Environmental factors that influence Sony Corporation

Sony Corp. History and introduction

Sony was founded in 1946 by Masaru Ibuka and Akio Morita. With a mix of a inimitable blend of product innovation and marketing savvy, both of them form a company that eventually grow into more than $60 billion global organization. (Sony, 2010) With branches all over the world and with an annual revenue about 68.39 billion US dollars, it can be considered as a huge company. The company’s headquarters are situated in Shinagawa, Tokyo. It is one of the leaders in the field of electronic equipment, communication and information technology (IWALOM LIMITED, 2010). In this assignment, we will discuss about the macro and micro environmental factors that might influence Sony’s company.

Macro environmental factors

Political factor

Political factors could have a direct impact on the ways Sony operates. Government often makes new decisions involving policy or legislation and it affect daily business

In the directive of businesses, the political factors have a huge influence. An example of political factors that affects Sony which includes government laws is minimum wage law. This would affect Sony as the minimum wage law keeps changing every year. As in the same time product cost also keeps on changing, this will make Sony facing losses.

Due to various governmental regulations in the different countries, Sony has to adapt different strategies in the countries it operates. Sony had passed a Global Policy On Occupational Health and Safety (OH&S) in 1998. It deals with group standard and shows Sony’s cares about the health and safety of its employees. It also requires fullfilment with all the laws regarding ooccupational health and safety. (Sony Corporation, 2009).

To manage the chemicals which the use of it is controlled by goverment ennvironmental legislation use at sites, a group-wide common approach is developed by Sony. Sony not only manage the chemicals used but also the amount released into the air, water and soil in order to not affect the environment. Sony sites apply internal standards based on Japan’s Pollutant Release and Transfer Register (PRTR) (Sony Corporation, 2009).

Among Class 1 substances, Sony used 412 kilograms of mercury as an additive in button batteries and 30 kilograms of lead solder, which is used in certain exceptional cases, including automotive applications.

Sony used perfluorooctane sulfonate(PFOS) that is Class 2 substances in semiconductor fabrication in fiscal year 2009, but eliminated this substance in March 2010.

Class 3 chemical substances are volatile organic compounds (VOCs) and greenhouse gases. The Sony Group’s target in terms of the atmospheric release of VOCs is to achieve an absolute reduction of 40% or more from the fiscal year 2000 level by fiscal year 2010. In fiscal year 2009, Sony released approximately 1,190 tons of Class 3 chemical substances, which is 204 tons less than in fiscal year 2008 and 35% less than in fiscal year 2000. The principal factor behind this decline was the implementation of production adjustments in response to the global economic downturn. With new semiconductor fabrication facilities expected to come on line, Sony expects emissions of Class 3 substances to increase and will take steps to counteract these increases, including installing gas scrubbing equipment and amending production processes. (Sony Corporation, 2009) This is how Sony Corporation manage all the harmful chemicals used by them.

Lastly, political factors could have a direct impact on the ways Sony operates. The impact that could impact Sony Corporation is an international company and in all countries the leadership style is different. Sony utilsed a Global Policy On Occupational Health and Safety (OH&S) in 1998. It shows Sony’s cares about the health and safety of its employees. Sony not only manage the chemicals used but also the amount released into the air, water and soil in order to not affect the environment.Although Sony use three class of chemical substances which are quite harmful for their products, but Sony have taken a full measures to make sure not harming the environment This shows Sony Corporation cares about the environment and also obey goverment rules that is do not harm the environment. Lastly, Sony Corporation is an international company that does business in the whole world. It is important for Sony to follow all the rules implied by the goverment.

Social factors

Demographic and cultural aspects includes in the social factors of the external environment. Sony has also been affected by social issues from time to time. This is mainly because Sony has so widely expanded into different cultures and different markets that it tends to become hard to deal with all the diversity. The social factors which influences Sony varies in each country. These show the customer’s needs and the size of the potential markets in every country.

