

fiscal year ending March 31, 2009*, and strive for the global No. 1

position in LCD TVs by FY2010. Of the planned 1.8 trillion yen

inves™ent over the next three years, approximately 900 billion yen

will be allocated towards strengthening core focus areas within

components and semiconductors, such as image sensors, batteries,

display devices and Blu-ray Disc-related components.

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Sony is also promoting the concept of “open innovation”, whereby we

are looking not only inside the company, but outside for technologies

that foster innovation. By combing Sony’s inherent technological

strengths with external expertise, we aim to accelerate R&D efficiency

and enable the company to effectively respond to rapidly changing

customer needs and preferences in the network era. Through the

creation of new user experiences, strengthening core businesses,

driving innovation, and minimizing the environmental impact of its

operations, Sony will strive to achieve not only sales volume, but also

sustainable and profitable growth.

In the Game segment, the two key drivers of new growth are non-

game content and services in tandem with enhanced network

capability. Sony also expects to achieve profitability in this segment in

the fiscal year ending March 31, 2009*, a significant year-on-year

improvement due to hardware cost reductions and an enhanced line-

up of software titles for PLAYSTATION®3 (“PS3”). Key Game

initiatives are:

1. Expand content and services available on the network platform

2. Continue to expand the PS3 customer base through the strength of

Blu-ray Disc

3. Accelerate PS3 sales through upcoming key franchise software

titles

4. Continue PS3 cost reduction initiatives

* Forecast as of May 14, 2008

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 our key hardware devices and content. We are

planning to expand services that will enable our customers to enjoy

content such as motion pictures and television programming through

the network on a variety of Sony products such as BRAVIA™ LCD TVs,

PS3, PSP® (PlayStation®Portable) and Walkman® video music

players.

Sony’s unique position in electronics and entertainment allows us to

offer compelling network services. As an example of our potential, this

November, Sony Pictures Entertainment will offer one of the most

highly anticipated films of the summer, “Hancock”, exclusively to all

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internet connected BRAVIA LCD TVs in the U.S. before it is available

on DVD. This film will be distributed to Sony customers directly to

their televisions outside conventional distributors and without the

need for any set-top box. This is an industry first.

Capitalize on Growth in BRIC Countries and Other Emerging

Markets

Because Sony believes that the largest growth opportunities exist

outside its traditional markets of Japan, North America and Europe,

expanding Sony’s business into new markets is a key area of focus.

New markets in regions including the BRIC countries – Brazil, Russia,

India and China – 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.

Sony will target annual sales of 2 trillion yen in the BRIC countries

(including revenues from Sony Ericsson Mobile Communications and

SONY BMG) by FY2010, doubling FY2007 sales with annual

Electronics segment sales alone slated to grow from 600 billion yen to

1.2 trillion yen during this period.

Environmental Initiatives – Green Management 2010

“Green Management 2010” is a series of mid-term environmental

targets that are guiding the Sony Group in its efforts to help prevent

global warming, recycle resources, ensure appropriate management

of chemical substances and address a broad range of other

environmental issues.

Through these initiatives, Sony is striving to achieve an absolute

reduction in greenhouse gas emissions, specifically a 7% or greater

reduction in CO2 emissions by FY2010 compared to the level of

FY2000.

Financial Strategies for the Mid-Term

In order to generate funds to continue to grow and innovate, Sony has

identified a 5 percent operating margin as a baseline of profitability.

Sony is also establishing return on inves™ent capital as a fundamental

framework for evaluating capital inves™ents and potential

acquisitions across the Sony Group to ensure the optimum use of

resources. Our targeted inves™ent (an aggregate of 1.8 trillion yen by

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the end of FY2010) will put Sony in a position to drive further growth

and innovation over the next three years and beyond. Sony will also

target an annual return on equity of 10% by FY2010. Going forward,

we will work to deliver a stable, high level of profitability while

enhancing shareholder value.

The business environment in which Sony operates is changing rapidly

and, with the advance in digital technology and broadband networks,

technological innovation is moving at a pace never experienced

before. In order to be a leading company in the digital age, Sony aims

to leverage its unique advantage of producing both hardware and

content, continuing to offer cutting-edge products together with

superior content and services to meet the needs and expectations of

our customers.

http://designtaxi.com/news/31848/Sony-Unveils-Plans-to-Expand-Global-Reader-Business/

Sony Unveils Plans to Expand Global Reader Business

Sony announced it is preparing to make its Reader digital book available in several new markets. Plans include availability in new Asia/Pacific markets this year, including Japan, China and Australia, as well as further European expansion to encompass countries such as Italy and Spain. In each country Sony intends to leverage its relationships with local retailers, publishers and distributors to introduce the Reader along with a host of local content to help ensure the best possible reading experience.

Sony anticipates strong global demand for eReaders and eBooks in 2010, specifically within Asian markets. According to analyst firm Nomura Holdings Inc., Asia represents one of the fastest growing eBook and eReader markets, with Japanese eBook sales topping $500 million in 2009. Additionally, analyst firm DisplaySearch is predicting that China will become the world's largest eReader market by 2015.

