Sonys Business Strategy In The Global Environment Commerce Essay

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Since 1946, Masaru Ibuka and Akio Morita founded Sony as Tokyo Telecommunications Engineering Corp in Tokyo. The company commenced researching with 20 employees with a budget lower than 200,000 yen. The company was manufacturing telecommunication and measuring equipment. Within a year, the first product was launched, a power megaphone. In 1950, the Japan's first tape recorder was distributed to a market.

When Sony eyes on bringing their merchandises to the international market in the mid-1950s, it seemed to be a virgin name, at the meantime, because the initials TTK were previously selected. The company combined its name from the Latin word for sound, "sonus," and the American word "sonny". Regard to a trade marking reasons, the company desired to have a word that will not be found in any language. Many questions came up from an internal according to the change because of the time spent on implementing its former brand known globally, but in 1958, the name was officially changed to Sony Corp. In 1960, Sony started out its U.S. branch, called SONAM (Sony Corporation of America), known as SCA, and the first branch in the United Kingdom in eight years later. Firstly, the branch was named as Sony (U.K.) Ltd and was changed later into Sony United Kingdom Ltd. The company spreads out into Spain and France in 1973 as well as in German in 1986.

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Sony has a long history of introducing technologies. Sony initiates, in 1950, the Japan's first transistor radio, the TR-55. In a while, the company released a pocket-sized transistor radio. For a decade, Sony released the world's first direct-view portable TV, the TV8-301. The company persisted in developing the TV and in a couple of years manufactured the tiniest all-transistor TV. In 1989, Sony released the Handycam, a portable, easy-to-use, 8 mm camcorder. Six years ago, the company brought the world's first Blu-ray disc player into the entertainment market. In 2005, Sony upgrades the Handycam to the High Definition Handycam, creating the world's smallest video camera.

The Walkman is the leader product from Sony pushing the SONY brand to the top. The first version was launched in 1979. The small, lightweight portable tape player revolutionized the way people listened to music. It also allowed individuals to make music truly personal by using headphones. In 1984, Sony released the Discman, the company's first portable CD player.

Since March 2009, Sony employed more than 171,300 people. The annual revenue of company in 2009 was almost $8 billion, with almost $1.5 billion in profit. They remain headquartered in Tokyo and have almost 100 affiliated companies outside Japan.

Particular Critical Incident of Sony

Sony has got various retail outlets around the World which ensures a continuous supply of products to the customers. However, from these retail outlets there are a lot of competitors such as Motorola which produce similar products and use the same outlets to make the products reach the consumers. Due to this there is a need for Sony to come up with strategies which can make them win over their competitors products. For example in the late 1990's Sony lost its leadership position in most of its markets simply because of improper strategies. There are various reasons which led to this failure and they are further discussed and supported by various schools here under;

Mintzberg Schools

According to Mintzberg et al (1998) there are ten strategies which when divided into three groups can be applicable in carrying out strategic management process. The three groups are; prescriptive, Descriptive and Configuration. Prescriptive describes how strategies should be made rather than how strategies are formulated; descriptive describes various processes involved in the formation of strategy and configuration includes description of both descriptive and configuration. For a company's strategy to work best in a given business environment, it has to identify and use a mix of strategies.

As referred to the case study, the failure of Sony to lead in most of its market would have been solved by looking as to whether the strategy behind the company was working or not. The company leading position in the market would have worked on the longer terms by identifying three Mintzberg strategies of entrepreneurial, cognitive as well as Power schools.

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The entrepreneurial school focuses on knowledge and intuition which managers need to be aware of, in the process of carrying out their managerial activities (Betz, 2002). The success of any strategy is mainly based on manager's vision, personal intuition, judgments, experience and wisdom. As referred to the case study, one of the ways which seemed to be solution to revive Sony was to replace the existing CEO at that time and Howard Stringer took over the company as a new CEO in 2005.

Stringer was able to revive the company through efficiency and reorganization which made different department cooperating together to achieve a common goal.

Another characteristic of strategy which needs to be seen at Sony Company is the cognitive schools which focus on strategist mind. According to Ginder at al. 2002, strategy depends on individual's understanding and how that individual manages the information used to develop the strategy.

The lost of Sony's leadership position was due to failures of strategists to recognize the growth of new technologies. This means the strategists did not have enough information related to market environment. This information would have been obtained through SWOT analysis and could help managers formulate the company's strategies effectively.

Power School as another Mintzberg strategy focuses on power relationships of where the strategy is created. The power school requires important characters in the organization to bargain persuade and comfort each other in the process of strategy formulation. (Betz, 2002) commented on his study that strategy can be used as a tool of making partnerships.

Having a new CEO, Howard Stringer Sony reported a loss which was caused by failure of the company to bring up innovative products. The new CEO and managers of the company fail to investigate changes happening in the competitive business environment, and therefore the changes brought loss to the company sometimes later.

Whittington

Whittington's theory of strategy focuses on four schools of classical, evolutionary, processual and systemic. The school which relate to Sony Company is evolutionary theory.