Social factors such as health consciousness of customers and consumer health rates might affect Sony. Usually the older population may not be interested in the latest Sony Products which includes more advance technology despite the better income they may receive, they are more interested in the simplicity of the products they buy.

Countries such as third world countries, for example some Asian and African countries may not be able to afford to buy Sony products which are quite expensive products. Instead these consumers will on the other hand buy a cheaper brand.

Home life changes have a big influence on attitudes and expectations of consumer. Nowadays, telephone and catalogue sales are increasingly popular.

Lately many youths demand better features such as better access to entertainments in their electronic products. This creates a demand for Sony’s products such as Play Station Portable (PSP) and Sony MP3 Player. Research shows that by 2005 Japan’s population will be over age of 65. Thus, Sony home-care robots for elders will soon be a social necessity (Kunii, I. M. and Port, O., 2001).

Lastly, social factor is one of the factors that affect Sony’s business. The social factors which influences Sony varies in each country. These show the customer’s needs and the size of the potential markets in every country. Social factor involve customer’s income, attitude, behaviour and other factors of a customer. It is important for Sony to fully understand and know well about customer. So that, they can target their specific product to which type of consumer they want to sell.

Ecological Environment

Climate change is something unpredictable and unchangeable. It might become a threat to Sony corporate activities and also society. Generally, it is also give a chance to Sony an opportunity to become one of the solutions.

Sony tackle climate change is an important commitment for them. this is to ensure their business continuity. Sony strongly believes that there is a need for protect the environment. Moreover, responses and eco conscious actions must be taken before it gives impact to Sony Company. For instance, rising sea levels and abnormal weather which cause by climate change could predict the underlying physical risks. Furthermore, the markets might change a flow, as their perceptions change to another purchasing trend. Sony has realized this problem where it could be social and financial ramifications, so to deal with legal and regulatory developments; the Company is evaluating the risks and also be alert to solve this problem anytime. For example, the Company started to collect information on laws and regulation in force in different countries to make sure that activities and products are match with the existing requirements. Moreover, climate change might influence Sony existing opportunities. An obvious example is the highly use of products boasting improved energy efficiency ratings to help minimize the factors that spur climate change (Sony, 2011).

Sony’s electronics products mainly contain few hundred or thousand parts that made from chemical substances. If these parts are not handed well, it may harm the environment. To prevent such environmental harm, Sony has set up necessary procedures according with the EU’s Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) Regulation’s requirement. So, Sony follows the JIB initiative (Joint Industry Guide) to collect data on certain chemical substances that buy from suppliers. At last, Sony follows the survey response tool by JGPSSI (Japanese Green Procurement Survey Standardization Initiative) for materials declaration that contains information on the parts, purpose of use and so on (Sony, 2011).

Sony should obey the rules and laws to continue their business and also to preserve the environment. Additionally, Sony has to think more solution to face the climate change and ways to protect the environment.

Environment technology

Sony is working hard on their products to reduce the effect towards the environment. It is to decrease the total energy that used and also reduce the resource in their product, such as BRAVIA and VAIO. Moreover, Sony has an effective supply chain management of controlling, reducing, and eliminating the use of chemical substances on their products. For instance, recycled plastic in product and the development of vegetables based product. All these are to preserve the environment being polluted (Sony, 2011).

Sony has compliance lab at Stuttgart, Germany which specialize in efficient and accurate of chemical compounds and materials that can match with their electronic products. Among their initiatives, they are using more and more recycled materials, and renewable energy in factories and offices which use around 32 sites in Europe alone itself. However, starting 2010, Sony’s objective is to maintain sustainable consumer electronic brand. Moreover, they are also wish to continue their success work in 2009. The main purpose of the eco activity is to show that technology can overcome the climate change and how they can help with the change. So, Sony office, warehouses and manufacturing around Europe have cut down CO2 emissions drastically, but they are still aiming to cut down more 10% emission for UK specific sites. Sony has established green teams in the UK businesses where people coordinate activity and the communication at different sites. This includes cutting general power consumption in facilities and offices, employee travel especially flights. Additionally, some of the effort and new ways can bring former costs down and help reconstruct business models in a different economical ways. Nowadays, people are more concern companies’ environment standpoint. Companies which are environmentally friendly, practices, products, and services are being seen by the buyers and also stakeholders (GreenPacks.org, 2011).