"Sony continues to be a pioneer in this market, and in the years since we unveiled the first eReader, we've hit a global tipping point in digital reading with demand for and sales of the Reader dramatically increasing in 2009," said Steve Haber, president of Sony Electronics' Digital Reading Business Division. "Sony's strategy has always been to make the Reader a global product and we'll take a thoughtful

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approach to country expansion that will consider not just the hardware experience within these new countries but the content experience as well."

The Reader's seamless integration with Sony's Reader Store recently enabled Sony to reach the 10 million eBook download milestone, and it will be working towards having relevant, local-language content available either through its own or local affiliated book stores, upon entering new countries. Since launching the Reader in the United States in 2006, Sony has expanded its global footprint into North America and Europe. Today, the Reader is available in eight countries across the world, including the United States, Canada, United Kingdom, France, Germany, Netherlands, Austria and Switzerland. Sony's Reader Store is currently available for users in the United States and Canada.

Sony will announce general availability, local pricing and pre-order dates for the Reader in Japan, China, Australia, Spain and Italy at a later date.

http://www.technologyreview.com/business/24257/

Technology

Sony Corp owns patent rights and license agreements worth $334 million.

Sony is one of the biggest innovators in the games industry. Its Blu-ray

technology gives it an important advantage over the Xbox 360, as the

PlayStation 3 (PS3) can play Blu-ray movies. However, it was slow to

introduce an online service for the PlayStation 3, but Sony Corp recently

patented and has plans for an upcoming technology which would allow

consumers to not only watch movies, but interact with them while watching

videos and other media. The combination of this technology with the recently

announced PlayStation 3 Netflix integration, could give a competitive

advantage to Sony over its two main competitors, Microsoft and Nintendo.

Market:

Sony Corp operates on four digital media segments: Electronics, Games,

Video, and Music.

Electronics is the bread-and-butter business of Sony, representing 65% of

the total revenues. In this segment, two products are key: TVs (25% of the

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http://www.technologyreview.com/business/24257/


electronics revenues) and digital and video cameras (21% of the revenue).

According to Datamonitor, the global consumer electronics market grew by

4% in 2008 to reach a value of $267.2 billion. In 2013, the global consumer

electronics market is forecast to have a value of $306.1 billion.

Games represents Sony's second-largest revenue-generating unit (Sony

Computer Entertainment Inc. (SCEI) with sales accounting for 13% of its

revenue and is currently the market leader with 53.5% share of the market's

volume. In 2012, the global games consoles market is forecast to have a

value of $24.6 billion.

Sony Pictures Digital Entertainment division encompasses motion picture,

television, home entertainment and digital content creation, acquisition and

distribution, amongst others. It recorded revenues of approximately $7.5

billion in 2008, a decrease of 11.2% compared to 2007.

Sony Music Entertainment Japan, a Japanese domestic recorded music

business which produces recorded music and music videos through contracts

with artists. The segment also operates an internet-related service business

subsidiary operating mainly in Japan and recorded an increase in revenues

of 7.6% between 2007 and 2008.

Strategy:

Sony Corp uses an "umbrella branding strategy" as it uses the corporate

name while promoting its products and services across different digital media

segments. In this way Sony Corp can leverage its corporate identity for

launching new products and adding brand extensions for its existing and new

customers.

In electronics, Sony is trying to recover from its delay in embracing the LCD

display format for flat panel displays. Hence, it has set-up a joint venture

company, called Sharp Display Products, that started operating in October

2009. Moreover, Sony Corp is investing in S-LCD technologies that provides

a source of high quality large screen LCD panels in order to differentiate

Sony's line of Bravia LCD televisions.

After the 2008 economic crisis in which Sony incurred a $1 billion loss, Sony

Corp's strategy is to become more international by producing and distributing

content worldwide. In 2009, Sony is uniting the domestic and international

divisions of Sony Pictures Entertainment and it has recruited a more

international management.

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Finally, Sony Corp is focusing in becoming leaner and faster. In 2008 some

18,000 jobs were cut, manufacturing plants where shuttered and the

company's electronics product lines were reduced by 20%. By March 2010 it

plans to sell 90% of its stake in its main North American TV factory, located in

Mexico, to a Taiwanese company.

Challenges and Next Steps:

Three trends figure in Sony's future. In electronics and media, Sony needs to

focus on bringing web-based video content to televisions. Given that Sony

sells 15 million TVs a year, this is a very important development for Sony. As

Robert Wiesenthal, the head of strategy for Sony's entertainment businesses

said "We can no longer afford to only offer great TVs. Otherwise, we set the

stage for someone to become the Google of the TV."

Another trend is the development of its digital media content and services. In

2008 Sony Corp acquired two digital media companies: Gracenote, a global

leader in technology and services for digital media identification, enrichment,

and recommendation and "2waytraffic" a Dutch entertainment company

engaged primarily in creating, producing, licensing and distributing light

entertainment content across television, mobile and digital platforms.

Finally, Sony is also planning a new online store, similar to Apple's iTunes. It

is expected that it will launch in 2010. It will offer music, movies, books, and

other downloadable content geared towards its different electronic products,

such as TVs, mobile phones, music players, and computers.

Its main competitive advantage is that it will link Sony's devices with digital

content that it produces, closing the whole circle of digital media creation,

production and distribution.

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Documents

Sony Strategy