According to Doty et al (1993) the evolutionary school focuses on the environment as the main factor rather than rational approach suggested by other schools. The Evolutionary approach believes that organizational environment is the biggest factor in the formulation of business strategy therefore the formulation of strategy must be reflected to the environment since it is unpredictable and changeable. In addition to that the theory keeps on stressing that profit maximization is determined by markets and not managers. Whittington concludes that rational approaches cannot determine the survival of firms in the marketing environment but it is evolution which determines it. In evolution, competition is overcome by the struggle and survival of the firm from which the principle of natural selection is translated into the strategy for the best performance.

Sony failure to be a leader in the global market can be linked to the evolutionary school due to lack of market information. Being a leader in the market, top management was supposed to be aware of the conditions prevailing in the market including innovation and technological advancement which could help the company maintain its leadership position.

On the other hand, when the new CEO, Mr. Stringer took over the company he seemed to be less concern with the environment instead he focused on reorganization. The departments in the company functioned independently and made the CEO to see it as a main cause of the company's failure to globalize. The CEO was supposed to look at what the company is producing and make comparison with the products available in the marketing environment to maintain the leadership position of the company.

Successful organizations are those that most effectively interact with their environments (Hambrick 1982, Pfeffer and Salancik 1978). Organizational Performance is dependent on the organization's ability to align or match its strategies, structures, and processes to its environment. Alignment depends on the organization's ability to obtain relevant information about its current and future environment. Environmental scanning is the process by which an organization collects environmental information, which is utilized in its strategic management process.

Therefore to be a leader and become success in its global markets it was suppose to scan its environment and any information obtained should be incorporated into the company's strategy as well as structures and processes within the company. While doing that, the top management has to make sure that information is shared among various members of the company mainly between the departments.

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Corporate CEO is a person whose decisions take the company in the desired direction. Most of the CEOS are leaders in the environmental movement. It is time to recognize that their commitment is vital to success. The world economy is now propelled by venture capital and technical innovation.

Barney's (1991) says that organizational resources are said to be embedded in the organization, team based, and subject to causal ambiguity. Such capabilities are also very much in line with the "routines". Here we focus on managerial skills at running the business or a part of the business. The success of the Sony, at the begging was well known but later on the company experienced losses just because of its poor organizational structure in which departments' functions independently from each other. The outcomes indicated that segmented and isolated work to team-based operations is crucial to organizational market leadership. Organizations operations should be carried out in line with task forces for short-term problem solving exercises, and with cross-functional and cross-hierarchical teams to achieve longer-term objectives and specific projects of an on-going nature. Moss Kanter (1983) argues that such team mechanisms promote the circulation of resources, information and support.

The trend, therefore, has been away from segmented and isolated structures with little communication and interaction between areas and different levels, to a situation where interaction and integration are seen as being essential to operations. No longer do functional areas concentrate only on their own tasks. Now they are made aware of the work of other areas and how they can be of assistance to them. Interaction through teams and networks ensures that the wider picture of the organization is understood. Team-based work ensures a more flexible and adaptable approach to work makes possible the wider exercise of autonomy and responsibility, gives rise to increased interaction, communication and information flows, and makes work more enjoyable for those involved.

Strategic Decisions

Globally, SONY is perceived as the brand whose products are of high quality, with the presence of competitors the company has to make sure that it has a tool of competitive advantage in order to overcome the upcoming competitors and acquire larger market share. In order to achieve the global aspirations the company has to consider the following key strategic decision;

According to Gupta and Govidarajan (2001), any company wishing to serve its markets globally will have to make four core decisions concerning;

The markets the company wishes to operate

The products to compete in the global market

The mode of entering the market

Time/speed of entry

PEST analysis

On the other hand SONY Company has to use PEST analysis to obtain the necessary information which helps the company to analyze and assess the competition it is facing. PEST analysis involves;

Political forces such as

Government policies and legislation

Political stability

Public interest groups (consumer watchdogs)

Economic forces such as

Exchange rates

Inflation

Social forces such as

Changes in lifestyle (faster pace of life leading to a demand in products/services which enable people to do things more quickly and conveniently)

Fashion and trends

Technological forces such as

Fast pace of technological change

Research and development (a need for increased budgets to keep step with the pace of technological change)

Opportunities for innovation

The cost of technology (reducing/increasing)

Increased regulation (health and safety aspects of new products)

SWOT analysis

Also Sony's SWOT analysis is one of the strategies which the company will have to make in order to attain its global aspirations. SWOT analysis will help the company to match its strength and weaknesses against opportunities and threats available in the environment in which the company operates.

Strengths for example skilled workforce, good systems and strong brand

Weaknesses for example inadequate resources, high cost base and slow internal decisions.

Opportunities for example booming economy and fashionable product

Threats for example - Global competition and industry reputation.

Porter's five forces

In addition to that the SONY Company has to use Porter's five forces analysis as a competitive strategy which postulates the impact that other organizations pose on the company. Porter's five forces include;

New entrants, Sony's global aspirations and High cost of entry to form a barrier to entry competitors.

Features of substitute products as to whether they are, Cheaper, Different and better

Existing players mainly competition within the industry such as Apple and Samsung.