Sony Europe is applying their eco thinking so that they can maximize the use of the renewable energy. Sony uses renewable energy is to reduce carbon dioxide emission. In year 2008, a record shown that a reduction of 55,216 tons of CO2 emissions in Europe, itself (92,000 tons globally). Sony uses shipping more efficiently by reducing the packaging and the size towards less CO2 intensive forms of transport such as barge transport (Sony, 2011).

Next is about dye sensitized solar cell. It can produce electricity by converting energy from light. This type of cell is produced by low cost materials so manufacturing expenditures will be lower. Moreover, vegetable based plastic can last long and fire resistant which is suitable use for durable consumer goods. Sony has decided use this material in year 2002 for walkman cases use. After that, it has been widely used in different products including DVD players, VAIO devices and so on (Sony, 2011).

It is undeniable that technologies can help to protect the environment, so Sony should take this advantage to maximize the use of technology and contribute it to the environment. The uses of technology can reduce carbon dioxide; apparently can avoid green house effect.

Customer

‘No customer there is no business.’ Customer satisfaction will be a target of company. SONY business can improve customer satisfaction. (David Eaves, 2010) If we make the customer feel that they are special, customer will be appreciate us and help in increase our dividends in business with support our product. (Adhijik Naik, 2011) For example, SONY camera gives a high quality services to customers and meet their needs. Sony’s promoter will give more details and information to customers when they have question or problem with buying SONY camera. Information about SONY camera will attract their interested in SONY camera and needs. They will feel more satisfy when using SONY camera. Then their satisfaction will be achieved through SONY camera. So, customers are very important in our business because they can easily influence our level of business.

Then, with customer it will increase sales by up selling and cross selling other products. (David Eaves, 2010) Up selling means promote the product to attractive customer to buy it while cross selling means sell the product in another branch. SONY will have an excellent profit and their sales will increased with loyal customer to support it. For example, SONY’s promoter describes the function and advantages of SONY camera to customer and compared with another product. They use their technique to persuade customer such as cheaper prices or special package of SONY camera.

Besides, customer can satisfy and increasing requires of business on the need to efficiently route and apply fresh idea. Customer can also help in increasing business revenue. (Gaynor Borade, non-year) For example, customer will purchase the SONY camera and SONY Company will earn profit from them and their business will achieve a high target. SONY Company also always creates some new fresh function of SONY camera to attractive customer to purchase in order to earn profit and their loyalty to SONY camera. So, SONY Company will have a stable commerce with emergence of the customer.

In addition, customer can become addition of the business’s behavior. That’s mean customer enable the entrepreneur to observe the growth of business into dream mission planned. (Gaynor Borade, non-year) To success in a business, entrepreneur always observe customer’s needs, wants, and demands in order to make a strong strategy to attain achievement. For example, they create the SONY camera according to customer’s favourite for instance different colour of camera and it will attract them to purchase it even improve business environment to better.

From the analysis above, it is obviously that customer is very important to SONY Company because customer’s needs, wants, and demands even their response will influence the SONY camera will be purchased or not. More customers there will higher market value of SONY camera while fewer customers there will lowest market value of SONY camera.

Supplier

Suppliers always work as equal partner and building relationships according to mutual trust (Sony Corporation, 2011). A supplier can satisfy a market function when he creates a new relationship with customer and partners. (Walter A., 2003) For example, suppliers promote and transmit the SONY camera to partners and have a good communication with them when they are selling SONY camera to customer. When partners satisfy with supplier and SONY camera then they will continue have a business with them in order to satisfy a market function.