Suppliers; Supplier concentration, Bargaining power, Supplier extension as well as Fixed/variable cost.

Customers; Buyer concentration, Customer loyalty, Switching costs and Buyer motives.

Porter's Diamond

In order Sony to achieve its global aspirations, it must be prepared to overcome strong competition in the global electronics business market. Porter's diamond theory concludes that the nation in which the organization is based can strongly affect the organization. According to Johnson et al. 2006, the nation in which the organization is based can help in creating a tool of competitive advantage by providing factors from which the organization can formulate the advantages. The factors include factor conditions, demand conditions, firm's strategy, structure and rivalry and related and supporting industries.

Source: http://en.wikipedia.org/wiki/File:The_Porter_Diamond.svg

The Porter's Diamond

Organization's can gain competitiveness using four factors presented in the Porter's diamond strategy (Matsuyama and Vanderbrink, 2003). The conditions existing in the local environment climate and policies can be tracked using the firm's strategy, structure as well as rivalry. Information about competition and local market influence can be collected using demand conditions.

If related to Sony Company, the only factor conditions, which will help to create competitive advantage, are innovation and technology improvements. Having produced varieties of electronics products, innovation will make the company to come up with new, well differentiated products and quality products. In order to achieve its global aspirations Sony Company can use product development strategy to facilitate its innovative practices.

Product development

New products in current markets - this may mean absolutely new products or iterations of other products to make them more suitable to the known market. The benefit to the organisation is; if the new products are successful, the cost of marketing a broader range of products to the market is less in relation to the larger revenues generated. The risk involved here is that new products can have a high failure rate.

Implementation Challenges in the Global Market

Michael, J. (1999) International relation of production mediated either by the market through internal transactions of the multinational corporation (MNCs), are spreading rapidly to the most parts of the world.

Porter, E (1998) Trade liberalization has brought competition among entrepreneurs in the world, as result; innovation remained the key weapon for business to survive within a market. However, change within an organization is a step forward toward to recognition of a business threat.

Threat of business can be internal or external, whichever way, Koontz and O'Donnell (1984) Contributed on the issue of management within an organization" Five areas were identified which makes managers to be proactive in their performances an obsession with responsiveness of customers, innovation in all areas of the firm, partnership - means sharing across stakeholders and gain connection with all people around organization"

According to the academic school, the Kurt lewin change was assumed to be a necessary within the organization if at all a company mean to bring change. However, Howard Stringer (CEO) of Sony Company has made some necessary changes into Sony Company, which lead to some reasonable change

The problem

From The company expert analyst major problem for Sony was a slowness of supervising its product. This problem was associated with company culture which prevented sharing information among other department.

When chief executive of Sony Company came to realise the problem, new strategy was implemented to resolve a problem. The problems were solved, but the major one was to restructure the whole organisation. February 2009, in one of (CEO) his vital speeches he said "There is still a lot of the old Sony, and not enough of the new which constraints our competitiveness". Haward Stringer said

Mintzberg et al (1998) the school model strategy forecast to make sure that internal and external capability are measure. This means a strategy should be planed diligently from the top to the bottom of the organisation, by defining the major obstacle to hinder change. Otherwise, change starts inside, where member of the organisation, their mindset should be influenced to cope with the change required. Kurt lewin model argued that change has a process; this process starts to, unfreezing; moving and refreezing Cummings and Worley, (2002).

However other model described lewin model realising the importance of whole people (members) of the organisation to support change .it is good idea to influence majority starting from top side of the management structure to the bottom by explaining why change was necessary for the organisation. This may reduce the impact of resistance for change.

Ivancevich and Matteson (2002) There different types of change, but change of behaviour and altitude and values are the most major which in turn results to move the organisation at different level of production. According to the announcement made by CEO of Sony Company early 2009, first and foremost change was for organisational culture, beliefs come from the perception and result it is fruit itself.

If the company managed to change staff beliefs, turn negative altitude to positive altitude the result is to make change happen. According to Maslow's Hierarchy of needs, as manager should understand the complexity of human needs.

If this was case, "the question which is raised that, how an employee can meet the organisational needs (Objectives) if the company manager has not fulfilled an employee needs?" Maslow's models recognised that, however a basic needs should be fulfilled at least then as far as you meet an employee need from bottom to top of the hierarch, perception of many employees is security.

Refreezing level this is the level whereby a company a company is looking to stabilise the change in a new fashion, assurance to staff is made and they feel secure therefore they will be able to deliver the quality as required by the organisation .

Example is where by a company will enter into the market chest forward with a product which meets "beyond customers the expectation" such as laptops by Sony's product. Very small and easy to keep into a small handbag in fact someone with piece in mind has to come up with this innovation etc. Therefore motivation is most important if really changes are planned.

The meet a goal has been defined, a company will defined how far is looking to reach in the market! This question automatically will be answered by the SWOT ANALYSIS discussed in the text above.

"Every culture has their say!" Swahili language acknowledges the use of the word "the head is a damp" meaning every decision should be pass first to the head of the organisation. Kurt Lewin supported that by supporting to seek support from the head of the organisation.

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