After that, Sony strengthens relationship with suppliers in make stronger technological capability, guarantee and advancing the quality of parts and sustaining competitive prices. Besides that, Sony manage and observing ‘Sony Group Environmental Vision” together with supplier in order to protect the global environment and realize a sustainable culture. (Sony Corporation, 2011) So, suppliers have strong bargaining power in SONY Company.

Suppliers are very important in developing new technology of SONY camera in SONY Company. Sony Company always creates and supply camera to customers in order to fulfil their needs, wants and demands. So, suppliers are important to become Sony partners to provide the product to customers and create a value in SONY Company.

When supplier provides different prices and materials of SONY camera then it will affect competitive among SONY. Then SONY Company’s business will reduced and less profit will be gained. So, SONY Company are always expects supplier to provide items at greatly reasonable prices and make a concentrated effort to decrease cost. (Sony Corporation, 2011)

Lastly, it shows that supplier is vital in SONY companies. It plays a role in building relationship and strengthens it among customer and SONY product. Supplier’s service will bring good outcomes for SONY companies and get a well performance in the market.

Intermediaries

Retailer and wholesaler are included in intermediaries. Regarding to SONY’s website analysis, without intermediaries there is a difficult to get SONY product. (Sony electronics Inc, 2011) For example, intermediaries need to purchase SONY camera from SONY Company and set an acceptable prices even a quality package of SONY camera in order to fulfil customer and let them easy to purchase SONY camera. These processes are vital in a business.

Through research of SONY’s website, retailer is also helps customer to prevent from buying low quality product. When customer purchase SONY camera from retailer, they can be assured that they are purchasing a high quality product. Retailer can confirm quality of SONY camera and provide warranty for customers. If retailer fulfil customer satisfaction there will achieve a high level of business because of high responses from SONY customer. So, retailer can assure customers to have greatest experience when buying a SONY camera from reseller. (Sony electronics Inc, 2011)

With SONY’s analysis, SONY retailers can produce assistance in setting up customers products and provide a good customer service to them. They can provide a good customer experience that can helps the customers to make a right decision. SONY’s retailer also can assist in sending the value products and service to customers when they buy a SONY camera. (Sony electronics Inc, 2011) For example, retailer can help them and explain the whole SONY camera’s function and uses to them and introduce them a good quality product that suitable them and satisfy their needs when they want buy camera. A good service such as talk politely to customer will persuade and influence customer to purchase it. So, retailer is important for customer.

From the analysis above, retailer is strongly to help in SONY companies to get a high value in the market. They try to give a good performance to customer and try to meet customer’s needs. Retailers also fulfil customers’ requirement. So, retailer is quite vital and their service will be appreciated by customers.

Competitors

It is crucial for Sony Corporation to watch attentively to its competitor so that they can maintain its position in the market. Sony Corporation has two types of competitor, that is, direct competitor and indirect competitor. Direct competitors are organisations that produce ‘similar’ products and services (wiseGEEK, 2011). Nokia, Motorola, Canon, Fuji Photo are all examples of direct competitors to Sony (Upvery.com, 2010). Indirect competitors are firms producing different types of products but satisfy the same needs (Rich Harshaw, 2011) of customers. The indirect competitor of Sony is video iPod. In which Sony PSP and iPod produced similar striking feature (Frank Hedley, 2008). Other competitors, especially in the software industry are Microsoft.

To maintain its competitive edge, Sony keeps updating the products with latest technologies that make it stable and sustainable over its competitors. The use of advanced technology in products has raised the quality and uniqueness, and has resulted in a mark demand increase. Though other competitors may seemed to be a threat to Sony Corporation, however with the fast paced advance in technology and the unstable global economy, Sony has embarked on collaboration and strategic alliance with its main competitors. Sony is in joint venture with Sony Ericsson which itself is a threat for new market entrants (Butod, 2010). Advanced use of technology in Sony products such as Game Consoles, Video Equipment and Mobile, and continuous production, switching costs and product differentiation has made Sony rather unbeatable in the electronic industry.

Apart from forming strategic alliances with its competitors, Sony has reviewed its manufacturing priorities and streamlined its resources to produce electronic products that are in greater demand and has continued producing differentiated products which could ensure its competitive advantage. As reiterated above, Sony’s ongoing process and product innovation has made it almost impossible for any current competitors and new entrant to compete them successfully, and this will be the core factor that will ensure Sony’s dominance in electronic products consumer market.

Thus, despite threats of current competitors and new entrants to the market, Sony Corporation is one of the world’s leading producers of electronic products. Approximately eighty (80) percent of hand-held computers in the United States operate on a Sony operating system while Microsoft which is a major competitor has only sixteen (16) percent of market share. Sony Corporation has hardware market share of sixty (60) % (2002), and other major competitors, Handspring is using Sony’s operating system, and hold about 7% and 14% market shares respectively. (Butod, 2009).

Government

The government imposed regulations to ensure business transactions are conducted in a fair and just manner. Legislations that are passed often influences the productions possibilities of a company and hence the type of goods and services that can be offered to the consumers. Apart from the above, the government also enforce taxation to collect revenue that will maintain itself and supply public services that may be needed by companies such as Sony. For example, Sony’s income taxes benefit amounts to $19billion resulting in an effective rate of 10% in Oct 30, 2009 (wikinvest, 2009).

In addition to the government’s role in regulating companies and taxation, the government also plays a major role in ensuring companies observe corporate social responsibility. An example of Sony taking over public responsibilities is the attitude of how Sony enthusiastically engages themselves in activities related to environment and climate changes. Sony plans to cut down 7% or more of CO2 gas emission comparing to the fiscal year of 2000 levels (Sony Corporation, 2009). In July 2006, Sony joined the WWF (World Wide Fund for Nature) with companies that plan and also carry out efforts to reduce greenhouse gases. By participating in this program, Sony is committed to reduce emissions of greenhouse gases and lower the product annual energy consumption. In short, Sony maintain corporate social responsibility, and though it incurs cost, but in the long run it ensures business sustainability.

The Financial Community

Shareholders are very important for Sony Company because they support the organization’s future expansion. There are two types of shareholders, that is private and institutional. As seen in the chart below, a major portion of Sony’s shareholders are the corporation itself (60.18%), followed by foreign investors (27.27%) and subsequently financial institutions (8.74%) (Sony Financial Holdings, 2010).

Figure 1: Ownership and distribution of share

Resource: http://www.sonyfh.co.jp/en/financial_info_e/shareholder_e/shareholder.html

Sony cooperation has to consider the needs and hope of possible investors.

The shareholder share represents a certain small percentage of ownership in the company therefore, stockholders has the right to obtain certain percentage of the company’s profits in the form of dividends (Farlex, 2009).

As in Sony, one of its important management task is to increase in returns to its shareholders, as well as return on equity. Its basic policy on returning profits to its shareholders is to maintain the trust of current shareholders and attract new ones, as well as securing enough retained earnings for future business expansion. In the fiscal year ended March 31, 2010, Sony provided the year-end cash dividend of ¥3,000 per share of Sony Financial Holdings totaling to ¥6,525 million as approved at the Ordinary General Meeting of Shareholders on June 25, 2010. With regards to its retained earnings, Sony has planned to utilize it in exploring new business, including the establishment of an individual annuities subsidiary, investing in information technology systems accompanied by business expansions (Sony Financial Holdings, 2010). Thus, with Sony’s dominance in the electronic company, and its high returns to shareholders and retained earnings, Sony is not only able to generate high profits with its current business ventures, but has also sufficient funds to ensure its future expansion in the competitive industry.

In conclusion, Sony must not be harming the environment and human being as they are using a lot of chemical substances in their product. Next, they must proper dispose their chemical waste. Furthermore, Sony should cooperate with supplier, government to continue their business and also to compete with their competitors. Sony also has to change their strategy in every country to boost their sales.